NEWS,23.09.2013

Obama unlikely to name new Fed head soon

President Barack Obama is unlikely to unveil his pick to succeed Ben Bernanke as chairperson of the Federal Reserve this week, and the current Fed No. 2, Janet Yellen, remains the leading contender, a source familiar with the process said on Monday.
Bernanke's second four-year term at the helm of the US central bank comes to a close in January, and speculation has swirled around Obama's plans for the replacement.
Former Treasury Secretary Lawrence Summers, considered the president's preference, withdrew his name from consideration a week ago, saying his confirmation would incite acrimony.
Besides Summers, Yellen and former vice chairperson Donald Kohn are among those Obama said he has been considering for the job. Yellen is still the top prospect, the source said.
The Senate needs to hold hearings and confirm the nominee, and with a compressed legislative schedule before the end of the year, time is growing tighter.
Lawmakers are currently preoccupied with measures to keep government funding going beyond Oct. 1 to keep the government from shutting down and to raise the nation's debt ceiling ahead of a mid-October date, or face the risk of default.
Yellen had been scheduled to speak to the Economic Club of New York on Oct. 1, but her speech has been postponed.

Lithuania urges push on EU farm reform

Lithuania, which currently holds the rotating EU presidency, on Monday urged a final push on a major reform of the bloc's generous farm subsidy programme that is held up in talks with European lawmakers.
A reform of EU farm subsidies agreed by member states in June after three months of marathon talks favours young farmers and smallholders over big business and has been called a "paradigm shift" for Europe.
"This is the challenge we must meet," said Lithuanian Agriculture Minister Vigilijus Juknawho as he met fellow European Union ministers in Brussels.
The ministers are locked in a row with European lawmakers, who want the reforms to go further.
If a compromise is not found before the end of the month, the European Commission could choose to suspend payments to farmers.
The main sticking point is how the reform affects large-scale farmers, with lawmakers pushing for more redistribution of farm aid to small holdings and ministers maintaining the reform has gone far enough.
EU ministers were to discuss the matter further Monday with another session of talks with the Commission and lawmakers set for the evening.
Irish Agriculture Minister Simon Coveney, who spearheaded the reform during the Irish EU presidency earlier this year, said there remained little room for more compromise from states.
But he said he was confident the Lithuanian presidency could find a deal in the coming weeks.
If approved, the CAP reform is due to be implemented starting in 2014.
Under the current rules, 80 percent of CAP payments go to the top 20 percent of intensive farm businesses since several countries still link the subsidies to production levels.
As the reform stands, member states would have to ensure that by 2019 each farmer receives at least 60 percent of the average national or regional subsidy per hectare. This would remove the advantage written into the current system for the more productive industrial farms.
The deal also states that 30 percent of EU members' farm payments will also be spent on "green" measures such as crop diversification.
The CAP accounts for about 38 percent of the EU's budget.

Spain heads for record tourism year

Sunseekers spurning unrest in Egypt and Turkey flocked to Spain in record numbers last month, setting the country up for its best-ever year for visitors and giving a boost to the ailing economy.
"It is very likely that 2013 will be the best year historically for tourism," Industry Minister Jose Manuel Soria told a news conference on Monday, adding that estimates for the fourth quarter were positive.
Tourism contributed over 5% of Spain's economy or GDP in 2012 and provided around 900 000 jobs, according to Euromonitor, in a country where one in four is out of work, meaning a boost to tourist figures should be good news as other sectors flag.
The number of international tourist arrivals in August rose to 8.3 million, figures from the tourism ministry showed, lifting the total for January through August by 4.5% on the year before to 42.3 million.
Those visitors spent a total of €40.4bn ($54.6bn), up 7% from 2012.
Political upheaval in other destinations has also benefited other Mediterranean countries, such as Greece.
But not everyone in Spain is celebrating the increase. Domestic travel fell by 6.9% between January and July, hitting destinations off the main tourist trail, so businesses and hotels reliant on city tourism suffered.
Two ends of the travel spectrum in particular are cashing in on the influx of international visitors - homeowners taking advantage of a growing preference for low-cost rents, and luxury stores whose clients are shielded from the worst of the economy's woes.
Many tourists have been choosing to rent private homes advertised on the Internet. And despite government efforts to tighten regulation around private renting, the trend is becoming more ingrained, with the number of rentals by tourists up 15% in August year-on-year to 1.3 million properties.
The unregulated rental industry has its risks since landlords and renters have little recourse if things go wrong, but it is worth it for homeowners who rent out year-round.
"What's happening ... because of the economic crisis is that people are preferring smaller airlines, smaller hotels and they are paying less," said Dimitrios Buhalis, a professor and director of the e-tourism lab at Bournemouth University.
Kept afloat
Spain's economy has been highly dependent on tourism since beach destinations took off in the 1960s. While Britain, France and Germany continue to send the most visitors, there has been a huge leap in the number of Russian visitors.
Some of the main beneficiaries are luxury retailers, as big spenders splash out at high-end accessory and jewellery stores. Department store El Corte Ingles for instance has offered a 10% discount to foreign shoppers since 2012 and has employed Chinese-speaking personal shoppers in a nod towards an important group of rich clients.
Value Retail, which has luxury outlets in Madrid and Barcelona, reported an increase in non-European visitors, especially Russian and Chinese, last year.
"Without a doubt, Spain's luxury sector is being kept afloat thanks to tourism," said Ana Franco, editor of Spanish luxury portal Deluxes.
Boosted by luxury, average spending by tourists rose by 2% in the first seven months of the year, from the same period of 2012, to 103 euros per day.
Regions attracting the most visitors are coastal Catalonia, the Balearic islands and southern Andalusia, home to the Costa del Sol. But Madrid saw a 22% fall in foreign visitors in August to 290 494, hit by a collapse in business travel and a decline in Italian and Latin American travelers.
There is little respite in sight for hotels operating in cities unless the domestic economy picks up, according to Ramon Estalella, secretary general of the Spanish Hotels Association (CEHAT).
NH Hoteles, which is focused mainly on city hotels, said in half-year results that Spain was its worst performing market. And Melia Hotels International reported a decline in prices and occupancy in Spanish cities in the first half, even though revenue from resort locations rose.
"There has been a strong fall in demand in Madrid because Iberia has cut flights and low-cost airlines have disappeared because of an increase in airport taxes," a Melia spokesperson said.
Spain's loss-making flag carrier Iberia, part of International Airlines Group (IAG), is undergoing a major restructuring, with dozens of routes canceled and thousands of staff being laid off.

