NEWS,16.07.2013

Snowden applies for Russia asylum

Fugitive US intelligence leaker Edward Snowden applied on Tuesday for temporary asylum in Russia, a pro-Kremlin lawyer said, after President Vladimir Putin accused Washington of "trapping" him in the country.

Snowden, wanted by the United States for revealing sensational details of its vast spying operations, is now spending a fourth week in the transit lounge at Moscow's Sheremetyevo airport without ever crossing the Russian border.

"The application has been filed with the Russian authorities" through the Federal Migration Service (FMS), said prominent lawyer Anatoly Kucherena, who has been in contact with Snowden.

"I have just left him," he told AFP after meeting the fugitive in the transit zone.

In his application, Snowden had written that he was concerned about his safety should he return to the United States, the lawyer said.

"He wrote that he fears for his life, safety, he fears that torture or death penalty could be applied against him," Kucherena said separately in televised remarks.

Receipt confirmed

"And under these circumstances, understanding his position and situation, the Federal Migration Service should of course grant his request."

The head of the Federal Migration Service, Konstantin Romodanovsky, confirmed it had received the application. Putin's spokesperson Dmitry Peskov referred all questions to the FMS.

Kremlin-friendly lawyer Kucherena participated in Snowden's meeting with rights activists and pro-Kremlin lawmakers at Sheremetyevo last week and said Snowden had contacted him for consultations after the encounter.

Kucherena said he was helping Snowden negotiate the complexities of Russian legislation and the difference between the status of refugee, political asylum and temporary asylum.

"He is actively consulting with me," Kucherena said. "After the meeting we've been in frequent touch."

Russian authorities generally consider an application for temporary asylum for up to three months, with preliminary consideration taking up to five days.

'Trapped' by US pressure

After the application is accepted, an applicant receives a temporary document allowing him to live and travel locally.

Temporary asylum lasts for one year and would in theory give Snowden enough time to find a way to leave Russia, possibly for Latin America. It then can be extended every year for another 12 months.

Snowden flew into Russia from Hong Kong on 23 June and has since been marooned in the transit zone of Sheremetyevo. He was checked in for an Aeroflot flight to Cuba on 24 June but never boarded the plane.

On Monday, Putin said Snowden would leave Russia "as soon as he can" and accused Washington of "trapping" the American in Moscow, saying no country wanted to take in Snowden due to US pressure.

Breaking silence for the first time since he arrived, Snowden, who is essentially stateless after Washington revoked his passport, held the closed-door meeting at the airport on Friday.

At the meeting, he said he would file for asylum in Russia before he could work out a way to travel legally to Latin America, asking the activists to petition Putin on his behalf.

Kremlin green light

Venezuela, Bolivia and Nicaragua have indicated that they would be open to offering the 30-year-old a safe haven.

Putin said earlier this month Snowden could claim asylum in Russia only if he stopped his leaks and the activists who had met Snowden on Friday said he promised not to harm the United States.

Even though the Kremlin has repeatedly said it had nothing to do with Snowden, political observers have noted that his meeting with activists at the state-controlled airport would have been impossible without a green light from the Kremlin.

The head of Amnesty International in Russia, Sergei Nikitin, who took part in the airport meeting, said Snowden would likely receive asylum.

"The way everything was organised so quickly, the whole logistics make it obvious for us that there's an interest of the authorities," he told AFP. "So the decision will probably be positive."

Nikitin had said he believed plain-clothed representatives of Russian special services had taken part in Friday's meeting.

Washington has reacted sharply to the possibility that Moscow might offer Snowden a safe haven and accused it of providing him with a "propaganda platform".

 

