NEWS,18.03.2013

Cyprus scrambles to rework bank tax

Cypriot ministers scrambled to revise a plan to seize money from bank deposits before a parliamentary vote on Tuesday that will either secure the island's financial rescue or threaten its default.The weekend announcement that Cyprus would impose a tax on bank accounts as part of a €10bn ($13bn) bailout by the European Union broke with previous practice that depositors' savings were sacrosanct. The euro and stock markets fell on concern the euro zone crisis was reigniting.Before Tuesday's vote, which is too close to call and would send reverberations across the currency zone if lost, the government was working to soften the blow to smaller savers by tilting more of the tax towards those with deposits greater than €100 000 ($130 000).The decision to target bank accounts stunned Cypriots, and police sealed off parliament in Nicosia as about 400 people staged a noisy protest outside, aggrieved that their small island of one million people should be singled out for such treatment.Angry demonstrators honked horns and waved placards reading "Hang the Banksters, Hands off People's Savings" and "Merkel go home and stay".Residents emptied cash machines over the weekend. The move also unnerved depositors in the euro zone's weaker economies and investors feared a precedent had been set that could reignite turmoil that the European Central Bank has calmed in recent months with its pledge to do whatever it takes to save the euro.The government says Cyprus has no choice but to accept the bailout with the levy on deposits, or go bankrupt.A Cypriot source told the introduction of a tax-free threshold for smaller bank deposits maybe up to €20 000 was under discussion but not yet agreed.The parliamentary speaker said debate on the bank levy would be delayed until 16:00 GMT on Tuesday to buy more time to build consensus. Banks, shut on Monday for a bank holiday, will remain closed on Tuesday and Wednesday to avert any panic.The eurozone has indicated that changes would be acceptable as long as the return of around €6bn is maintained."It is up to the government alone to decide if it wants to change the structure," European Central Bank policymaker Joerg Asmussen, who was pivotal in the weekend negotiations, told reporters in Berlin."The important thing is that the financial contribution of €5.8bn remains," he said. Eurozone finance ministers will hold a teleconference at 18:30 GMT on Monday.On the streets of Nicosia, ordinary Cypriots blamed European leaders, especially German Chancellor Angela Merkel."We are hugely disappointed by our so-called European partners. They have hurt the credibility of the banking system and the country's dignity," said Andreas Evangelou, 52, who said savings to put his son through university would be taken."They are treating us like guinea pigs," said Takis Georgiou, 49. "The government has lost its credibility in the eyes of the people. We'd be better off leaving the euro and returning to the pound, we don't want to end up like Greece."Protesters had inked the word "No" on the palms of their hands. "Europe is for its people and not for Germany," one placard said.On markets, the euro fell before recovering some losses. European stocks dropped two percent before recouping most of the lost ground denoting only modest levels of concern with banks taking the heaviest blow."The most important question is what would happen the following day if the bill isn't voted," Cyprus central bank governor Panicos Demetriades told parliament."What would certainly happen is that our two big banks would need to be consolidated. This doesn't mean that they would be completely destroyed. We will aim for this to happen in a completely orderly way."Brussels has emphasised that the measure is a one-off for a country that accounts for just 0.2% of European output.The worst fear is that savers in other, larger European countries become nervous and start withdrawing funds, although there was no immediate sign of that on Monday."If I were a saver, certainly in Spain or maybe Italy, I think I'd be looking askance at these measures and think this could yet happen to me," said Peter Dixon, global financial economist at Commerzbank.Cyprus's banking sector, which attracts money from Russians, dwarfs the size of its economy and has been severely hurt by exposure to its much larger neighbour Greece.Moscow is considering extending an existing €2.5bn loan to help bail the island out and said the fact it had not been consulted about the bailout could come into play."We will consider the issue of restructuring of the loan taking into account our (future) participation in the coordinated actions with the European Union to help Cyprus," Russian Finance Minister Anton Siluanov.President Vladimir Putin criticised the bank levy as setting a dangerous precedent. "Putin said that such a decision, should it be made, would be unfair, unprofessional and dangerous," Kremlin spokesperson Dmitry Peskov told reporters.In Serbia, where many saw Cyprus as a haven for money during the rule of Slobodan Milosevic, some with accounts there showed signs of concern.A Belgrade physician, who gave his name as Nebojsa, said he had €270 000 in a Cyprus account. He refused to identify himself as Serbs are not allowed to keep bank accounts abroad."I will go (to Cyprus) this week to collect money from a friend who is authorized to take care of my savings there," Nebojsa said. "He had already emptied my account as soon as rumours about the new tax started. I will stash my money it somewhere, I will probably get a safe deposit box."Approval in Cyprus's 56-member parliament is far from a given: no party has an absolute majority and three parties say outright they will not back the tax.A source close to the consultations  authorities were hoping to cut the tax to 3.0% from 6.7% for deposits under €100 000.Even that effectively rips up the protection savers thought they enjoyed on insured deposits up to that limit. The rate for deposits above that would then be jacked up to 12.5% from 9.9%.Cypriot President Nicos Anastasiades, a conservative elected just three weeks ago, said in a TV address that the tax was an alternative to a disorderly bankruptcy. It was painful, but "will eventually stabilise the economy and lead it to recovery".Savers who lost money would be compensated by shares in commercial banks, with equity returns guaranteed by future revenues expected from natural gas discoveries, Anastasiades said. But many legislators remain unconvinced."Essentially parliament is called to legalise a decision to rob depositors blind, against every written and unwritten law," said Yiannakis Omirou, speaker of parliament and head of EDEK, the small Socialist party. "We refuse to subscribe to this."

Cyprus MPs postpone bailout session

Cyprus's parliament has postponed until Tuesday a session to vote on a EU bailout deal that slaps a levy on all Cypriot bank savings, as negotiators scrambled to soften the blow for small deposit holders.Amid rising anger and jitters on global markets, MPs had been due to vote on the measure Monday but the speaker Yiannakis Omirou said the session would now take place at 6:00 pm (16:00 GMT) on Tuesday.He said the postponement was agreed by parliamentary party leaders after being briefed by President Nicos Anastasiades.The bailout deal, agreed at the weekend, sparked market turmoil on Monday and stoked fresh fears of debt crisis contagion.Cyprus Finance Minister Michalis Sarris and Central Bank governor Panicos Demetriades separately told lawmakers they were seeking a fresh formula that would exempt smalltime bank depositors from the unprecedented levy.They added they were looking to see a tax-free threshold for savings up to €100 000, but that under this plan deposits of more than €100 000 would be forced to take a bigger hit.A EU source in Brussels said Nicosia and international creditors were busy discussing changes to the levy."We really want to reduce the impact" on smaller savers but the "idea is still to achieve the same objective, (of raising) €5.8bn," the source said.In the bailout accord agreed in the early hours of Saturday with the EU, the International Monetary Fund and the European Central Bank, Cyprus accepted a levy of 6.75% on accounts up to €100 000 and 9.9% thereafter.The aim was to limit the overall size of the bailout to about €10bn, rather than the €17bn originally mooted.But the move has triggered outrage in Cyprus, forcing the newly-elected government onto the defensive as it tries to get parliament approval for the rescue package.The accord also dealt a serious blow to global confidence by stoking fears that other countries in difficulty might opt for the same course of action.On the financial markets, which have risen strongly in recent months on hopes the worst of the debt crisis was over, the banks were hit badly Monday as investors looked for safety first."If European policymakers were looking for a way to undermine the public trust that underpins the foundation of any banking system they could not have done a better job," said CMC Markets analyst Michael Hewson."The feeling is that the euro crisis could be back and that you could see full-on contagion, that's why you're seeing the market reaction today," Shane Oliver, chief economist at AMP Capital in Sydney, told Dow Jones Newswires.News of the controversial tax also drew a sharp response from Russian President Vladimir Putin, who, according to a Kremlin spokesperson, called it "unfair, unprofessional and dangerous."Russian Prime Minister Dmitry Medvedev too slammed the deal."We should say this directly: this simply looks like the confiscation of other people's money," Russian news agencies quoted Medvedev as saying. "I do not know who the author of this idea is, but this is what it looks like."Several analysts said the measure was meant to make sure that Brussels did not spend billions propping up the at-times ill-gotten gains of rich Russians, who are widely reported to have exploited Cyprus's reputation as a tax haven.Cyprus has repeatedly denied the allegations of being soft on "dirty money" and offered to open its accounts to international inspection.Estimates vary but the Moody's rating firm estimates that up to $19bn in private Russian cash is held in Cyprus. The figure accounts for between a third and half of all Cypriot deposits.Anastasiades, in an address to the shell-shocked nation on Sunday night, said he had chosen "the least painful option" and that rejecting the EU demands would have seen Cyprus exit the eurozone and face bankruptcy.Terming it the worst crisis to hit Cyprus since the 1974 Turkish invasion, he gave an assurance that those taking a hit now would be compensated when huge gas offshore gas deposits are eventually exploited, in about 2018.Breaking news of the levy shocked Cypriots at the start of a three-day holiday weekend, many rushing to cash points and depleting them within hours.Online transfers were stopped although shoppers were able to use credit cards at supermarkets and at fuel stations.Local media said Anastasiades is struggling to secure even a simple majority for the terms of the bailout in the 56-member parliament in which his conservative DISY parliament holds just 20 seats.Reports said the president may have to declare an additional bank holiday on Tuesday following the parliamentary postponement in order to prevent accounts being emptied.

