NEWS,29.4.2013

Japan PM to meet Putin, a first in 10yrs

Japanese Prime Minister Shinzo Abe was to meet Russian President Vladimir Putin in Moscow on Monday for the first such top-level visit in a decade that aims to break years of stalemate in a territorial dispute dating from World War II.

The failure of the two sides since the 1950s to agree a peace treaty owing to the dispute over ownership of the Pacific Kuril islands chain has held up full potential of bilateral ties.

However since returning to power in December, Abe has made a priority of improving relations with Russia. Before leaving Tokyo, he reaffirmed his desire to restart stalled talks over the dispute.

"I would like to build a trusted personal relationship with President Putin," Abe told reporters in Tokyo ahead of his departure for the three-day trip.

"I will work on boosting Japan-Russia relations so that this visit will mark a restart in stalled negotiations over a peace treaty," Abe said.

Abe and Putin were expected to release a joint statement confirming they would restart territorial talks, a Japanese government source told Kyodo News.

Biggest delegation ever

Abe and Putin are due to hold one-on-one talks at the Kremlin, followed by meetings involving business delegations from both sides. They were then to give a joint news conference.

The last such top-level official visit was by then Japanese Prime Minister Junichiro Koizumi, who travelled to Moscow to meet Putin in January 2003.

Former prime ministers Yasuo Fukada and Taro Aso visited in 2008 and 2009 for shorter, lower-level trips.

Abe's visit is also taking place after an intriguing trip to Moscow in February by Abe's close ally, the former Prime Minister Yoshiro Mori, who delivered a message from the new premier to Putin.

Abe is being accompanied by a business delegation of 120 people, the biggest ever such group to join a Japanese prime minister on a visit to Russia.

Japan is particularly interested in increasing its import of Russian energy resources as it seeks to diversify supplies in the wake of the Fukushima nuclear disaster

'Unforgivable outrage'

Russia's trade with Japan reached $32bn in 2012. But Russia, despite its size and proximity, was only Japan's 15th most important trading partner, in a sign of the unrealised potential of relations.

The dispute surrounds the southernmost four of the Kuril islands - known in Japan as the Northern Territories - which have been controlled by Moscow since they were seized by Soviet troops at Stalin's behest in 1945 at the end of World War II.

The Kremlin said in a statement that Russia believed that "dialogue in the interests of arriving at a mutually acceptable solution must be held in a calm, respectful atmosphere."

Yet there remains little hope of an immediate breakthrough, with Tokyo insisting the four islands currently inhabited by around 16 500 Russians are its territory and Moscow showing no hint of a compromise.

Russian Prime Minister Dmitry Medvedev has twice visited the island of Kunashir, called Kunashiri in Japan, infuriating Tokyo.

Medvedev's first visit to the island, which juts out past the north-eastern tip of Japan's Hokkaido island, in November 2010 - when he still held the post of president - was condemned by Tokyo as an "unforgivable outrage".

One solution mooted in the past could involve Russia ceding control of the two smallest islands of Shikotan and Khabomai and keeping the much larger Kunashir and Iturup (known as Etorofu in Japan).

But even this would require massive concessions from both sides that would be unacceptable for nationalists.

After Russia, Abe was due to visit Saudi Arabia, the United Arab Emirates and Turkey for talks with leaders there.

 

Mine strife a test for private equity

 

