NEWS,26.03.2013

China, Brazil sign currency deal

Brics members China and Brazil agreed on Tuesday to trade in their own currencies the equivalent of up to $30bn per year, moving to take almost half of their trade exchanges out of the US dollar zone.The agreement, due to last three years and signed hours before the start of a Brics summit in Durban, South Africa, marked a step by the two largest economies of the emerging powers group to make real changes to global trade flows long dominated by the United States and Europe. "Our interest is not to establish new relations with China, but to expand relations to be used in the case of turbulence in financial markets," Brazilian Central Bank Governor Alexandre Tombini told reporters after the signing. Trade between the two countries totalled around $75bn in 2012. Brazilian officials have said they hope to have the trade and currency deal operating in the second half of 2013. At the summit in Durban, the fifth held by the group since 2009, Brazil, Russia, India, China and South Africa are widely expected to endorse plans to create a joint foreign exchange reserves pool and an infrastructure bank. They are also due to discuss trade and investment relations with Africa.

 

Brics wrangle over new development bank

Brics emerging powers on Tuesday sought a deal on setting up a development bank that would rival Western-backed institutions, trying to iron out significant differences ahead of a leaders' summit in Durban.The grouping of Brazil, Russia, India, China and hosts South Africa are racing to flesh out proposals for an infrastructure-focused lender that would challenge seven decades of dominance by the World Bank.Just hours before leaders kick off the summit at 17:30 GMT, finance ministers were still working to agree key elements of the plan. Disputes remain over what the bank will do, with each side trying to mould the institution to their foreign or domestic policy goals and with each looking for assurances of an equitable return on their initial investment of around $10bn.Failure to secure a deal would be a major embarrassment for many of the participants and would play into the hands of those who argue the Brics have little to bind them together.Xi Jinping, who has underscored the growing importance of the group by making Durban his first summit as China's president, earlier expressed hopes for "positive headway" in establishing the bank.In a keynote speech in Tanzania on Monday Xi vowed Beijing's "sincere friendship" with the continent, and a relationship that respects Africa's "dignity and independence."Meanwhile host President Jacob Zuma has lauded the summit as a means of addressing his country's chronic economic problems including high unemployment."Brics provides an opportunity for South Africa to promote its competitiveness" Zuma said in a speech on the eve of the summit."It is an opportunity to move further in our drive to promote economic growth and confront the challenge of poverty, inequality and unemployment that afflicts our country."A failure to take concrete steps would raise questions about whether the Brics grouping can survive."Ironically it may be the cleavages within the Brics grouping that more accurately hint at the future of the global order: tensions between China and Brazil on trade, India on security, and Russia on status highlight the difficulty Beijing will have in staking its claim to global leadership," said Daniel Twining of the German Marshall Fund.But if the leaders succeed it would be the first time since the inaugural Brics summit four years ago that the group matches rhetorical demands for a more equitable global order with concrete steps.That would send a loud message to the United States and European nations that the current global balance of power is unworkable.Together the Brics account for 25% of global GDP and 40% of the world's population.But members say institutions like the World Bank, the International Monetary Fund and the United Nations Security Council are not changing fast enough reflect their new-found clout.Diplomats say it could start with $10bn seed money from each country, but the exact role of the bank is up for debate.Indian officials have pressed for a Brics-led South-South development bank, recycling budget surpluses into investment in developing countries.Many developing nations inside and outside Brics will hope that is a way of tapping China's vast financial resources.Meanwhile China would no doubt like the bank to invest in trade-multiplying projects.Aside from the development bank, the group will also try to establish a foreign exchange reserve pool worth as much as $240bn to be drawn on in financial crises.China has the world's largest foreign exchange reserves, worth $3.31 trillion at the end of 2012, and establishing currency swap lines could help other Brics tap that massive resource.Later on Tuesday Brazil is to sign a bilateral accord with China to promote trade in their national currencies.Brics leaders will also establish business and think tank councils.With Syria's two-year long civil war escalating through the suspected use of chemical weapons, Brics leaders will also have to weigh a call from President Bashar al-Assad to intervene.In a message to the summit leaders Assad asked "for intervention by the Brics to stop the violence in his country and encourage the opening of a dialogue, which he wishes to start," said his senior adviser Bouthaina Shaaban after he delivered the message to South African President Jacob Zuma.

Cypriot youths rally against bailout

Hundreds of Cypriot students marched on the presidential palace in Nicosia on Tuesday, after a Facebook call for a rally against a painful bailout for the financially crippled island."Troika out of Cyprus," said banners held by the angry students, in reference to the creditors of the European Union, European Central Bank and the International Monetary Fund (IMF)."Hands off Cyprus," and "Those who stole our money should go to jail and pay," chanted the demonstrators, who an AFP cameraman said numbered around 1 500.The protesters, who gathered following an appeal on their student union's Facebook page, were cheered by government workers as they marched past the labour ministry.Cyprus secured a deal with the troika on Monday for a €10bn bailout that helped it avert bankruptcy but which will see large deposit-holders at its two biggest banks losing much of their savings."We don't know what our future is, and we are angry that it will not stop at those measures," said one of the youths who only gave his name as Christos, aged 16. "This why we... came out to express our opinion."Banks under lockdown"We must all come together to save our country. It's about us, not only for our parents, it's for our future," another protester also named Christos said."We fear for our future. What is happening in my country makes me angry," said Lauren, aged 17, who added she was seriously considering going abroad to finish her studies because of the uncertainty.Cypriots woke on Tuesday to find banks under lockdown for an 11th day after authorities reversed course and kept them closed to prevent a run on deposits following the bailout.The bailout involves depositors in the two biggest banks paying huge levies on deposits more than €100 000. It also effectively shuts down Laiki, the island's second-largest lender also known as Popular Bank.The student protest will be followed by a leftwing anti-austerity demonstration organised by the communist Akel party on Wednesday outside the presidential palace.

N Korea threatens Hawaii, US mainland

North Korea's military put its "strategic" rocket units on a war footing on Tuesday, with a fresh threat to strike targets on the US mainland, Hawaii and Guam, as well as South Korea."All artillery troops including strategic rocket units and long-range artillery units are to be placed under class-A combat readiness," the Korean People's Army supreme command said in a statement.The units should be prepared to attack "all US military bases in the Asia-Pacific region, including the US mainland, Hawaii and Guam" and South Korea, said the statement carried by the Korean Central News Agency.Despite a successful long-range rocket launch in December, most experts believe North Korea is years from developing a genuine inter-continental ballistic missile that could strike the mainland United States.Hawaii and Guam would also be outside the range of its medium-range missiles, which would be capable, however, of striking US military bases in South Korea and Japan.The supreme command announcement came days after the South Korean and US militaries signed a new pact, providing for a joint military response to even low-level provocative action by North Korea.Elevated tensionsWhile existing agreements provide for US engagement in the event of a full-scale conflict, the new protocol addresses the response to a limited provocation such as an isolated incident of cross-border shelling.It guarantees US support for any South Korean retaliation and allows Seoul to request any additional US military force it deems necessary.Military tensions on the Korean peninsula have been at an elevated level for months, following December's rocket test and the North's third nuclear test which it carried out last month.Both events triggered UN sanctions that infuriated the North, which has spent the past month issuing increasingly threatening statements about unleashing an "all-out war" backed by nuclear weapons.Some have included similar warnings of looming strikes on US bases in the Pacific region, including Guam.North Korea was particularly incensed that nuclear-capable US B-52 bombers flying out of Andersen Air base on Guam took part in recent joint South Korea-US military exercises.Sinking anniversary"We will demonstrate the firm resolution of our people and military to protect our sovereignty and dignity through real military action," Tuesday's statement warned."There is no greater delusion than the idea that they will have an opportunity for retaliation," it added.The statement coincided with the third anniversary of the sinking of a South Korean naval vessel by what Seoul insists was a North Korean submarine. Pyongyang has always denied any involvement.Addressing a memorial ceremony for the 46 sailors who died in the incident, South Korean President Park Geun-Hye warned North Korea that its only "path to survival" lay in abandoning its nuclear and missile programmes.Sabre-rattling and displays of brinkmanship are nothing new in the region, but there are concerns that the current situation is so volatile that one accidental step could escalate into serious conflict.