Russia: Cyprus deposit tax 'dangerous'

Russian President Vladimir Putin on Monday called a proposed tax on bank deposits in Cyprus that could hit Moscow oligarchs especially hard "unfair, unprofessional and dangerous." "Putin said that this decision, in case of its adoption, will be unfair, unprofessional and dangerous," Russian news agencies quoted Kremlin spokesman Dmitry Peskov as saying. Russian prime minister and former president Dmitry Medvedev for his part said the levy "simply looks like the confiscation of other people's money. "Terms of the €10bn EU rescue package yet to be adopted by the Cypriot parliament would slap an unprecedented 9.9% fee on all bank deposits exceeding €100 000.Several analysts said the measure was meant to make sure that Brussels did not spend billions propping up occasionally ill-gotten gains of Russia's super-rich, much of which is believed to have been placed in Cypriot bank accounts."It is clear that (Cyprus) is under tremendous pressure from the European Union," Deputy Finance Minister Sergei Shatalov was quoted as saying by Interfax.Estimates vary but the Moody's rating firm estimates that up to $19bn in private Russian cash is secretly buried in Cyprus. The figure accounts for between a third and half of all Cypriot deposits.Russia's number two bank VTB - a state-owned institution - alone had $13.5bn resting in Cyprus through a subsidiary and was due to lose a tenth of that amount."VTB Group is carefully monitoring the situation," the bank said in a statement. "We can only assess its repercussions after studying the text of the law."Criticism resounded through Moscow amid warnings that a possible run on Cypriot banks could reverberate across Europe and set a bad precedent for future rescue packages for struggling states.A frustrated-sounding tycoon and former presidential contender Mikhail Prokhorov said that Brussels "had set a real financial mine under the idea of a single Europe.""And this is not because it touches Russian business, which can afford to lose two or three billion dollars," Prokhorov told the Kommersant business daily."The European Union essentially opened a Pandora's box," he stressed.Some analysts believe that the Russians will now only compound Cyprus's problems by taking their cash out and parking it in other tax havens such as Luxembourg."The unhappiest of the Russians will simply look for other places to put their money," said Paragone Advisory Group analyst Alexander Zakharov.Others noted that the Russian ruble was now likely to weaken in the face of growing investor risk aversion."Cyprus’s decision to impose a haircut on banks' depositors is likely to charge up negative dynamics in the ruble (and the whole emerging markets foreign exchange spectrum as well)," Moscow's VTB Capital said in research note.The Moscow market down more than 2% on Monday afternoon may also suffer from the smaller volume of available cash from which foreigners make direct investments in Russia.Cyprus has consistently ranked as the largest single foreign direct investor in Russia because of the tycoons' desire to repatriate their cash into money-making enterprises at home.But perhaps most under threat is an agreement on the extension of €2.5bn loan that Moscow extended to Nicosia in 2011 at a rate of 4.5%.Cypriot Finance Minister Michalis Sarris was tentatively scheduled to visit Moscow on Wednesday with the brief of lowering that rate and extending the loan's expiration date until 2020 from 2016.Moscow was reported to be seeking in exchange details about Russian billionaires who held accounts on the island.Russia was also reportedly interested in buying a majority stake in Cypriot lender Patriot Bank that is in need of rescue.Yet top Moscow finance officials hinted on Monday that the bank deposit tax may scuttle negotiations."It looks like the Eurogroup took this action without consulting Russia," Finance Minister Anton Siluanov was quoted as saying by Interfax."So, we are going to take a second look at whether to take part in a deal to restructure our earlier credit," Siluanov said.Medvedev said Russia would also "need to draw certain conclusions" before entering more Cyprus loan talks.

Cyprus faces recession 'for decades'

Russians are preparing to withdraw billions of euros from Cyprus and the island will plunge into a recession lasting for decades due to the onerous terms of a EU bailout, economists warned on Monday."The Russians are already indicating they want to withdraw their money. Why should they stay? They will go somewhere where they can be protected; we can't protect them," economist Simeon Matsi said."We have indications that billions (of euros) will be withdrawn, we already know of about three billion that is ready to move. They are already asking lawyers to draw up documents to withdraw money."As a condition for a desperately-needed €10bn bailout for Cyprus, fellow eurozone countries and international creditors Saturday imposed a levy on all deposits in the island's banks.Deposits of more than €100 000 will be hit with a 9.9% charge, while under that threshold the levy drops to 6.75%.The controversial tax is seen hitting Russian pockets hard, with experts estimating that Russian deposits in Cypriot banks amount to at least €15.4bn of the estimated €70bn of deposits held by Cyprus banks.Russian President Vladimir Putin on Monday criticised the proposed tax, describing it, according to a spokesman, as "unfair, unprofessional and dangerous". "The deal by the eurogroup dealt a very heavy blow to Cyprus it was the death knell for the financial sector," said economist Matsi."No one is going to trust Cyprus any more, whatever happens. The eurogroup, International Monetary Fund and the European Central Bank have managed to destroy the reputation of Cyprus."He predicted that Cyprus banks, which were scheduled to reopen on Tuesday after a three-day weekend, will remain closed for a long time to prevent a rush on accounts.Economist Castas Apostolides said the Cypriot government went unprepared into negotiations with the eurogroup."We should have called Europe's bluff," he said."A bank haircut on deposits is unacceptable; they should have walked out because without a business sector there is no Cyprus economy," Apostolides said."Cyprus will be unable to exit recession for the next 20 years. Our children will pay for this mistake."Anastasiades was Monday seeking the backing of MPs for the EU bailout deal that has also jolted global markets and raised fears of a new eurozone debt crisis. Ahead of the afternoon parliamentary vote on the hugely unpopular measure, negotiators were seeking to soften the blow on small-time depositors, who have been stunned by the announcement that their savings will be skimmed."If the proposal is rejected today (in parliament) then we will most probably be out of Europe and have to start again from scratch," said Masti.A University of Nicosia poll meanwhile found that 73% of Cypriots believe the newly-elected president had failed to secure the best possible deal for Cyprus.It also found that 71% of respondents believe parliament should vote against the bank levy, while 72% said deposits under €100 000 should not be touched.Sixty-two percent said that Cyprus should stay in the eurozone.

Cyprus mulls plan to seize bank deposits

Cyprus's parliament votes on Monday on a plan to seize money from bank deposits as part of an EU bailout, a move that has sent a shiver across the bloc, caused the euro to tumble and stock markets to dive.The announcement at the weekend that tiny Cyprus would impose a tax on bank accounts as part of a €10bn bailout broke with previous practice that depositors' savings were sacrosanct.Ahead of the vote in parliament, the government was working on a plan to soften the blow to smaller savers, by tilting more of the tax towards those with deposits greater than €100 000. The government says Cyprus has no choice but to accept the bailout with the levy on deposits, or go bankrupt.Residents on the island emptied its cash machines to get their funds over the weekend. The move not only infuriated Cypriots, it unnerved depositors in the eurozone's weaker economies and investors fearing a precedent that could reignite market turmoil.The euro tumbled early on Monday in Asian trade.London's FTSE 100 and Paris's CAC 40 fell between 1.5% and 2% on opening.Brussels has emphasised that the measure is a one-off for a country that accounts for just 0.2% of European output. The worst fear is that savers in other, larger European countries could become nervous and start withdrawing funds, although there was no immediate sign of that early on Monday."Despite reassurances from Brussels that Cyprus is a special case and that indiscriminate levies won't be a common policy tool, depositors across Europe are doubting their sincerity and are fearing that a new precedent has been set for other debt-laden eurozone countries," Jonathan Sudaria, dealer at Capital Spreads, said in a note.Monday is a bank holiday in Cyprus, giving the government until Tuesday to approve the measures before banks open. The bailout is needed mainly to recapitalise banks.Approval in the fractious 56-member parliament is far from a given: no party has an absolute majority and three parties say outright they will not back the tax. A vote initially planned for Sunday was rescheduled to give more time to build a consensus.Faced with a growing public backlash, Cypriot finance ministry officials began discussions with lenders on Sunday to lessen the blow for smaller savers.A source close to the consultations authorities were hoping to cut the tax to 3.0% from 6.7% for deposits under €100 000. The rate for deposits above that would then be jacked up to 12.5% from 9.9%.In Brussels, a spokesperson for Olli Rehn, the European commissioner in charge of economic affairs, said changes to the amounts paid by different depositors could be acceptable given that the financial impact would be the same.Cypriot President Nicos Anastasiades, a conservative elected just three weeks ago, said the tax on deposits was an alternative to a disorderly bankruptcy.In a televised address, he said it was painful but "will eventually stabilise the economy and lead it to recovery."Savers who lost money would be compensated by shares in commercial banks, with equity returns guaranteed by future revenues expected from natural gas discoveries, Anastasiades said. But many legislators remain unconvinced."Essentially parliament is called to legalise a decision to rob depositors blind, against every written and unwritten law," said Yiannakis Omirou, speaker of parliament and head of EDEK, the small Socialist party. "We refuse to subscribe to this."Cyprus's banking sector is large for a country that makes up a tiny portion of the eurozone economy, and its banks have been severely hurt by exposure to much larger neighbour Greece.Its open economy has meant that its banks also attract large deposits from Russians. Moscow is also considering extending an existing €2.5bn loan to help bail the island out.A Russian government source said there was no decision yet on whether to extend the loan or whether to involve Russian investors in the recapitalisation.Russia's Deputy Economy Minister Andrei Klepach was quoted as saying he did not believe the Cyprus action would affect Russia's domestic capital flows.Many foreigners live on Cyprus, including large communities of expatriates from Britain, which maintains a military base there. The government in London has said it will guarantee the deposits of its military service members stationed there.