With the world's largest miners flocking to sell assets, cost cuts across the industry and a virtual drought in buyers, private equity funds may finally be tempted into a sector long seen as potentially lucrative but risky.
Industry veterans say the coming months will be a test of whether private equity funds can turn intentions into investments and become more than niche players in an industry that has traditionally relied on public markets for cash.
"Interest from private equity in the sector is the highest I have ever seen," one veteran industry banker said.
Another senior industry adviser described a "now or never" moment despite volatility in commodity prices, citing what could be a drawn out period of low valuations in which traditional buyers - largely, other miners - are kept out by demands they refocus and cut back rather than grow.
Volumes certainly point to increased interest.
According to research and data group Preqin which studies private equity, eight natural resources funds focused solely on mining raised an aggregate $8.5bn in 2012, more than the years 2006-2010 combined, though data did not show how much was spent on acquisitions.
Analysis by consultancy Ernst & Young suggests that private capital investors accounted for 21% of mining deal activity globally in the nine months to September 30 last year, against just 12% for the same period in 2011.
Smaller miners and developers are also eager to tap alternative sources for funding. In a sign of how tough the markets now are, the Toronto stock exchange - the prime destination for emerging producers - has not had one mining IPO in the first quarter, for the first time in a decade.
"There are a lot of buying opportunities, and for those who have the funds, you might find there is less competition, and that is what private equity looks for - a good deal," said Jason Burkitt, UK mining leader at PricewaterhouseCoopers.
Gold rush?
Private equity firms have so far steered clear of mining because of the scale and political risk involved in many operations.
Volatile commodity prices and long time horizons are also off-putting, not to mention that the investment firms often lack the manpower or expertise to cover global projects.
Typically, funds have stuck to niche assets, like high-end aluminium products for the aerospace and auto industry, in the case of Alcan Engineered Products, later Constellium, bought from Rio Tinto by funds led by Apollo in 2011.
Now, however, heavyweights like Apollo but also KKR and Carlyle are joining specialised energy-focused First Reserve, Denham Capital and Resource Capital in betting more heavily on the sector, drawn in by the prospect of an extended period of cheap prices and an unprecedented funding drought.
Apollo, which aims to invest $100m to $500m per transaction, closed a $1.3bn natural resources fund in 2012 which will invest in areas including oil, gas and mining.
The fund was one of several to look at BHP Billiton's majority stake in Canadian diamond mine EKATI, which also elicited interest from rival KKR before being sold to miner Dominion Diamond Corp.
KKR has also been named as a potential suitor for Rio's majority stake in the Northparkes copper-gold mine.
Smaller firms in pole position
However industry bankers and specialist funds both questioned whether big name private equity firms would be able to successfully compete in the mining sector.
"Size sometimes can be a disadvantage in our environment. You need to make decisions quickly - you need to have the coal face not too far removed from decision making process, so you can react quickly," Sierra Rutile's chief executive, John Sisay, said. The Sierra Leone-focused mineral sands producer's largest shareholder is specialist fund Pala.
"Smaller firms are able to do that better."
Traditional funds may also lack the extensive specialist teams needed to evaluate projects across commodities and across the world, and may be unable to invest for the longer term.
One of the top shareholders in EMED Mining, a London-listed company redeveloping the former Rio Tinto copper mine near Seville, is specialist Resource Capital.
"If you are playing the development game you are playing the development timeline," EMED's chief executive, Harry Anagnostaras-Adams, said.
Bert Koth, a Perth, Australia-based director at Denham Capital, also questioned the idea that traditional firms would step in. Although mining firms are shedding assets at a pace not seen for decades, many are doing so at auctions which can drive up prices - something private equity is likely to want to avoid.
"Generalist PE firms have a pretty poor track record as they don't fully understand the risks involved. I query whether they really appreciate what they are getting into," Koth said.

Iran squeezed by higher edible oil costs

Iran is having to pay a premium for basic foodstuffs such as cooking oil, highlighting the increasing strain on Tehran from Western sanctions aimed at its disputed nuclear programme, even though the sanctions don't cover food.
Wilmar International, the world's largest listed planter, and Mewah International, a $570m edible oils processor - both listed in Singapore - are driving sales to Iran on long-term contracts, with Middle Eastern trading sources reporting premiums of up to $30 a tonne to the cash benchmark.
Food shipments are not targeted under the sanctions, but the financial squeeze has cut off firms operating in Iran from much of the global banking system and pushed inflation above 30%. Oil exports, Iran's major source of hard currency, have more than halved since 2011.
Food exporters largely shun Iranian deals, with a volatile rial currency deepening risk and foreign banks wary of financing the food trade for fear of reputational damage.
A shopkeeper in Tehran told Reuters he had put up his price of imported cooking oil by up to 30% this month. A 900 millilitre bottle of cooking oil costs around 39 000 rials ($3.18), compared to a 1 litre bottle that sells for $3.10 in Britain and $1.20 in palm oil-producing Malaysia. Another storekeeper said prices had been stable for weeks.
"One woman man"
Iran has shifted to Southeast Asian palm oil as sanctions and limited supplies have disrupted imports of soybeans and oil from Argentina. Malaysia, the world's second-largest palm oil producer, saw exports to Iran jump 60% last year to a record 548 603 tonnes - still less than 5% of Malaysia's total exports of about 17 million tonnes.
Wilmar and Mewah dominate the trade with Iran where demand for high-value refined palm olein, used in cooking oil, can reach 500 000-700 000 tonnes a year.
Wilmar sells to Saudi Arabian food company Savola, which buys palm oil to feed its edible oil processors in Iran, three Middle Eastern trading sources told Reuters.
They said Wilmar demands a premium of $20-$30 per tonne to cover potential payment delays and interest charges.
Wilmar said it does not comment on specific contracts. Savola did not respond to requests for comment.
"Savola is a one woman man. It sticks to one palm oil company to supply its refineries and it's Wilmar for the past few years," said a Dubai trading source close to Savola. "Payments can be slow, but there are ways around it. The money will be banked in (Saudi) riyals, euros and US dollars from Turkish banks. Sometimes, the money will come via India."
Mewah last month shipped 75 310 tonnes of palm oil to Iran, its best month so far this year, shipping documents show.
"Mewah is the go-to person for Iran. It buys the palm oil from Malaysian firms and then sells it to Iran," said a trading executive from a Malaysian plantation who deals with Mewah. "They are established in the Iran trade and have deep pockets to withstand payment delays."
Planters who have sent cargoes to Iran with Mewah include subsidiaries of IOI Corp, Kuala Lumpur Kepong and a Malaysian unit of Wilmar, cargo surveyor documents show. Officials at those companies declined comment.
Shipping documents obtained by Reuters show Wilmar exported at least 114 000 tonnes of refined palm oil to Iran from the Indonesian island of Sumatra alone last year. In January of this year, Wilmar shipped another 10 700 tonnes to Iran from Sumatra.
"Wilmar doesn't do high stakes gambling. So it has taken a corporate guarantee from Savola's head office in Saudi Arabia," said a Southeast Asian trading source who has done deals with Savola. "It's become standard practice."
Savola has 832,000 tonnes of annual capacity in Iran, giving it nearly 40% market share in a country of over 74 million people. The firm's revenues from Iran increased by almost a third last year to 4.4bn riyals ($1.17bn), about 42% of its global edible oil sales.
Captive market
Iran is proving more profitable than price-sensitive China, where competition means Wilmar only profits from refining margins. And India, the world's top palm oil buyer, has imposed higher import taxes to stem the flow of cheap refined edible oil from Indonesia and Malaysia.
With more than half a million hectares of oil palm estates in Indonesia and Malaysia, Wilmar makes most of its sales, and profits, from trading with India and China.
"Indonesia is looking for new markets for its refined palm oil. Iran is a natural choice, it has captive consumers. They desperately need the oil and they will pay a premium," said a Singaporean trader, who didn't want to be named as he is not authorised to speak to the media.
So far this year, shipping records show Mewah has exported 168 100 tonnes of palm oil from Malaysia to ports in Iran. Most cargoes are taken up by private Iranian buyers though state food procurement firm GTC is also an occasional buyer, traders said.
"We do come into the palm oil market from time to time to buy. These are private deals," a GTC official told Reuters from Tehran. He declined to discuss the deals.