Poles protest for job security, pensions

Thousands of workers held work stoppages in Poland's southern industrial region on Tuesday to demand more job security, higher pensions and government protection for coal mines. The four-hour protests in the Silesia region were led by the Solidarity trade union. The protesters called for the government of Prime Minister Donald Tusk to improve the labor code to give companies more work time flexibility in times of crisis, and to restructure the strapped and inefficient health care system.The stoppages involved coal mines, local railways and some schools. In a sign of support some hospitals and city transport flew Solidarity flags. Union members also held support actions in the cradle of Solidarity, Gdansk and some other cities across Poland.Economy Minister Janusz Piechocinski said the government had been in talks with the unions, which had pressed "unacceptable" demands that would burden the already tight state budget.Silesia was Poland's most prosperous region under communism, but it has suffered under the market economy since 1990 as many mines and steel mills have been closed down.Bowing to the power of tens of thousands of miners, some previous governments have agreed to lenient lay-off and pension terms for them. Poland still depends on black coal for much of its electricity, a policy that has put Warsaw at odds with nations that are cutting down on carbon gas emission.

NEWS,25.03.2013

Only two banks to reopen in Cyprus

Cyprus' central bank says all banks in the country except the two biggest will reopen for business on Tuesday, more than a week after they shut down to prevent a run.Laiki and Bank of Cyprus will remain closed until Thursday, and a withdrawal limit from ATMs of €100 ($130) a day will also remain in place until then, the bank said.Financial institutions in the country have been shut since March 16 as Cyprus and its international lenders struggled to agree on a plan to raise funds so the island could qualify for a bailout package.Cypriots express fearsCypriots expressed fears for their jobs and their businesses on Monday after the island agreed to a tough bailout, while accusing other European nations of trying to destroy their country.Although there were none of the violent protests that have hit other bailed-out euro nations, anger bubbled below the surface of the cafes in Nicosia where hundreds of young people gathered on what was a national holiday."We laugh about it because if we did not laugh we would lose our minds," said Antonia Epaminondou, 28, who was with a group of friends sitting in bright sunshine on Ledra street, downtown Nicosia's busiest shopping area.Epaminondou said she worked for a subsidiary of debt-stricken Laiki, or Popular Bank, the Mediterranean nation's second largest bank. Laiki will effectively be shut down under the deal agreed in the early hours of Monday."Of course I am afraid I will lose my job. But it is the same for all of Cyprus - we are all afraid," she said.The government has defended the 11th hour deal, which will also deal a major hit to investors in depositors in the island's top bank, the Bank of Cyprus, as necessary to avoid a default and remain in the euro.Most Cypriots put the blame on the "troika" of the European Union, International Monetary Fund and European Central Bank, saying they had bullied an island whose economy is just a fraction of a percentage of the EU's.'A victim of the Germans'"Cyprus is a victim of the Germans," said George Evagorou, 50, who runs a transport company."They want to be leaders of Europe. The Germans and the French want to conquer us through the economic system."Evagorou said capital controls imposed to stop a run on struggling Cypriot banks meant he had been unable to get enough cash to prepare his fleet of vehicles for the coming tourist season.Other Cypriots had more immediate worries as they tried and failed to get money out of ATM machines."It's a disaster," Tudor Neagu, a client of Laiki Bank, as he unsuccessfully tried to withdraw cash from an ATM in Ledra Street.Cypriot authorities closed banks for 10 days as the government scrambled to seal a deal. Banks have also imposed tough daily ATM limits of €100 a day for Laiki bank and €120 a day for Bank of Cyprus.No cash in ATMs"I'm unable to withdraw cash as the machine doesn't work. I doubt Cyprus will ever revive again," he lamented, before the customer who was in the queue behind him was also unable to get any cash from the machine.The controls also threaten Cyprus businesses, with the possibility that many will not be able to pay employees or conduct normal business."Personally I don't know whether I will have work in the future, because the company I work for has accounts with one of the banks, said Maria Makri, 33, an employee of a fertilizer export company."The payroll of the company, the provident fund of the company, we do not know what will happen," she said at a cafe in Nicosia.Makri added that the "European idea does not exist any more" after the behaviour of Cyprus's European partners.Travel agency employee Maria Spyrou, 31, said foreign clients had been calling to cancel contracts because of uncertainty over Cyprus's future."We have been treated very badly. I don't know the reason that other countries want to destroy us," she said, adding that she blamed "the German government, although not the German people."The Russian linkIlias Toursidis, the owner of a shop in one of the Old City's narrow lanes that sells only Russian products, and his assistant Melina were also very concerned.Russian clients stood to be among the biggest losers as many had put their money in banks in Cyprus because of its reputation as a tax haven."If people have their jobs, we also have work. If they don't have their jobs, then we don't have (them)," a flustered Toursidis said as he took his cap off and wiped his brow.Melina added: "If the Russians leave, then we will probably close because only Russians buy from here," she said.The situation also affected Cyprus's significant migrant workforce, which includes many Filipinos and South Asians."No money in the bank. I need food, I need to pay my rent. I need everything. I came but the bank did not give us our money," said Fawzi Allada, a Pakistani who showed his anger by pretending to tear up his Bank of Cyprus cheque book.

Govt: Cyprus deal heralds new beginning

The Cyprus bailout deal concluded early Monday in Brussels ended uncertainty and prevented a "disorderly default" that could have seen Cyprus exit the eurozone, the Cypriot government spokesperson said. "Finally, Cyprus has ended a period of uncertainty and insecurity for the economy. A disorderly default was avoided, which would have meant leaving the eurozone, with devastating consequences," spokesperson Christos Stylianides said in a statement."A disorderly default was avoided, which would have meant leaving the eurozone, with devastating consequences."Early Monday the eurozone struck a deal with Cyprus to resurrect a bailout for its government, but only after a radical downsizing of the island's financial sector.Under the terms of the agreement the island's second largest lender Laiki (Popular Bank) will be wound up while the Bank of Cyprus, the island's No.1 lender, will have to endure a major "haircut" on all deposits of more than €100 000."The important thing is that we have reached an agreement that allows us to kick-start the economy and lay the groundwork for a new beginning," Stylianides said."Without doubt that there are painful aspects that will place a burden on all of us."Diko MP and chairperon of parliamentary finance committee, Nicolas Papadopoulos, too spoke of the pain the deal will deliver to Cypriots."Without a shadow of a doubt the eurogroup deal and bailout agreement with the troika is a very painful one," he said.In other early reaction, Green party MP George Perdikes told state television, "once the pressure has lifted we should seriously look at whether staying in the euro is in our interest or whether it is worth changing our currency".Former Cyprus central bank governor Afxentis Afxentiou told state radio "Cyprus has suffered a big hit and our standard of living will spiral downward, although the economy maybe able to recover in 2-3 years our standard of living will take at least 10 years to return." Cyprus President Nicos Anastasiades, meanwhile, sent a tweet in which he expressed gratitude to Cypriots."Thank you for your messages of support. They gave me strength during last night's struggle to secure the best possible outcome for Cyprus," said the tweet.