Cypriots 'betrayed' by EU bailout

"How do I feel about the bailout? I will tell you from the heart. We are facing an economic war," said Mano, a souvenir shop owner in Cyprus which is facing crippling EU bailout terms.Like many Cypriots, Mano feels betrayed by the European Union and his government for agreeing the €10bn bailout that will impose an unprecedented levy on all bank deposits in return."My son is in the army. Next year he will be going to university. He has saved five thousand euros. But against his will, they will take €300 from him. The EU will be stealing legally from his pocket," said Mano."I always taught my son to be straight. I hope he will not follow the morality of the EU."A few streets away from Mano's Nicosia shop, public sector employee Elpida is sitting in a cafe with her husband and daughter, enjoying the Sunday sunshine and an iced coffee.She too is still digesting the announcement made early on Saturday after marathon talks in Brussels between Cyprus and fellow eurozone members. "I feel betrayed. This decision might bring good results in terms of arithmetics but it will break our trust in the economy," she said.Many Cypriots have rushed to withdraw cash from ATM machines across the Mediterranean island since the announcement was made on Saturday at the start of a three-day holiday weekend, but not Elpida."I felt it was pointless to go and it would be frustrating if I could not withdraw money," she said. Andreas Hadgigeorghiou, a dentist, said he was angry because the bailout is the first in the eurozone in which private depositors are having to help foot the bill. "Many countries have economic problems more than Cyprus. Why are they doing this only in Cyprus?" he lamented. Others said they were simply resigned to the bailout and refused to talk about it "because we just want to enjoy our coffee now while we can," in the words of one woman.The streets of Nicosia were largely empty on Sunday as most families were off to the coast or the countryside to enjoy the weekend break and prepare for the Green Monday bank holiday which marks the start of Lent for the Greek Orthodox.For Mano, the decision to announce the bailout deal early on Saturday was a calculated one by the Cypriot government and the Eurogroup whom he brands as "the biggest thieves I have ever seen.""They know that Green Monday is a special day for Cypriots, that people will go to their villages and be with their families to eat, drink wine and relax," and be at the most vulnerable he said. Elpida agreed, saying the absence of weekend street protests was because people had taken by surprise. "Some people are still in a state of shock and still don't realise what happened. They don't know how to react," she said. "What do you do? Do you go out on the streets and start yelling? "Cyprus postponed an emergency debate in parliament on the bailout until Monday in the face of hostility to its terms among many MPs.But despite the public statements of opposition; many people expect that the bailout will eventually go through. "It is too late now. The damage has been done," said one banker, who works mostly with an international clientele. "In any case, I think that, when banks reopen, we will lose the foreign depositors," said the banker, alluding to the many Russians who had regarded Cyprus as a safe haven for their investments, sparking money-laundering allegations. Irini Makrides, who owns shoe shops across the Mediterranean island, said there is nothing that can be done but for the MPs to approve the bailout."I am not happy, but they have to sign," she said. "But the levy must be a one-off." Mano said that in the end Cypriots would have to cope with the demands of the Eurogroup." They are not going to allow us to breathe... but we will survive," he said. "We have no other choice."

Eurozone nod for €10bn Cyprus bailout

Eurozone finance ministers and the International Monetary Fund on Saturday agreed on a €10bn bailout deal for Cyprus, the fifth eurozone member to be saved from bankruptcy.The debt rescue package, which was agreed after some 10 hours of talks in Brussels, is significantly less than the 17 billion euros Nicosia had initially requested. Under the deal, diplomats said all bank deposits in Cyprus would be hit with a one-off, unprecedented "levy" of up to 9.9%, depending on the amounts held. At the same time, a "withholding tax" will be imposed on interest on bank deposits, in a further hit for private investors in the Cypriot banking system. Monday is a bank holiday in Cyprus so it will be Tuesday before depositors will be able to react.Cyprus Finance Minister Michalis Sarris said his country's parliament would on Sunday vote on the introduction of the bank levy.The rescue talks, attended by Cyprus President Nikos Anastasiades, had dragged on as the Cypriot government fought its ultimately doomed battle to avoid a "bail-in" or haircut, which it argued would trigger a run on its banks and ricochet on through the wider eurozone financial system.Cyprus which accounts for just 0.2% of the combined eurozone economy - has become the latest country to secure a debt rescue package from its eurozone partners in the three-year debt crisis.The price tag is very small compared with two rescues for Greece worth some €380bn, Ireland's €85bn, Portugal's €78bn and €41bn for Spanish banks."It's something that compared to other possible outcomes, is the least onerous," Sarris said about the deal, adding that the arrangement meant his government "avoided salary and pension cuts" for public sector workers.Intended to apply to everyone from pensioners to Russian oligarchs alleged to have billions stashed away in what officials say is a bloated Cypriot banking sector, the proposed bank levy immediately raised concerns among finance experts over a possible bank run in bigger eurozone economies, where fragile public finances are also under scrutiny.Dutch Finance Minister Jeroen Dijsselbloem, after chairing the talks with counterparts including International Monetary Fund head Christine Lagarde and the European Central Bank's Mario Draghi, said the "upfront, one-off" tax is expected to raise €5.8bn on top of the loans still to be finalised by eurozone parliaments.The levy will see deposits of more than €100 000 in Cypriot banks hit with a 9.9% charge when lenders re-open their doors on Tuesday. Under that threshold the levy drops to 6.75%.Top ECB official Joerg Asmussen said the only way to drive down the rescue was to claw back money from the Cypriot banking sector, which is estimated to hold assets worth five times the country's economic output. "In order to have burden-sharing, you extend the tax base," Asmussen said. "To residents and also to non-residents."Lagarde said she would recommend that the IMF board now agree to chip in what one diplomat said could amount to another billion euros in loans.Lagarde said "the exact amount is not yet specified and will take a little bit of time" to arrive at.Officials including the EU's economy and euro commissioner Olli Rehn also cited "positive" parallel talks with Russia on possibly easier terms on a €2.5bn loan it gave to the Cypriot government.According to an EU diplomatic source, Sarris is set to visit Moscow on Wednesday, RIA Novosti news agency reported, for expected talks about extending that loan, due to be repaid in 2016.Russians are among the biggest investors in Cyprus, and hardline lenders like Germany had pressed for months for a clampdown on banks' alleged involvement in money laundering.Under the new bailout deal, the Cyprus government will also have to hike corporate tax to 12.5% from 10% and sell off state assets so as to help balance the public finances."As it is a contribution to the financial stability of Cyprus, it seems 'just' to ask a contribution of all deposit-holders" to the rescue, Dijsselbloem said. "The challenges we were facing in Cyprus were of an exceptional nature," the Dutchman added, under tough questioning from journalists at a press conference after the meeting in Brussels."We did what we had to," said French Finance Minister Pierre Moscovici on exiting the talks.The total annual output of the Cypriot economy is €17bn, and the IMF was concerned that a bailout on that level would take the country's debt burden to unsustainable levels.