Central banks prop up global economy

Five years after the onset of the global financial crisis, the world economy is in such a chronic condition that the European Central Bank might cut interest rates this week and the Federal Reserve is likely to indicate no let-up in the stimulus it is providing the US economy.
With the eurozone economy in recession, momentum is building for the ECB to lower interest rates for the first time since July 2012, according to senior sources involved in the deliberations.
If the bank does not act on Thursday, a quarter-point cut in June is considered a racing certainty.
The ECB is the most conservative of the world's main central banks. Its main short-term rate, now at 0.75%, is higher than the equivalent rate of the Fed, the Bank of England and the Bank of Japan. And unlike its peers the ECB has not engaged in quantitative easing - printing new money to buy bonds.
But the ECB seems to be softening. "I would argue that the ECB should be thinking of easing policy; whether they are currently is more debatable," said Stephen King, global chief economist for HSBC in London.
Only a small majority of 76 economists polled by Reuters expected a cut as early as this week.
The swing factor for King is what is happening to Germany, the eurozone's largest economy. Until recently, Germany had been showing resilience thanks to its export sector. But April's survey of purchasing managers and the Munich IFO institute's monthly poll were distinctly soft.
"Germany is becoming more like everybody else. It is being dragged down, whether it likes it or not, through weakness in southern Europe, slowing growth in China and the depreciation of the Japanese yen," he said.
"None of these things are good for Germany. So the weaker Germany becomes, the easier it is to agree on a common monetary policy," he added.
China's official purchasing managers' survey for April, to be released on Wednesday, is likely to provide more evidence that the world's second-largest economy is shifting down to a lower trend rate of growth after three decades of averaging around 10 percent a year.
Economists polled by Reuters expect the index derived from the survey to have edged up to 51.0 from 50.9 in March, holding above the threshold of 50 that demarcates month-on-month expansion from contraction.
Jian Chang, who tracks the Chinese economy for Barclays in Hong Kong, prefers to describe the economy as being in a stabilisation rather than a recovery phase.
"As long as the PMI comes in above 50 it will show that modest, slow growth is continuing," she said.
Global markets have become addicted to the drug of super-fast Chinese growth and tend to react badly to signs of softness. But Chang said the authorities in Beijing, intent on guiding the economy to a more sustainable growth rate, are not panicking.
There has been no big investment package, for example, to support the government's urbanisation drive.
Policymakers will be comfortable as long as growth for the year as a whole comes in above their target of 7.5%, she said. Barclays is forecasting an outcome of 7.9%.
Whether that target is met will depend in part on an improvement in exports to the European Union and to the United States, which on Friday reported a disappointingly soft first-quarter gross domestic product growth rate of 2.5%.
The pace of expansion has averaged just 1.4% over the last two quarters and 1.8% over the past year, noted Jay Feldman, director of US economic research at Credit Suisse in New York.
"All in all, growth is persistent, but decidedly underwhelming. At this trajectory, achieving a labour market recovery beyond the fits-and-starts progress of the last few years will be a challenge," he told clients.
Figures this week are likely to fit into the same pattern.
The Institute of Supply Management's April manufacturing survey is forecast to dip to 51.0 from 51.3 in March, while the economy is likely to have generated 150 000 jobs in April, up from just 88 000 in March but not enough to reduce the jobless rate from 7.6%.
Because the Fed has pledged to stick to its super-loose policy until unemployment falls to 6.5%, the central bank is expected to confirm at this week's policy meeting that it will keep buying $85bn in bonds every month to keep bond yields low and encourage investment.
Talk had started to grow that the Fed might start to wind down, or taper its quantitative easing programme. But after the latest economic data, the central bank's tone is likely to change, according to Steve Ricchiuto, chief US economist for Mizuho Securities in New York.
"They're going to come out of this meeting with a more balanced view on tapering and say, 'we could increase or we could taper'," he said.
Indeed, price pressures are so muted because of slack in the economy that some Fed policymakers have raised the prospect of injecting even more stimulus.
The core personal consumption expenditure deflator, the Fed's favourite inflation gauge, rose just 1.3% in the year to March, Friday's GDP report showed.
"Low inflation leaves that much more leeway for the Fed to focus on growth and jobs. If the core PCE index falls much farther, look for 'inflation being too low' to show up in more Fed communications," Feldman said.