Cyprus secures bailout, avoids bankruptcy

Cyprus secured a €10bn package of rescue loans in tense, last-ditch negotiations early Monday, saving the country from a banking system collapse and bankruptcy that could have destabilised the entire euro area."We've put an end to the uncertainty that has affected Cyprus and the euro area over the past week," said Jeroen Dijsselbloem, who chairs the meetings of the 17-nation eurozone's finance ministers.In return for the bailout, Cyprus must drastically shrink its outsized banking sector, cut its budget, implement structural reforms and privatise state assets, he said. The country's second-largest bank will be shut down immediately, with all bond holders and people with more than €100 000 in their bank accounts there facing significant losses. The measures are likely to deepen the recession in Cyprus and lead to more job losses.The cash-strapped Mediterranean island nation has been shut out of international markets for almost two years. It first applied for a bailout to recapitalise its ailing lenders and keep the government afloat last June, but the political negotiations stalled. After a botched agreement last week, the European Central Bank moved forcefully to focus leaders' minds, threatening to cut off crucial emergency assistance to the country's banks by Tuesday if no agreement was reached."It's not that we won a battle, but we really have avoided a disastrous exit from the eurozone," said Cyprus' Finance Minister Michalis Sarris. "A long period of uncertainty and insecurity surrounding the Cyprus economy has ended."The eurozone finance ministers accepted the plan, reached after more than 10 hours of negotiations in Brussels between Cypriot officials and the so-called troika of creditors - the International Monetary Fund, the European Commission and the ECB."We believe that this will form a lasting, durable and fully financed solution," said IMF chief Christine Lagarde.Without a bailout deal by Monday night, the tiny nation of about 800 000 would have faced the prospect of bankruptcy, which could have forced it to become the first country to abandon the euro currency. That would have roiled markets and spurred turmoil across the entire eurozone of 300 million people, analysts said, even though Cyprus only makes up less than 0.2% of the eurozone's €10 trillion economy.After the eurozone's finance ministers' approval, several national parliaments in eurozone countries such as Germany must also approve the bailout deal, which might take another few weeks. EU officials said they expect the whole program to be approved by mid-April.Under the plan, Cyprus' second-largest bank, Laiki, will be restructured and holders of bank deposits of more than €100 000 there will have to take losses, Dijsselbloem said, adding that it was not yet clear how severe the losses would be."This will have to be worked out in the coming weeks," he added, noting that it is expected to yield €4.2bn overall. Analysts have estimated investors might lose up to 40% of their money.Savers' deposits with all Cypriot banks of up to €100 000 will be guaranteed by the state in accordance with the EU's deposit insurance guarantee, Dijsselbloem said. Laiki will be dissolved immediately into a bad bank containing its uninsured deposits and toxic assets, with the guaranteed deposits being transferred to the nation's biggest lender, Bank of Cyprus.Large deposits with Bank of Cyprus above the insured level will be frozen until it becomes clear whether or to what extent they will also be forced to take losses, the Eurogroup of finance ministers said in a statement.Dijsselbloem defended the creditors' approach of making deposit holders take heavy losses, saying the measures "will be concentrated where the problems are, in the large banks."The international creditors, led by the IMF, were seeking a fundamental restructuring of the country's outsized financial system, which is worth up to eight times the Cypriot gross domestic product of about €18bn. They said the country's business model of attracting foreign investors, among them many Russians, with low taxes and lax financial regulation had backfired and needed to be upended.The drastic shrinking of the financial sector, the wiping out of wealth through the losses on deposits, the loss of confidence with the recent turmoil and the upcoming austerity measures all mean that Cyprus is facing tough times."The near future will be very difficult for the country and its people," acknowledged the EU Commission's top economic official, Olli Rehn. "But (the measures) will be necessary for the Cypriot people to rebuild their economy on a new basis."Cypriot banks have been closed this past week while officials worked on a rescue plan, and they are not due to reopen until Tuesday. Cash has been available through ATMs, but long lines formed and many machines have quickly run out of cash.Amid fears of a banking collapse, Cyprus' central bank on Sunday imposed a daily withdrawal limit of €100 from ATMs of the country's two largest banks to prevent a bank run by depositors worried about their savings.The Cypriot government also approved a set of laws over the past week to introduce capital controls, in order to avoid a huge depositor flight once banks reopen.To secure the rescue loan package, the Cypriot government had to find ways to raise several billion euros on its own. The bulk of that money is now being raised by forcing losses on large deposit holders, with the remainder coming from tax increases and privatisations.The creditors had insisted that Cyprus couldn't receive more loans because that would make its debt burden unsustainably high. The IMF's Lagarde said Cyprus would now reach a debt level of about 100% of GDP by 2020.A plan agreed to in marathon negotiations earlier this month called for a one-time levy on all bank depositors in Cypriot banks. But the proposal ignited fierce anger because it also targeted small savers. It failed to win a single vote in the Cypriot Parliament.Cyprus' bid to secure more financial aid from its long-time ally, Russia, then failed, forcing it to turn again to its European partners. Russia was expected, however, to extend a €2.5bn emergency loan granted last year, also lowering the interest rate due and extending then repayment schedule.

Emerging markets thrive amid global woes

No matter how Cyprus's financial drama ends, its troubles show yet again that rich countries enfeebled by the great financial crisis remain a weak link in the world economy.By comparison, emerging markets are not only looking stronger but are also contributing more consistently to global growth.At worst, if Cyprus has to abandon the euro, fragmentation of the single-currency bloc would chill investment and could reduce trend growth in the eurozone's four major economies by a full percentage point on average in the period 2015-2020, according to economists at Bank of America Merrill Lynch.Under that scenario, trend growth in Germany could fall to zero, they said.Even if a solution is found that keeps the tiny Mediterranean island afloat, the inept handling of the crisis has revived political risk. Confidence in the eurozone economy, already relapsing after a fairly bright start to the year, can only suffer.Several banks lowered their forecasts for the bloc on the heels of grim purchasing managers' surveys, and a clutch of sentiment indicators and money supply figures this week are likely to further underscore the economy's precarious position.While policy makers in the eurozone struggle to keep the single currency together, the leaders of Brazil, Russia, India, China and South Africa (Brics) will meet to strengthen the foundations of emerging markets' growth.The summit, to be held in Durban, South Africa, on Tuesday and Wednesday, is expected to give the go-ahead for a joint foreign exchange reserves pool as well as an infrastructure bank.The initiative is being hatched partly out of frustration with international financial institutions that they judge to primarily reflect the interests of industrialised countries. Jim O'Neill, the chairman of Goldman Sachs Asset Management, noted that, for all the havoc that Cyprus can potentially cause, its annual output of $22bn is no more than China produces in a week."For the Cyprus fiasco week to be followed by a Brics summit week sums up the changing fortunes of global economic development," O'Neill, who coined the Brics acronym in 2001, said.Source of strengthPortugal, mired in recession due to austerity measures demanded by international lenders, provides a vivid illustration of the growing importance of emerging markets.The number of Brazilians visiting Portugal has been growing by double digits for more than five years, according to Francisco Calheiros, president of the Portuguese Tourism Confederation.Sales to China from Volkswagen's factory outside Lisbon, the country's second-largest exporter, jumped 54% in 2012 even though the plant's total output fell 15%.Angola is now Portugal's fourth-largest market, accounting for 6.6% of its exports more than the United States."This is how we've been able to grow our exports, which is the only component in our GDP which is going up," said Joao Leite, an economist with Banco Carregosa in Lisbon.Global figures illustrate the relative vigour of developing countries.Trade in goods between advanced economies is down by 6% over the past four years whereas trade among emerging markets is up by 38%, according to Ebrahim Rahbari and Deimante Kupciuniene, economists at Citi."Trade transformation towards emerging markets has a long way to go," they said in a report.America's wary eye on emerging marketsA stronger net export performance is one reason why the United States grew modestly in the fourth quarter 2012 after a preliminary report that the economy shrank.Thursday's final revision for gross domestic product for the October-December period is likely to show a 0.5% rate of growth, according to economists polled by Reuters.Among the week's other data highlights, US durable goods orders and personal income are both expected to have rebounded in February from a swoon in January induced in part by an increase in payroll taxes.The debate in the United States on whether free trade is to blame for the stagnation of middle-class incomes and rising inequality is likely to heat up as talks over transatlantic and transpacific market-opening deals gather momentum.In a study for the Peterson Institute for International Economics in Washington, Lawrence Edwards and Robert Lawrence acknowledge that some of the public's fears are well founded because free trade can cause short-term job losses that put communities under strain.But they conclude that rapid growth in emerging markets is part of the solution to America's problems, not their source, because a rising tide lifts all boats."Developing country growth has therefore contributed toward faster US export growth, an increase in the variety of imports available to Americans, and higher terms of trade associated with any given trade balance," they wrote.