Sudan almost doubles fuel, gas prices

Sudan almost doubled prices for fuel and cooking gas on Monday, struggling to bring its budget under control in an economic crisis that is stirring widespread discontent.

President Omar Hassan al-Bashir went on television for two hours to announce the plan. He has avoided an "Arab spring" uprising of the sort that has unseated other rulers in the region, but many in Sudan complain about soaring food prices, corruption, violent conflicts and high unemployment.

"We've been just notified of the prices increases," said a petrol station worker, asking not to be named "It's huge leap and we worry that people will be angry."

The Arab African country lost three-quarters of its oil reserves - its main source of revenues and of dollars for food imports - when South Sudan became independent in 2011.

Petrol stations in the capital Khartoum raised the price of a gallon (3.8 litres) of petrol on Monday to almost $3 based on black market prices.

"The government...has no idea of what people are going through. I am ready to join any protest against the lifting," said 41-year old Ahmed Iassan, an unemployed worker.

The government started reducing some fuel subsidies in July 2012. Several weeks of small protests ended with a security crackdown.

It had hoped to sustain the remaining support by boosting gold exports to replace oil revenues, but was thwarted by the recent fall in global gold prices.

A gallon of gasoline now costs £14, up from £8.5, petrol station staff said. The prices for a cylinder of cooking gas rose to £25 from £15.

In a televised news conference, Bashir said late on Sunday Sudan was no longer able to afford the subsidies which he said cost the treasury $15.5bn every year based on the official exchange rate.

Sudan produces too little to feed its 32 million people. Even basic food imports arrive by ship in Port Sudan, before they get trucked for days across the vast country, spurring food price inflation.

The Sudanese pound is worth barely a third of its value against the dollar on the black market at the time of the south's succession.

Opposition activists have criticised the move to cut fuel subsidies but the weak opposition has yet to stir mass protest.

Singapore tightens rules for hiring foreigners

Singapore will require many companies operating in the city-state to consider Singaporeans for skilled job vacancies before turning to candidates from abroad, bowing to public pressure over a surge in foreigners over the past decade.

"The measures might mean more hassle and paperwork for companies, and it might even lower the long-term economic growth rate," said Michael Wan, an economist with Credit Suisse in Singapore.

"But I don't think this will necessarily lower Singapore's attractiveness to companies because there are other factors that they take into account -- such as tax incentives, political stability and access to the Asean region."

Starting next August, firms with more than 25 employees must advertise a vacancy for professional or managerial jobs paying less than S$12 000 ($9 600) a month on a new jobs bank administered by the Singapore Workforce Development Agency for at least 14 days, the Ministry of Manpower said in a statement.

Only after that period can the company apply for an employment pass to bring in a foreign national.

Singapore will also raise the qualifying salaries for employment pass holders to at least S$3 300 a month, up from the current S$3 000, starting in January 2014, reducing the competition for entry-level jobs that typically require tertiary education.

Singapore, a global financial centre and the Asian base for many banks and multinationals, is one of the world's most open economies. Foreigners account for about 40% of the island's 5.3 million population and take up many senior and mid-level positions as well as most of the low-paying jobs that locals shun.

The Association of Banks in Singapore, which represents financial institutions operating in the city-state, said banks will need to adjust their hiring processes to comply with the new rules.

"We need to assess the impact these rules will have," a spokesman for the association added.

Discrimination

Singapore, Asia's main centre for private banking as well as commodities trading, has seen a sharp increase in foreigners over the past decade, triggering a backlash from Singaporeans unhappy about congestion on roads and trains as well as competition for jobs.

There have also been complaints about foreign managers who prefer to hire their fellow countrymen rather than employ Singaporeans.

Earlier this year, several banks admitted to "hot spots" within their organisations "where clusters of employees from the same country appeared to have developed over time", according to advertisements taken up by an organisation backed by the manpower ministry.

The ministry said it will scrutinise all companies, including smaller firms, for signs of discriminatory hiring practices. Firms that fall into this category include those that "have a disproportionately low concentration of Singaporeans" in professional or management positions compared with others in the industry.

"Even as we remain open to foreign manpower to complement our local workforce, all firms must make an effort to consider Singaporeans fairly," Acting Manpower Minister Tan Chuan Jin said in a statement.

"Singaporeans must still prove themselves able and competitive to take on the higher jobs that they aspire to," Tan added, as officials took pains to stress that the new framework is not aimed at forcing firms to hire Singaporeans first.

Singapore has already been making it harder for employers to recruit cheap workers from abroad in a bid to push up the pay of low-income Singaporeans. The measures include lowering the ratio of foreigners a firm can hire relative to the number of local employees and raising the levy firms must pay to hire lesser-skilled foreigners.

