NEWS,19.06.2012

Growth the watchword at G20 summit

 

The leaders of the world's major economies embarked on the final day of the G20 summit Tuesday determined to kickstart growth and pull the eurozone back from the brink of disaster.European members were under extraordinary pressure from their international counterparts to loosen the straitjacket of their austerity programs and to allow the European Central Bank to open the lending floodgates.Beyond the summit conference center in the Mexican resort of Los Cabos, bond markets jacked up rates on Spanish and Italian debt amid self-fulfilling fears that the debt crisis that sank Greece was spreading once again.Germany's Angela Merkel remains the driving force behind the eurozone's austere determination to privilege deficit busting over stimulus spending, although US officials say her position is softening."Discussion here has been balanced: we need the right mix of consolidation and growth stimulus at the same time," Merkel told reporters on Tuesday, saying the previous night's showpiece dinner had been a "very frank and honest exchange."A draft version of the G20 final statement, which was to be finalized and published by the leaders on Tuesday, suggested that a formulation would be found that would commit the leaders to a pro-growth agenda."All G20 members will take the necessary actions to strengthen global growth and restore confidence," it said, vowing that eurozone members would safeguard the stability of the single currency in the face of volatile markets.The version seen by AFP allowed no hint that Merkel or her allies might crumble and allow the ECB to pump out cash or to pool German debt with that of the weaker eurozone members in order to create low-interest eurobonds.But it opened up the possibility of more lending and spending if the European economy continues to struggle."Should economic conditions deteriorate significantly further, those countries with sufficient fiscal space stand ready to coordinate and implement discretionary fiscal actions to support domestic demand," the draft reads.There was also an indication that Merkel was coming round to the idea of a more integrated EU banking system that would allow joint supervision and a unified system to pay back depositors in any failing institutions."We support the intention to consider concrete steps towards a more integrated financial architecture, encompassing banking supervision, resolution and recapitalization, and deposit insurance," the draft statement said."Markets expect that we work together more closely," Merkel told reporters on Tuesday morning, without specifically mentioning unifying the banking system.EU Commission chairman Jose Manuel Barroso bristled at hostile questioning over why his rich continent needed so much support from abroad, declaring: "We are certainly not coming here to receive lessons from nobody."US President Barack Obama cancelled a planned meeting with European G20 members after the official dinner hosted by Mexico's President Felipe Calderon ran long."Everything that could have been said at the Obama meeting had been said at dinner, so we were done with the topic," Merkel said.Obama called for Greece to be given more time to get its affairs in order, after parties committed to honoring the terms of its bailout agreement won a majority of seats in Sunday's parliamentary election.But Merkel -- fast becoming a hate figure among Greeks -- remained unmoved. "Elections cannot call into question the commitments Greece made. We cannot compromise on the reform steps we agreed on," she told reporters on Monday.Progress was made in Los Cabos in boosting the resources available to the International Monetary Fund to help protect vulnerable countries from the backwash of the eurozone crisis.IMF chief Christine Lagarde thanked emerging powers, led by China, for pledging enough to bring her pool for emergency loans up to $456 billion (361 billion euros) in exchange for a greater say in Fund affairs.In addition to summit sessions, the leaders were to hold a series of side meetings on Tuesday, notably a two-way between Obama and Chinese President Hu Jintao, and a possible reschedule of the cancelled US-EU talks.The summit was due to draw to a close with a ceremony at 2330 GMT, after which Calderon was to address the press.Next year's G20 summit will be held September 5-6 in Saint Petersburg, Russia.