Netanyahu: Iran hasn't crossed red line

Prime Minister Benjamin Netanyahu said on Monday, Iran had not crossed the "red line" he set for its nuclear programme, despite an assessment to the contrary by a former Israeli intelligence chief.

At the UN in September, Netanyahu drew a red line across a cartoon bomb to illustrate the point at which he said, Iran will have amassed enough uranium at 20% fissile purity to fuel one nuclear bomb if enriched further.
He said then that Iran could reach that threshold by mid-2013.
Last week, Amos Yadlin, a former chief of Israeli military intelligence, told a security conference in Tel Aviv, that "the Iranians have crossed the red line" Netanyahu drew at the UN General Assembly.
Without referring directly to Yadlin, Netanyahu said at a meeting on Monday of his Likud-Beitenu parliamentary faction, that Iran's nuclear activities remained short of his benchmark.
"Iran is continuing with its nuclear programme. It has yet to cross the red line I presented at the UN, but it is approaching it systematically," he said in broadcast remarks.
"It must not be allowed to cross it."
Uranium usage
The Islamic republic says it is enriching uranium only for peaceful energy and medical purposes.
Israel, widely believed to be the Middle East's only nuclear-armed power, has issued veiled warnings for years, that it might attack Iran if international sanctions and big power diplomacy fail to curb what it regards as a drive by Tehran to develop atomic weapons.
Israel has long insisted on the need for a convincing military threat and setting clear lines beyond, which Iran's nuclear activity should not advance.
It says this is the only way to persuade Iran to bow to international pressure, by curbing enrichment activity and allowing unfettered UN inspections.

Venezuela signs $1bn agreement with Cuba

Venezuelan President Nicolas Maduro wrapped up a two-day visit to Cuba late on Sunday in which the two allies reaffirmed their strategic alliance, signing $1bn in co-operation agreements.

The visit, which came just two weeks after Maduro's election to replace the late Hugo Chavez, was hailed as great success by state media, which said it will help Havana and Caracas "strengthen our union."

The two countries said they signed 51 agreements encompassing health, education, transportation, sports, energy and special "social missions".

Maduro, before he departed the island, hailed his nation's relationship with Cuba as "a strategic alliance that transcends the times; more than an alliance, it is a brotherhood".

Cuba is only the second country Maduro has visited since his 14 April election victory.

Maduro held talks with President Raul Castro, who reaffirmed Cuba's "unyielding will to continue co-operation in solidarity with Venezuela, determined to share our fate with the heroic Venezuelan people".

He also held a separate, five-hour meeting with Fidel Castro, aged 86, the retired leader of the Cuban revolution, who paid homage to his dear friend Chavez and the alliance that the two nations forged in October 2002.

12-year-old leftist relationship

The relationship has been crucial to Cuba, shoring up a Soviet-style economy that has floundered since the collapse of the Soviet Union in 1989.

The deal is Cuba's biggest source of cash, well ahead of money sent home by expatriate Cubans, tourism or exports of nickel and tobacco.

