NEWS,21.07.2013

OECD publishes plan to cut tax evasion

The Organisation for Economic Co-operation and Development (OECD) unveiled new plans to tackle tax evasion by improving the way tax authorities share information about individuals and entities like trusts.
Countries are increasingly moving to a standard of sharing information on taxpayers even in the absence of any specific request.
This is more likely to flag up inappropriate behaviour than the longer established practice of one tax authority starting an investigation into suspicions of wrongdoing, and then making a request for data.
The European Union has estimated hundreds of billions of euros are lost each year to tax evasion. The stashing of undeclared earnings in accounts in offshore jurisdictions has long been a favoured method for hiding cash from one's home tax authority, aided by the veil of secrecy.
The OECD, which advises its mainly rich nation members on economic and tax policy, issued an updated standard for the automatic exchange of information at the sidelines of a meeting of G20 finance ministers on Saturday.
The OECD has proposed a detailed description of the kinds of information that would be exchanged and proposals for common legal and technological standards to facilitate the flow of information.
The OECD hopes to have a new draft agreement ready for countries to sign in late 2013.
The shift to an international standard on automatic sharing of information has been accelerated by the US Foreign Account Tax Compliance Act (Fatca) which forces banks outside the United States to give Washington details of foreign accounts held by US citizens.
Countries like Bermuda, often labelled a tax haven by Western lawmakers, said that once they agreed to share information with the United States, other large countries pressured them for a similar deal.

China frees up lending rates

China's central bank removed controls on bank lending rates, effective on Saturday, in a long-awaited move that signals the new leadership's determination to carry out market-oriented reforms.
The move gives commercial banks the freedom to compete for borrowers, a reform the People's Bank of China said on Friday will help lower financial costs for companies. Previously, the lending floor was 70% of the benchmark lending rate.
However, the PBOC, in a statement, left a ceiling on deposit rates unchanged at 110% of benchmark rates, avoiding for now what many economists see as the most important step Beijing needs to take to free up interest rates.
The latest step underscores Beijing's resolve to start fixing distortions in its financial system and the economy more broadly as it tries to shift from export- and investment-led growth to more consumption-led activity.
Some analysts said cheaper credit could help support the economy, which has seen year-on-year growth fall in nine of the last 10 quarters.
"This is a big breakthrough in financial reforms," said Wang Jun, senior economist at China Centre for International Economic Exchanges, a prominent government think-tank in Beijing.
"Previously, people had thought the central bank would only gradually lower the floor on lending rates. Now they scrapped the floor once and for all."
The Australian dollar rose modestly on the news on hopes cheaper credit will lead to more demand from Australia's biggest export market.
The announcement provided some support to weak stock markets in Europe and a timely reminder to the world's top financial leaders meeting in Moscow of China's intention to rebalance its economy.
A Group of 20 draft communique will urge China to encourage more domestic demand-driven growth as part of wider efforts to rebalance the world economy, G20 sources said.
The United States welcomed the move, saying China promised to let markets play a bigger role in allocating credit during the US-China Strategic and Economic Dialogue in Washington last week.
"This is a welcome further step in the reform and liberalisation of China's financial system," Holly Shulman, a spokesperson for the US Treasury, said in an email.
Signal of resolve
China's big lenders, such as Industrial and Commercial Bank of China , China Construction Bank, Bank of China and Agricultural Bank of China have generally resisted interest rate reforms because they do not want to see their rate margins get squeezed.
But many economists say such a push is necessary so that lenders learn to better price risk, which will force them to allocate capital more efficiently and so help rebalance an economy saddled with overinvestment and overcapacity in sectors from cement to steel making to solar panels.
Scrapping the lending floor will likely cut borrowing costs for businesses and individuals, ending what many observers say had been artificially high rates that benefited state lenders at the expense of private enterprise.
Some economists were sceptical at how much direct economic impact the move would have because few banks have fully utilised the limited freedom they already had to charge interest rates slightly below benchmark rates, choosing instead to keep their rates slightly above the floor that has been in place.
"So the move may have more of a signalling effect than transmit immediately to the economy but it is an important signalling effect," said Manik Narain, emerging market strategist at UBS in London.
However, to the extent that it does lead banks to lower their lending rates, the move could serve to stimulate investment at a time when the world's second-largest economy is running around its lowest growth rates since 2009, having logged 7.5 percent growth in the second quarter.
More important, though, is the sign that policymakers are getting serious about tackling challenging reforms, just four months after Premier Li Keqiang took office, analysts said.
"This is one of the biggest steps they could have taken," said Mark Williams, chief Asia economist at Capital Economics. "It tells you something about the trajectory."
The need for financial reforms was put on full display in late June, when the central bank attempted to choke off funds flowing to "shadow banking" activities, leading to a crunch in the country's money markets that sent short-term borrowing rates to levels normally seen only during financial crises, prompting jitters among investors around the world.
The shadow banking sector, or non-bank lending, has ballooned in recent years, raising concerns that authorities are losing track of potential bad debts building in the economy.
Long path ahead
The central bank said it is also scrapping controls on rates on discounted bills, a common form of payment among companies.
The PBOC made clear in its statement it does not intend to ease up on its controls over mortgage rates. Beijing has been clamping down on the property sector for several years to try to keep a lid on rising prices and speculative buying.
It said it planned to free up deposit rates eventually but now was not the right time. It said it still needed to do more groundwork, which is expected to include launching a deposit insurance system, something many observers expect may happen this year.
"(Reform of deposit rates) is more difficult and more sensitive. We should not expect it to happen very soon," said Yu Yongding, former member of the central bank's monetary policy committee and a researcher at the Chinese Academy Of Social Sciences in Beijing.
Beijing worries that allowing banks to raise deposit rates to compete for funds could crush some smaller lenders and force them to go bust.
Longer term, the latest move could signal that the government will step up other reforms seen as necessary to help rebalance the economy.
"This underlines that China is moving to a fully convertible currency and floating exchange rates," said Flemming Nielsen, senior analyst at Danske Bank in Copenhagen. "Their next step will be to widen the daily trading band for RMB (yuan). They should do that within the next three months."