Bangladesh pay protests force factory closures

More than 100 Bangladeshi garment factories were forced to shut on Monday as thousands of workers protested to demand a $100 a month minimum wage and about 50 people were injured in clashes, police and witnesses said.
Garments are a vital sector for Bangladesh and its low wages and duty-free access to Western markets have helped make it the world's second-largest apparel exporter after China.
But the $20bn industry, which supplies many Western brands, has been under a spotlight after a series of deadly incidents including the collapse of a building housing factories in April that killed more than 1 130 people.
Workers took to the streets for a third day on Monday, blocking major roads and attacking some vehicles in the Gazipur and Savar industrial zones on the outskirts of the capital, Dhaka.
At least 50 people - including some policemen - were injured, witnesses and police said, as police fired teargas and rubber bullets, and workers responded by throwing broken bricks.
Some workers also vandalised factories, witnesses said.
"We had to take harsh actions to restore order as the defiant workers would not stop the violence," an Gazipur police officer said.
The monthly minimum wage in Bangladesh is $38, half what Cambodian garment workers earn.
The government is in talks with unions and factory owners on a new minimum wage.
Bangladesh last increased its minimum garment-worker pay in late 2010 in response to months of street protests, almost doubling the lowest pay.
Recently, factory owners offered a 20% pay rise which workers refused, calling it "inhuman and humiliating".
"We work to survive but we can't even cover our basic needs," said a protesting woman worker.
The recent string of accidents has put the government, industrialists and the global brands that use the factories under pressure to reform an industry that employs 4 million and generates 80% of Bangladesh's export earnings.
The April 24 collapse of Rana Plaza, a factory built on swampy ground outside Dhaka with several illegal floors, ranks among the world's worst industrial accidents and has galvanised brands to look more closely at their suppliers.
This month, a group of retailers and clothing brands failed to establish compensation funds for the victims of Bangladesh factory disasters, as many companies that sourced clothes from the buildings decided not to take part in the process.
Very low labour costs and, critics say, shortcuts on safety, makes the country of 160 million the cheapest place to make large quantities of clothing, with 60% of clothes going to Europe and 23% to the United States.

UK wants to ease sanctions on gas field

Britain could be close to agreeing a deal to ease sanctions that have stopped gas production from the North Sea's Rhum field, jointly owned by BP and the National Iranian Oil Company, the Mail on Sunday newspaper said.

Production from the field, which once supplied 5 percent of Britain's gas output, has been suspended since 2010 as a result of international sanctions against Iran.

But with signs of a thaw in relations between Iran and the West, the government now hopes to win agreement from the European Union and the United States for a sanctions waiver in the near future, the newspaper said, citing people close to the talks.

One stumbling block to a deal, however, could be concerns from companies involved in financing and servicing the field that any exemption for the producers would not fully protect them from legal action, it added.

A Department of Energy and Climate Change spokesman said: "We are working to ensure the long-term security of the Rhum gas field but no decision has been made at this time on a solution."

A spokesman for BP declined to comment on the possibility of a waiver being granted.

"As operator of the field our priorities are two-fold - to ensure the field remains safe and that we remain compliant with the law," he said. "It is up to the government to decide on the longer-term options."

Sudan to host German business conference

Sudan will host a business conference with German firms to boost economic ties with Europe's largest economy, state media said on Sunday, the second such event between Berlin and the isolated African country this year.

Sudan is trying to attract more investment to overcome an economic crisis after losing most oil reserves with South Sudan's secession in 2011. Most Western firms shun the country due to a U.S. trade embargo over Sudan's human rights record.

The Khartoum conference, from October 28 to 31, is likely to irk human rights activists who criticized Berlin for inviting top Sudanese officials to a similar forum in January.

The Berlin event had been open to South Sudan, but Juba only sent its ambassador in Berlin to avoid contact with arch foe Sudan at time of bilateral tensions, diplomats said. Sudan had sent a high-level delegation to Berlin.

The conference is organized by German and Sudanese business groups with support from both governments, according to the German-African Business Association.

While foreign investors in Sudan often complain of a massive dollar scarcity and shrinking state infrastructure projects, the Berlin-based association painted a much brighter picture.

"Sudan's economic perspectives have developed positively recently. ... The economy has been recovering since southern secession," the German-African Business Association said on its website. It cited opportunities for German firms as Sudan planned to expand its oil, gas and mining sectors.

Most Western countries have only limited ties to Sudan. President Omar Hassan al-Bashir faces charges of war crimes in Darfur at the International Criminal Court.

NEWS,03.07.2013

Obama leery of intervention in Mideast

From Egypt to Syria to Iraq and beyond, the Obama administration is determined to show it will only go so far to help save nations in chaos from themselves.

President Barack Obama has long made it clear that he favours a foreign policy of consultation and negotiation, but not intervention, in the persistent and mostly violent upheavals across the Mideast. And he appears determined not to deviate this week even to help reverse turbulence in Egypt, one of the United States' most important Arab allies.

US officials say the Obama administration delivered pointed warnings on Tuesday to three main players in the latest crisis to grip Egypt as hundreds of thousands of protesters flooded Tahrir Square in Cairo to demand President Mohammed Morsi's ouster over his hard-line Islamist policies. The powerful Egyptian military appeared poised to overthrow him.

The administration stopped short of demanding that Morsi take specific steps, the officials said, and instead offered strong suggestions that are backed by billions of dollars in US aid to ease the tensions.

The US officials spoke on condition of anonymity because they were not authorised to speak publicly about the delicate diplomacy that is aimed at soothing the unrest and protecting Egypt's status as a bulwark of Mideast stability. Yet the warnings were unlikely to placate the protesters gathered at the site of Egypt's Arab Spring revolution two years ago, many of whom have accused the US of siding with Morsi.

"The United States is only looking after their interests. They will only bet on the winning horse, and the winning horse is always chosen by the people," an ultraconservative member of the Salafist movement who would only identify himself as Amr, aged 31, said on Tuesday night at Tahrir Square. "At the end of the day it is the people who say that who stays and who goes."