The two allies also have engaged in a variety of joint projects, like a refinery in Cienfuegos, Cuba.

An estimated 40 000 Cuban doctors, technicians and advisers work in Venezuela, which supplies Cuba with 130 000 barrels of oil a day as part of a 12-year-old relationship that has closely bound together their leftist, anti-US governments.

But the Cuban connection also remains a point of heated contention in Venezuela, which split 50.8-49 in the elections to succeed Chavez and saw some 700 000 people switch to the opposition.

During the election campaign, opposition candidate Henrique Capriles repeatedly attacked the "gifts" sent from Venezuela to Cuba, calling Maduro "Cuba's candidate" and demanding that Caracas cut off oil supplies to Havana.

Venezuela's National Electoral Council plans to begin an expanded audit of the results on Monday, but cautioned the move cannot overturn Maduro's win.
The opposition has until the end of next week to file suit with the Supreme Court to contest the outcome.

NEWS,07.04.2013

French minister confirms 0.1% growth

French Finance Minister Pierre Moscovici said Sunday that France's economy was expected to grow just 0.1% this year, revising downward an official target as the country struggles to get back on its feet.

The French government had initially forecast 0.8% growth in 2013 for the eurozone's second largest economy, which continues to battle rising unemployment, stagnant growth and a stubborn budget deficit.

Speaking on Europe 1 radio, Moscovici also predicted growth for 2014 at around 1.2%.

For 2015, "I think French growth will get back to a cruising speed that will enable it to create jobs," he said, pointing to an expected growth of 2%.

His 2013 prediction confirms those already made by the European Commission and Organisation for Economic Cooperation and Development, which both forecast that the French economy would manage to grow by just 0.1% this year.

Moscovici already said last week that he "feared" growth in France would be around that figure, and Sunday's announcement confirmed this.

Last month, French President Francois Hollande insisted that the country's promised turnaround was still on course, despite near record unemployment, a drop in household purchasing power and thousands of layoffs.

Offshore accounts data reveal crimes

A trove of data obtained by a US-based journalists' group that details thousands of offshore accounts reveals several instances of swindles and other financial crimes, The Washington Post newspaper reported Sunday.

Among the 4 000 US individuals listed in the records, at least 30 were American citizens accused in lawsuits or criminal cases of fraud, money laundering or other serious financial misconduct, the report said.

They include billionaire hedge fund manager Raj Rajaratnam, who was convicted in 2011 in one of the biggest insider trading scandals in US history, and Paul Bilzerian, who was convicted of securities fraud, the paper noted.

The report was the latest by prominent newspapers around the world which were given copies of the data for scrutiny by the Washington-based International Consortium of Investigative Journalists.

The head of the ICIJ, Gerard Ryle, obtained the data, involving 2.5 million records of more than 120 000 companies and trusts set up by two offshore companies operating in the British Virgin Islands and in Asia and the South Pacific, on a hard drive after investigating a fraud and offshore haven case in Australia.

Several newspapers, including France's Le Monde and Britain's Guardian, have been publishing revelations based on the data.

The Washington Post's report said the records contained information on at least 23 companies linked to an alleged $230m tax fraud in Russia that was investigated by a Moscow-based lawyer named Sergei Magnitsky.

After Magnitsky informed Russian authorities of his findings, he was accused of fraud himself and thrown in prison, where he died in 2009 under suspicious circumstances.

One of the companies mentioned in the records was used to set up Swiss bank accounts, into which the husband of a Russian tax official deposited millions in cash, the paper said.

Today, there are between 50 and 60 offshore financial centers around the world holding billions of dollars at a time of historic US deficits and budget cuts, The Washington Post said.

Groups that monitor tax issues estimate that between $8 trillion and $32 trillion in private global wealth is parked offshore, according to the paper.

According to fraud experts, offshore bank accounts and companies are vital to those wishing to conceal complex financial crimes.

For example, Allen Stanford, who ran a $7bn Ponzi scheme, used a bank he controlled in Antigua, The Post noted.

And Bernard Madoff, who ran the largest Ponzi scheme in US history, used a series of offshore "feeder funds" to fuel the growth of his scam.

The Washington Post quoted a top official in the US Justice Department's fraud section, Paul Pelletier, as saying US owners of offshore accounts were sometimes trying to hide money from US tax authorities, law enforcement or regulators.

"As a prosecutor, it was very difficult pursuing these people," he said.

Italy to pay €40bn owed to business

The Italian government on Saturday gave its go-ahead for a bill to repay €40bn in debts owed to the private sector over the next 12 months in a bid to stimulate growth.

"The cabinet meeting today approved an urgent decree to pay back the debts of the public sector to the private sector," Prime Minister Mario Monti told a press conference after the talks.