Cyprus works on deal to soften bank levy

Cyprus was working on a last-minute proposal to soften the impact on smaller savers of a bank deposit levy after a parliamentary vote on the measure central to a bailout was postponed until Monday, a source said. In a radical departure from previous aid packages, eurozone finance ministers want Cyprus savers to forfeit a portion of their deposits in return for a €10bn bailout for the island, which has been financially crippled by its exposure to neighbouring Greece. The decision, announced on Saturday morning, stunned Cypriots and caused a run on cashpoints, most of which were depleted within hours. Electronic transfers were stopped.The originally proposed levies on deposits are 9.9% for those exceeding €100 000 euros and 6.7% on anything below that.The Cypriot government was on Sunday discussing with lenders the possibility of changing the levy to 3.0% for deposits below €100 000, and to 12.5% for above that sum, a source close to the consultations on condition of anonymity.The move to take a percentage of deposits, which could raise almost 6 billion euros, must be ratified by parliament, where no party has a majority. If it fails to do so, President Nicos Anastasiades has warned, Cyprus's two largest banks will collapse.One bank, the Cyprus Popular Bank, could have its emergency liquidity assistance (ELA) funding from the European Central Bank cut by March 21.A default in Cyprus could unravel investor confidence in the eurozone, undoing the improvements fostered by the European Central Bank's promise last year to do whatever it takes to shore up the currency bloc.A meeting of parliament scheduled for 14:00 GMT on Sunday was postponed for a day to give more time for consultations and broker a deal, political sources said. The levy was scheduled to come into force on Tuesday, after a bank holiday on Monday.Making bank depositors bear some of the costs of a bailout had been taboo in Europe, but eurozone officials said it was the only way to salvage Cyprus's financial sector, which is around eight times the size of the economy.European officials said it would not set a precedent.In Spain, one of four other states getting eurozone help and seen as a possible candidate for a sovereign rescue, officials were quick to say Cyprus was a unique case. A Bank of Spain spokesman said there had been no sign of deposit flight.But the chief of Greece's main opposition, the anti-bailout Syriza party, Alexis Tsipras, blamed the move on German Chancellor Angela Merkel, according to Greek state news agency ANA."We must all together raise a shield to protect the peoples (of Europe) from Ms Merkel's criminal strategy," said Tsipras, who wants a pan-European debt conference to forgive debt. The crisis is unprecedented in the history of the Mediterranean island, which suffered a war and ethnic split in 1974 in which a quarter of its population was internally displaced. Anastasiades, elected only three weeks ago, said savers will be compensated by shares in banks guaranteed by future natural gas revenues.Cyprus is expecting the results of an offshore appraisal drilling this year to confirm the island is sitting on vast amounts of natural gas worth billions.In a televised address to the nation on Sunday, Anastasiades said he had to accept the tax in return for international aid, or else the island would have faced bankruptcy."The solution we concluded upon is not what we wanted, but is the least painful under the circumstances," Anastasiades said. With a gross domestic product of barely 0.2% of the bloc's overall output, Cyprus applied for financial aid last June, but negotiations were stalled by the complexity of the deal and the reluctance of the island's previous president to sign.International Monetary Fund Managing Director Christine Lagarde, who attended the meeting, said she backed the deal and would ask the IMF board in Washington to contribute to the bailout. According to a draft copy of legislation, failing to pay up would be a criminal offence liable to three years in jail or a €50 000 fine.Those affected will include rich Russians with deposits in Cyprus and Europeans who have retired to the island, as well as Cypriots themselves. "I'm furious," said Chris Drake, a former Middle East correspondent for the BBC who lives in Cyprus. "There were plenty of opportunities to take our money out; we didn't because we were promised it was a red line which would not be crossed." "I've lost several thousand," he told.British finance minister George Osborne told the BBC on Sunday that Britain would compensate its 3 500 military personnel based in Cyprus. Anastasiades's right-wing Democratic Rally party, with 20 seats in the 56-member parliament, needs the support of other factions for the vote to pass. It was unclear whether even his coalition partners, the Democratic Party, would fully support the levy.Cyprus's Communist party AKEL, accused of stalling on a bailout during its tenure in power until the end of February, and would vote against the measure. The socialist Edek party called EU demands "absurd". "This is unacceptably unfair and we are against it," said Adonis Yiangou of the Greens Party, the smallest in parliament but a potential swing vote.Many Cypriots, having contributed to bailouts for Ireland, Portugal and Greece Greece's second bailout contributed to a debt restructuring that blew the €4.5bn hole in Cyprus's banking sector are aghast at their treatment by Europe.Cyprus received a "stab in the back" from its EU partners, the daily Phileleftheros said.But it and another newspapers highlighted the danger of plunging the banking system into further turmoil if lawmakers sat on the fence."Even if the final agreement is wrong, if this is not approved by parliament the damage will be even greater," Politis economics editor Demetris Georgiades said in an editorial.

NEWS,14.,15.,16. AND 17.03.2013

1.7 m applications for 1 500 jobs

India's largest state-run bank has received 1.7 million applications for just 1 500 entry-level clerk jobs and has promised to examine all of them, a report said this week.State Bank of India chairperson Pratip Chaudhuri attributed the huge interest to good arketing and attractive employment terms, with the number of applications  underlining the appeal of "jobs for life" in the Indian public sector. "This time, we had given the advertisement a good profile, highlighting the position of SBI and describing the compensation package in detail, which attracted a lot of attention," Chaudhuri told The Times of India.For positions in Mumbai, the bank offered a starting package of 69 000 rupees ($1 270) a month for the "probationary officers" including a housing allowance - an attractive perk in the expensive local real estate market.Job opportunities in the Indian private sector have fallen in the last 18 months as economic growth has dropped to its lowest level in a decade due to declining business confidence and high interest rates.The government forecasts that India's once-booming economy will grow by just 5% in the current financial year to March 31.Last year, it grew by 6.2% but even that rate - while enviable by anaemic Western standards is insufficient to create the jobs India needs for its fast-growing young population.India's Prime Minister Manmohan Singh, a former economist, believes that India requires at least 8% growth to create enough jobs for its expanding population, with the government keen to promote the industrial sector.Chaudhuri said all 1.7 million applicants more than 1 100 per position available - would be assessed."We have conducted such examinations in the past by hiring schools across the country. This time, we may have to do two shifts," he told the newspaper. Nine out of ten Indians are currently employed in the "informal" sector in jobs that offer no security, few perks and often illegal working conditions, government data shows.

London's gold, silver in price fix probe

 

London's gold and silver markets face the possibility of a probe alongside other benchmarks into price setting, putting a century-old practice under the spotlight after the Libor rigging scandal that exposed widespread interest rate manipulation by banks.The US Commodity Futures Trading Commission has engaged in "a couple" of conversations about whether the daily setting of gold and silver prices in London is open to manipulation, Commissioner Scott O'Malia said on Thursday, although he said the situation is "fairly immature in its development."The Wall Street Journal, citing unnamed sources, reported on Wednesday that the CFTC was examining various aspects of gold and silver price-setting, including whether it is sufficiently transparent "What was stated in that story was more than I think we're doing," O'Malia told reporters at the annual Futures Industry Association conference in Florida on Thursday."I think we've had a couple of conversations. We're looking at energy, indexes, prices, how they're set. We'll look at all of the range of index-setting," O'Malia said.The CFTC declined to provide an official comment, while the chairs of the London Gold Fixing Company and London Silver Fixing Company were not available for comment.Another CFTC Commissioner Bart Chilton, known as an outspoken proponent of regulation to protect investors and consumers, declined to specifically address the report, saying: "Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks - many other benchmarks are legit areas of inquiry."Britain's Financial Services Authority (FSA) also declined to comment on whether it was looking into gold and silver price setting, but said on Thursday it is feeding into a wider review of price benchmarks run by the International Organisation of Securities Commissions (Iosco) a global umbrella group for markets regulators.Iosco is set to publish a report in May with principles on how to compile important benchmarks to avoid rigging.The setting, or "fix", of the gold price in London dates back to 1919, originally involving NM Rothschild & Sons, Mocatta & Goldsmid, Samuel Montagu & Co, Pixley & Abell and Sharps & Wilkins. Silver price setting started in 1897.Currently, gold fixing happens twice a day by teleconference with five banks: Bank of Nova Scotia-ScotiaMocatta, Barclays Bank Plc, Deutsche Bank AG, HSBC Bank USA, NA and Société Générale. The fixings are used to determine prices globally.Chairmanship of the Gold Fixing rotates annually among the member banks.At the start of each gold price-fixing, the chairperson announces an opening price to the other four members who relay that to their customers, and based on orders received from them, instruct their representatives to declare themselves as buyers or sellers at that price.The gold price is adjusted up and down until demand and supply is matched at which point the price is declared "Fixed".The fixings are used to determine spot prices for the billions of dollars of the two precious metals traded each day.Buyers and sellers can get insight on price changes and the level of interest during the fixing process. They can cancel, increase or decrease their interest based on that information.Gold and silver price setting has long been the subject of debate, and the CFTC looked at complaints about the silver market in 2008.But most believe that the process is transparent."The fix is open, consequential, transparent and has stood the test of time. It's not open to manipulation in the same way as Libor," said Ross Norman, chief executive of bullion broker Sharps Pixley.