 

Greek leaders poised for coalition deal

 

Greece's conservatives expect to be able to form a coalition Government with the Socialists today, allowing the two parties that dominated politics for decades to share power despite a major anti-establishment election vote.Conservative New Democracy leader Antonis Samaras has promised to negotiate less punishing terms for Greece's international bailout, after only narrowly beating a radical left-wing party that campaigned to scrap the austerity deal entirely.A senior New Democracy official expected agreement soon on a new cabinet with the PASOK Socialists and possibly another smaller centre-left party following Sunday's election, the second in as many months.Speaking late last night, he said a deal would be reached today that would involve more than a symbolic involvement by PASOK in the Government."They will participate actively," said the official, who declined to be identified.New Democracy and PASOK alternated in power from the fall of military rule in 1974 until last year, when Greece's economic crisis forced the arch rivals to share power in a pro-bailout national unity Government."Political leaders should be aware of the fact that this Government is Greece's last chance to remain in the eurozone," the centre-left daily Ta Nea said in an editorial."The Greek people are ready to reward the parties that manage to ease austerity and punish those that raise voices of dissent," it said.The comment underscored the widespread expectation in Greece that a new Government will be able to negotiate an easing in the tough conditions of the European Union and International Monetary Fund bailout despite resistance from Germany.Many Greeks hold both parties responsible for the nation's near bankruptcy, which forced it to take bailouts from the EU and IMF in 2010 and again this year.New Democracy narrowly won the election, averting the immediate risk of a Greek euro zone exit but raising doubts on whether the new Government can impose austerity cuts on a nation deeply divided over the price for bailout funds.After claiming victory over the radical leftist SYRIZA party to jubilant crowds, Samaras began yesterday the more sobering task of talking to rivals to cobble together a coalition.The greatly weakened PASOK, which finished third in Sunday's vote, has yet to commit to supporting Samaras, but its leader Evangelos Venizelos said talks must be wrapped up by today - signalling a deal would be agreed by then.The smaller, moderate Democratic Left party, which opposed the bailout backed by the conservatives and the Socialists, has also suggested it will offer conditional support to a Government led by Samaras.Venizelos was due to meet the head of Democratic Left, Fotis Kouvelis in the morning to gauge support for a three-way alliance with their traditional conservative rivals.With Greece just weeks away from running out of cash and a new government needed to negotiate the next instalment of funds from lenders, Greek political leaders appeared determined to avert the deadlock that followed an inconclusive vote on May 6."I am optimistic that this time they will agree to form a Government," a Greek banker who declined to be named told Reuters."They have realised that there is no margin of error or further delays. A third election would be a disaster."With New Democracy taking a 50-seat bonus under Greek electoral law for coming first, a New Democracy-PASOK alliance would have 162 seats, a majority in the 300-seat parliament.Adding the Democratic Left would give it 179 seats.Nation in crisis A difficult road lies ahead for Samaras, a US-educated economist who went to college with former Socialist Prime Minister George Papandreou.He inherits a nation in deep social and economic crisis, with an economy in its fifth year of a recession that has left one in five workers out of a job.A rising number of businesses are closing down, the number of homeless on the streets is growing and anger at austerity cuts is at boiling point.Samaras promised Greeks and prospective partners that he would water down the painful terms of the EU/IMF bailout."We will simultaneously have to make some necessary amendments to the bailout agreement in order to relieve the people of crippling unemployment and huge hardships," he said.Samaras campaigned on promises to cut taxes as well as raising unemployment benefits and pensions.The New Democracy official said the new Government would aim to accelerate and broaden a privatisation programme to top up state coffers, but also ask its creditors to spread 11.7 billion euros of further austerity cuts over four years instead of two.But any attempt to veer off the prescribed austerity path would not sit well with European partners already irritated by what they see as the slow pace of Greek reform.Germany, Europe's paymaster, has ruled out more than minor delays to some targets in the 130-billion-euro rescue package.Chancellor Angela Merkel said at a meeting of G20 leaders in Mexico that any loosening of Greece's agreed reform promises would be unacceptable and reiterated that Athens had to stick to its commitments.With an emboldened SYRIZA bloc led by former communist student leader Tsipras at the head of a powerful opposition, the new government could face protests soon after taking office.SYRIZA almost doubled its share of the vote since the previous election on May 6.

NEWS, 28.05.2012.