Two thirds opposed to war

It should come as little surprise that Obama, who is grappling with a recovering economy, a war-weary public at home and diminished US status as a global superpower abroad, would not wade into foreign conflicts. Obama campaigned by promising to end the war in Iraq, which he did in 2011; he now plans to withdraw most, if not all, US troops from Afghanistan by the end of next year and inevitably will face pitched pleas from Kabul to reconsider as the deadline nears.

US polls indicate that two-thirds of Americans have opposed the wars in Iraq and Afghanistan.

"The burdens of a young century cannot fall on American shoulders alone," Obama wrote in his 2010 National Security Strategy. "Indeed, our adversaries would like to see America sap our strength by overextending our power."

Despite pressure from some in Congress and its allies abroad, the Obama administration refused until last month to give weapons to Syrian rebels who for more than two years have been battling to overthrow Syrian President Bashar Assad. The arms a tepid show of guns, ammunition and shoulder-fired anti-tank grenades only came after US intelligence concluded that Assad had used chemical weapons against his own people.

Other Sunni-dominated Mideast nations, most notably Qatar, have provided heavier weapons to help the rebels beat back Iranian forces and aid that is flowing to Assad's regime. An estimated 93 000 people have been killed in the fighting.

Rebel commanders have been underwhelmed by the US support, saying they need enough firepower to stop Assad from using chemical weapons again, and to stop his tanks and heavy artillery. The Free Syrian Army, which is made up of some opposition forces, also wants allies to establish a no-fly zone over Syria to prevent Assad's superior air power from crushing the rebels or killing civilians.

Light weapons 'insufficient, insulting'

The White House is, at best, highly reluctant to create such a territory over which warring aircraft are not allowed to fly. The US and international allies have enforced them in several military conflicts over the past two decades.

Even American officials say the help to Syria is not enough.

The light weapons are "clearly not only insufficient, it's insulting", said Senator John McCain, a leading Republican proponent of taking a bigger military role in Syria.

McCain and several other hawkish Republican also have criticised Obama for withdrawing US forces from Iraq, where violence has dramatically escalated since their departure 18 months ago.

The Obama administration agreed to the longstanding 2011 withdrawal deadline, which was set by the Republican administration of President George W Bush, after negotiations fell through to keep some US forces in Iraq. But American officials involved in the negotiations have blamed the White House for making only a weak effort to keep troops in the country and being all too happy when the Shi'ite-led government in Baghdad refused to let them stay.

Despite nearly nine years of war that aimed to stabilise Iraq during which nearly 4 500 US troops were killed and about $800bn in taxpayer money was spent near-daily bombings and other attacks continue. And the White House rarely, if ever, discusses Iraq except to pat itself on the back for leaving.

America's role

In June alone, 761 Iraqis were killed and nearly 1 800 wounded in terror-related violence, the UN envoy in Baghdad said in a statement this week. Comparatively, that's about twice as many killed in the deadliest month of 2011 before the American troops left, according to data from the British-based Iraq Body Count.

Tamara Cofman Wittes, who served as deputy assistant secretary of state from late 2009 until early this year, said the White House cannot afford to take its eye off the Mideast even as Obama tries to refocus on Asia and Africa. Even so, the administration's strategy in the Mideast may be a not-so-subtle reminder that the US is no longer willing or able to play either world policeman or peacekeeper.

"One of the things that many Americans questioned in the wake of the experience of Iraq and Afghanistan is whether the United States in fact can be successful in stabilising unstable parts of the world," Wittes, now director of the Saban Centre for Middle East Policy at the Brookings Institute think tank, said on Tuesday.

"The Obama administration has set itself the task not only of closing the chapter on a decade defined by two wars and reorienting not only America and its expectations for its role in the world, but reorienting other countries' expectations for the role America will play," she said.

US 'very concerned' about Egypt

The United States said on Wednesday it was "very concerned" about developments in Egypt's political crisis, and urged President Mohammed Morsi to "do more" to address the concerns of protesters.
"We do remain very concerned about what we are seeing on the ground in Egypt," state department spokesperson Jen Psaki said. "We feel there was an absence of significant steps laid out by President Morsi."
Washington believes he "should do more" to address the concerns of the Egyptian people, she told reporters, noting: "Actions speaker louder than words."
Psaki said Morsi's proposal for a unity government was one that had been "made in the past," and which "others in Egypt felt was not sufficient enough".
She, however, was careful to note that it was not up to Washington to judge.
When asked if Washington would consider cutting military aid to Cairo, the spokesperson said: "It would be premature to suggest that we have taken steps or are thinking about taking steps."