Saudi: $100 a fair price for oil

Oil prices at around $100 a barrel are reasonable for consumers and producers, Opec heavyweight Saudi Arabia's oil minister said on Monday, again highlighting the top crude exporter's preferred oil price.Saudi Arabia's Gulf ally Kuwait echoed the comments on price, saying the current levels were fair, with the market a little bit oversupplied. "I just came from Hong Kong and I told everybody, in 1996, I thought $20 a barrel was reasonable; in 2006 I thought $27 a barrel was reasonable and now it is around $100 a barrel. I told them again it is reasonable," Ali Al Naimi told reporters asking him what the fair price for consumers and producers would be. Current oil prices will not deter economic growth, he told an investment conference in Hong Kong last week, amid warnings from the International Energy Agency earlier this month on worsening Chinese business sentiment, a European slowdown and the prospect of US budget cuts potentially limiting demand for oil worldwide.In the second quarter, Saudi Arabia is expected to increase its oil output to match higher Chinese demand, industry sources said in February. Benchmark Brent has traded above $100 a barrel for most of the time since early 2011, driven by supply concerns. Unrest in Libya to a standoff over Iran's nuclear programme have all helped keep prices high, worrying investors that elevated energy costs will hurt the fragile global recovery. Brent swung between a high of $128.40 and a low of $88.49 and gained just 3.5% in 2012 from a year earlier. Prices for the benchmark crude so far this year have swung between $119.17 and the $106.80 a barrel it hit on Monday before rebounding to above $108 a barrel. Both Naimi and his Kuwaiti counterpart were speaking on the sidelines of an energy conference in Kuwait.Hani Hussein, Kuwaiti oil minister, said Opec member Kuwait's average oil production in March was a little less than 2.9 million barrels per day, but the market was a little bit oversupplied. Kuwait produces on average around 3 million bpd.

NEWS,24.03.2013

Cyprus faces moment of truth

Cyprus President Nicos Anastasiades headed to Brussels on Sunday for emergency talks with the island's international creditors in a bid to avert bankruptcy in a crisis that is again threatening the stability of the wider eurozone.The clock is ticking for the tiny country after the European Central Bank threatened to halt emergency funding if there is no deal by Monday, a day before Cyprus's banks are due to reopen after a 10-day shutdown.Cyprus and its creditors are trying to nail a deal that will restructure the island's banks and deliver up to €6bn from bank deposits in order to resurrect an agreement for a bailout worth up to €10bn."Unfortunately, the events of recent days have led to a situation where there are no longer any optimal solutions available. There are only hard choices left," European Union economics head Olli Rehn warned Saturday. He acknowledged that Cypriot leaders faced hard choices to try to limit the damage from the blow to its bloated banking sector, after a firestorm of protest over the EU plans to impose a special levy on bank customer deposits that caused global concern. Rehn said he welcomed "progress" made towards meeting the EU-IMF demands but said it was essential that an agreement was reached on Sunday night. "The negotiations are at a very delicate stage. The situation is very difficult and the time limits are very tight," Cypriot government spokesperson Christos Stylianides said after Anastasiades left on a special flight for Brussels.Anastasiades meets at 13:00 GMT with ECB head Mario Draghi, IMF managing director Christine Lagarde, EU president Herman Van Rompuy, European Commission president Jose Manuel Barroso and Eurogroup chairman Jeroen Dijsselbloem, sources told AFP.Dijsselbloem will then gather finance ministers from all 17 currency partners from 17:00 GMT for what is likely to prove yet another sleepless night in snow-covered Brussels. The sums involved are a pittance compared to Cyprus's closest ally Greece, which needed hundreds of billions all told in the eurozone's first bailout three years ago.But with Cypriot banks in lockdown already for 10 days and the ECB threatening to pull the rug out from under Nicosia on Monday, the fallout from the current crisis could infect other troubled economies."We have learnt down the years that even little problems can become intractable," said Holger Schmieding, chief economist with Germany's Berenberg Bank. "There's just no telling what can unfold in this type of situation."German Finance Minister Wolfgang Schaeuble also warned that if Cyprus was to stay in the eurozone it had to meet the terms of the rescue package."The eurozone countries want to help Cyprus, but the rules must be respected, the aid must be relevant and the programme must tackle the problems at their root," he told the Welt am Sonntag.Cypriot reports suggested officials had made progress with EU and IMF representatives, having agreed a 20% haircut on Bank of Cyprus and a 4% levy on other banks.Private channel Mega TV said the final stumbling block might not be settled before Sunday's meetings.A radical restructuring of the island's second largest lender Laiki (Popular Bank) will see all deposits over €100 000 put into a "bad bank" where they will be tied up for years and may never be fully recovered.But negotiations stumbled on EU-IMF demands for a substantial levy on deposits above the same threshold in the Bank of Cyprus to avoid it facing similar restructuring. It holds more than a third of all deposits.The haircut would take the form of a bond or share swap in a bid to get the measure through parliament, after MPs flatly rejected an earlier plan for a levy on all deposits.Cyprus negotiators had been desperate to avoid the Bank of Cyprus being subjected to the same bitter pill imposed on Laiki.A threat to Bank of Cyprus's pension fund sparked an angry march on parliament by bank staff on Saturday and a threat of industrial action.The Cypriot economy is reeling from the prolonged bank closure, imposed for fear of a run by panicked depositors, which has seen many businesses accept only cash transactions.Overnight, vandals spray-painted the front of Anastasiades' Nicosia party headquarters with slogans including "Kleftes" Greek for "thieves" and "Get out."

Cyprus bailout talks go to the wire

Cyprus still had no final agreement early on Sunday on the terms of a bailout deal to save its eurozone economy from imminent bankruptcy as its leaders braced for make-or-break talks in Brussels.Cypriot officials huddled with EU and IMF representatives until nearly midnight (22:00 GMT) on Saturday in a bid to find a way to meet their conditions for unlocking €10bn in desperately needed emergency loans by a Monday deadline.The so-called troika of the EU, IMF and European Central Bank is demanding that Cyprus raise €5.8bn in return and shrink its bloated financial sector.Privately run Mega TV said the government had reached agreement with troika representatives on most elements of a deal but that the final stumbling block might not be settled before the crunch 17:00 GMT talks between President Nicos Anastasiades and EU chiefs.EU Economy and Euro Commissioner Olli Rehn welcomed the "progress" made by Cyprus towards meeting the troika's demands and vowed "intensive work and contacts" through the night to try to a reach deal before the Brussels meeting."It is essential that an agreement is reached by the Eurogroup on Sunday night," Rehn said.The Cypriot parliament has already approved a painful package of banking reforms and there was reluctant consensus on a raft of other revenue-raising measures to put to eurozone ministers.A swinging restructuring to the island's second largest lender Laiki (Popular Bank) passed by MPs on Friday will see all deposits over €100 000 put into a "bad bank" where they will be tied up for years and may never be recovered in full.But negotiations stumbled on troika demands for a substantial levy on deposits above the same threshold in Bank of Cyprus the island's largest lender with more than a third of all deposits to avoid it being subjected to a similar restructuring.Mega TV said the government had finally agreed to a 20% haircut on Bank of Cyprus and a 4% levy on other banks, the latter to pay for the €600m Laiki pension fund lost in its restructuring.It said the haircut would be in the form of a bond or share swap in a bid to get it through parliament.MPs flatly rejected an earlier plan for haircut on bank deposits when it was put to them last Tuesday.The Cyprus president has invited all the island's party leaders to accompany him to Brussels in a bid to convince eurozone ministers that there will be no repetition of that defeat.Mega TV said the remaining sticking point was over whether Bank of Cyprus should absorb the "good bank" carved out of Laiki or they should remain two separate lenders as argued for by the government. The EU's Rehn acknowledged that Cypriot leaders had faced hard choices to try to limit the damage to the island's economy from the blow to its huge banking sector. "Unfortunately, the events of recent days have led to a situation where there are no longer any optimal solutions available," he said."There are only hard choices left." Cyprus negotiators had been desperate to avoid Bank of Cyprus being subjected to the same bitter pill imposed on Laiki.Laiki economist Yiannis Tirkides said that savings hived off into the bad bank would be "blocked" for years while it absorbs the lender's non-performing loans, which he put at about 30% of all Laiki lending.The threat to the bank's pension fund sparked an angry march by bank staff on parliament on Saturday and a threat of industrial action."If you don't secure our pension fund, we will go on strike from Tuesday," when branches are finally scheduled to reopen after a closure of more than a week, banking union chief Loizos Hadjicostis said.The strike threat was a serious one for an economy reeling from the prolonged bank closure that has seen many businesses accept only cash transactions.The streets of Nicosia were otherwise largely deserted on Saturday, as anxious residents waited to see which way the crisis turns."People don't know if they will have money tomorrow or the day after," said Yiorgos Andoniou, a jobless 57-year-old."We are in this situation because... we were living beyond our means for 25 years and now the bill has come," said a woman identifying herself as Catherine."Eventually we'll tighten our belts and go back to the practical and hard-working people that we were before."