Israel to free Palestinian prisoners

Israel announced on Saturday it will release some Palestinian prisoners as a "gesture", after the two sides agreed to lay the groundwork to resume peace negotiations frozen for three years.

Some of those to be freed have been in prison for decades, Israeli Intelligence Minister Yuval Steinitz said.

His announcement came hours after US Secretary of State John Kerry said Israeli and Palestinian negotiators had agreed to meet to pave the way for a resumption of direct peace talks.

The last round of direct talks broke down in 2010 over the issue of Israeli settlements in the West Bank and east Jerusalem.

Speaking on privately owned Channel 2, Israeli Justice Minister and chief peace negotiator Tzipi Livni noted that while there were no preconditions to talks, "everything will be on the table", including the 1967 borders and east Jerusalem, which the Palestinians want as their future capital.

Steinitz said his government would engage in the staggered release of a "limited number" of prisoners, some of whom he defined as "heavyweights", who have been in jail for up to 30 years.

4 713 imprisoned

"There will definitely be a certain gesture here", he said, without noting how many prisoners were to be freed.

According to Israeli rights group B'Tselem, at least 4 713 Palestinians are imprisoned in the Jewish state.

Their release is one of the Palestinians' key demands for resuming peace talks, particularly the 107 prisoners arrested prior to 1993, when the Oslo peace accords were signed.

An Israeli official said no prisoners would be released before direct talks begin, and the process would then be dependent on the Palestinians proving they are "really serious and not playing games".

"It won't happen tomorrow and not next week," the official told AFP, speaking on condition of anonymity. He could also give no indication of the number of prisoners involved.

He said the releases, once they begin, would take place in stages and include "pre-Oslo prisoners, prisoners set to be released anyway, and those the Palestinians 'forgot' during the Oslo accords".

Commitment

Steinitz said Israel would not compromise "diplomatic issues", and that there was no agreement on a settlement construction freeze or on accepting the borders that existed prior to 1967 Six-Day war as the basis for talks, as the Palestinians demand.

He said the Palestinians had committed to "negotiate seriously" for "at least nine months", during time which they would refrain from taking action at the United Nations and other international institutions.

Kerry gave away very little detail of the agreement, which came after four days of consultations with Israeli and Palestinian leaders, saying both sides had reached "an agreement that establishes a basis for resuming direct final status negotiations".

"This is a significant and welcome step forward," he added, having doggedly pushed the two sides to agree to resume talks in six intense trips to the region since becoming secretary of state in February.

A State Department official said Kerry had wrenched a commitment from both sides "on the core elements that will allow direct talks to begin".

The Israelis and Palestinians remain far apart on final status issues including the borders of a future Palestinian state, the right of return of Palestinian refugees and Jerusalem.

'Ball in Israel's court'

Palestinian president Mahmud Abbas has also repeatedly called for a freeze to Israeli settlement building and a prisoner release.

"The ball is now in Israel's court," a Palestinian official said, speaking on condition of anonymity.

"Kerry has proposed the bases for a resumption of negotiations and asked [Israeli Prime Minister Benjamin] Netanyahu to respond favourably to one of them.

"The bases are the release of Palestinians jailed before the Oslo accords, minors, the sick or the elderly," he said. "And that Israel recognise the 1967 border lines as a reference point, or a halt to settlement building."

The official said Netanyahu had agreed to hold a special cabinet session to draw up Israel's response to Kerry's proposals.

The Islamist Hamas movement which runs the Gaza Strip rejected a return to talks, saying Abbas had no legitimate right to negotiate on behalf of the Palestinian people.

And the leftist Popular Front for the Liberation of Palestine warned that "a return to talks outside the framework of the United Nations and its resolutions would be political suicide".