Japan's PM set to push trade pact

Japan's hard-charging prime minister on Friday said he wanted in on talks to forge a huge trade pact, the latest bold move from a man who says he is determined to lick the frail economy into shape.With caveats aimed squarely at reassuring the cosseted farming industry, Shinzo Abe said Japan could not afford to miss negotiations on thrashing out the Trans Pacific Partnership (TPP).The announcement came just hours after his pick for central bank chief was approved by parliament, boosting the likelihood of more of the aggressive monetary easing he has been calling for to counter chronic deflation."A huge economic bloc that would account for roughly a third of the world economy is about to begin," Abe told a news conference."What the TPP is aiming to achieve is to make the Pacific Ocean a sea where goods, services and investment are freely exchanged."Supporters of the TPP say participation would give Japan's flagging economy a boost the government estimates by as much as $33bn over a decade and increase consumer choice.They say opening up Japan's cosseted markets is vital if its stumbling economy is going to pick up speed, a key campaign promise from Abe.But opponents claim it could be a body blow to the country's ageing farmers, removing the sky-high tariffs that have sheltered them and sending many to the wall, changing the face of the countryside in the process.Japan's rural heartland is a crucial source of support for Abe's brand of conservative nationalism and any suggestion that farmers will lose their unparalleled protection could be politically costly for him.But, said the premier, the agricultural sector could not stand still. He said it was already facing challenges and participation in the TPP presented an opportunity."I am sure that Japan's delicious and safe farm products will become popular all over the world," he said."The TPP is not a crisis but, rather, a huge chance. I have heard many who worry that Japan's agriculture would be devastated if we join."I promise that I will protect Japan's farm industry and Japan's food industry by any means."The TPP forms a vital plank in US President Barack Obama's vaunted "pivot" to Asia, and is seen by some as part of a US bid to contain China's rising economic might.Washington has been keen to get Japan on board because of the economic heft its participation lends to the project and Acting US Trade Representative Demetrios Marantis said the US welcomed Abe's "important announcement".But the US Alliance for American Manufacturing, which is backed by the US auto industry and is nervous of allowing Japanese rivals unfettered access to the huge auto market, was critical of the idea of Japan joining the talks."Japan's closed market, currency manipulation, and many other concerns stand in the way. It's not worth sacrificing American jobs and American manufacturing to secure a TPP agreement at any cost," said AAM president Scott Paul.The TPP has been on the global agenda for years, but a succession of politically weak leaders have been unable to commit Japan to involvement.The fact that Abe appears ready to take the plunge is a sign, say observers, of the momentum he has gathered in the less than three months since he came to power in landslide elections.He hit the ground running on taking office on December 26 and his calls for more monetary easing, coupled with threats to change the law governing the independence of the Bank of Japan, succeeded in driving down the painfully strong yen.Helped by the slide in the currency, which helps the country's many exporters, the stock market is at more than four-year highsFriday's upper house approval for Abe's slate of central bank chiefs Haruhiko Kuroda was confirmed as governor, while Kikuo Iwata and Hiroshi Nakaso got the nod as his deputies - boosts his efforts to pull Japan out of more than a decade of deflation.The BoJ's new management team, which was approved by the lower house on Thursday, is set to take up their positions next week with the focus now squarely on their first policy meeting next month."High hopes are resting on the ability of the Bank of Japan's new leadership to revitalise the economy," London-based Capital Economics said in a note.Kuroda, 68, is thought likely to back the premier's prescription of big spending and aggressive monetary easing, vowing during confirmation hearings to do "everything possible" to reverse years of falling prices.

IMF urges EU to clean up banks

The International Monetary Fund said on Friday that the European economy and financial system remained weak and urged the region to quickly clean up its banks in order to advance toward a banking union.In a first-ever assessment of the stability of the European Union financial system, the IMF said banks in the region were still weak and needed more capital strengthening."Much has been achieved to address the recent financial crisis in Europe, but vulnerabilities remain, and intensified efforts are needed across a wide front," the IMF report said."Financial stability has not been assured," it said, pointing to continued falls in asset prices, distrust of sovereign debt and the overall weak economy, which remains in recession.The first priority, the IMF said, is to shore up banks by cleaning up their balance sheets, weighed down by large but still-unclear levels of bad assets, and put them through more stress tests.Secondly, the EU must complete the establishment of a region-wide financial oversight mechanism, necessary to strengthen the eurozone currency union and the single market for banking, and then a regional resolution mechanism for winding up failed financial institutions.All that needs to be done this year, the IMF emphasized, stressing that market and economic threats continued to hang over the European economy.With those jobs tackled, it said, the region can move toward a banking union with, ideally, a road map laid down by the middle of this year."The crisis has shown that national decisions, even well-intended ones, have union-wide repercussions on financial stability, and that there is a need for single frameworks for crisis management, deposit insurance, supervision and resolution, with a common backstop for the banking system."The IMF acknowledged some significant progress toward a single supervisory mechanism and a banking union.However, it said, as long as EU members failed to unite on an EU-wide approach to financial stability, the system remains "vulnerable to shocks, and generates incentives for national ring-fencing and fragmentation."

IMF calls for Palestine breather

The International Monetary Fund (IMF) on Thursday called for "urgent action" to help revive the Palestinian economy, saying it had been choked by Israeli restrictions and political uncertainty."Urgent actions are needed by the Palestinian Authority (PA), by the government of Israel, and by donors to stabilsze the fiscal position and rekindle economic growth over time," the IMF said in a statement.The fund said the situation in the West Bank and the Gaza Strip had deteriorated in recent months, pointing to rising unemployment which had claimed nearly a quarter of the labour market in late 2012."Israeli restrictions on movement and access are virtually unchanged and continue to hamper growth prospects," the IMF said, noting that gross domestic product had risen by only 6% last year compared to an average of around 11% in 2010 and 2011.Further slippage in GDP to around 5% was possible this year, the IMF said, citing "increasing political uncertainty" in the region."The military confrontation between Hamas and Israel last November, continued settlement expansion, and recent outbreaks of unrest in the West Bank underline the common view that prospects for peace remain dim," the IMF said.The fund's analysis also said the Palestinian Authority faced a "liquidity crisis" with public spending on an "unsustainable" trajectory."If left unchecked, these trends will ultimately lead some to question the legitimacy of the PA and undermine its ability to govern effectively," the IMF remarked.The fund called on the international community to increase financial support to the Palestinian Authority while urging "enhanced economic cooperation with Israel".The IMF analysis echoed a report by the World Bank on Tuesday ahead of a meeting of international donors on March 19, which warned of "lasting damage" to the Palestinian Authority's economy wreaked by Israeli restrictions and the worsening fiscal situation.

US slaps sanctions on covert Iran oil net

The United States on Thursday slapped financial sanctions on a Greek businessman for secretly operating a shipping network on behalf of the Iranian government to get around international sanctions on the country's sale of oil."Today, we are lifting the veil on an intricate Iranian scheme that was designed to evade international oil sanctions," US Treasury undersecretary for terrorism and financial intelligence David Cohen said in a statement. The move named Dimitris Cambis and a number of front companies for buying tankers on behalf of the National Iranian Tanker Company, barring US citizens from doing business with them and freezing any of their assets under US jurisdiction.Cambis was identified in Reuters report last month that said Iran was using old tankers to ship oil to China. He denied that he had been involved.But a senior US administration official dismissed Cambis' denial in a telephone conference call with reporters on Thursday, and said the clandestine operation had been deliberately structured to conceal Iranian involvement.As the sanctions have had increasing impact, so have the efforts to evade them, the official said.Sanctions were introduced last year by the West to choke Tehran's funding of its nuclear program by targeting the country's oil exports.The West believes Iran is developing weapons, a charge Tehran denies.Sanctions halved Iran's oil exports in 2012 by more than 1 million barrels per day, about the amount that oil production grew in the United States during that time, and Washington has been at pains to keep up the pressure."We will continue to expose deceptive Iranian practices, and to sanction those individuals and entities who participate in these schemes," Cohen said.The targeted network bought and operated eight tankers, each able to carry roughly $200m of oil per shipment."These operations are conducted through a series of ship-to-ship transfers in an attempt to mask the fact that the true origin of the oil is from Iran and to introduce it into the global market as if it were non-Iranian oil," Treasury said.US officials stressed that the sanctions were not aimed in any way at the Greek government, other Greek shippers, or the Greek shipping industry in general.