Kid-free couples fuel high-end boom

While their parents may have scrimped and saved to raise small armies of children on a single paycheck, growing numbers of high-earning Mexican couples are putting the department store before the baby carriage.
Couples with dual incomes but no kids, or "Dinks," are on the rise in Mexico, nearly doubling since 2005. They are buoying a growing high-end goods market, splashing out on everything from expensive lingerie to home decor.
Though just over a million in number, the couples are a gold mine for leading brands, and their spending habits are shoring up consumer demand as Mexico's economy cools.
Sandra Rodarte, 27, an events producer who shops for Apple products and loves fine whiskies, drops at least 10 000 pesos ($780) a month on non-essentials like annual trips to the United States.
She and her live-in boyfriend have no plans to raise a family, she explains while lunching at the exclusive marble-clad shopping mall, Antara, in downtown Mexico City.
"It's more fun, freer ... as a person and as a couple," said Rodarte, who is conscious that being a Dink means going against the grain in a culture that values marriage and motherhood. "Of course there are stigmas. Here in Mexico, women are supposed to leave their homes in white to get married as virgins."
Little data exists on how much Mexican Dinks spend, but a 2008 study by consulting firm De la Riva Group found that each couple shells out about 165 000 pesos ($12 900) per annum, largely on movies, restaurants and bars - or some 220 billion pesos ($17.17bn) in total.
That infusion is helping to boost Mexico's luxury goods market, which is projected to expand 12% this year, on par with growth over the last four years, according to Bain & Company, a consulting firm.
By contrast, total retail sales grew 3.7% last year.
For luxury leather goods maker Coach, Dinks are a growing market, company president Ian Bickley said in an email.
The firm, which set up shop in Mexico a decade ago, now boasts 26 locations, its biggest presence in Latin America, and plans to open a new store in the city of Queretaro this year.
And with good reason.
Spending in Mexico on designer apparel, luxury accessories and fine wines hit $3.88bn in 2012, up from $2.16bn in 2004, according to Euromonitor, a sales tracking firm.
"We see a definite uptick in interest from brands that just a couple of years ago we never imagined ... would be calling us and saying, 'We're interested in Latin America and what can you tell us about Mexico?'" said Franco Calderon, president of Latin American Retail Connection, which helps consumer goods stores set up shop in the region.
His firm is working on plans with luxury lingerie brand Agent Provocateur to debut in Mexico through top-end department store chain Palacio de Hierro.
Falling birth rates, rising spending
Dinks, a concept born in the 1980s, are still a small subset of Mexicans, making up a projected 3.4% of households at the end of 2012. That compares with 4.5% in regional peer Brazil, 14% in the United States and 17.6% in the United Kingdom.
But analysts see the number continuing to grow, thanks to powerful social changes.
Mexican women, who once were far likelier to be looking after children than becoming lawyers, accountants or doctors, are now almost as well educated as men.
In 1960, only 0.5% of women had a university degree. By 2010 the number had leapt to almost 16 percent - just a fraction behind their male peers.
Meanwhile, birth rates in Mexico have plunged to an estimated 2.2 babies per woman this year from 5.7 babies in 1976, according to the national statistics agency.
Unlike in Europe, where the birth rate is a low 1.6, Mexican Dinks typically postpone child bearing rather than avoid it altogether. Seven out of 10 Mexican Dinks in the De la Riva Group survey said they want to have children eventually.
One of them is Tatiana Romero, a 27-year-old licensing compliance expert at software firm The Foundry. She and her boyfriend spend about 10 000 to 11 000 pesos ($780 to $860) a month on non-essentials, including 2 000 pesos ($160) for a nice meal.
Romero, who bought a Mexico City home with her partner this month, said she hopes to have kids by age 33, but for now, she is happy to enjoy "the acquisitive power, the ability to treat ourselves" that comes with two incomes and no children.
A fan of clothing brands from H&M and Zara to Tommy Hilfiger and Hugo Boss, Romero says having a family "is something I grew up with. You dream about getting married and having kids."
The combination of delayed parenthood and dual income has encouraged more expensive tastes.
"You're talking about relatively young couples that have strong purchasing power because they work and have enough discretionary income that they can undoubtedly dedicate to decorating their homes," said Carlos Miranda, vice president of Grupo Axo, which this year brought home decor brand Crate & Barrel to Mexico from the United States.
Axo, which also operates cosmetics company Sephora and clothing label Emporio Armani, has already opened two Crate & Barrel stores in Mexico City, with plans for a third in the city of Puebla.
Hey big spender
To be sure, some see potential headwinds over Dinks' creditworthiness and financial optimism.
"They're spending more than they can afford," said Bain & Co Partner Claudia D'Arpizio, who describes the group as "Henrys," "High Earners, Not Rich Yet."
The De la Riva study suggested that saving is not a big priority for Dinks. As a group, however, they earn more on average than all other types of households, according to a 2010 survey by the Mexican statistics office.
What is clear is that spending by the no-kids set is resilient.
Sales at department stores Palacio de Hierro and Liverpool rose about 10% in the first quarter from the year earlier, almost double revenue growth at supermarket chains Wal-Mart de Mexico and Soriana over the same period.
"Clearly the soft patch has had a bigger impact on Mexico's upcoming middle class and not necessarily on the wealthier segments of the economy, which continue to consume," said Will Landers, an equity portfolio manager at BlackRock.