Venezuela ends rapprochement with US

Venezuela says it has "ended" its rapprochement with the United States due to a statement by Samantha Power, nominated to become the US envoy to the United Nations.
Power said at a US Senate confirmation hearing on Wednesday that if she got the job she would stand up to "repressive regimes" and challenge the "crackdown on civil society being carried out in countries like Cuba, Iran, Russia, and Venezuela."
Washington and Caracas have not exchanged ambassadors since 2010 even though Venezuela exports 900 000 barrels of oil to the US per day.
"The Bolivarian Republic of Venezuela hereby ends the process ... of finally normalising our diplomatic relations" that began in early June, the Foreign Ministry said in a statement.
Venezuela is opposed to the "interventionist agenda" presented by Power and noted that her "disrespectful opinions" were later endorsed by the State Department, "contradicting in tone and in content" earlier statements by Secretary of State John Kerry.
Kerry and his Venezuelan counterpart, Elias Jaua, agreed on the sidelines of an Organisation of American States meeting in Guatemala in June that officials would "soon" meet for talks that could lead to an exchange of ambassadors.

NEWS,06.02.2013

US tightens oil sanctions on Iran

The United States on Wednesday imposed new sanctions on Iran to choke off its oil income, saying it was necessary to increase the pressure on Tehran over its suspected nuclear weapons program.The US Treasury said it was tightening up the list of countries allowed to continue buying Iranian oil without violating the US sanctions regime.Those still permitted to buy Iranian oil will have to retain their payments outside Iran, to prevent Tehran access to the funds, the Treasury said."So long as Iran continues to fail to address the concerns of the international community about its nuclear program, the US will impose tighter sanctions and intensify the economic pressure against the Iranian regime," said US Treasury official David Cohen.The United States also placed sanctions on Islamic Republic of Iran Broadcasting, the government's broadcast authority, and its chief Ezzatollah Zarghami, for censorship and for broadcasting forced confessions of political detainees.

 

US sues S&P over inflated ratings

The US Justice Department said on Tuesday it is seeking at least $5bn in civil penalties from Standard & Poor's for losses due to inflated ratings of mortgage bonds.Announcing a suit against S&P and its parent, The McGraw-Hill Companies, Attorney General Eric Holder said the powerful rating agency knowingly exaggerated the ratings on financial securities, misrepresenting their true credit risk."Put simply, this alleged conduct is egregious and it goes to the very heart of the recent financial crisis," said Holder, flanked by justice officials from several states joining the suit."Today's action is an important step forward in our ongoing efforts to investigate and punish the conduct that is believed to have contributed to the worst economic crisis in recent history," he said.The suit cited S&P's top-grade ratings of dozens of mortgage-based collateralsed debt obligations (CDOs) issued in early 2007 that were in default within one year, some within six months.The defaults dealt billions of dollars in losses to financial institutions insured by the US, some of which collapsed in the 2008 crisis and others, like Citigroup, forced to seek a government bailout."At the very least, we believe conservatively that S&P's actions make it liable for more than $5bn in civil penalties," said US Acting Associate Attorney General Tony West.S&P called the lawsuit "entirely without factual or legal merit," and an S&P lawyer hinted that it was political retribution for the agency's historic downgrade of the US credit rating from triple-A status in August 2011."Is it true that after the downgrade the intensity of the investigation significantly increased? Yes," Floyd Abrams, an attorney representing S&P, said on CNBC television."I'm sure the government would say it has nothing to do with it."Holder, in a news conference, said there was "no connection" between the S&P downgrade and the litigation.The suit, filed in California and backed by a number of state governments, accused the credit rater of knowingly inflating its ratings on CDOs and residential mortgage-backed securities in 2007 in order to win revenue from issuers.S&P was specifically charged with wire fraud, mail fraud and financial institution fraud.The suit cited internal communications in which S&P considered the need to update its analytic models to keep up with the securities in the changing market, only to continue with the weaker models that permitted higher ratings to go through.S&P's modus operandi was to "limit, adjust and delay those updates" to favor issuers and "maintain and grow S&P's market share and profits," the complaint alleges.S&P staff debated how many securities to downgrade as more of the loans came up delinquent and the housing market began to sink. As the troubles became more widely apparent, one S&P analyst likened the situation to "Burning Down the House" in an email, satirizing the market problems with mock lyrics of the famous Talking Heads song."Strong market is now much weaker. Subprime is boi-ling o-ver. Bringing down the house."But at the same time, S&P continued to rate new CDOs "without making adjustments to account for continuing deterioration" in the investments, the complaint alleges. S&P said the Justice Department took statements from internal communications out of context. "There was robust internal debate within S&P about how a rapidly deteriorating housing market might affect the CDOs - and we applied the collective judgment of our committee-based system in good faith," S&P said. "The email excerpts cherry-picked by DOJ have been taken out of context, are contradicted by other evidence, and do not reflect our culture, integrity or how we do business," S&P continued.S&P also argues that it was far from alone in its failure to predict the scale of the housing collapse.But the government has not taken any action against S&P's competitors. Moody's remained quiet on the subject Tuesday, while Fitch told AFP that it has "no reason to believe Fitch is a target of any such action."S&P is a unit of McGraw-Hill, whose shares fell 10.7% on Tuesday after losing nearly 14% on Monday. Moody's lost 8.8%.