Still hope for fiscal deal: top official

Senior congressional Republicans said on Sunday they see a chance for a broad deal with President Barack Obama on deficit reduction and reining in spending on vast government programs like Medicare and one senator signaled potential flexibility on taxes.Obama, who met with lawmakers of both parties last week, has been calling for more tax increases on the wealthiest taxpayers, coupled with new spending cuts, to help curb budget deficits that have exceeded $1 trillion in each of the past four years.House of Representatives Speaker John Boehner, the top Republican in Congress, and Obama failed to come to terms at the end of last year on an agreement to get America's fiscal house in order.Such a deal could include spending cuts, tax reform and curbing spending on costly entitlement programs like the Social Security retirement program and the Medicare health insurance program for the elderly and disabled.Speaking on the "Fox News Sunday" program, Senator Bob Corker, a Tennessee Republican, said: "There, by the way, is a chance on a deal. I know the president is saying the right things. And we have an opportunity over the next four to five months."Asked on the ABC programme "This Week" if prospects for a "grand bargain" were dead, Boehner said, "I don't know whether we can come to a big agreement. If we do, it'll be between the two parties on Capitol Hill. Hopefully, we can go to conference on these budgets and hope springs eternal in my mind."Boehner said that while the United States does not have "an immediate debt crisis" one is looming because entitlement programs are not sustainable in their current form. "They're going to go bankrupt," he said.Asked how long the country had to solve these problems, Boehner said, "Nobody knows where this is. It could be a year or two years, three years, four years."Obama has engaged in a couple of weeks of outreach to lawmakers - some have called it a "charm offensive" but the prospects of a large deficit reduction deal by midyear remained unclear. Corker underscored the importance of reform in the huge entitlement programs like Medicare."I think Republicans, if they saw true entitlement reform, would be glad to look at tax reform that generates additional revenue. And that doesn't mean increasing rates. That means closing loopholes. It also means arranging our tax system so that we have economic growth."Boehner said he has "a very good relationship" with Obama, they are "trying to bridge some big differences" and that he "absolutely" trusts the president.But Boehner said that if Obama "believes that we have to have more taxes from the American people, we're not going to get very far.""If the president doesn't believe that the goal ought to be to balance the budget over the next 10 years ... (I'm) not sure we're going to get very far," he said. Obama met last Wednesday with House Republicans and made little headway in persuading them to accept his demand for tax hikes as part of any deficit-reduction deal. Republicans and Democrats in Congress last Tuesday offered up vastly different plans to slash long-term deficits. On Thursday, a Senate bill to avert a federal government shutdown stalled under the weight of more than 100 proposed amendments as senators sought to attach pet provisions. Senate Democratic leaders postponed further votes on the government spending legislation until Monday and said they would work over the weekend to try to whittle down the number of amendments. They had hoped to pass the measure on Thursday.Democrat Dick Durbin of Illinois, the No. 2 Senate Democrat, said senators must pass the budget resolution "and then we're going to move to the next stage and that is the grand bargain stage. That's what the president has tried to set up."The added provisions in the Senate budget measure threatened to make the bill unacceptable to the Republican-controlled House, which last week passed a much less complicated version of the extension to government funding through September 30. Government agencies and programs face a broad shutdown if Congress fails to pass an extension by March 27.

NEWS,13.03.2013

Cardinals opt for seasoned, popular pontiff

In choosing a 76-year-old pope on Wednesday, cardinals clearly decided that they didn't need a vigorous, young pope who would reign for decades but rather a seasoned, popular pastor who would draw followers to the faith.The cardinal electors overcame deep divisions to select the 266th pontiff  Jorge Bergoglio of Argentina in a remarkably fast, five-ballot conclaveBergoglio, who chose the name Francis, became the first pontiff from the Americas and the first from outside Europe in more than a millennium.Looking stunned, Francis shyly waved to the crowd of tens of thousands of people who gathered in St Peter's Square, marvelling that the cardinals needed to look to "the end of the earth" to find a bishop of Rome.Francis asked for prayers for himself, and for retired Pope Benedict XVI, whose surprising resignation paved the way for the conclave that brought the first Jesuit to the papacy."Brothers and sisters, good evening," Francis said to wild cheers in his first public remarks as pontiff."You know that the work of the conclave is to give a bishop to Rome. It seems as if my brother cardinals went to find him from the end of the earth. Thank you for the welcome."Bergoglio had reportedly finished second in the 2005 conclave that produced Benedict - who last month became the first pope to resign in 600 years.After announcing "Habemus Papam" "We have a pope!" - a cardinal standing on the balcony of St Peter's Basilica on Wednesday revealed the identity of the new pontiff, using his Latin name.The longtime archbishop of Buenos Aires has spent nearly his entire career at home in Argentina, overseeing churches and shoe-leather priests.Like other Jesuit intellectuals, Bergoglio has focused on social outreach. Catholics are still buzzing over his speech last year accusing fellow church officials of hypocrisy for forgetting that Jesus Christ bathed lepers and ate with prostitutes.Bergoglio has slowed a bit with age and is feeling the effects of having a lung removed due to infection when he was a teenager.In a lifetime of teaching and leading priests in Latin America, which has the largest share of the world's Catholics, Bergoglio has also shown a keen political sensibility as well as the kind of self-effacing humility that fellow cardinals value highly, according to his official biographer, Sergio Rubin.

He showed that humility on Wednesday, saying that before he blessed the crowd he wanted their prayers for him and bowed his head."Good night, and have a good rest," he said before going back into the palace.Tens of thousands of people who braved cold rain to watch the smokestack atop the Sistine Chapel jumped in joy when white smoke poured out a few minutes past 19:00 local time, many shouting "Habemus Papam!" or "We have a pope!" - as the bells of St Peter's Basilica and churches across Rome pealed.They cheered again when the doors to the loggia opened, and again when Bergoglio's name was announced."I can't explain how happy I am right now," said Ben Canete, a 32-year-old Filipino, jumping up and down in excitement.Elected on the fifth ballot, Francis was chosen in one of the fastest conclaves in years, remarkable given there was no clear front-runner going into the vote and that the church had been in turmoil following the upheaval unleashed by Pope Benedict XVI's surprise resignation.A winner must receive 77 votes, or two-thirds of the 115, to be named pope.For comparison's sake, Benedict was elected on the fourth ballot in 2005 - but he was the clear front-runner going into the vote.Pope John Paul II was elected on the eighth ballot in 1978 to become the first non-Italian pope in 455 years.Patrizia Rizzo ran down the main boulevard to the piazza with her two children as soon as she heard the news on the car radio."I parked the car... and dashed to the square, she said. "It's so exciting, as Romans we had to come."The Vatican spokesperson the Reverend Federico Lombardi said it was a "good hypothesis" that the pope would be installed next Tuesday, on the feast of St Joseph, patron saint of the universal church.Unlike the confusion that reigned during the 2005 conclave, the smoke this time around has been clear: black during the first two rounds of burned ballots, and then a clear white on Wednesday night - thanks to special smoke flares akin to those used in soccer matches or protests that were lit in the chapel ovens.The Vatican on Wednesday divulged the secret recipe used: potassium perchlorate, anthracene, which is a derivative of coal tar, and sulfur for the black smoke; potassium chlorate, lactose and a pine resin for the white smoke.The chemicals are contained in five units of a cartridge that is placed inside the stove of the Sistine Chapel. When activated, the five blocks ignite one after another for about a minute apiece, creating the steady stream of smoke that accompanies the natural smoke from the burned ballot papers.Despite the great plumes of smoke that poured out of the chimney, neither the Sistine frescoes nor the cardinals inside the chapel suffered any smoke damage, Lombardi said.

John Kerry's Norwegian impresses

US Secretary of State John Kerry showed off more of his hidden language skills on Tuesday, revealing he still knew some Norwegian picked up as a boy when he spent a couple of years in Oslo.

And he won praise from his Norwegian counterpart Espen Barth Eide, who said after talks at the State Department that Kerry "can even speak quite [impressive] Norwegian phrases".

America's new top diplomat had tried out some phrases "and we were quite impressed by his memory", Eide told journalists.

During his first overseas trip after taking over as secretary of state from Hillary Clinton, Kerry delighted his European hosts by speaking French, German and Italian on stops in Paris, Berlin and Rome.

The son of an American diplomat, Kerry spent much of his boyhood in Europe as he accompanied his father to various postings.

He told Eide that he had "wonderful memories of Norway" and the times he had spent in the "parks and the fjords there".