Greeks strike against public sector cuts

Trains ground to a halt and hospitals worked with emergency staff as Greek workers went on strike on Tuesday in protest at government plans to fire thousands of public sector employees.
Athens must reform and shrink its civil service to receive more bailout funds from foreign lenders but the latest plan of job cuts has sparked uproar among Greeks struggling with an unemployment rate of nearly 27%.
More than a week of marches by municipal workers are expected to culminate in a rally before parliament in the capital, with garbage collectors, bus drivers, bank employees and journalists among the groups joining the walkout.
"We are continuing our fight to put an end to policies that annihilate workers and drive the economy to an even greater recession," said the private sector union GSEE, which called the strike with public sector union ADEDY.
"We will stand up to those who, with wrong and dead-end choices, have driven the Greek people to poverty and despair."
Flights to and from Athens will be disrupted as civil aviation unions stage a four-hour work stoppage in solidarity.
City transport was also affected with bus and trolley bus drives holding work stoppages in the morning and in the evening. Trains stopped running and tax offices and municipal services remain shut.
Representing about 2.5 million workers, the two unions have brought workers to the streets repeatedly since Greece slid into a debt crisis in late 2009.
The latest strike comes before a parliamentary vote on Wednesday on reforms Athens agreed with its European Union and International Monetary Fund lenders as a condition for €6.8bn ($8.9bn) in aid.
Among the measures included in the bill are job cuts for teachers, municipal police and local government posts.
Demolition of rights
On Thursday, German Finance Minister Wolfgang Schaeuble will visit Athens, which is also expected to draw protests from Greeks who blame European paymaster Germany for austerity policies that have shrunk pay levels and boosted unemployment.
Greece's lenders, which have bailed it out twice with €240bn in aid, have grown impatient with the slow progress it has made in streamlining a 600,000-strong public sector widely seen as corrupt and inefficient.
But with unemployment at an all-time high and at twice the euro zone average, many Greeks are furious at plans to put 12 500 workers into a "mobility pool" by September, giving them eight months to find work in another department or get fired.
Some 25 000 workers will be placed in the scheme by the end of the year.
The plan has turned into the latest headache for Prime Minister Antonis Samaras's fragile coalition government, which nearly collapsed last month after he abruptly shut the state broadcaster ERT and fired its 2 600 staff.
ADEDY accused Samaras of using the "coup-like" closure of ERT to pave the way for mass firings in the public sector.
"The policy of mass layoffs, the dismantling of public institutions responsible and the demolition of any notion of labor rights inaugurate a new undemocratic governance of the country," the union said.

Dutch look again at tax treaties

The Dutch government is reviewing double taxation treaties with developing countries to determine if they are unfair and should be renegotiated, State Secretary of Finance Minister Frans Weekers said.
The decision to examine the treaties, some of which date back to the 1950s, came after several studies found that emerging economies are losing revenue due to low tax rates set in the deals.
It also comes amid a growing international effort to halt tax dodging by multinationals.
The Netherlands has more than 90 double taxation agreements. Several thousand international corporations, including 80 of the world's largest, use the Netherlands to re-route profits from dividends, royalties and interest, often paying no withholding tax in the country of origin.
From the Netherlands, capital can be transferred to tax havens, often reducing tax rates to below 10%. The use of holding companies known as "brass-plaque" companies has led to annual capital flows of €8 trillion ($10.44 trillion), or more than 10 times annual Dutch GDP.
"These investments via the Netherlands are a problem because they involve unintended use of Dutch tax treaties and investment treaties," said tax researcher Francis Weyzig of Utrecht Univercity.
The government commissioned the outside study into its dual taxation agreements (DTA) with Bangladesh, Ghana, Uganda, Zambia and the Philippines, a spokesman for the Ministry for Development said.
It was launched shortly after Mongolia cancelled its treaty with the Netherlands, accusing the Dutch of facilitating fiscal avoidance.
"We are looking at whether these treaties are possibly damaging for these countries," Weekers told Reuters. "We are looking (to see) if they can be misused and if there is a level playing field."
Weekers said the study would determine if rich countries have won better terms than developing ones.
A June study by the Centre for Research on Multinational Corporations found that use of the Dutch tax system by multinational corporations causes €771m ($1.01bn) in annual lost tax revenue in 28 developing countries.
There are at least 12 000 "brass-plaque" firms known as special purpose institutions in the Netherlands. In 2010, €278bn in dividends, royalties and interest were channelled through them.
The companies create roughly 13 000 jobs and generate €3-3.4bn in annual income for the Dutch economy through taxes, wages and services, less than half a percent of annual GDP, a government-backed study by Amsterdam University's Centre for Economic Research (SEO), found.