Obama unveils plans to avert budget cuts

US President Barack Obama on Tuesday called for a balanced program of stop gap spending reductions and tax reforms to avert punishing multi-billion dollar automatic budget cuts due to kick in on March 1.Obama said the fragile US economy could not afford the hit from huge cuts to defense and other government programs, known as the sequester, and the jobs of Americans should not be held hostage to partisan wrangling in Washington.The president said if Congress could not act on a bigger deficit cutting package by March 1, lawmakers should pass a smaller plan of spending cuts and tax reforms to delay the economically damaging impact of the sequester."There is no reason that the jobs of thousands of Americans who work in national security or education or clean energy, not to mention the growth of the entire economy, should be put in jeopardy," Obama told reporters."Let me repeat, our economy right now is headed in the right direction. It will stay that way as long as there aren't any more self-inflicted wounds coming out of Washington."The Congressional Budget Office reported Tuesday that if the sequester is put through, the US budget deficit will shrink sharply this year but that also economic growth will be crunched from 2012's 1.9% to just 1.4%."If all of the fiscal tightening still embodied in current law for 2013 was removed, growth in real GDP would be about 1.5 percentage points higher this year than CBO currently projects," the study said.Obama said his short-term spending would allow the White House and Congress more time to come up with a plan to cut the deficit, which he insists, despite Republican opposition, must include new revenue from higher taxes.The sequester was agreed by the president and Congress last year to be so punishing that it would force Washington's warring political factions to forge an agreement on deficit cuts.But no agreement is in sight, and the cuts have already been put off once, by a short-term deal agreed between Obama and Republicans late last year.House Republican Speaker John Boehner Tuesday blamed Obama for the sequester, which many observers now believe will come into force, despite its punitive impact on defense and social programs and the fragile US economy."We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes," Boehner said in a statement."The president's sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years."Cuts due to come into force in March will slash defense spending by $55bn and non defense discretionary spending by $27bn this year, and will have a painful impact on the economy.The Bipartisan Policy Center has warned that a million jobs will be lost by the end of next year caused by a slowdown brought on by the cuts.

Clinton website stokes 2016 speculation

Once again fuelling speculation about whether she will run for president in 2016, Hillary Clinton launched a new website even before she officially stepped down as secretary of state.HillaryClintonOffice.com only features a picture of Clinton without the black glasses she took to wearing in the last few weeks of her reign at the State Department and a contact sheet.But in a nod to her future career and the fierce news buzz which surrounds her, the contact sheet urges visitors to specify whether they are trying to contact Clinton for a scheduling request, or for a media inquiry.According to news reports, the website was registered on Thursday, just 24 hours before Clinton stepped down as America's top diplomat, handing the baton to John Kerry.Clinton has so far said she has no plans to re-enter politics and run in the 2016 presidential elections, saying she wants to rest after two decades in the public spotlight, catch up on reading and spend time with her family.But as the woman dubbed "the rock star diplomat," there is little doubt she will be highly sought after on the lecture circuit and could command substantial fees.In a second bid aimed at ensuring she remains in the public eye, her husband, former president Bill Clinton, and her daughter, Chelsea, sent out a message on Tuesday entitled "Thank you Hillary" that praised her four-year tenure as secretary of state."We couldn't be more proud of what she's accomplished or more humbled by her commitment to making our country and our world stronger, safer, and better," they said in a joint message released by the Clinton Foundation."She's transformed the way we practice diplomacy and taken advantage of global trends - engaging directly with people, embracing technology, and championing economics, education, and energy to improve lives and strengthen communities around the world."The message, emailed to supporters, also called on them to send a message of thanks to Hillary Clinton a move that could add even more names to her already substantial mailing list, vital if she intends to elicit donations for a 2016 campaign.

Obama picks second female cabinet member

President Barack Obama will seek to add another woman to his cabinet on Wednesday by picking business executive Sally Jewell to head the vast interior department, a White House official said. Obama has been criticised for naming middle aged white men to the top jobs in his second term team, but has pledged to promote diversity in his other picks, and has now settled on several prominent females.If confirmed by the Senate, Jewell who heads Recreational Equipment, an outdoors retail chain will succeed Ken Salazar at interior, which manages US national resources, wildlife, tribal issues and national parks."With years of experience managing a nearly $2bn a year company, she will bring to the position integrity, keen management skills, as well as dedication to the department's mission of managing our nation's lands," a White House official said."She believes deeply in the American tradition of preserving our nation's wild places, while also understanding firsthand the inextricable link between conservation and the economy. "She also believes we must be good stewards of our nation's natural resources, underscoring the administration's ongoing priority of expanding safe and responsible energy production," the official said, noting that Jewell began her career as an engineer for Mobil Oil Corporation.Obama had been under pressure to add more diversity to his new cabinet after picking Chuck Hagel, John Kerry and Jack Lew, to serve as the secretaries of defence, state and treasury.In January, Obama nominated high powered New York prosecutor and organised crime buster Mary Jo White to lead the Securities and Exchange Commission to implement his Wall Street reforms.