President scrambles to save Portugal

Portuguese President Anibal Cavaco Silva on Wednesday took steps to settle a political crisis that threatened to topple the government, after two ministers resigned over austerity policies agreed with the European Union and the International Monetary Fund.
Cavaco Silva was to meet Prime Minister Pedro Passos Coelho and party representatives on Thursday, the president's office announced.
Before that, the president was scheduled to meet Socialist opposition leader Antonio Jose Seguro.
Cavaco Silva was coming under growing pressure to dissolve parliament and to call early elections after the resignations of the finance minister, Vitor Gaspar, and the foreign minister, Paulo Portas, brought the government to the verge of collapse this week.
Hundreds of demonstrators gathered to demand that Passos Coelho step down. The main trade union confederation, CGTP, has announced a rally for Saturday to demand early elections.
Passos Coelho said Tuesday he would not accept the resignation of Portas, but would try to reach an agreement with the party the foreign minister heads, the conservative-nationalist CDS-PP.
The party is the junior coalition partner of Passos Coelho's Social Democratic Party (PSD). If other ministers belonging to the CDS-PP follow the example of Portas and resign, Passos Coelho will lose his absolute majority in parliament.
That would make it difficult for him to complete the €78bn bailout programme agreed with the EU and the IMF in 2011.
The government crisis has made stock markets plunge, while the yields for Portuguese bonds has gone up.
European Commission President Jose Manuel Barroso has warned that "the financial credibility recently built up by Portugal could be jeopardized by the current political instability."
Gaspar, who was the main architect of the austerity policies applied under the bailout programme, justified his resignation by saying he had failed to meet budget deficit targets. He also cited widespread opposition to his spending cuts.
Portas said he was stepping down over the choice of Maria Luis Albuquerque as Gaspar's successor.
The CDS-PP wants to soften the government's austerity policies, while Albuquerque is known as a staunch supporter of Gaspar's budget crackdown.
Spending cuts and economic reforms have helped Portugal reduce borrowing costs and the budget deficit, which went down to 6.4% of gross domestic product in 2012, from 10.1% in 2010.
But the economy has been in recession for two years and is expected to shrink by 2.3% this year. Unemployment has climbed to nearly 18%.
The EU is confident that Portugal can weather its political crisis, an official said in Brussels.
"It's obvious that it would have been our strong preference if the stability of the government had been maintained," the EU official said, speaking on condition of anonymity.
"But I'm quite relaxed ... Portugal is well-financed. I have no concerns whatsoever for the whole of 2013."
Germany stressed the need for Portugal to adhere to the course of austerity. "The German government is confident that Portugal will stick to the agreed reforms," spokesperson Steffen Seibert said in Berlin.
Eurozone finance ministers are expected to discuss the Portuguese situation when they next meet on Monday in Brussels.
Experts from the European Commission, the European Central Bank and the IMF are then scheduled to launch a review mission to examine the country's economic progress and pave the way for the next stage of its bailout.
The EU official noted that the process would be more difficult if the Portuguese government announced new elections.

Union boss urges French labour reform

The new chief of France's main employers union pressed on Wednesday for a 'Round 2' of labour reform, urging President Francois Hollande for a further overhaul on the day a first, hard-fought deal entered the law books.
Pierre Gattaz's remarks on his first day as MEDEF leader showed a combative chief ready to pile pressure on a Socialist government that many economists have criticised for not going far enough in its structural reform programme.
The 53-year-old is to meet Hollande and Prime Minister Jean-Marc Ayrault this week to discuss upcoming reforms, including an overhaul of an indebted pension system.
"Our companies are terrorised by a labour code that is too complex and stops them from hiring," Gattaz told journalists in an acceptance speech. "This shouldn't last, and it won't last."
France's labour reform deal took effect on Wednesday after months of tense debate and street protests, and it is still disputed by trade unions on the far left. Few public figures have spoken out in favour of any further changes.
Gattaz, chief executive of connector maker Radiall, was the sole candidate to succeed MEDEF chief Laurence Parisot after she lost an internal battle to alter the group's statutes and extend her eight-year term.
The son of a notoriously combative former MEDEF chief, Gattaz took over the powerful group, equivalent to Germany's BDA employer association and Italy's Confindustria lobby, by rallying less well-connected rivals to his camp.
Saying he will bring a "fighting spirit" to talks on reforms to job training and pensions, his hard-charging tone breaks with Parisot's diplomatic approach.
His call to raise the legal retirement age from the current 62, in line with recommendations from the European Commission, also goes against the views of Hollande, who has ruled it out in favour of lengthening the pay-in period.
On labour rules, Gattaz will retain the services of Patrick Bernasconi as chief negotiator after he brokered a landmark deal to loosen regulation in January.
Bernasconi advocates a far-reaching second round of labour reform to end the 35-hour working week and give firms more power to reach in-house wage and work-time deals, he told business daily Les Echos in May.

Portugal's political crisis deepens

Two more Portuguese ministers from the junior ruling coalition party were ready to resign on Wednesday, local media said, deepening turmoil that could trigger a snap election and derail Lisbon's exit from an EU/IMF bailout.
Multiple newspaper radio and television reports said agriculture minister Assuncao Cristas and social security minister Pedro Mota Soares will follow their CDS-PP party leader Paulo Portas, who tendered his resignation on Tuesday.
Party officials were not available to comment as the party's executive commission was in a meeting.
Prime minister Pedro Passos Coelho told the nation late on Tuesday that he did not accept Portas' resignation and would continue to head the government to ensure political stability and work to overcome the stalemate.
Many commentators called the situation "absurd".
With no solution imminent, Portugal's bond and stock prices slumped further. The returns investors demand to hold 10-year bonds surged to above 8.1% for the first time since November and the PSI 20 stock index slumped 6%, led by sharp losses of over 10% in banks' shares.
Coelho's decision to reject his foreign minister's resignation puts the responsibility for the government's survival squarely on the shoulders of Portas. He now has to decide whether to stay in his post or pull his rightist CDS-PP party out of the coalition.
Without the CDS-PP, the centre-right government would lose its majority.
"One thing is certain, the prime minister is going to do everything to stay on, giving all possible concessions to Portas," said political scientist Antonio Costa Pinto.
"Failing that, however, we can hardly avoid an early election."
Portugal is subject to strict budget conditions imposed by a European Union (EU) and International Monetary Fund (IMF) bailout. It had been hoping to return to normal debt markets, but rows over continued austerity have now thrown this into question.
"We see early elections as the most likely outcome at this stage, even if we cannot fully rule out support from some CDS MPs and the continuation of the government," Barclays' economist Antonio Garcia Pascual said in a note.
"We consider that the decision of the CDS leader to step down from the government can be explained to a large extent by the fall in popular support for the government coalition."
A day before Portas tendered his resignation, Finance Minister Vitor Gaspar, the architect of spending cuts and tax hikes required by lenders as a condition of their support, stepped down citing an erosion in support for the bailout.
Costa Pinto also said counting on occasional support from CDS-PP in parliament would allow the government to muddle through, but not for long.
Although president Anibal Cavaco Silva is expected to promote a grand coalition government, analysts do not expect the largest opposition party, the moderate centre-left Socialists who lead in opinion polls, to play ball.
Still, while opinion polls indicate Socialists will win a snap election, they would fall short of a majority, which would also require CDS support.
The only two remaining parties in parliament, the Communists and the Left Bloc, have never entered any coalition and are unlikely to do so, analysts said.
"So, it's all in Portas' hands," Costa Pinto said.
Barclays' said a Socialist victory should not represent a radical change in the course of the bailout programme. It also said that even if there are delays in upcoming bailout reviews and disbursements, Portugal has enough funds to meet bond repayments this year.