US preparing for possible N Korea actions

The top US military officer said on Sunday the Pentagon had bolstered its missile defences and taken other steps because he "can't take the chance" that North Korea won't soon engage in some military action.
Heightened tensions with North Korea led the United States to postpone congressional testimony by the chief US commander in South Korea and delay an intercontinental ballistic missile test from a West Coast base.
North Korea, after weeks of war threats and other efforts to punish South Korea and the US for joint military drills, has told other nations that it will be unable to guarantee diplomats' safety in the North's capital beginning Wednesday.
US General Martin Dempsey, the Joint Chiefs of Staff chair who just wrapped up a visit to Afghanistan, was asked in an Associated Press interview whether he foresees North Korea taking military action soon.
"No, but I can't take the chance that it won't," he said, explaining why the Pentagon has strengthened missile defences and made other decisions to combat the potential threat.
Dempsey said the US has been preparing for further provocations or action, "considering the risk that they may choose to do something" on one of two nationally important anniversaries in April - the birth of North Korean founder Kim Il Sung and the creation of the North Korean army.
US General James Thurman, the commander of the 28 000 American troops in South Korea, will stay in Seoul as "a prudent measure" rather than travel to Washington to appear this coming week before congressional committees, Army Colonel Amy Hannah said in an e-mail on Sunday to the AP.
Thurman has asked the Senate Armed Services Committee, the House Armed Services Committee, and the House Appropriations subcommittee on defence to excuse his absence until he can testify at a later date.
Dempsey said he had consulted with Thurman about the rising tensions on the Korean peninsula.
Missile test

The Pentagon has postponed an intercontinental ballistic missile test that was set for the coming week at Vandenberg Air Force Base in California, a senior defence official told the AP on Saturday.

The official said US Defence Secretary Chuck Hagel decided to put off the long-planned Minuteman 3 test because of concerns the launch could be misinterpreted and exacerbate the Korean crisis. Hagel made the decision on Friday, the official said.
North Korea's military said this past week that it was authorised to attack the US using "smaller, lighter and diversified" nuclear weapons.
North Korea also conducted a nuclear test in February and in December launched a long-range rocket that could potentially hit the continental US.
The US has moved two of the Navy's missile-defence ships closer to the Korean peninsula, and a land-based system is being deployed to the Pacific territory of Guam later this month. The Pentagon last month announced longer-term plans to strengthen its US-based missile defences.

Citing North Korea's suggestion that diplomats leave the country, South Korean President Park Geun-hye's national security director said the North may be planning a missile launch or another provocation around Wednesday, according to presidential spokesperson Kim Haing.

In Washington, an adviser to President Barack Obama said "we wouldn't be surprised if they did a test. They've done that in the past."

US Senator John McCain said the North's young leader, Kim Jong Un, is playing a game of brinksmanship.

"In the past we have seen this repetitious confrontation, negotiation, incentives to North Korea to better behave, hopes that they will abandon their nuclear quest - which they never will, otherwise, they'd be totally irrelevant," McCain told CBS's Face the Nation.
"And so we've seen the cycle over and over and over again, for last 20 or 30 years. They confront. There's crisis. Then we offer them incentives - food, money. While meanwhile the most repressive and oppressive regime on earth continues to function," he added.
McCain said China "does hold the key to this problem. China can cut off their economy if they want to."

Israel Holocaust memorial day begins

Israel's annual memorial day for the 6 million Jews killed in the Holocaust has begun with a ceremony marking 70 years since the Warsaw ghetto uprising.
The uprising has come to symbolize Jewish resistance against the Nazis in World War II.
Sunday's main ceremony was taking place at Yad Vashem, Israel's official Holocaust memorial. Israel's president and its prime minister were set to speak before hundreds of Holocaust survivors and their families, Israeli leaders, diplomats and others.
The Israeli flag flew at half-staff, and a military honour guard stood at one side of the podium as poems and psalms were read and the Jewish prayer for the dead was recited.
The annual Holocaust memorial day is one of the most solemn on Israel's calendar.

Acting president fears death plot

Venezuela's acting president Nicolas Maduro has accused former US officials Roger Noriega and Otto Reich of plotting to kill him to prevent his victory in next week's presidential elections.
Speaking at a televised campaign event on Saturday, Maduro said the plot also involved "right-wing forces" from El Salvador, which had already dispatched paid assassins to Venezuela to implement the plan.
"Their goal is to kill me," said Maduro, who had been designated by the late Venezuelan leader Hugo Chavez as his heir apparent. "They want to kill me because they know they cannot win free and fair elections."
A presidential election to replace Chavez, who died of cancer last month, will be held on 14 April.
Maduro said part of the plot also involved sabotaging the nation's electrical grid.
Parts of oil-rich Venezuela suffer from regular power outages, a problem opposition leader Henrique Capriles had seized upon to criticise the socialist government that Chavez led for 14 years until his death on 5 March.
On Thursday, Maduro also accused the opposition of plotting to sabotage the national power grid to cause a blackout ahead of the election.
A conservative Mexican-American, Roger Noriega served as US Permanent Representative to the Organization of American States (OAS) from 2001 to 2003.
Otto Reich, a Cuban-American, was the US president's special envoy for the Western Hemisphere, assistant secretary of state and US ambassador to Venezuela.
While vocal critics of Venezuelan policies, both have repeatedly denied any involvement in Venezuelan affairs.