Media vents North Korea frustration

China should exact a "heavy price" from North Korea if an imminent nuclear test goes ahead, state-run media said on Wednesday in their strongest call yet, but analysts say Beijing appears unable to restrain its wayward ally. The state-run Global Times raised the prospect that the relationship founded on the battlefields of the 1950-53 Korean War, and which Pyongyang has relied on ever since, "might break down" over the issue.That would "be of no benefit to Pyongyang", it said. "North Korea would face an even worse situation, but China could find some ways to compensate for geopolitical losses."The article appeared in both the English- and Chinese-language editions of the paper.But analysts and diplomats said that despite its discontent Beijing was unwilling to carry out meaningful action, leaving the media as its only theatre to display its frustrations.North Korea vowed to conduct its third nuclear test after the UN Security Council condemned its 12 December rocket launch in a resolution that was the product of extensive negotiations with China.The Global Times - which is owned by the People's Daily, the official mouthpiece of the ruling Communist Party has previously urged Beijing to cut off aid if it goes ahead with the blast.But the threats contrast with Beijing's official position of repeatedly urging calm and restraint, and avoiding punitive measures to prevent regional instability.China is widely seen as fearing the consequences of a North Korean collapse, which could send an exodus of refugees across the border and potentially lead to a reunified, US-allied Korea on its border."If North Korea insists on a third nuclear test despite attempts to dissuade it, it must pay a heavy price," said Wednesday's Global Times editorial. "The assistance it will be able to receive from China should be reduced.""China is never afraid of Pyongyang," it went on. "If Pyongyang gets tough with China, China should strike back hard, even at the cost of deteriorating bilateral relations."Stephanie Kleine-Ahlbrandt, the Beijing-based Northeast Asia director for the International Crisis Group, said that "editorials are a great way to let off steam".Although Beijing has long maintained its stance of supporting its unpredictable neighbour, she said, the media provides a way to vent the views of those arguing for a tougher tack."They are really upset," she said. "But there's a higher-order priority."Avoiding instability was China's main concern in the Korean peninsula, she said."Even if they diminish the assistance, they are not going to do it enough to cripple the regime or make a difference," she said. "Beijing is simply afraid of pushing the regime too far."Beijing provides substantial economic support to Pyongyang through cross-border trade and investment, while aid constitutes "just one part of the relationship", she added.The foreign ministry did not immediately respond to requests for comment on reports in South Korea that Pyongyang's ambassador had been summoned for talks "several times".A car bearing diplomatic plates and carrying a North Korean flag was seen entering the foreign ministry on Tuesday.A Western diplomat in Beijing said: "I don't think the Chinese are going to change their policy, even if there is a lot of frustration here about the fact that they can't persuade Pyongyang."The foreign ministry distanced itself from the editorials, with spokesperson Hua Chunying saying that Global Times pieces "are perhaps not that in line" with its positions, and repeating China's call for calm and restraint.China has acted as Pyongyang's main benefactor since the Korean War, providing vital diplomatic support and economic ties to one of the world's most isolated regimes.

President Obama to make first Israel trip

President Barack Obama will go to Israel in March, the White House said on Tuesday, marking his first visit to the staunch US ally since becoming president. While in the region, Obama will make stops in the West Bank and Jordan.Obama and Israeli Prime Minister Benjamin Netanyahu discussed the visit to Israel in late January, when Obama congratulated Netanyahu on his success in Israel's recent election. The White House has not released the date of Obama's trip or details about Obama's itinerary, but Israel's Channel 10 reported that the trip had been scheduled for 20 March."The start of the president's second term and the formation of a new Israeli government offer the opportunity to reaffirm the deep and enduring bonds between the United States and Israel and to discuss the way forward on a broad range of issues of mutual concern, including Iran and Syria," said National Security Council Spokesperson Tommy Vietor.White House spokesperson Jay Carney said Obama would work closely with Palestinian Authority and Jordanian officials on regional issues during his visit to Jordan and the West Bank.Obama's trip to Israel, coming shortly after the start of his second term, could offer an opportunity to repair a notoriously strained relationship with Netanyahu. But the trip is almost certain to raise expectations for the type of peace initiative that eluded Obama and his foreign policy team during his first four years in office. Obama has in the past warned against setting expectations too high for a breakthrough in stalled negotiations between Israelis and Palestinians.Although Obama visited Israel and Jordan while running for president in 2008, he hasn't been back since, drawing intense criticism from some pro-Israel groups who have claimed he is insufficiently supportive of the United States' closest Mideast ally. Other top administration officials, including former Secretary of State Hillary Clinton, have visited, and Clinton's replacement, John Kerry, is expected to travel to Israel on his first Mideast trip.For Obama, the trip might also be a chance to improve his image within Israel, where many view him as not supportive enough of the Jewish state.Netanyahu's office in Jerusalem had no immediate comment on the report of Obama's visit. Hanan Ashrawi, a senior official with the Palestine Liberation Organisation, said the visit was important given Obama's expressed interest in playing a role in Mideast peace efforts."We hope that this is more than just a symbolic visit, but with a clear message and clear commitment to the genuine substance and imperative of peace," Ashrawi said.The announcement of Obama's visit comes at a time of uncertainty for Netanyahu who emerged weakened from January's election but will remain in charge if he can build a governing coalition before the mid-March deadline. The emergence of a new centrist party in Israel's election offered hope to those urging the hawkish Netanyahu to make peace with the Palestinians a higher priority.Negotiations have remained frozen during Netanyahu's previous four-year term, in part because of Israeli settlement construction in the West Bank and east Jerusalem, which the Palestinians claim for their future state.Obama's upcoming trip was a long time in the making. In July, when Republican presidential candidate Mitt Romney was hammering Obama on Israel, Obama's campaign said that if he were re-elected, he would visit Israel during his second term. Then Romney himself made the trip, where Netanyahu hosted Romney as if he were already a world leader. Netanyahu denied backing either candidate but was widely perceived as preferring Romney.But the tenuous chemistry between Obama and Netanyahu was clear from early in Obama's first term. On one visit to Washington, the US-educated Netanyahu appeared to lecture Obama on the pitfalls of peacemaking, and gave a speech to Congress in which he appeared to be rallying support against Obama.For Obama, starting his second term out on firmer ground with his Israeli counterpart could also make it easier to co-ordinate on a number of pressing regional issues of critical concern to both nations. These include Iran's nuclear programme and Syria's ongoing civil war, plus lingering questions about what kind of partner Egyptian President Mohammed Morsi will be in efforts to bring stability to the region."Obama knows that he's going to have a lot of conversations with Netanyahu this year," said David Makovsky of the Washington Institute for Near East Policy. "Those conversations will be easier conversations if Obama connects with the Israeli public and demonstrates what he believes, which is that he has their back."