Cyprus in last-ditch bailout talks

Cyprus President Nicos Anastasiades entered emergency talks with the island's international creditors Sunday seeking to avert bankruptcy in a crisis that is again threatening the stability of the wider eurozone.The clock is ticking for the tiny country after the European Central Bank threatened to halt life-support funding if there is no deal by Monday, a day before Cyprus's banks are due to reopen after a 10-day shut down.Cyprus and its creditors are trying to nail a deal that will restructure the island's banks and deliver up to €6bn from large bank deposits in order to resurrect an agreement for a bailout worth up to €10bn."Unfortunately, the events of recent days have led to a situation where there are no longer any optimal solutions available. There are only hard choices left," European Union economics head Olli Rehn warned on Saturday. He acknowledged that Cypriot leaders faced hard choices to try to limit the damage from the blow to its bloated banking sector, after a firestorm of protest over the EU plans to impose a special levy on bank customer deposits that caused global concern.Rehn said he welcomed "progress" made towards meeting the EU-IMF demands but said it was essential that an agreement was reached on Sunday night."The negotiations are at a very delicate stage. The situation is very difficult and the time limits are very tight," Cypriot government spokesperson Christos Stylianides said.Anastasiades's cortege complete with police escort entered EU headquarters in Brussels shortly after 14:00 (13:00 GMT), an AFP correspondent said. That followed a pit-stop in Athens on a special plane laid on by the European Commission, the Cypriot government said in a statement. Anastasiades was to meet with ECB head Mario Draghi, IMF managing director Christine Lagarde, EU president Herman Van Rompuy, European Commission president Jose Manuel Barroso, Eurogroup chairman Jeroen Dijsselbloem and Rehn, sources told AFP.Dijsselbloem will also bring in the finance ministers from all 17 currency partners from 17:00 GMT for what is likely to prove yet another sleepless night in snow-covered Brussels. One of those, France's Pierre Moscovici, said on television before leaving for Brussels that it was time to put an end to "casino economy" practices on Cyprus."If we don't, it's you, it's me, it's all of us who will be left picking up the tab," Moscovici said.The volume of Cyprus sovereign aid is a pittance compared to Nicosia's closest ally Greece, which needed hundreds of billions all told in the eurozone's first bailout three years ago.But with Cypriot banks in lockdown already for 10 days, the fallout from the current crisis could infect other troubled economies."We have learnt down the years that even little problems can become intractable," said Holger Schmieding, chief economist with Germany's Berenberg Bank. "There's just no telling what can unfold in this type of situation."German Finance Minister Wolfgang Schaeuble also warned that if Cyprus was to stay in the eurozone it had to meet the terms of the rescue package."The eurozone countries want to help Cyprus, but the rules must be respected, the aid must be relevant and the programme must tackle the problems at their root," he told Welt am Sonntag newspaper.Cypriot reports suggested officials had made progress with EU and IMF representatives, having agreed a 20% haircut on Bank of Cyprus and a 4.0% levy on other banks.A radical restructuring of the island's second largest lender Laiki Popular Bank will see all deposits over €100 000  put into a "bad bank" where they will be tied up for years and may never be fully recovered.But negotiations stumbled on EU-IMF demands for a substantial levy on deposits above the same threshold in the Bank of Cyprus to avoid it facing similar restructuring. It holds more than a third of all deposits.The haircut would take the form of a bond or share swap in a bid to get the measure through parliament, after MPs flatly rejected an earlier plan for a levy on all deposits.Cyprus negotiators had been desperate to avoid the Bank of Cyprus being subjected to the same bitter pill imposed on Laiki.A threat to Bank of Cyprus's pension fund sparked an angry march on parliament by bank staff on Saturday and a threat of industrial action.

Israel must ease new Gaza restrictions

Two Israeli rights groups demanded on Sunday that Israel lift fishing restrictions imposed on Gaza after militants fired two rockets across the border, slamming them as "collective punishment."Israel on Thursday halved the area in which Palestinian fishermen are permitted to work, closed the Kerem Shalom goods terminal and imposed restrictions on people wanting to leave the territory after two rockets hit southern Israel, causing damage but no casualties.The move, which saw the fishing zone cut from six nautical miles to three, was condemned by the Israeli human rights group B'Tselem as well as by Gisha, which campaigns for Palestinian freedom of movement."The decision to once again reduce the fishing range in response to missile fire by armed groups constitutes collective punishment imposed on fishermen for the actions of others," said a statement from B'Tselem.It said Israel's duty to protect its citizens "cannot justify the harsh damage to fishermen who have done nothing wrong"."B'Tselem calls on the military to rescind its latest decision and the restrictions imposed on fishermen in the Gaza Strip in the past years, and to permit fishing in the 20 nautical miles range, as was set under the Oslo agreements."In a letter to Defence Minister Moshe Yaalon, Gisha director Sari Bashi said it was "the second time in less than a month" Israel had blocked civilian travel and goods transfer in response to rocket fire and urged him to lift the restrictions."In the last month, there appears to be a new policy toward the Gaza Strip, in which Israel is openly restricting civilian movement to and from Gaza, not because of a concrete security necessity, but rather as a punitive step taken against the civilian population in direct response to fire by combatants," she wrote.The group condemned the rocket fire as "a blatant violation" of international law, but also noted Israel's obligation to avoid harming civilians, saying the recent steps were "entirely unacceptable".Israel on Friday resumed full diplomatic ties with Turkey after apologising for a deadly 2010 raid on a Gaza aid flotilla which left nine Turkish activists dead.As part of the deal, Prime Minister Benjamin Netanyahu pledged "to work on improving the humanitarian situation" in the Palestinian territories in a phone call with his Turkish counterpart Recep Tayyip Erdogan brokered by US President Barack Obama on a landmark visit.The radical Palestinian group Islamic Jihad on Sunday slammed the Israeli apology as "poisonous."It was an "imaginary victory for Turkey and a poisoned apology from Israel... which came under pressure from US President Barack Obama," Islamic Jihad leader Khaled al-Batsh said in a statement on the group's Facebook page.Batsh said the apology was an Israeli attempt to "renew military, security and political cooperation with Turkey... and to prevent it from improving any further than necessary its relationship with the Islamist dimension: Iran and Egypt.""The suggestion that this is a victory for Turkey is one of lies. It will not result in lifting the blockade on Gaza the one who will benefit is the Zionist enemy," he said.