Use W Cape as African gateway, China told

China should use the Western Cape as an investment gateway into Africa, the provincial agriculture and rural development department said on Wednesday.
Western Cape MEC Gerrit van Rensburg made this invitation to Chinese commerce officials in Beijing on Tuesday, while on a visit to stimulate trade and investment.
Van Rensburg said wine exports from South Africa to China increased by 34% between 2009 and 2012.
He invited Cao Jiachan, the deputy director general for West Asia and Africa commerce, to attend a wine tasting to be hosted by the department in Beijing later this month.
The provincial government would also support a South African wine delegation at the annual Yantai International Wine Exposition in China from July 5.
Van Rensburg said government support of promotional activities and maintaining relationships with government departments was crucial for sustained export growth to China.

North Korea restores hotline with South

North Korea on Wednesday restored its official hotline with South Korea and announced it would let the South's businessmen visit a shuttered joint industrial zone, Seoul officials said.
The move came hours after dozens of South Korean firms threatened to withdraw from the zone at Kaesong in the North, complaining they had fallen victim to political bickering between the two rivals.
"The hotline was restored this afternoon after North Korea accepted our request to normalise it," a South Korean unification ministry official said on condition of anonymity.
After months of tensions and threats of nuclear war, the North restored the hotline in the border truce village of Panmunjom last month for talks on setting up a rare high-level meeting to discuss the fate of the zone.
But it was switched off again after plans for the talks collapsed due to disputes over protocol.
In an unexpected reversal on Wednesday, the North sent a message to the South through Panmunjom saying South Korean businessmen and managers would be allowed to visit the industrial complex.
It said the businessmen could take emergency steps to avert damage to facilities and materials in the complex during the rainy season, according to a unification ministry statement.
South Korea will review the North's proposal and convey its response later, the ministry said.
Established in 2004 as a rare symbol of inter-Korean cooperation, the industrial estate was the most high-profile casualty of months of elevated tensions that followed the North's nuclear test in February.
Operations at the complex just north of the border ground to a halt soon after the North banned entry by southerners on 3 April, amid soaring military tensions with Seoul.
About a week later Pyongyang pulled all its own workers out, prompting Seoul to withdraw its managers and officials soon afterwards.

NEWS,02.07.2013

UK union to take postal protest to banks

Trade unions opposing the privatisation of the British postal service will hold a protest next week at the London offices of the banks advising the government on the float.
Goldman Sachs and UBS, located in London's financial district, will be the focus of the protest, which forms the centrepiece of a week of activity planned by union branches across the country.
The government, which hopes to launch the stock market flotation of the country's 497 year-old postal service later this year, says the Royal Mail needs to access private capital and modernise. Royal Mail said the privatisation would allow it to secure as many jobs as possible.
But the plans have been criticised by unions, which say the sale will spark a decline in postal service provision and working conditions for the company's 150 000 employees.
"We're going to tour the city and take this campaign to the banks that are selling this company," said Kevin Slocombe, the head of the Communication Workers Union (CWU) campaign.
"This is a good attempt to really engage people in the city... the banks and the people who actually buy shares."
UBS and Goldman Sachs both declined to comment on the protest.
Royal Mail chief executive Moya Greene has acknowledged union members will never drop opposition to privatisation but glossed over whether investors had expressed concern at the level of response from the company's workforce.
The CWU protest plans were unveiled at a packed parliamentary lobby on Tuesday, where union members and lawmakers outside the current coalition government spoke to an audience of postal workers.

Three-day ultimatum for Greece - EU

Greece has three days to reassure Europe and the International Monetary Fund it can deliver on conditions attached to its international bailout in order to receive the next tranche of aid, four eurozone officials said on Tuesday.

The lenders are unhappy with progress Greece has made towards reforming its public sector, a senior euro zone official involved in the negotiations said, while another said they might suspend an inspection visit they resumed on Monday.

Athens, which has about €2.2bn of bonds to redeem in August, needs the talks to conclude successfully. If they fail, the International Monetary Fund might have to withdraw from the €240bn bailout to avoid violating its own rules, which require a borrower to be financed a year ahead.

That would heighten the risk that concerted efforts by policymakers over the past nine months to keep a lid on the eurozone crisis could unravel, at a time when tensions are rising in other countries on the region's periphery.

Portugal's Finance Minister Vitor Gaspar, the architect of its austerity drive under an EU/IMF bailout, resigned on Monday in a potential blow to his country's planned exit from an EU-IMF rescue programme.

Political tension has also increased in Italy, where Prime Minister Enrico Letta called a government meeting after a coalition partner threatened to withdraw.

Athens and its creditors resumed talks on Monday to unlock €8.1bn ($10.6bn) of rescue loans, after a two-week break during which the government almost collapsed over redundancies at state broadcaster ERT.

"All agreed that Greece has to deliver (pledges) before the Eurogroup on Monday. That's why they must present again on Friday," a second source told Reuters.