UK wants to change welfare system

Prime Minister David Cameron said on Sunday that Britain's welfare system had "lost its way" and become a "lifestyle choice", amid a raging debate on government cutbacks to state handouts.
Cameron's Conservative-Liberal coalition government, trying to rein in the national budget deficit, is bringing in a series of changes to the system this month - in the face of bitter opposition from the Labour Party.
The debate has been fuelled by the case of Mick Philpott, a nationally notorious welfare-dependent father of 18, who was jailed last week for the manslaughter of six children in setting fire to his own house.
Conservative finance minister George Osborne was blasted by Labour in unusually fierce terms when, asked whether Philpott was a product of the welfare system, he suggested there needed to be a debate about whether taxpayers should be subsidising lifestyles like his.
Opposition Labour finance spokesperson Ed Balls said for Osborne "to link this wider debate to this shocking crime is nasty and divisive and demeans his office".
Writing in The Sun newspaper, Cameron launched a staunch defence of the welfare shake-up, which includes capping the amount a household can claim at national average earnings.
Backfiring
He suggested it was "crazy" that welfare claimants could have a bigger income than workers.
The Conservative leader suggested that a system originally designed to protect the frail and be a "stopgap" was now backfiring.
"It was invented to help people escape poverty, but has trapped too many people in it. It was meant to be a stopgap in hard times, but has become a lifestyle choice for some. It was designed to bring us together, but is causing resentment," he said.
"No-one wants to work hard every day and see their hard-earned taxes being used to fund things they themselves cannot afford or keep generations dependent on welfare.
"So this month we are making some big changes. They are changes that have a simple principle at their heart: we are restoring the fairness that should lie at the very heart of our tax and welfare systems.
"We are saying to each and every hard-working person in our country: we are on your side."
The debate has set not only politicians at each other's throats but also newspapers and commentators of opposing political stripes.
Meanwhile a YouGov opinion poll for The Sun found that six out of 10 voters thought welfare handouts were too generous.
About 67% said the system needed an overhaul while 79% back the government's move to limit a family's welfare payments to 26 000 pounds a year - the average working family income.

NEWS,19.1.2013

Obama kicks off inauguration weekend

President Barack Obama on Saturday was heading up a national day of service, kicking off a whirlwind weekend of inauguration events that mark the end of his historic first term and the start of his second. Obama added the day of service projects in 2009 and hopes it will become a tradition for future presidents. He and first lady Michelle Obama planned to volunteer in the Washington area, as did Vice President Joe Biden and his wife, Jill.The president will be officially sworn in for his second term on Sunday in a small ceremony at the White House. He'll take the oath of office again on Monday before hundreds of thousands of people on the National Mall, followed by the traditional parade and formal balls. Thousands of workers and volunteers were making final preparations for the celebration. Hotels and government buildings along the parade route were adorned with red, white and blue bunting. White tents, trailers and generators lined the Mall.Yet there is decidedly less energy surrounding Obama's second inauguration than there was in 2009. That history-making event drew 1.8 million people for the swearing-in of the nation's first black president. This time, Obama takes the oath of office following a bruising presidential campaign and four years of partisan fighting. He's more experienced in the ways of Washington. He has the gray hair and lower approval ratings to show for it.For at least the inauguration weekend, the fiscal fights and legislative wrangling will be put aside in favour of pomp and circumstance.The White House did not say in advance what Obama's service project would be. In 2009, he helped spruce up a shelter for homeless teens in one of Washington's porter neighbourhoods then visited wounded soldiers at Walter Reed Army Medical Centre.In an effort to expand the day of service, former first daughter Chelsea Clinton was headlining a volunteer summit on the Mall. The inaugural committee organised volunteer events in all 50 states.