NEWS,18 AND 19.06.2013

Ranks of the rich swelling - report

The number of millionaires in the world jumped 9.2% to 12 million last year, in part because of simultaneous strength in the stock, bond and real estate markets, according to a study of the high-net-worth population.
The survey, released on Tuesday by RBC Wealth Management and Capgemini Financial Services, tracked high-net-worth people, whom it defined as those with more than $1m that they can invest.
North America was home to the highest number of millionaires - 3.7m. But the study projected that the Asia-Pacific region, which held the top spot in 2011, would reclaim it.
Part of the strength in North America came from rising equities markets - the Standard & Poor's 500 stock index gained 13% in 2012. North American investors put 37% of their money into stocks, a higher proportion than people in the Asia-Pacific region, where investors tend to be more conservative, the study said.
The amount of wealth held by the world's richest people also increased substantially, rising 10% to $46.2 trillion, well above the pre-economic crisis level of $40.7 trillion in 2007.
The study forecast high-net-worth wealth would increase 6.5% annually to $55.8 trillion by 2015, mainly because of growth in the Asia-Pacific region.
The survey found that 53% of wealthy US individuals would prefer to have a single firm handle their financial accounts.
However, a 2011 study from Boston-based research firm Aite Group showed more than half of high-net worth investors held their money in four or more financial institutions.
"Having one super-adviser would be preferred, but finding someone who can do that well is hard," said Aite analyst Sophie Schmitt.
The RBC-Capgemini survey polled more than 4 000 high-net-worth people globally in February and March, including 736 Americans.

Switzerland buries US tax law

Swiss lawmakers dealt a death blow on Wednesday to a draft law which aimed to protect the country's banks from criminal charges in the United States for helping wealthy Americans evade tax.
The Swiss government has warned that the bill's failure could prompt impatient US prosecutors to indict banks, though it could still use an executive order to allow them to hand over data to try to avoid criminal charges.
The bill, which lawmakers from both the centre-left and right opposed for widely differing reasons, was designed to let banks sidestep Swiss secrecy laws by disclosing their US dealings so they could avoid prosecution. With or without the law, they will still seek out of court settlements with US authorities that could cost the industry as much as $10bn.
Parliament's lower house voted 123 to 63 against debating the legislation, effectively killing the law, even though the upper house had confirmed its support earlier in the day.
Switzerland's banking lobby expressed regret about the vote and urged the government to do everything possible to help banks reach settlements under a US Department of Justice programme.
"Switzerland must not take the risk of a further indictment of a bank lightly," the Swiss Bankers Association said in a statement.
Finance Minister Eveline Widmer-Schlumpf said the government would do everything in its power but its options were limited without the bill.
The protection of client information has helped to make Switzerland the world's biggest offshore financial centre, with $2 trillion in assets. But the haven has come under fire as other countries have tried to plug budget deficits by clamping down on tax evasion, with authorities investigating Swiss banks in Germany and France as well as the United States.
Experts were divided over the threat posed to Swiss banks by parliament's decision to oppose the law.
"The Americans will get the data they want. They will not stop until they have it," said Martin Naville, head of the Swiss-American Chamber of Commerce. "It is taxing the patience of our American friends. When their patience is over, there will be indictments, perhaps just one or two, but it will be more than enough to create chaos."
No one was immediately available for comment at the US Department of Justice.
Wegelin precedent
Earlier this year a U.S. indictment felled Switzerland's oldest private bank, Wegelin. It paid a $58m fine and closed its doors for good after pleading guilty to helping wealthy Americans evade taxes through secret accounts.
Shares in Basler Kantonalbank, one of the banks under US investigation seen at immediate risk, closed down 2.5%, compared with broadly positive Swiss stocks.
But Peter V. Kunz, professor for business law at Berne University, was more sanguine.
"I think bankers will be indicted, but I don't really see banks getting indicted... as there may not be enough evidence to accuse them of systematically violating US law," he said.
"Wegelin was indicted and settled but in my view this was a singular case. I don't see it as a model case for Swiss banks."
The government's attempt to fast-track the legislation through parliament to meet a US ultimatum angered many lawmakers in the fiercely independent country.
Right-wing lawmakers opposed the bill on the grounds that it could set a precedent that might prompt other countries to seek concessions from Switzerland. The centre-left also rejected it for different reasons, believing Swiss banks should be forced to face the music for aiding tax evasion.
Lawmakers from both the lower and upper house endorsed a statement saying they supported a solution to the long-running tax dispute despite the defeat, and called on the government to allow banks to cooperate under existing laws.
Protracted negotiations
Switzerland's biggest bank, UBS, was forced to pay a $780m fine in 2009 and deliver the names of more than 4,000 clients to avoid indictment, giving the US authorities information that allowed them to pursue other banks.
Since then, the government has tried to reach a settlement for the whole financial industry, but has been hamstrung by Swiss secrecy laws and bickering among banks over who should pay the heavy fines.
US authorities have more than a dozen banks under formal investigation, including Credit Suisse, Julius Baer, the Swiss arm of Britain's HSBC, privately held Pictet in Geneva and local government-backed Zuercher Kantonalbank and Basler Kantonalbank.