Eurozone finance ministers are scheduled to meet on July 8 and discuss the situation in Greece, which is in its sixth year of recession and has seen unemployment surge to record highs.

Missed deadlines

"It is a very difficult negotiation," a senior Greek official participating in the talks said. "We're moving fast to wrap up as many issues as possible a soon as possible."

But Greece's financial overseers the IMF, the eurozone and the European Central Bank were unlikely to be able to conclude their review in July and might need to suspend the visit and resume it in September, a senior eurozone official said on condition of anonymity.

Representatives of the EU-IMF-ECB "troika" have been holding serial meetings with government ministers in Athens, struggling to agree on a host of outstanding issues.

If talks are not concluded by the middle of month, Athens risked missing the instalment, the Greek official added.

Athens has missed a June deadline to place 12 500 state workers into a "mobility scheme", under which they are transferred or dismissed within a year.

A shortfall of more than €1bn has emerged at state-run health insurer EOPYY, meaning automatic spending cuts may have to be agreed to bring it back on an even keel.

Athens and the troika are also at odds over an unpopular property tax and a sales tax for restaurants.

The government plans to ask its creditors to lower this year's privatisation target of €2.6bn after failing to find a buyer for natural gas company DEPA.

The beleaguered government of Prime Minister Antonis Samaras has ruled out imposing any new austerity measures on a population that is going through the sixth year of recession.

Unemployment has hit a record 27% and Greeks have lost about a third of their disposable income at an average as a result of bailout-imposed austerity policies.

Putin backs white-collar crimes amnesty

Russia's lower house of parliament on Tuesday passed a Kremlin-drafted bill that grants an amnesty to white-collar criminals in a bid to improve the country's frigid business climate.
The amnesty, backed by Russian President Vladimir Putin, covers individuals who have committed an economic crime for the first time.
But critics said the bill was extremely weak and would only affect a tiny minority of prosecuted businessmen.
Kremlin representative Garri Minkh presented the bill to the lawmakers, saying it would impact 1 299 ongoing criminal cases and 22 people who are currently in pre-trial jail.
Minkh said 340 people would be freed from jail due to the amnesty, according to the State Duma website.
Human rights groups have expressed concern that the measure is too limited because it would not cover some of the biggest Putin critics who have been jailed for disputed business crimes.
Putin said the new law would cover only those who committed business-related crimes for the first time and not apply to repeat offenders.
Boris Titov, a business ombudsman who backed the bill, expressed disappointment that the result was not a wider amnesty.
It will not affect Russia's jailed former oil tycoon and repeated Kremlin critic Mikhail Khodorkovsky - now serving his second consecutive jail sentence for white-collar crimes he disputes.
Opposition leader Alexei Navalny, currently on trial for fraud in a timber deal, would also not benefit from the amnesty.
Khodorkovsky's attorney Vadim Klyuvgant said on June 22 that the bill was so weak that it looked like the government was only trying to score public relations points instead of actually changing the legislation.
The legislation is now expected to be comfortably passed by the Federation Council upper house of parliament before Putin signs it into law.

 

Lack of capital may curb airline growth

The International Air Transport Association (Iata) called for new thinking on the relationships between partners in the air transport value chain in order to attract the $4-5trn that will be needed over the next 20 years to meet the growing demand for aviation-enabled connectivity.

An Iata study, supported by analysis from McKinsey & Company, shows that returns on capital invested in airlines have improved in recent years, but are still far below what investors would normally expect to earn.
 
“Aviation supports some 57 million jobs globally and we make possible $2.2trn worth of economic activity. By value, over 35% of the goods traded internationally are transported by air,” said Tony Tyler, Iata’s Director General and CEO.

“But in the 2004-2011 period, investors would have earned $17bn more annually by taking their capital and investing it in bonds and equities of similar risk.”

Unless the airline industry could, therefore, find ways to improve returns for its investors, it may prove difficult to attract the capital needed to serve the expansion in connectivity, especially to support growth in developing economies.

During the 2004-2011 period, returns on capital invested in the airline industry worldwide averaged 4.1%. This is an improvement on the average of 3.8% generated in the previous business cycle over 1996-2004.

However, this is nowhere near the average cost of capital of 7.5%, which represents the return on capital that investors would expect to earn by investing in assets of similar risk outside the airline industry.

While some airlines have consistently created value for equity investors, these are few in number. On average industry returns were just sufficient for the industry to service its debt, with nothing left to reward equity investors for risking their capital.
 
The study showed that over the past 40 years virtually all industries have generated higher returns on invested capital (ROIC) than the airline industry.

Moreover, airlines are the least profitable segment of the air transport value chain while other segments consistently generate good returns for their investors.

The biggest cost for airlines today is fuel and companies in this sector benefited from an estimated $16-48bn of their annual net profits generated by air transport.

The most profitable part of the rest of the value chain is in distribution, with the computer reservation systems businesses of the three global distribution system companies generating an average ROIC of 20%, followed by freight forwarders with an ROIC of 15%.
  
 “More effective partnerships are required among stakeholders in the air transport industry. Efficiency gains are a win-win for all concerned,” said Tyler.

An agenda for governments is also outlined in the study.

“Smart regulation is needed from governments around the world in order to maximise the economic benefits of connectivity jobs and growth,” said Tyler.

“Unfortunately, high taxation and poorly designed regulation in many jurisdictions make it difficult for airlines to develop connectivity. On top of the cost issues, airlines also face a hyper fragmented industry structure owing to government policies that discourage cross-border consolidation.”

Saudi taps new oil areas

Saudi Aramco plans to develop two less productive areas of major oilfields, industry sources said, as Riyadh takes care to maintain excess capacity for the long term, even while non-Opec oil supplies are on the rise.