NY's Bloomberg predicts more gun checks

New York Mayor Michael Bloomberg predicted on Sunday that pressure from the American public would eventually force the US Congress to expand background checks for gun buyers, even though the measure faces an uncertain fate in the Senate.As Bloomberg launched a $12m national advertising campaign aimed at prodding members of the Senate to support expanded background checks, he said the measure's widespread popularity would trump gun-rights groups like the powerful National Rifle Association that oppose it."If 90% of the public wants something and their representatives vote against that, common sense says they are going to have a price to pay for that," Bloomberg said on NBC's Meet the Press. A top NRA executive predicted that the self-made billionaire' s efforts would change few minds. "He can't buy America," NRA executive vice president Wayne LaPierre said on the same programme.Lawmakers are scaling back President Barack Obama's ambitions for sweeping gun control measures, which took on a new urgency after the 14 December school shooting in Newtown, Connecticut, that killed 20 children and six adults.Senate Democratic leader Harry Reid effectively ruled out an assault weapons ban last week, and limits on high-capacity ammunition clips also are likely to fall short.Gun-control advocates say a system of expanded background checks would be the single most effective way to reduce gun violence across the country. Opinion polls show that more than 90% of all American voters and 85% of gun owners support it.While such a measure could pass the Democratic-controlled Senate, it faces long odds in the House of Representatives, where Republicans hold the majority."I don't think their bill will pass the Senate and even if it does it won't pass the House," Republican Senator Tom Coburn said on C-SPAN.The NRA argues that expanding existing background checks to cover the 40% of gun sales that are now exempt would only create more hurdles for law abiding citizens and do little to deter criminal purchases. The NRA instead wants the federal government to step up prosecutions under existing gun laws and boost security in schools.Bloomberg acknowledged that a national ban on assault weapons is less popular with the public and is unlikely to succeed in Congress.Several states, including New York, have passed assault-weapons bans of their own but others like Colorado, which tightened its gun laws recently, have not restricted the military-style rifles that are popular with gun owners."I think the feeling right now around assault weapons, at least in Colorado, is that it's so hard to define what an assault weapon is," Colorado Governor John Hickenlooper said on CNN's State of the Nation. "There's a lot of questions whether the 10-year federal ban that existed made a difference," Hickenlooper said. "It's a tough sell."

NEWS,23.03.2013

Kerry, Abbas discuss 'new' peace efforts

Palestinian president Mahmoud Abbas on Saturday told US Secretary of State John Kerry that Israeli settlements "endanger" peace efforts, at a meeting in the Jordanian capital to discuss a "new" peace push, the Palestinian ambassador said."Kerry and Abbas discussed possible steps to revive a new political process for peace," Palestinian ambassador in Amman Attallah Kheiry said."Abbas stressed that Israeli settlements endanger the peace process and that Israel should free Palestinian prisoners."The two sides, Kheiry said, "evaluated US President Barack Obama's visit to the Palestinian territories".During his four-day visit to the region, Obama, met top Israeli and Palestinian leaders in Jerusalem and Ramallah, but there was no visible breakthrough in the impasse between the two sides.Kerry, who accompanied Obama, was to hold a separate meeting with Israeli Prime Minister Benjamin Netanyahu in the evening.The US secretary of state will be Obama's new pointman on the Middle East, as part of the renewed US efforts to push the sides back to negotiations.Israel and the Palestinians have not had direct talks for over two years.

Obama ends Middle East trip

US President Barack Obama strolled among the ancient Jordanian ruins at Petra on Saturday, before heading home after a four-day Middle East tour dominated by his embrace of Israel.Obama flew by helicopter to view the rose-coloured stone ruins of the ancient Nabataean city, after winds from a sandstorm abated and allowed him to make the 55-minute trip across the rugged plains and mountains of Jordan.On Friday, high winds in Israel forced Obama to take his motorcade instead of his Marine One chopper to visit the Church of the Nativity in Bethlehem, and there had been fears his jaunt to Petra would also be scrapped.But Obama was able to spend two hours at the fabled tourist spot before returning to Amman, where Air Force One lifted off headed to Washington in the early afternoon.The US president, on the first foreign journey of his second term, had earlier emerged into a sunlit square facing the iconic Treasury building at Petra, carved out of the towering walls of sandstone in southern Jordan."This is pretty spectacular," Obama, in a blue windbreaker, sweater, khaki pants and sunglasses said, peering up at the rocky cliffs."It's amazing."Obama arrived at the ruins through a famous passageway squeezed between rock formations, and was led through the World Heritage Site by Dr Suleiman al-Farajat, a University of Jordan tourism professor.The visit to Petra, Jordan's most visited tourist site, wrapped up a four-day stay in the Middle East designed to assure Israel he is serious about its defence from Iran and to keep Israeli-Palestinian peace hopes alive.Obama also warned on Friday that he was worried that Syria could become an enclave of "extremism" as his own policy towards the vicious sectarian war threatening to tear the nation apart came under scrutiny."[Extremists] are very good about exploiting situations that, you know, are no longer functioning. They fill that gap," Obama said at a news conference with King Abdullah II.Obama's reluctance to arm opposition groups in Syria, fearing they are, or could become, extremist Islamist foes with links to al-Qaeda, dogged him during questioning by journalists. On Friday, a Jordanian reporter asked him why superpower America had no plan to end the killing in Syria, prompting Obama to defend US diplomatic efforts to isolate Syria and to note hundreds of millions of dollars in US aid.He also said he would ask Congress to provide $200m in budget support for Jordan this year as it cares for more than 450 000 Syrian refugees. "This will mean more humanitarian assistance and basic services, including education for Syrian children so far from home, whose lives have been upended," he said. At least 120 000 Syrian refugees are in the sprawling northern border camp of Zaatari alone, and Jordan has repeatedly complained that the growing numbers of Syrians, expected to reach 700 000 this year, are draining its resources. Obama also warned during his visit that the use of chemical weapons by Syria's armed forces would be a game changer that would invite international action.He wrapped up his first visit to Israel as president on Friday by giving Prime Minister Benjamin Netanyahu, with whom he had feuded in his first term, a hug.He also pulled off an unexpected coup, engineering a deal to restore diplomatic relations between estranged US allies Israel and Turkey, concluded in a tarmac telephone call at Tel Aviv airport before he departed for Jordan.Netanyahu apologised to Turkey and his counterpart Recep Tayyip Erdogan for a deadly raid on a Gaza aid flotilla and announced a full resumption of diplomatic ties as well as compensation to end a near three-year row.The centrepiece of Obama's visit to Israel was a powerful direct appeal to young Israelis on Thursday when he declared the two-state peace solution was very much alive and their only hope of true security, urging them to try to see the situation through Palestinian eyes.He also accepted that Israel had a right to ensure its self-defence, but urged time for his diplomatic push to work to halt Iran's controversial nuclear programme.

White House will push gun laws - Biden

The White House will keep pushing for tough gun ownership laws despite little support in Congress, Vice President Joe Biden said on Thursday, as fellow Democrats vowed to introduce a bill to halt violence."I'm not going to rest and nor is the president until we do all of these things," Biden told a press conference in New York with Mayor Michael Bloomberg and bereaved parents from Newtown, where 20 elementary school children were shot dead in December."For all those who say we couldn't or shouldn't ban high-capacity magazines, I ask them just one question: think about Newtown,"Biden said in a brief but emotional speech in which he referred to the "beautiful little babies" killed at Sandy Hook Elementary.Turning to face the parents of the school teacher who was killed when she tried to confront the Newtown shooter, Biden said: "It's time for the political establishment to show the courage your daughter showed."Senate Democrats have conceded that their proposed ban on assault rifles, like the gun used by a deranged intruder in the Newtown slaughter, has no way of passing in Congress.But Senator Majority Leader Harry Reid said he was introducing a bill with three other gun violence prevention measures, including a requirement for background checks for all gun sales, and would bring it to a vote in April."I hope negotiations will continue over the upcoming break to reach a bipartisan compromise on background checks, and I am hopeful that they will succeed," Reid said in a statement ahead of a two-week congressional recess.The Senate's top Democrat had dropped the assault weapons ban from the broader legislation earlier this week, saying he wanted a bill with a chance of passage.But in what appeared to be a concession to the ban's chief sponsor, Democrat Dianne Feinstein, Reid said he would "ensure that a ban on assault weapons, limits to high-capacity magazines, and mental health provisions receive votes" on the Senate floor. "In his State of the Union address, President Obama called for all of these provisions to receive votes, and I will ensure that they do. "Bloomberg, a billionaire who has focused heavily on reducing crime in New York and on a broader anti-gun campaign across the United States, joined Biden in hammering Congress. "The only question is whether Congress will have the courage to do the right thing," he said, highlighting the huge, barely reported death toll from gun violence around the country."It has been 97 days since Newtown. In that time, we estimate that more than 3 000 Americans have been murdered. "If Congress does nothing, another 12 000 people will be murdered with guns this year alone. "Despite the divide in political circles, polls show Americans overwhelmingly support universal background checks on gun purchasers, among other new regulations. "We remain optimistic Congress will take action... because the American people could not be more clear about where they stand," Bloomberg said.Gun control is one of the most politicized issues in a country rich in gun lore and where the Constitution is interpreted as guaranteeing the right of citizens to bear arms.Opponents to any new gun laws, including the politically powerful National Rifle Association, argue that legal restrictions are the thin end of a wedge into constitutional rights and that criminals can in any case buy weapons illegally when needed.However, Biden said Americans back "common sense" measures like background checks and alerts to the authorities when someone tries to amass weaponry."Not one (new rule) infringes on anybody's Second Amendment constitutional rights," he said.One of the weapons used in Newtown, the popular military-style Bushmaster .223 rifle, is "a weapon of war," Biden said. "That weapon of war has no place on American streets."The vice president also asked whether the shooter would have been capable of spraying so many bullets had he been forced to use smaller ammunition clips as the White House wants rather than the 30-round clips that allowed him to keep firing for longer.Neil Heslin, whose young son was killed in Newtown, had difficulty keeping his composure as he addressed the press conference, saying: "Quite honestly, I'm really ashamed to see that Congress doesn't have the guts to stand up."