Kerry also praised Norway's role on the global stage.

"On almost every challenge or conflict in the world today, Norway plays one of the giant outsized roles of any country on this planet," Kerry said. "I think it's safe to say that Norway is one of the great global citizens."

George P Bush runs for Texas office

 

George P Bush filed paperwork on Tuesday to run for Texas land commissioner next year, hoping to continue his family's two-president political dynasty in one of the country's most conservative states.

Spokesperson Trey Newton told that Bush filed the official paperwork to run for the office, which is a popular stepping stone to higher posts.

Bush is the nephew of George W Bush and grandson of George HW Bush.

An attorney and Spanish speaker whose mother is originally from Mexico, Bush is considered a rising star among conservative Hispanics.

Hispanics accounted for two-thirds of Texas' population growth over the last decade and now make up 35% of its population. They tend to vote overwhelmingly Democratic. Bush is a Republican.

The Texas land commissioner administers state-owned lands and mineral resources.
 
Bush is the son of former Florida Governor Jeb Bush and his wife, Columba, who was born in Mexico.

George P Bush has been active in politics for years. Last summer, he was promoted to deputy finance chairperson of the Texas Republican Party.

Even though he had yet to officially settle on an office, Bush's campaign raised an impressive $1.3m between early November and 31 December.

Current Land Commissioner Jerry Patterson said he believes running with the Bush name is "both a blessing a curse". He described Bush as smart and qualified but stopped short of offering an official endorsement on Tuesday.

Matt Glazer, executive director of the liberal advocacy group Progress Texas, suggested it may be too early to anoint the next Bush a future political force to be reckoned with.

"Serving in elected office is a privilege, not a birthright," Glazer said in a statement. "George Bush must go through the same public screening as any other candidate."

North Korea confirms end of war armistice

 

North Korea confirmed on Wednesday that it had shredded the 60-year-old armistice ending the Korean War, and warned that the next step was an act of "merciless" military retaliation against its enemies.

A lengthy statement by the North's armed forces ministry added to the tide of dire threats flowing from Pyongyang in recent days that have raised military tensions on the Korean peninsula to their highest level for years.
The statement carried by the official Korean Central News Agency argued that the real "warmongering" was coming from the US and its "puppets" in Seoul.
"They would be well advised to keep in mind that the armistice agreement is no longer valid and [North Korea] is not restrained by the North-South declaration on non-aggression," a ministry spokesperson said.
"What is left to be done now is an action of justice and merciless retaliation of the army and people" of North Korea, the spokesperson said.
The North announced last week that it would nullify the 1953 armistice and peace pacts signed with Seoul in protest over joint South Korea-US military manoeuvres that began on Monday.
Because the Korean War was concluded with an armistice rather than a peace treaty, the two Koreas have always remained technically at war.
Voiding the ceasefire theoretically opens the way to a resumption of hostilities, although observers note this is far from the first time that North Korea has announced the demise of the armistice.
The armistice was approved by the UN General Assembly, and both the UN and South Korea have repudiated the North's unilateral withdrawal.
"The terms of the armistice agreement do not allow either side, unilaterally, to free themselves from it," said UN spokesperson Martin Nesirky.
The North has also threatened to launch nuclear strikes against the US and South Korea in response to fresh UN sanctions adopted after the North carried out its third nuclear test last month.
While the threats have been mostly dismissed as bluster, there are strong concerns that the North will attempt some form of military provocation in the coming weeks.
The South's Yonhap news agency on Wednesday quoted a senior military source as saying sorties by North Korean fighter jets in recent days had reached "unprecedented" levels, with around 700 counted on Monday alone.
As well as nullifying ceasefire agreements, the North severed a Red Cross hotline that was one of the few means of communication between Pyongyang and Seoul, which do not have diplomatic relations.
However, a spokesperson for the presidential Blue House in Seoul said a military hotline was still operating.
"The military communication is working normally and we will seek to convey any message to the North via the channel when necessary," she said.
Wednesday's statement by the armed forces ministry was notable for carrying the first official criticism of South Korea's new president, Park Geun-Hye, since she took office a little more than two weeks ago.
While the spokesperson did not mention Park by name, he said the "frenzy" stirred up the "warmongers" in South Korea was orchestrated by the "swish of the skirt made by the owner of Chongwadae [the Blue House]."
He also slammed Park's recent comments that the North's obsession with nuclear weapons would bring about its own collapse as "utter ignorance" and an echo of the "confrontational" policy of Park's predecessor Lee Myung-Bak.
Park had campaigned on a pledge of greater engagement with North Korea, but February's nuclear test put any rapprochement on indefinite hold.

G20 economies grow despite dip in Europe

Economic growth in G20 countries climbed by 0.5% in the fourth quarter of 2012, slowing only slightly from the 0.6% pace recorded in the previous three-month period despite heavy contractions across Europe, preliminary estimates from the OECD showed on Wednesday.
For the full year 2012, the Organisation for Economic Cooperation and Development said that gross domestic product (GDP) in the G20 group of 20 major global economies expanded by 2.8%, down from 3.8% a year earlier.
The OECD said that as economic trends were still diverging widely within the G20 - with China posting the strongest growth in the quarter and Italy dipping deep into negative territory - the aggregate growth rate "continues to mask" mixed patterns among the world's largest economies.
China's economy grew by 2.0% in the fourth quarter compared with the third quarter, while Italy's contracted by 0.9%.
The OECD said that the economies of all of the G20's European members, including Britain, France, Germany and Italy, contracted in the last quarter of 2012 compared with the previous three-month period.
Japan and the United States remained stable however, while emerging economies such as Brazil, India, Korea, Mexico, and South Africa showed higher growth, it said.

Spain's plan to get youth back to work

Spain pledged €3.5bn over four years on Tuesday to easing mass unemployment among the country's youth, as the government tries to stem a relentless tide of layoffs and lengthening jobless queues.
Prime Minister Mariano Rajoy presented 100 different measures including tax breaks for young freelance workers and for companies that hire workers in their twenties.
Many of the measures, such as lower social security payments for young self-employed workers and up-front payment of unemployment benefits for entrepreneurs, had been announced previously.
On Tuesday they were wrapped into a single strategy.
During five years of economic stagnation and recession, Spain's unemployment rate has risen to 26% - the highest level since the 1970s and one of the highest in the European Union - and more than half of 18-25 year olds are out of work.
More and more young Spaniards are studying German and English and heading abroad to find work.
Public anger is growing over austerity measures to tackle government overspending, which have aggravated economic problems, and over €40bn in public debt spent on rescuing banks that loaned too freely to builders during a real estate boom that ended in 2008.
With more than 5 million people out of work, job losses have accelerated in the first months of 2013.
Spain's 35 blue chip companies have announced more than 35 000 layoffs so far this year, compared with 18 000 layoffs by the same companies last year, according to a report in El Economista newspaper.
Rajoy spoke to an audience of union, company and government representatives at the Moncloa government palace.
But labour union leaders did not wait to hear the details before expressing scepticism over the new strategy.
"If the government does not re-orient its economic policy to make growth and jobs a priority instead of deficit cutting, the effects of the plan will have a limited effect and the economic recession and job destruction will continue," Spain's two biggest union federations, CCOO and UGT said in a statement just before Rajoy made the announcement.
Rajoy has said that any stimulus measures for the economy and jobs will not undermine his determination to cut the budget deficit in line with EU demands.
The government has trimmed the budget by tens of billions of euros this year and last, cutting public sector wages and limiting health and education spending at a time when the economy is shrinking an estimated 1.5% per year.
A third of the funding for the jobs plans will come from a European Special Fund, Rajoy said.     

EU to suspend aviation carbon tax

The European Union is set to partially suspend its controversial airlines emissions tax scheme, officials said Tuesday, as part of a bid to push international critics into reaching a global aviation deal.
Since last year, all airlines landing and taking off from EU airports have been liable for their carbon dioxide emissions, a move that infuriated countries such as the United States, China, Russia and India.
But after the bloc's parliament and governments struck a deal on Tuesday, the EU is now set to "stop the clock" for airlines flying intercontinental routes until the International Civil Aviation Organisation (ICAO) holds its general assembly in September.
The suspension should go into effect before April 30, EU parliamentarian Peter Liese said. Internal flights within the EU will continue to be liable for their emissions.
In the past, the EU had justified its decision to proceed unilaterally on aviation emissions by pointing to 15 unsuccessful years of pushing for a global agreement.
"It is now up to ICAO to deliver," said Irish Environment Minister Phil Hogan, whose country holds the EU's rotating presidency. "I hope this ... derogation will serve as an incentive in the negotiations."
"Nobody should put our determination in question to address the problem of aviation emissions," Liese added.
The European Parliament and EU governments still have to endorse the deal reached on Tuesday, but the move usually is a formality.