The plan to increase capacity from Khurais and Shaybah by a total of 550 000 barrels per day (bpd) by 2017 will take the strain off Ghawar, the world's largest conventional oilfield, two sources familiar with the plans said.

Such projects are not intended to raise Saudi production capacity beyond the current stated 12.5 million bpd, Saudi oil officials have previously said.

After pumping its biggest fields at near record rates to make up for lost supplies from Libya and Iran over the last two years, the kingdom wants to focus on less productive fields to ease pressure on aging reservoirs to help keep their output robust.

"The targeted area includes the two fields south of Khurais, Abu Jiffan and Mazalij, which are smaller complex fields that have not produced much oil in past years," Sadad al-Husseini, a former top executive at Saudi Aramco, said.

"As for Shaybah field, they want to mainly raise production from the south where the reservoir is less productive and to gather large volumes of additional natural gas liquids, which are recovered from the associated gas."

By 2017, Saudi Aramco aims to boost capacity at Khurais by 300,000 bpd to 1.5 million bpd and at Shaybah by 250,000 bpd to 1 million bpd, the sources said.

The company could not immediately be reached for comment.

Saudi Arabia had planned in 2008 to increase production capacity to 15 million bpd but then put the plan on hold after the financial crisis.

A surge in North American unconventional oil over the last few years, meanwhile, has taken pressure off Riyadh. Officials now say there is no plan to expand beyond the kingdom's current capacity.

Aramco is still investing in new production projects, however, to increase its options and take pressure off big fields such as Ghawar and Abqaiq that have been the main source of wealth for the economy for decades.

Husseini said the expansion plans would require new oil and gas processing facilities and a dedicated pipeline to transport natural gas liquids from Shaybah.

Aramco completed a large capacity expansion plan in 2009-2010, which included the start-up of Khurais and the expansion of Shaybah to 750 000 bpd.

Khurais contains highly prized Arab Light crude, which is easily converted into transport fuels.

Emerging market borrowers left stranded

Developing countries that did not take advantage of historically low yields by selling international bonds in the first half of 2013 are finding themselves left high and dry as borrowing costs rise.

Emerging market borrowers sold more than $200bn of bonds between January and July, a record-breaking streak that culminated in April with the startling sight of Rwanda issuing a 10-year dollar bond at a yield of less than 7%.

But the US Federal Reserve's indication that it will turn off the liquidity taps which have depressed interest rates in the West and fuelled demand for higher-yielding assets has burst a bubble that had developed in emerging debt, bankers say.

"In March/April, some valuations were very high - investors were awash with liquidity and were desperate for higher-yielding instruments," said Chris Tuffey, head of EEMEA debt capital markets at Credit Suisse. "Prices got to levels driven by technicals rather than fundamentals."

Issuance fell dramatically last month, when only 25 bonds were issued, according to Thomson Reuters data, compared with 82 in May, 103 in April, and 66 in June 2012. Emerging debt prices have fallen as a sharp rise in US yields robs riskier borrowers of their usual yield appeal.

Countries such as Bahrain, Nigeria and Russia have continued to hold investor presentations, known as roadshows, or assigned lead managers for planned international debt sales, but no bonds have followed.

Borrowers have regularly held "non-deal" roadshows since the 2008/09 financial crisis made them nervous of committing to a particular timetable for issuing debt, although investors say such pitches always take place with a bond sale in mind.

Markets have been so favourable until recently, however, that even unfamiliar names, such as last year's debut borrower Zambia, were able to raise money as soon as their roadshows ended, drawing massive demand.

Costing rising

Emerging market debt was yielding on average less than 5% in April, an unprecedentedly low level, but that has now risen to around 7 percent, meaning that borrowers will have to pay much more for their funding.

Rising interest costs could make life difficult for countries already struggling with high debt and deficits.

"A lot of issuers have not fully woken up to the fact that issuance at higher yields will significantly change the debt sustainability picture," said David Hauner, head of EEMEA fixed income strategy at BofA-Merrill Lynch Global Research.

Nigeria finished a roadshow last week but no bond followed, while African countries waiting in the wings include Kenya and Tanzania.

Other countries which have held roadshows in the past few weeks include Latvia and Ukraine, according to Thomson Reuters market news and information service IFR.

Some, such as Kenya, which has made and dropped plans for its first Eurobond several times since 2007, may not have any pressing need to borrow, while others may find alternative and cheaper sources of funding.

Ukraine's debt insurance costs have recently hit 18-month highs, however, as investors worry that without an International Monetary Fund deal, the country will not be able to refinance its debt. Kiev sold a $1 billion 10-year Eurobond in April and said it aimed to raise another $2.5bn this year.

More regular sovereign borrowers may also struggle to complete their annual issuance programmes, let alone borrow in advance of next year's plan, as countries often seek to do.

Turkey has raised $4.2bn of its $6.5bn borrowing target for this year, while Hungary has completed $3.25bn of a 2013 target of around $5.5bn.

"People used to do a lot of pre-funding and that won't be the case any more," said Gorky Urquieta, co-head of emerging markets debt at asset manager Neuberger Berman.

Holding back

Companies and financial firms, which made up the vast bulk of this year's issuance, are also holding back.

Turkish banks Ziraat and Yapi Kredi are among those who have said they are waiting for better market conditions, while Nigeria's Diamond Bank ended a roadshow last week without a deal.

Bankers involved in emerging market debt remain optimistic the recent rise in US Treasury yields may be temporary, saying this month's US employment numbers and Federal Reserve meeting could put a different complexion on the Fed's intentions.

If that is the case, for emerging market borrowers, "the summer should be active, rather than quiet," said Credit Suisse's Tuffey.

But countries and companies who missed the window which closed in April will have to resign themselves to borrowing at higher rates.

"Emerging markets will never have it as good again," BofA-ML's Hauner said.