UN: Easier to find a phone than a toilet

The United Nations says six billion of the world's seven billion people have mobile phones - but only 4.5 billion have access to toilets or latrines.So the UN is launching a global campaign to improve sanitation for the 2.5 billion people who don't have it.UN Deputy secretary general Jan Eliasson calls their plight "a silent disaster" that reflects the extreme poverty and huge inequalities in the world today.Eliasson said on Thursday that toilets and open defecation, which is a fact of life for 1.1 billion people, are rarely talked about at the UN.But he said the problem must be addressed immediately for the world to meet the UN goal of halving the proportion of people without access to sanitation by 2015.

Cyprus under pressure to rethink levy

Cypriot politicians were facing increasing pressure to rethink their rejection of a levy on bank deposits, as a deadline to secure an EU bailout loomed closer on Saturday. They approved the first three of eight measures put forward by the government in their bid to meet the terms of the EU bailout in a late-night session late on Friday. But with the clock ticking down to a crunch Sunday meeting with eurozone finance ministers, MPs still have to debate more contentious issues, such as a tax of up to 15% on bank deposits of €100 000 and more. The government needs to seal the package by Monday or face being denied European Central Bank emergency funds, a blow that would devastate the island's banks and its economy. On Tuesday, MPs flatly rejected proposals for a 9.9% tax on bank deposits over €100 000, with a 6.75% levy on deposits of €20 000-100 000.The original proposal had also proposed to tax savings below €20 000, but the parliament's financial committee had dropped it before the vote. The levy would have hurt many ordinary Cypriots as well as many Russians, including wealthy tycoons. They hold between a third and half of all Cypriot deposits and are believed to have more than $30bn in private and corporate cash in the island's banks. With the EU deadline approaching, Cyprus's chamber of commerce and employers' federation have joined its major banks in calling on deputies to reconsider their rejection of the levy. Some of the bank employees demonstrating outside parliament were among those calling for a rethink on the tax, or "haircut". In Friday's late-night session, the MPs backed a national solidarity fund to be set up through the nationalisation of public and private sector pensions.They also approved capital controls to prevent a run on the island's troubled banks when they finally reopen on Tuesday after more than a week. And they passed a restructuring plan drawn up by the central bank that will separate good debts from bad in the island's troubled banks, particularly second largest lender Popular Bank - Laiki in Greek.This bill, easily the most contentious of the three approved, passed by 26 votes to two, with 25 abstentions. Acting ruling Disy party leader Averof Neophytou has appealed to MPs to back the legislation, saying it would guarantee all deposits of up to €100 000. Those with larger balances however might have to wait years to get all their money back.Neophytou said the plan would also secure some 8 000 jobs in Popular Bank, although a few hundred might be lost through restructuring.Friday's emergency session came after angry bank employees, fearful for their jobs, demonstrated outside parliament as rows of riot police lined up behind barriers facing them.MPs adjourned the session shortly before midnight with no time set to resume debate on the rest of the government's package. It is aimed at raising €5.8bn to unlock loans worth €10bn.German Chancellor Angela Merkel warned Cyprus against "exhausting the patience of eurozone partners" at a meeting Friday with the parliamentary group of her junior Free Democratic Party coalition partners, participants told AFP.Some EU sources have said the bloc is ready to eject Cyprus from the eurozone to prevent contagion of other debt-hit members such as Greece, Spain and Italy.While bank employees demonstrated on Friday in favour of pushing through a levy on deposits, other protesters vehemently oppose the measure. A group of about 30 hooded youths burned a European flag next to the parliament building in front of police barricades. "The haircut is robbery," they chanted. Eurozone finance ministers and IMF chief Christine Lagarde will gather in Brussels on Sunday in a bid to finalise the Cyprus rescue before Monday's deadline.

NEWS,22.03.2013

China, Russia eye energy, investment deals

China's new leader Xi Jinping, on his first foreign trip as president, held talks with Russian host Vladimir Putin on Friday which focused on a raft of energy and investment accords. A key deal expected to be signed between the two nations will see Russia ramp up oil supplies to China, which is the world's biggest energy consumer."We are grateful for your decision to make your first foreign trip to our country," Putin said at the start of the Kremlin talks."Russian-Chinese ties are an important factor of international politics."Xi, who arrived in Russia accompanied by first lady Peng Liyuan, said he was eager to boost "strategic cooperation" with Putin, stressing his personal rapport with the Russian strongman."We always treat each other with an open heart," said Xi, who will travel to Africa after his Moscow talks."We are good friends," said Xi, who will preside over the world's second-largest economy for the next 10 years.Putin and Xi first met in 2010 when the Chinese leader, then vice-president, travelled to Moscow for talks.Earlier in the day Russian Deputy Prime Minister Dmitry Rogozin and his Chinese counterpart Wang Yang oversaw the signing of a number of deals.These agreements included a $2bn (€1.5bn) deal involving Russian energy firm En+ Group and China's largest coal company Shenhua Group to develop coal resources in Russia's Far East.Experts say the two leaders will use the symbolic visit to try and map out a cooperation plan for the next 10 years."Essentially we are talking about a new epoch in relations between Russia and China," said Sergei Sanakoyev, a veteran China expert with links to the Russian government.Once bitter foes during the Cold War, Moscow and Beijing have over the past years ramped up cooperation as both are driven by a desire to counterbalance US global dominance.At the UN Security Council, China and Russia have both vetoed resolutions to impose sanctions on Syrian President Bashar al-Assad's regime, which is locked in a two-year conflict with the opposition.Both Syria and North Korea are set to be high on the day's agenda. But the economy is expected to be at the forefront of the talks between Russia, the world's largest energy producer, and China, the world's largest energy consumer.Russia, which wants to diversify its energy markets away from Europe, needs to finalise a potentially huge gas deal which could eventually see almost 70 billion cubic metres of gas pumped to China annually for the next 30 years.The Russian state's natural gas giant Gazprom is likely to sign an agreement although not a firm contract, said company spokesman Sergei Kupriyanov.The commercial contract has so far proved elusive as talks have become mired in pricing disputes.Russia's biggest oil company Rosneft is expected to sign an agreement to boost supplies to China from the current 15 million tonnes a year. A Rosneft spokesperson declined to comment but Rosneft chief Igor Sechin indicated that the firm could increase supplies to China to 50 million tonnes a year."China is a strategic market for Rosneft," he told Russian media. "The goal of 50 million (tonnes a year) is not something that's unattainable."Sanakoyev, general secretary of the Russia-China Chamber for Promotion of Trade in Machinery and Innovative Products, said the two countries will also sign a preliminary agreement allowing Chinese companies to help develop Russia's remote Far East. Xi's first overseas trip will then take him to Africa to shore up his resource-hungry country's soaring influence on the continent with visits to Tanzania, South Africa and the Democratic Republic of Congo.Russia and China are members of the BRICS grouping of emerging economies, which includes Brazil, India and South Africa and which will hold a summit in South Africa next week attended by both Putin and Xi.