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

 

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

Britain's Blair faces grilling over ties to Murdoch

 

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

NEWS,22.04.2012.

France votes as Sarkozy faces defeat after one term

France's incumbent President and right-wing ruling party Union for a Popular Movement (UMP) candidate for the French 2012 presidential election Nicolas Sarkozy smiles on April 22, 2012 as he leaves the polling booth before casting his vote for the first-round of the 2012 presidential election at a polling station in Paris.Tens of millions of French voters turned out Sunday for the first round of a presidential poll that is expected to see the left oust Nicolas Sarkozy after only one turbulent term in office.The left has not won a presidential election in a quarter of a century, but with France mired in low growth and rising joblessness, opinion polls predict Socialist challenger Francois Hollande will beat the right-wing incumbent.Turnout at 5:00pm (1500 GMT), with three hours of voting to go, was strong at almost 71 per cent, belying fears that a low-key campaign would be capped by mass abstentions in the vote itself.Polling organisation IFOP predicted an overall turnout of 80 per cent.Sunday's poll will whittle down the field from 10 to two and Hollande and Sarkozy are expected to face each other in the May 6 run-off to decide who runs France, a nuclear-armed power and Europe's second largest economy.Hollande says Sarkozy has trapped France in a downward spiral of austerity and job losses, while Sarkozy says his rival is inexperienced and weak-willed and would spark financial panic through reckless spending pledges.The eurozone debt crisis and France's sluggish growth and high unemployment have hung over the campaign, with Sarkozy struggling to defend his record and Hollande unable to credibly promise spending increases."I have never missed a vote, but this time I feel little enthusiasm for the election," said 62-year-old retired high school teacher Isabelle Provost as she emerged into bright Paris sunshine after casting her ballot."Economically there is little difference between the two main candidates," she said, echoning the sentiment of many other voters of the right and the left.If, as expected, Sarkozy polls second, he will be the only incumbent French president to lose a first round-vote in the history of the Fifth Republic, which came into being in 1958.Hollande voted in his stronghold, the country town of Tulle in the central Correze region, where he is the local member of parliament and heads the regional council. He was warmly greeted by officials and voters alike."I am attentive, engaged, but first of all respectful," he told reporters. "The day ahead will be a long one, this is an important moment."Sarkozy and his former supermodel wife Carla Bruni cast their ballots in Paris' plush 16th district, a stronghold of his right-wing UMP party.Hollande was to make a speech in Tulle minutes after polls close and official results estimates are announced on the prime-time 8:00 pm television news, while Sarkozy was to speak in Paris at around 9:00 pm.

Protests in Spain

 

 Thousands of people demonstrated in the streets of Barcelona on Saturday a day after the government announced cuts to public spending in health and education.Education unions which organised the demonstration said 30 000 turned out to voice their opposition to the cuts, to be carried out at the national and at the level of the local region, Catalonia. Police put the figure at 2 000.Rosa Canyadell, of the education USTEC said the authorities were in the process of dismantling state education."Education is the best way of overcoming the economic and social crisis, and public education is the only way we can guarantee social cohesion," said a statement by parents, unions and educational associations.Spain's ruling conservative Popular Party has vowed to cut the country's deficit, which reached 8.51% of GDP in 2011.On Friday it adopted an austerity budget designed slash spending by 10 billion euros ($13 billion) a year: three billion euros of those cuts will come from education.The measures include letting regional governments expand class sizes by 20% and raising university fees to an average 1 500 euros from 1 000 euros.Spain's main unions have called for a day of protests against the cuts in health and education spending on April 29.

NEWS,21.04.2012.