NEWS,16.01.2013

Obama unveils $500m gun-control proposals

President Barack Obama on Wednesday launched the most sweeping effort to curb US gun violence in nearly two decades, announcing a $500m package that sets up a fight with Congress over bans on military-style assault weapons and high-capacity ammunition magazines just a month after a shooting in Connecticut killed 20 school children.Obama also signed 23 executive actions, which require no congressional approval. But the president, speaking at the White House, acknowledged the most sweeping, effective actions must be taken by lawmakers."To make a real and lasting difference, Congress must act," Obama said. "And Congress must act soon." He added, "I'll put everything that I've got into this."Obama was joined by children who wrote him letters about gun violence in the weeks following the Connecticut shooting. Families of the children killed in the shooting, as well as survivors, were also in the audience.The president appealed to the nation's conscience, but his announcement promises to set up a bitter fight with a powerful pro-gun lobby that has long warned supporters that Obama wanted to take away their guns.The US has the highest rate of gun ownership of any country in the world, and pro-gun groups see any move on gun restrictions as an offense against the right guaranteed by the Second Amendment of the US Constitution. Critics counter that the country's founding fathers never could have foreseen assault weapons more than two centuries ago, when guns were intended for the common, not individual, defence, guns were often stored in community areas and rifles fired one shot at a time."This is the land of the free and the home of the brave, and always will be," Obama said, acknowledging the right to possess and bear firearms. "But we've also long realised ... that with rights come responsibilities."Emotions have been high since the Connecticut shooting, which Obama has called the worst day of his presidency. He largely ignored the issue of gun violence during his first term but appears willing to stake his second term on it now. He'll have to contend with looming fiscal issues that have threatened to push whatever he proposes aside, at least for a while.Gun control advocates also worry that opposition from the powerful National Rifle Association (NRA) and its allies in Congress will be too great to overcome. The NRA released an online video on Wednesday that called Obama an "elitist hypocrite" for having armed Secret Service agents protect his daughters at school while not committing to installing armed guards in all schools. The NRA insists that the best way to prevent more mass shootings is to give more "good guys" guns.The White House called the NRA video "repugnant and cowardly”.The public appears receptive to stronger federal action on guns, with majorities of Americans favouring a nationwide ban on military-style rapid-fire weapons, according to a new AP -GfK poll. Three-quarters of Americans said they reacted to the Connecticut shooting with deep anger, while 54% said they felt deeply ashamed it could happen in the US.The poll also shows 51% said they believed laws limiting gun ownership infringe on the public's right to bear firearms.White House officials, seeking to avoid setting the president up for failure, have emphasised that no single measure - even an assault weapons ban - would solve the scourge of gun violence. But without such a ban, or other sweeping Congress-approved measures, it's unclear whether executive actions alone can make any noticeable difference.The president asked Congress to renew the ban on high-grade, military-style assault weapons that was first signed into law by then-president Bill Clinton in 1994, but expired in 2004. Obama also called for limiting ammunition magazines to 10 rounds or fewer, and he proposed a federal statute to stop purchases of guns by buyers who are acting for others.The president also called for a focus on universal background checks. About 40% of gun sales take place without background checks, including those by private sellers at gun shows or over the internet, according to the Brady Campaign to Prevent Gun Violence.The president's framework is based on recommendations from Vice President Joe Biden, who led a wide-ranging task force on gun violence. Beyond the gun control measures, Biden also gave Obama suggestions for improving mental health care and addressing violent images in video games, movies and television.States and cities have been moving against gun violence as well. New York Governor Andrew Cuomo on Tuesday signed into law the toughest gun control law in the US, and the first since the Connecticut shooting. The law includes a tougher assault-weapons ban and provisions to try to keep guns out of the hands of mentally ill people who make threats.The NRA criticised the bill, saying in a statement, "These gun control schemes have failed in the past and will have no impact on public safety and crime."In Washington, it's unclear how much political capital Obama will use in pressing for congressional action.The White House and Congress will soon be consumed by three looming fiscal deadlines, each of which is expected to be contentious. And the top Republican in the Senate, Mitch McConnell, has warned the White House that it will be at least three months before the chamber considers gun legislation.Congress, in any case, can move slowly. The chair of the Senate Judiciary Committee said on Wednesday he'll begin hearings in two weeks on gun safety proposals. Democratic Senator Patrick Leahy, a gun owner, said he envisions a series of hearings examining violence in popular media and how to keep guns safe, among other topics.Leahy's plan could take more time than Obama has urged.Obama's long list of executive orders includes the following:Ordering tougher penalties for people who lie on background checks and requiring federal agencies to make relevant data available to the federal background check system.Ending limits that make it more difficult for the government to research gun violence, such as gathering data on guns that fall into criminal hands.Requiring federal law enforcement to trace guns recovered in criminal investigations.Giving schools flexibility to use federal grant money to improve school safety, such as by hiring school resource officers.Giving communities grants to institute programs to keep guns away from people who shouldn't have them.