UK backs jail time for reckless bankers

Bankers who are reckless with customers' or taxpayers' money could face criminal charges and have bonuses and pensions clawed back, according to proposals backed by Britain's prime minister on Wednesday.
Many Britons blame bankers' risk-taking for the 2008 financial crisis and subsequent economic slump and were furious when the former boss of RBS left the bank with a pension of almost £17m even after a state rescue.
He later agreed to a cut and was stripped of his knighthood but it was one in a series of banking scandals that increased pressure on Prime Minister David Cameron to get tougher on a sector contributing billions of pounds to the British economy.
The parliamentary commission on banking standards he set up last year after Barclays was fined for manipulating interest rate benchmarks said on Wednesday the law should be changed so that bankers found guilty of "reckless misconduct in the management of a bank" could face jail.
The UK Treasury said the new rules could be in place before the end of 2015 but lawyers said it would be hard to prove when a banker had taken too much risk or simply made a mistake.
Asked in parliament whether he supported the report's recommendations on criminal penalties and pay, Cameron said: "Penalising, including criminal penalties ... bankers who behave irresponsibly, I say yes."
Lawyers doubted that new laws would be effective.
"There is likely to be a considerable burden of proof - merely miscalculating or being negligent in an assessment of risk most likely won't be enough," said Michael Isaacs, head of banking litigation at law firm Pinsent Masons.
The commission also recommended a new pay code to better balance risk and reward, with bonuses deferred for up to ten years with the aim of preventing bankers taking risks for short term reward, one of the factors blamed for the crisis.
It also proposed that the UK financial regulator would be granted a new power enabling it to cancel all bonuses and pension rights not yet paid out to senior executives in the event of their banks needing taxpayer support.
Watered down
Banking industry sources said banks were likely to accept many of the proposals in principle, including the threat of criminal sanctions, but will lobby for some to be watered down, including the 10-year deferral on bonuses.
"The commission's conclusions contain many constructive proposals to help fix the issues which have afflicted the industry, most importantly in the emphasis on personal responsibility and accountability," said HSBC Chairman Douglas Flint.
The cross-party commission, which includes former British finance minister Nigel Lawson and Justin Welby, head of the Anglican church, recommended senior bankers are held personally responsible and regulators granted greater powers.
Commission member Pat McFadden said it would be "pressing the government very hard in the coming weeks" to make sure the proposals are implemented. The government has set itself a four week deadline to give a formal response.
"I think all of us who were engaged in this process over the last year very much hope this is not a report which is going to gather dust," he told Reuters.
The British Bankers Association, a lobby group, said it would work with government and regulators to take forward proposals from what it described as the "most significant report into banking for a generation".
Unpopular
Bankers are deeply unpopular in Britain where the economy has narrowly avoided a triple-dip recession and is expected to show tepid growth at best through next year.
"I think jail sentences would be suitable," Ben Stewart, a 34-year-old cabinet maker said in Whitechapel, not far from the City of London, the traditional financial heartland.
"It's fraud a lot of what they've done. Even if it's not legally fraud, I think by most people's moral compass, they'd find it quite distasteful."
The commission recommended the industry adopt two new registers for senior bankers and other employees to make sure the most important responsibilities within banks were assigned to specific individuals.
The 'Senior Persons Regime' would enable those responsible for failures to be identified more easily and provide a stronger basis for action to be taken against them, the report said.
The Financial Conduct Authority, the financial services industry watchdog which took over regulation of banks in April, said it was "learning from the regulatory mistakes of the past".
The commission also urged the government to immediately consider a range of strategies for RBS, which is 81% state-owned, including a possible break-up.
Some commission members, including Lawson, have advocated hiving off RBS's toxic loans into a 'bad bank' leaving the remaining 'good bank' better able to lend to British businesses and households. But Finance Minister George Osborne said such a move would be complicated, time consuming and costly.
The report said the government had interfered in the running of RBS and Lloyds Banking Group, in which it holds a 39% stake, and said RBS was being held back by having the government as its main shareholder.
The level of the government's influence over RBS has come under scrutiny since chief executive Stephen Hester was ousted last week with the Treasury's approval.
Osborne is set to lay out strategies for returning RBS and Lloyds Banking Group to full private ownership in his annual speech to financiers in the City of London on Wednesday.