Putin, Seagal team up for sports

President Vladimir Putin on Wednesday teamed up with American action movie actor Steven Seagal to promote the Soviet-style regime of rigorous physical training for Russian schoolchildren.

Accompanied by the black-clad star of "Under Siege" and "Above the Law", Putin, himself an avid sportsman, toured a newly-built complex at a prominent sambo martial arts training centre in Moscow.
After attending several training sessions, the Russian strongman said too many Russian children were sickly, noting they should take up sports to be able to defend themselves - and the country.
"We should not have any children who, as they say, sit on the bench during physical education classes. Everyone should practise sports, everyone without exception," Putin said at the Sambo-70 sports complex.
Sambo, a mixture of judo and wrestling, was the official in-house martial art of the KGB security services, which Putin practised before switching to judo.
Saying that two-thirds of Russian teenagers suffered from chronic illnesses by the age of 14, Putin called on the government to reintroduce the Soviet-era national fitness programme that used to be known by its abbreviation GTO, or Ready for Labour and Defence.
"Children should become strong, they should be healthy, love sports and have an opportunity to practise them, should know how to defend themselves, their loved ones, their family," Putin said in remarks released by the Kremlin.
"Ultimately, they should be able to defend their motherland."
Putin's spokesperson Dmitry Peskov told Russian reporters that the Russian president and Seagal have been friends "for a long time" and regularly meet.
Earlier in the day, the two men had breakfast at Putin's residence outside Moscow, Peskov was quoted as saying.
In 2010, Putin, then the country's prime minister, visited a championship match of ultimate fighting in the company of Hollywood star Jean-Claude Van Damme.

NEWS,12.03.2013

British manufacturing output slumps

Britain's manufacturing output slumped by 1.5% in January compared with December, official data showed on Tuesday, dealing a fresh blow to the country's hopes of avoiding a fresh recession.The wider measure of industrial production - which includes mining and quarrying, electricity, gas and water supply dropped by 1.2% in January from December, the Office for National Statistics added in a statement.Analysts' consensus forecast had been for manufacturing and industrial output to have each grown by 0.1% in January month-on-month, according to a survey by Dow Jones Newswires.Industrial output fell as suspended production at the Schiehallion oil platform in the North Sea hit oil and gas extraction."January’s figures do little to ease fears that GDP may still be contracting and that the economy could therefore be in a triple-dip recession," said Capital Economics analyst Samuel Tombs.Recent official data showed that British gross domestic product (GDP) shrank by 0.3% in the final quarter of 2012, compared with the previous three months.Another contraction in the current first quarter of 2013 would place the British economy in its third technical recession since the 2008 global financial crisis."Industrial production measure fell 1.2% month-on-month in January, a far worse outturn than expected," said Royal Bank of Scotland economist Ross Walker."The slump in January leaves a decline in first-quarter GDP looking more likely than not."In a separate data release on Tuesday, the ONS also revealed that Britain's trade-in-goods deficit narrowed at the start of the year.The deficit shrank to £8.2bn in January from £8.7bn in December.That beat analysts' forecasts for a January deficit of £8.9bn.However, IHS Global Insight economist Howard Archer argued that the improvement masked a worrying trend."On the face of it, the sharply reduced trade deficit in January is better news for hopes that the economy can grow in the first quarter," Archer said."But even here the headline figure masks some worrying trends as the reduced deficit occurred because UK imports fell more than exports. This indicates that UK exporters are currently still finding life very tough while domestic demand is weak."

Eurozone crisis not over - ECB's Weidmann

The euro zone crisis is not over and governments must tackle the roots of their troubles with reforms, Bundesbank chief Jens Weidmann said on Tuesday, adding that France's reform drive seems to have gone off track."The crisis is not over despite the recent calm on financial markets," Weidmann, a member of the European Central Bank's policymaking governing council, told a news conference to present the Bundesbank's 2012 results.There was uncertainty about the reform course in Italy and Cyprus, he said, adding: "The reform course in France seems to have floundered".

Judge blocks NY ban on giant fizzy drinks

New York judge blocked mayor Michael Bloomberg's planned ban on giant sodas Monday, dealing a setback to his public health agenda just hours before curbs on selling such drinks were due to begin.Judge Milton Tingling ruled that measures to restrict soda servings to a maximum of 16 ounces (470 milliliters) in restaurants and other venues, were "arbitrary and capricious," and he was barring the plan "permanently."Bloomberg has made health issues a key plank of his administration, banning smoking in restaurants, bars and other public places. He quickly denounced the judge's decision on sodas as "clearly wrong," and said the city would appeal."I am trying to do what is right to save lives. Obesity kills," a visibly angry Bloomberg told reporters, noting that 5 000 New Yorkers and 70 000 US citizens would fall victim to the disease this year."Sugary drinks are a leading cause of obesity. We have a responsibility as human beings to do something, to save each other," he added.But Bloomberg's super-sized soda ban, which would have been a first for a US city, sparked frenzied debate, with petitions and media campaigns from both sides.Some supported Bloomberg's arguments, emphasizing that 30 years ago the average soda serving was just six ounces, but that these days, it's not rare to see young Americans with giant fizzy drinks of more than a litre (33 ounces).Opinion polls over the summer indicated that a majority of New Yorkers opposed the limited ban, with some suggesting the mayor was impinging on civil liberties and others arguing the rules would not be effective.Industry lobby groups led by the American Beverage Association (ABA) and the National Restaurant Association took the court action that led to Monday's judgment, and they praised the decision."The court ruling provides a sigh of relief to New Yorkers and thousands of small businesses in New York City that would have been harmed by this arbitrary and unpopular ban," the ABA said in a statement.As well as the thousands who die each year from obesity-linked problems, one in eight adult New Yorkers has diabetes, which can be aggravated by sugar consumption, and studies have shown that sodas, which often cost less than bottled water, are a contributing factor."Remember, for many years, the standard soda size was six ounces - not 16, it was six, then it was 12 ounces and people thought that was huge. Then it became 16, then 20 ounces," Bloomberg said."We believe it's reasonable to draw a line and it's responsible to draw a line right now," he added.The New York Board of Health approved the measures last September and they were due to come into force on Tuesday in restaurants and places of public entertainment, such as stadiums.In a boost for the soda limits, the newly-built basketball stadium for the Brooklyn Nets had said it would immediately adopt the rules.But under the measures put forward by the city there was nothing to stop people from buying as much soda as they like by refilling smaller containers.Also, the ban did not extend to drinks sold in supermarkets or any dairy or fruit drinks, many of which also contain huge quantities of sugar.Diet and alcoholic drinks were also exempted under the city's plan."The exclusion of all alcoholic beverages from the ban is completely irrational. Beer and soda have nearly the same calories per ounce," the legal complaint said.And "the application of the ban to some business establishments but not others is arbitrary and capricious," it argued.Bloomberg previously acknowledged that the plan would fall short of ending over-consumption of sugary drinks, but he said the disappearance of mega-sized cups would at least make people more aware of what they were consuming.

Australia unveils media shake-up

Australia's centre-left Labour government unveiled a shake-up of media laws on Tuesday, introducing a public interest test for mergers but stopping short of press regulation asfeared by the industry.Communications Minister Stephen Conroy said the reforms, drafted after an inquiry into Australia's media following the phone-hacking scandal in Britain, were aimed at modernising the industry and guarding fairness and diversity.If passed into law, the changes would bring a public interest test to "nationally significant" mergers and acquisitions, which Conroy said was not the same as the "fit and proper person" test seen in Britain.It would be monitored by a new statutory authority called the Public Interest Media Advocate, which would oversee a robust self-regulation model, the minister said, stressing that the government would have no role."The government will not fund or oversee press standards bodies, they will be run, funded and operated by the print media themselves," he said.Proprietors, most vocally Rupert Murdoch's dominant local arm News Limited, had feared official regulation of the press, but Conroy said the present model of self-regulation would continue, although it would be tightened.Conroy added that the government would be seeking a "more transparent and open process" on appointments to regulatory bodies such as the current Press Council and better enforcement of existing press standards.The Press Council could apply to be authorised under the new framework, but Conroy said it would be  expected to be "transparent, open and independent" of proprietors, not just the government, to address community concerns."In Australia there is a real risk that over time there will be fewer and fewer organisations owning and controlling sources of news and commentary," Conroy told reporters."There are two existing mechanisms that address this risk: competition law and foreign ownership restrictions. But these alone do not reflect the full question of public interest in media diversity."Conroy said the government would not barter on the legislation, which he believed had enough backing in parliament."If these reforms do not garner sufficient support to pass the parliament by the end of next week then the government will not proceed with the bills containing them," he said.