Republicans ready for debt-ceiling battle

Republican lawmakers are preparing to introduce legislation to direct the US Treasury to make interest payments on American bonds first and then prioritise other government outlays in case Congress does not raise the debt ceiling.Supporters of the idea see it as a politically palatable alternative to default, which could rattle markets as occurred in the summer of 2011. The likelihood of another market-unsettling event is challenging Republicans to find another idea as they use the debt ceiling as leverage to extract spending cuts from President Barack Obama.But critics, including some Republicans, say prioritising payments is largely unworkable and would not fool the markets.The Treasury hit the $16.4tn debt ceiling, or the legal amount it is allowed to borrow, on New Year's Eve and started moving funds around so that the government can continue paying its bills. But the department said it will run out of funds as early as mid-February. Among those advocating the approach is Republican Senator Pat Toomey of Pennsylvania, who is expected to reintroduce legislation next week to instruct the Treasury to make sure bond-holders, got paid first if Congress does not raise the debt ceiling by the deadline.In the House of Representatives, Arizona Republican David Schweikert introduced legislation that would force the Treasury to prioritize payments to bond-holders, Social Security recipients and military salaries."No one is talking about default except for the president," said Patrick Tiberi, a Republican Representative from Ohio who heads a tax-writing subcommittee."He doesn't need to default because he has enough revenue, money coming in from the taxes that you guys pay to pay bills," Tiberi told reporters on Tuesday."Ninety-nine percent of my constituents would say that sending out Social Security payments and keeping veteran hospitals open is a bigger priority than national parks," he said. But former advisers to Republican President George W Bush say the idea is unworkable for a number of reasons, including the fact that tax revenue does not come in at the same rate that payments are due."Prioritisation is impossible," said Tony Fratto, who was Deputy Press Secretary for Bush and a spokesperson on economic policy who fought through approximately seven debt limit increases with Congress. "Is the government really going to be in the position of withholding benefits, salaries, rent and contract payments, in order to pay off Treasury bond-holders? That would be a political catastrophe," Fratto said.Keith Hennessey, Bush's National Economic Council director, said prioritisation was a bad idea that could increase credit risk and said it would be irresponsible."Payment prioritisation doesn't stop payments, it just delays them. Then the aggrieved party sues the government, and probably wins, and it turns into a bloody mess," Hennessey, now an economist at Stanford, said in a blog post this week.Even when the government was operating under a budget surplus, as it did from 1998 through 2001 under President Bill Clinton, the Treasury still had to borrow or issue debt to make its regular payments because its income fluctuates month-to-month.The department is expected to run out of ways to stave off a default as early as mid-February, and Republican lawmakers say they will refuse to give the Obama administration the votes needed to raise the debt cap unless Democrats agree to spending cuts and changes to federal benefits programs.On 15 February, the government is expected to take in about $9bn in revenues and is required to pay bills amounting to $52bn, according to the think tank the Bipartisan Policy Centre, which analysed Treasury's cash flows. The Treasury Department has said ensuring that bond investors got paid before others would be a "default by another name."And in the past, Treasury officials have said the department lacks the formal legal authority to establish priorities to pay obligations, according to the non-partisan Congressional Research Service.