Big expectations for Obama Berlin speech

Five years and 50 years. As President Barack Obama revisits Berlin, he can't escape those anniversaries and the inevitable comparisons to history and personal achievement.

His 26-hour whirlwind visit to the German capital caps three days of international summitry for the president and marks his return to a place where he once summoned a throng of 200 000 to share his ambitious vision for American leadership.

That was 2008, when Obama was running for president and those who supported him at home and abroad saw the young mixed-race American as a unifying and transformational figure who signified hope and change.

Five years later, Obama comes to deliver a highly anticipated speech to a country that's a bit more sober about his aspirations and the extent of his successes, yet still eager to receive his attention at a time that many here feel that Europe, and Germany in particular, are no longer US priorities. A Pew Research Centre poll of Germans found that while their views of the US have slipped since Obama's first year in office, he has managed to retain his popularity, with 88% of those surveyed approving of his foreign policies.

Obama also has an arc of history to fulfil.

Fifty years ago next week, President John F Kennedy addressed a crowd of 450 000 in that then-divided city to denounce the Soviet bloc and famously declare "Ich bin ein Berliner", German for "I am a Berliner". Since then, presidents from Ronald Reagan to Bill Clinton have used Berlin speeches to articulate broad themes about freedom and international alliances.

Need for activism

Obama, fresh from a two-day summit of the Group of Eight industrial economies, will speak at the Brandenburg Gate, a symbol of Germany's division and later reunification. It is a venue that German Chancellor Angela Merkel denied him in 2008, saying only sitting presidents were granted such an honour.

The past context and the weight of it are not lost on the White House.

"This is a place where US presidents have gone to talk about the role of the free world essentially," said Obama's deputy national security adviser, Ben Rhodes. "He is seeking to summon the energy and legacy of what's been done in the past and apply it to the issues that we face today."

Rhodes said Obama will make the case that even though the Berlin Wall came down 23 years ago and the threat of nuclear war has dissipated, the type of activism apparent during the Cold War needs to be applied to such current challenges as climate change, counterterrorism and the push for democratic values beyond the United States and Europe.

A senior administration official said Obama will also renew his call to reduce the world's nuclear stockpiles, including a proposed one-third reduction in US and Russian arsenals. He is not expected to outline a timeline for this renewed push. The official insisted on anonymity in order to preview the issue before the president's speech.

Obama will also hold a joint news conference with Merkel.

Merkel surprised by scope of spying

The visit was attracting widespread attention in Germany. People waved and snapped photos as Obama sped by after his arrival and a thick cluster awaited the motorcade as it passed the Brandenburg Gate. An evening news show in Berlin devoted itself to the president's visit, highlighting "Das Biest", or "The Beast", as the president's armoured limousine is called.

There have been a few small protests, including one directed against the National Security Agency's surveillance of foreign communications, where about 50 people waved placards taunting, "Yes, we scan."

Merkel has said she was surprised at the scope of the spying that was revealed and said the US must clarify what information is monitored. But she also said US intelligence was key to foiling a large-scale terror plot and acknowledged her country is "dependent" on co-operating with American spy services.

For Merkel, the visit presents an opportunity to bolster her domestic standing ahead of a general election in September.

The US and the Germans have clashed on economic issues, with Obama pressing for Europe to prime the economy with government stimulus measures, while Merkel has insisted on pressing debt-ridden countries to stabilise their fiscal situations first.

But the two sides have found common ground on a trans-Atlantic trade pact between the European Union and the US At the just-completed G8 summit, the leaders agreed to hold the first talks next month in the US.

Obama calls for nuclear reductions

Issuing an appeal for a new citizen activism in the free world, President Barack Obama renewed his call on Wednesday to reduce US and Russian nuclear stockpiles and to confront climate change, a danger he called "the global threat of our time."