The Re-emergence of Europe: Why Exiting the Euro Is a Bad Idea

At the height of Europe's debt and banking crisis it seemed temptingly easy to simply jettison the euro altogether and opt for national devaluation. Sometimes, if a country's currency is overvalued in real terms and it looks like the current account is going to be in deficit for the foreseeable future, devaluation can make sense. But the fallacy put about was that this process would be relatively easy and could be done without too much collateral damage to the rest of Europe. This fallacy only served to exacerbate the crisis in 2010 and 2011, creating unnecessary, time-wasting and distracting noise around the policy options. An overwhelming number of economists, international civil servants and policy-makers argue that a fragmentation of the Eurozone would cause a new depression and massive wealth destruction around the world. It would also end the period of economic integration that has characterized world politics since the end of the Cold War. All banks that have looked at the implications of a euro break-up reach roughly similar conclusions. For example, Swiss bank UBS estimates that it would cost each southern European economy up to 40 percent of their gross domestic product (GDP) in the first year. And ING predicts that the Eurozone as a whole, including Germany, could see a 9 percent drop in GDP in the first year following break-up. In short, the cost of devaluation would far exceed the supposed benefits. Here is why:If even one country, large or small, were to leave the euro, the Eurozone would effectively rupture. The important founding notion of solidarity would be broken. Old rivalries could be reignited. If a highly productive economy such as Germany were to exit, it would mark the end of a 60-year commitment to a stable Europe. If a less productive economy exited, it would almost instantly become a pariah, exporting its pain to its neighbours.Switching back to an old currency would also be a technical challenge and have to be done quickly. Who would set the exchange rate? New coins would have to be minted, new currency printed and new interest rates set by the central bank. Everything that was paid in euros from national debt to teachers' salaries would have to be switched back as quickly as possible to avoid financial chaos. Unravelling a system that took three years to put in place would be much harder than people think. There would probably be a run on the banks, as depositors stampeded to withdraw their money, fearing for the value of their savings. Governments would be forced to impose withdrawal limits. Legal challenges and a likely credit crunch would follow, if Argentina's forced devaluation in 2002 is anything to go by. Investors would sell off assets and dump the country's bonds.In addition, the government would almost certainly default on its foreign euro-denominated debt, leading to possible bank collapses at home and across the rest of Europe; such is the interdependence of the banking system. Access to international capital markets would be denied possibly for years forcing the country to bring its budget into balance immediately. The one potential advantage is that its debt, now redenominated in the new currency, might be significantly lower. But while a devalued currency might make exports cheaper and therefore more attractive to foreign buyers, imports would become more expensive and cause a decrease in real incomes. It may improve the current account position temporarily, but it will not necessarily lead to longer term growth. Devaluation does not address the fundamentals of competitiveness. Restructuring the economy over the long term cannot be avoided.Apart from all this, there is no legal framework for a member country to re-establish its own currency or for one member to expel another. Leaving would have far-reaching implications for a country's politics, finances, economy, society and future.

Maduro active in Chavez's absence

Venezuela's vice president stepped into the shoes of ailing President Hugo Chavez in a flurry of public events on Friday, working to maintain an image of government continuity after more than five weeks of unprecedented silence from the normally garrulous president.Vice President Nicolas Maduro and other Cabinet ministers have striven to assure a nervous public that Chavez's administration is firmly in charge even as the opposition challenges its legitimacy. Chavez has been out of sight in Cuba since undergoing cancer surgery on December 11.Among three televised events held nationwide on Friday, Maduro helped opened a school in Chavez's home state of Barinas alongside the president's elder brother, Adan, who is the state's governor."We're all Chavez. We have to feel that way," Maduro said during the school visit. "We all love Chavez from our hearts."The vice president, whom Chavez designated last month as his chosen successor, also visited an agricultural training centre in Lara state, where he insisted on the importance of "socialist efficiency". He then spoke to National Guard troops in western Zulia state, blaming materialistic values for exacerbating crime. A day earlier on Thursday, Maduro presided over the inauguration of a housing project in Caracas.Oil Minister Rafael Ramirez gave an update on the government's efforts to build new public housing for the poor, saying more than 400 000 homes are currently under construction nationwide. "All the programmes of the revolution continue and will continue," Ramirez told reporters on Friday. "The revolutionary government hasn't stopped, not one minute. "Opposition leaders have said the government violated the constitution by indefinitely postponing Chavez's swearing-in past January 10, a stance that has been dismissed in a ruling by the Supreme Court. Meanwhile, a president known for speaking and singing on television for hours at a time has not uttered a word or appeared on television since December 10. Even his popular and normally busy Twitter account has gone dark since early November. Maduro and other government leaders don't enjoy anywhere near the level of public adoration that Chavez does, but the president's followers have still embraced him as his anointed stand-ins. Critics note that while many Venezuelans remain on edge awaiting news of Chavez's condition, the government faces serious challenges ahead. The opposition newspaper Tal Cual headlined an editorial by journalist Fernando Rodriguez on Monday saying Venezuela is now a "headless country"."Who's in charge in this country?" Rodriguez asked. He noted that Venezuela is being battered by 20 percent inflation, shortages of some types of food and that hundreds were murdered last month during the holidays.Rodriguez wrote that as he sees it, "The country is standing still."