France goes to first round of poll

 

After hectic months ot the hustings, France’s presidential contenders go to the first round ofelections on Sunday to whittle down the field of 10 to two frontrunners.The chances of incumbent Nicolas Sarkozy winning look increasingly bleak as Socialist candidate Francois Hollande has notched up a commanding lead over UMP ruling party, according to the latest polls conducted in France ahead of the first round. The polls showed Hollande had opened a five-point lead for the first round of voting and a 16-point lead in voting intentions for the May 6 run-off. With those poll results, the Sarkozy camp was hit with the most damning opinion poll for weeks, but somehow Sarkozy briefly overtook Hollande in polls for round one following the Toulouse murders by an Islamist gunman. All in all, however, Hollande has made steady gains in recent days in most polls, with one survey giving him 29 per cent of the first round vote against 24 per cent for Sarkozy.As if the poll showings were not daunting enough, Sarkozy’s campaign was also hit by a potentially damaging revelation when it was revealed that his top donors met last Sunday at the Hotel Crillon, one of Paris’s most expensive and select venues. That meeting was in many quarters considered a major public relations gaffe given the incumbent’s recent attempts to shed his “president of the rich” tag.“That sums up his presidency,” sneered a jubilant Hollande. “He started in a top restaurant, Le Fouquet’s, and ends up in a grand hotel with the same guests.”Even as Sarkozy’s hopes appeared to crumble, some of his closest right-wing ministers openly came out against him, with Fadela Amara, the former town planning minister and a one-time star of Sarkozy’s ethnically diverse “rainbow” cabinet, becoming the latest leading political figure to desert the embattled incumbent.The incumbent’s popularity had earlier dropped dramatically following assertions that Jacques Chirac would vote for Hollande, a development that reportedly made Sarkozy’s popularity rating drop lower than any other French president seeking re-election.After Amara’s desertion other former ministers close to Chirac followed suit, including Brigitte Girardin, the former overseas minister, who said she wished to “end policies that for five years have weakened the country and divided the French”. At the same time Corinne Lepage, an ecologist environment minister in a previous centre-right government, announced that she would back Hollande, arguing that Sarkozy had veered too far to the right. The avalanche of desertions continued with Azouz Begag, the equal opportunities junior minister and Jean-Jacques Aillagon, the former culture minister joining the list of those jumping ship.

Mass rally against Czech regime

Tens of thousands of protesters gathered for an anti-government rally in Prague’s central Wenceslas Square on Saturday as the centre-right ruling coalition was teetering on the verge of collapse.Unions, pensioners, student associations and others angered by austerity cuts and graft scandals teamed up for what they said would be the biggest protest yet against the cabinet of right-wing leader Petr Necas.“The police estimate about 80-90,000 people are in Wenceslas Square right now,” Prague police spokeswoman Eva Kropacova.Union leader Jaroslav Zavadil put the number of protesters at 120,000 before lambasting the cabinet for “humiliating the powerless with its anti-social reforms.”“They promised budgetary responsibility but instead the government debt is growing. They promised to fight graft but corruption has gripped their parties and the entire society,” he told the crowd.The government — comprised of Necas’s right-wing Civic Democrats and the rightist TOP 09 and centrist Public Affairs parties — has vowed to cut the public deficit under 3.0 per cent of GDP in 2013 from 3.5 per cent expected this year.“As the prime minister... I feel responsible for keeping our country out of the debt trap,” Necas said on Saturday as protesters waved banners saying “down with the government,” “no to corruption,” or “an end to thieves and liars.”But Necas’s plans might vanish into thin air soon as the cabinet has lost its majority of 118 in the 200-seat parliament to find itself scrambling for 101 votes following the split-up of Public Affairs earlier this week.Necas gave the Public Affairs faction still backing his cabinet until Monday to secure the votes, and warned of early elections possibly in June.Recent surveys showed the leftist opposition Social Democrats would dominate an early vote ahead of the Communist Party, while Necas’s Civic Democrats would slump to the third place.Marching to Prague’s centre, Jana Sizlingova, a visibly angry pensioner from Prague, said she was fed up with the government that “doesn’t do anything for ordinary people.”“I’m upset with corruption, non-transparent procurement, the health system, the social system — simply, there’s nothing good about this government,” she said.