In a wide-ranging speech that enumerates a litany of challenges facing the world, Obama said he wanted to reignite the spirit that Berlin displayed when it fought to reunite itself during the Cold War.
"Today's threats are not as stark as they were half a century ago, but the struggle for freedom and security and human dignity, that struggle goes on," Obama said at the city's historic Brandenburg Gate before a crowd of 6 000 invited guests under a bright, hot sun.
"And I come here for this city of hope because the test of our time demands the same fighting spirit that defined Berlin a half-century ago."
He called for a one-third reduction of US and Russian nuclear stockpiles, saying it is possible to ensure American security and a strong deterrent while also limiting nuclear weapons.
Obama's address, delivered from behind bullet-proof glass, comes nearly 50 years after John F Kennedy's famous Cold War speech in this once-divided city.
The president has previously called for reductions to nuclear stockpiles. But by addressing the issue in a major foreign policy speech, Obama signalled a desire to rekindle an issue that was a centrepiece of his early first-term national security agenda.
The president discussed non-proliferation with Russian President Vladimir Putin when they met on Monday on the sidelines of the Group of 8 summit in Northern Ireland. During Obama's first term, the US and Russia agreed to limit their stockpiles to 1 550 as part of the New START Treaty.
In Moscow, Russian foreign policy aide Yuri Ushakov said that plans for any further arms reduction would have to involve countries beyond Russia and the United States.
"The situation is now far from what it was in the '60s and '70s, when only the USA and the Soviet Union discussed arms reduction," Ushakov said.
Withdrawal
Obama's calls for co-operation with Moscow come at a time of tension between the US and Russia, which are supporting opposite sides in Syria's civil war. Russia also remains wary of US missile defence plans in Europe, despite US assurances that the shield is not aimed at Moscow.
Germany's foreign minister, Guido Westerwelle, is a strong advocate of nuclear disarmament and has long called for the removal of the last US nuclear weapons from German territory, a legacy of the Cold War.
The Buechel Air Base in western Germany is one of a few remaining sites in Europe where they are based.
Under an agreement drawn up when they formed a coalition government in 2009, Merkel's conservatives and Westerwelle's Free Democratic Party agreed to press Nato and Washington for the nuclear weapons to be withdrawn, but did not set any time frame.
Nuclear stockpile numbers are closely guarded secrets in most nations that possess them, but private nuclear policy experts say no countries other than the US and Russia are thought to have more than 300.
The Federation of American Scientists estimates that France has about 300, China about 240, Britain about 225, and Israel, India and Pakistan roughly 100 each.

Obama defends terrorism tactics in Berlin

President Barack Obama defended US intelligence methods on a visit to Berlin on Wednesday, telling Chancellor Angela Merkel and wary Germans that Washington was not monitoring the e-mails of ordinary citizens or damaging civil liberties.

Obama is popular in Germany but revelations before the trip that the United States has a covert internet surveillance programme, codenamed Prism, have caused outrage in a country where memories of the eavesdropping East German Stasi secret police are still fresh.

Merkel said at a joint news conference that also touched on Afghanistan, Syria and the global economy, that the two leaders had held "long and intensive" talks on the spying issue, and pointed out that some questions still need to be cleared up.

"This is not a situation in which we are rifling through the ordinary e-mails of German citizens or American citizens or French citizens or anybody else," said Obama, on his first visit to the German capital as president.

"This is not a situation where we simply go into the internet and start searching any way we want. This is a circumscribed system directed at us being able to protect our people and all of it is done under the oversight of the courts."

Obama was later due to speak to a crowd of roughly 4 000 invited guests at the Brandenburg Gate, which used to stand alongside the Berlin Wall dividing communist East Berlin from the capitalist West of the city.

Tension in Afghanistan

His visit comes on the 50th anniversary of John F Kennedy's famous Ich bin ein Berliner speech. Seizing on the Cold War theme, Obama is expected to announce plans to sharply reduce nuclear arms stockpiles, an initiative he kicked off with a speech in Prague in 2009 but which involves complex negotiations with Russia.

At the news conference, he touched on tensions with Afghan President Hamid Karzai over US plans to begin talks with the Taliban to try to seek a negotiated peace after 12 years of war, acknowledging "huge mistrust" between the Western-backed government in Kabul and its arch-foes.

"We do think that ultimately we're going to need to see Afghans talking to Afghans about how they can move forward and end the cycle of violence there so they can start actually building their country," Obama said.

As a sign of displeasure with the US move, Karzai has suspended talks with Washington on a troop agreement. But Obama said he welcomed Karzai's announcement that Afghan forces would soon take responsibility for security from the US-led Nato peacekeeping force.