Germany to bring gold home

Germany's central bank is hauling home tens of thousands of gold bars currently stored in the US and France, in a high-security operation spread over eight years. All 374 tons of German gold held in Paris vaults will be moved back to the Bundesbank's vaults in Frankfurt by 2020, the bank said on Wednesday. A further 300 tons of gold stored in New York will also be brought back.In total, the shipments are worth $36bn at current market prices and represent about 19% of Germany's gold reserves - the world's second-largest after the United States.Once the shipment is complete, Frankfurt will hold half of Germany's 3 400 tons of reserve gold - currently worth about $183bn - with New York retaining 37% and London storing 13%.But don't expect the Bundesbank to reveal how it's going to keep the valuable cargo safe on its way back to Germany - especially after the stunning raid of a Berlin bank earlier this week in which burglars tunnelled 30m to reach the safety deposit room."For security reasons we can't discuss that, partly to protect the gold, partly to protect the staff that will be carrying out the transfer," said spokesperson Moritz August Raasch."But of course since we transport large sums of money around Germany every day, we've got a certain amount of experience with this."During the Cold War, Germany kept most of its gold abroad for fear it could fall into the hands of the Soviet Union if the country was invaded.Another reason was that it's easier to swap the reserves for foreign currency in London, Paris and New York, where gold is traded.Since France, like Germany, switched to the euro more than a decade ago, storing gold in Paris was no longer necessary, the Bundesbank said.The move follows criticism last year from Germany's independent Federal Auditors' Office, which concluded that the central bank failed to properly oversee its gold. The auditor suggested the central bank should carry out regular inspections of the gold held abroad.The auditors' report stunned Germany, where the Bundesbank routinely tops polls of the nation's most trusted institutions. The central bank was taken aback and maintained it didn't see the need for more scrutiny in overseeing the reserves, saying "there is no doubt about the integrity of the foreign storage sites."But several politicians jumped on the issue and called for some of the reserves to be repatriated.The Bundesbank isn't taking any chances should anything happen to the gold on its way back to Frankfurt.

Renewed talks on Iranian nuclear probe

Senior UN investigators opened a new round of talks on Wednesday with Iranian officials in Tehran in the hopes of restarting a probe into allegations that the Islamic Republic carried out atomic bomb trigger tests and other suspected weapons-related studies. The semi-official ISNA news agency reported that negotiations started at the headquarters of Iran's Atomic Energy Organisation. It gave no further details.The UN meetings are considered an important test of Iran's willingness to address Western concerns before the possible resumption of wider dialogue with the US and other world powers.Negotiations with the six nations - the US, Russia, China, Britain, France and Germany - fell apart more than six months ago and Iran has proposed getting them back on track, perhaps as soon as later this month.The US and others hope the talks will result in an agreement by the Islamic Republic to stop enriching uranium to a higher level that could be turned relatively quickly into the warhead-grade material.Iran denies such aspirations, insisting it is enriching only to make reactor fuel and to make isotopes for medical purposes.ISNA said EU Foreign Policy Chief Catherine Ashton has agreed restart the next round of world power talks with Iran on 28-29 January, but no decision has yet been made on the venue. The last round, held in Moscow in June, ended in stalemate.The official IRNA news agency, however, said the talks may not resume until early February.Before departing on Tuesday for Iran, UN team leader Herman Nackaerts said the International Atomic Energy Agency hoped to "finalise the structured approach" that would outline what the agency can and cannot do in its investigation.The UN nuclear watchdog wants to revisit Parchin, a military site southeast of Tehran, to probe allegations that Iran may have tested components needed to develop a nuclear weapon. Tehran has steadfastly denied any such activity.Iran says IAEA's suspicions are based on forged intelligence provided by the CIA, the Israeli Mossad, Britain's MI-6 and other intelligence agencies, and that Tehran has not been allowed to see the materials to respond to them.The IAEA also is trying to follow up other suspicions, including whether Iran did computer modelling of nuclear warhead core. The agency says it has intelligence information indicating Iran carried out preparatory work for a nuclear weapons test, and development of a nuclear payload for Iran's Shahab 3 intermediate range missile - a weapon that can reach Israel.Iranians say they have a bitter memory of allowing IAEA inspections and providing replies to a long list of queries over its nuclear program in the past decade. Now, Tehran says such queries should not be revived.Iran's Foreign Ministry spokesperson Ramin Mehmanparast said on Tuesday that Iran provided detailed explanations to IAEA questions on six outstanding issues in the past but instead of giving Iran a clean bill of health, the agency levelled new allegations on the basis of "alleged studies" provided by Iran's enemies.Iran uses that term to refer to allegations about Parchin and other claims that it says the IAEA levels only to keep the issue alive.Tehran has in the past allowed IAEA inspectors twice into Parchin, but now it says any new agency investigation must be governed by an agreement that lays out the scope of such a probe."Obligations of the other party must be clearly specified. If a claim is to be raised on a spot in Iran every day and [the UN agency] seeks to visit our military facilities under such a pretext... this issue will be unending," Mehmanparast said on Tuesday.President Mahmoud Ahmadinejad acknowledged on Wednesday that sanctions have slowed down Iran's growth and disrupted its foreign trade and said the country must move away from a dependence on oil revenues to overcome sanctions.Addressing parliament, Ahmadinejad said "structural changes" are needed in Iran's economy to overcome the sanctions.Iran is under toughed Western oil and banking sanctions over its refusal to halt uranium enrichment. The US and its allies fear Iran may ultimately be able to develop nuclear weapons, a charge Tehran denies.