On Syria, Obama said reports that the United States was ready to "go all in" to war in the country were exaggerated. He reiterated his view that President Bashar Assad's government had used chemical weapons, while acknowledging that Russia was sceptical on this point.

For her part, Merkel said Germany would not deliver weapons to the rebels, even though a European Union arms embargo on Syria has lapsed.

Pragmatic relationship

Obama arrived in Germany from a two-day summit with Group of Eight leaders in Northern Ireland where he and other leaders clashed with Russian President Vladimir Putin over Syria.

He last came to Berlin in 2008, during his first campaign for the presidency. Back then, Merkel refused to allow him to speak at the Brandenburg Gate. Instead he spoke down the road in Berlin's Tiergarten park, attracting a crowd of 200 000 - largely enthusiastic admirers.

The Democrat has forged a pragmatic - if not warm - relationship with the conservative Merkel, who is hoping to get a boost out of the visit months before a German election.

In a message which seemed designed for her domestic audience, she told Obama at the news conference that balance was essential in government monitoring of Internet communications.

"I made clear that although we do see the need for gathering information, the topic of proportionality is always an important one and the free democratic order is based on people feeling safe," said Merkel, who grew up in the communist East and experienced the Stasi first hand.

Obama said the US had thwarted at least 50 threats because of its monitoring programme, including planned attacks in Germany.

Reassurance on drones

"So lives have been saved and the encroachment on privacy has been strictly limited," he said.

A poll last week showed 82% of Germans approve of Obama, but the magic of 2008, when he was feted like a rock star, has faded amid concerns about his tactics in combating terrorism.

In a nod to the criticism, Obama defended his failure to close the Guantanamo Bay prison on Cuba that his predecessor George W Bush opened after the invasion of Afghanistan in 2001, shortly after the 11 September attacks in New York and Washington.

He also reassured Germans that the US military was not using German bases to launch unmanned drone attacks.

For Obama, who grew up in Hawaii and spent part of his childhood in Indonesia, Europe has sometimes seemed an after-thought. The signature foreign policy initiative of his first term was his "pivot" to Asia.

But analysts say plans to create a free-trade zone between the United States and European Union are a sign that he is repositioning policy to focus on Europe.

Enduring bonds

"The Obama administration has found it harder than expected to work with emerging powers and has fallen back to a more traditional reliance on European allies," said Charles Kupchan, professor of international affairs at Georgetown University.

"Washington doesn't have better options. And when it comes to who to engage in Europe, Germany grows stronger and stronger."

Obama spoke of "enduring bonds based on common values" that linked the United States to Europe.

Peacekeeping: Ban warns of new threats

UN Secretary General Ban Ki-moon said on Wednesday the world body's peacekeeping efforts face growing dangers from non-traditional threats such as suicide bombers and improvised explosive devices.

Ban told reporters on a visit to a peacekeeping training base near the Chinese capital that the UN must ensure that peacekeepers have the necessary training and specialised skills to face the threats.

These threats "are not new to the UN, but they are more intense," Ban said.

Ban's comments came at the start of a three-day visit to China to meet with newly appointed President Xi Jinping and Premier Li Keqiang. Their discussions are expected to include China's growing involvement in UN affairs, along with international topics including tensions on the Korean Peninsula.

He said peacekeepers need to react rapidly and gather and analyze information on remote areas. In order to ensure that capability, the UN is deploying drones for the first time to its mission in the Democratic Republic of the Congo, Ban said.

Ban also praised China's commitment to peacekeeping efforts. China has dispatched 22 000 troops to 23 missions, more than the other four permanent members of the UN Security Council combined.

"I applaud this solidarity," Ban said, noting 14 Chinese peacekeepers have died while serving.

Threatened

In all, nearly 3 000 peacekeepers have died in the line of duty since the first were deployed 65 years ago - 103 of them last year in Congo, Darfur, Sudan, Ivory Coast and other countries. Eight more civilian contractors, such as pilots, also died during deployment with peacekeeping missions in 2012.

The United Nations currently has more than 113 000 personnel serving in 16 UN peacekeeping and political missions.

In the latest crisis to hit peacekeeping efforts, Austria announced it would pull out its 377 peacekeepers from the 911-member UN force in the Golan Heights after fighting from the Syrian civil war threatened their positions earlier this month.

That will leave just 341 Philippine soldiers and 193 from India in the strategic area along the border with Israel.

Philippine Foreign Secretary Albert del Rosario told reporters on Wednesday that his country will keep its peacekeepers in place at least until 3 August. It will then consider a request from Ban to stay on, del Rosario said.