Russia rebuffs Cyprus, EU awaits 

'Plan B'

Russia rebuffed Cypriot entreaties for aid on Friday, leaving the island's increasingly isolated leaders scrambling to strike a bailout deal with the European Union by next week or face the collapse of its financial system.In Nicosia, lawmakers considered proposals to nationalise pension funds, pool state assets and split the country's second-largest bank in a desperate effort to satisfy exasperated European allies.The governor of the Central Bank, Panicos Demetriades, warned political leaders the country would face a disorderly bankruptcy on Tuesday unless they approved the bills, an official present at the talks said."The next few hours will determine the future of the country," government spokesman Christos Stylianides said before the parliamentary debate. "We must all assume our share of the responsibility."Even if the measures are approved, there was no confirmation they would raise the €5.8bn demanded by the EU in return for a €10bn bailout to avoid a default.Hundreds of protesters rallied outside the parliament and depositors, who began raiding banks' cash machines last weekend, queued again to withdraw what they could.The clock was running down to a Monday deadline set by the European Central Bank for a deal to be in struck before it cuts funds to Cyprus's stricken banks, potentially pushing it out of Europe's single currency.Nicosia angrily rejected a proposed levy on tax deposits in exchange for the EU bailout on Tuesday and turned to the Kremlin to renegotiate a loan deal, win more financing and lure Russian investors to Cypriot banks and gas reserves."The talks have ended as far as the Russian side is concerned," Russian Finance Minister Anton Siluanov told reporters after two days of crisis talks with his Cypriot counterpart, Michael Sarris.Russians have billions of euros at stake in Cyprus's outsized and now crippled banking sector, a factor in the EU's unprecedented demand that bigger depositors take a hit in the interests of keeping Cyprus afloat.But Siluanov said Russian investors were not interested in Cypriot gas and that the talks had ended without result. Sarris was due to fly home, where lawmakers were locked in yet more crisis talks.New bills submitted to the Cypriot parliament included a "solidarity fund" to bundle state assets, including future gas revenues and nationalised semi-state pension funds, as the basis for an emergency bond issue.JP Morgan likened it to "a national fire sale", and eurozone paymaster Germany indicated it opposed the nationalisation of pension funds.They were also considering a bank restructuring bill that officials said would see the country's second largest lender, Cyprus Popular Bank, split into good and bad assets, and a government call for the power to impose capital controls to stem a flood of funds leaving the island when banks reopen on Tuesday after a week-long shutdown.There was no silver bullet, however, and Cyprus's partners in the 17-nation currency bloc were increasingly unimpressed. It was unclear whether parliament would even vote on the bills on Friday."I still believe we will get a settlement, but Cyprus is playing with fire," Volker Kauder, a leading conservative ally of German Chancellor Angela Merkel, told public television ARD.Merkel told lawmakers that nationalisation of pension funds was unacceptable as a way to plug a hole in finances and clinch the bailout, parliamentary sources said.Two lawmakers quoted the chancellor as saying debt sustainability and bank restructuring would have to be the core of any deal, which she called a matter of "credibility".They also quoted Merkel as saying: "There is no way we can accept that", and "I hope it does not come to a crash".Her finance minister, Wolfgang Schaeuble, said he did not know whether eurozone finance ministers would meet over the weekend. "I can't say in advance if and when Cyprus will deliver results," he said.Cypriots have been stunned by the pace of the unfolding drama, having elected conservative President Nicos Anastasiades barely a month ago on a mandate to secure a bailout.News that the deal would involve a levy on bank deposits, even for smaller savers, outraged Cypriots, who raided cash machines last weekend.While EU lenders, notably Germany, had wanted larger, uninsured bank depositors to bear some of the cost of recapitalising the banks, Cyprus feared for its reputation as an offshore banking haven and planned to spread the levy to deposits under €100000 were covered by state insurance.Senior eurozone officials acknowledged in a confidential conference call on Wednesday that they were "in a mess" and discussed imposing capital controls to insulate the currency area from a possible collapse of the small Cypriot economy.Cyprus itself refused to take part in the call. Several participants described its absence as troubling and reflecting the wider confusion surrounding the island's predicament.In Brussels, a senior European Union official told ECB withdrawal would mean Cyprus's biggest banks being wound up, wiping out the large deposits it has sought to protect, and probably forcing the country to abandon the euro."If the financial sector collapses, then they simply have to face a very significant devaluation, and faced with that situation, they would have no other way but to start having their own currency," the EU official said.Cypriot banks have been crippled by their exposure to Greece, the centre of the eurozone debt crisis.On Thursday there were angry scenes outside parliament, where hundreds of demonstrators gathered after rumours spread that Popular Bank would be closed down and its staff laid off."We have children studying abroad, and next month we need to send them money," protester Stalou Christodoulido said through tears. "We'll lose what money we had and saved for so many years if the bank goes down."

Cyprus knocks German business confidence

German business confidence fell unexpectedly in March, data showed Friday, as weak economic data, political gridlock in Italy and the Cyprus crisis begin to sour business confidence in Europe's top economy.The Ifo economic institute's closely watched business climate index slipped to 106.7 points in March from 107.4 points in February. Analysts had been expecting a modest increase this month to 107.6 points."After rising sharply last month, the Ifo business climate index edged downwards in March," said Ifo president Hans-Werner Sinn. "Companies were slightly less positive about their future business outlook than in February, but assessed their current business situation almost as positively as last month."But he insisted: "The German economy remains on track in a challenging environment thanks to strong domestic demand."Ifo calculates its headline index on the basis of companies' assessments of their current business and the outlook for the next six months.The sub-index measuring current business slipped fractionally to 109.9 points in March from 110.2 points in February. And the outlook sub-index fell by one full point to 103.6 points.Cyprus's Parliament overwhelmingly rejected a proposed tax on bank deposits as a condition for aid, pushing the Mediterranean island a step closer to the brink of financial meltdown.The Cypriot Parliament is expected to discuss a new banking bill on Friday. This follows reports that the European Central Bank would withdraw its emergency liquidity assistance programme by next Monday if an agreement has not been agreed.

US congress OKs funding stopgap

US lawmakers approved a funding stopgap on Thursday that prevents a government shutdown, but their clash over budget blueprints signaled a contentious debate over the future of federal spending. A trio of key votes bookended the action in Congress ahead of a two-week congressional recess, the most urgent one being on the so-called continuing resolution, a $1.2 trillion appropriations measure that will keep the doors of federal agencies open through September, the end of the fiscal year. The Senate passed the measure on Wednesday, and with the House following suit and making no changes, it now heads to President Barack Obama's desk for his signature.The CR locks in the $85bn in automatic spending cuts mandated by the so-called sequester, although it cushions the blow by providing some flexibility within the Pentagon and other departments to make more targeted, less reckless cuts.Obama must sign the CR into law by March 27 or the US government will go into partial shutdown.With 2013 funding largely resolved, lawmakers turned immediately to the impasse over future government spending, as well as the looming battle over raising the country's borrowing cap. The House passed the plan crafted by Paul Ryan, the House Budget Committee chairperson and last year's failed Republican vice presidential nominee, along a mostly party-line vote, 221 to 207."We've done the hard work of bringing this plan forward," House Speaker John Boehner told members on the floor.All US budget blueprints are essentially political messaging documents, leaders on both sides acknowledged on Thursday.Still, 10 Republicans voted against the Ryan plan. And when it was brought to a vote in the Democratically-led Senate, it was rejected 40-59, with five Republicans opposed, potentially weakening the Republican bargaining hand during upcoming negotiations.The Ryan blueprint aims to balance the budget over the next 10 years, but Democrats denounce it as a recipe for a decade of austerity marked by slow economic growth and dramatic cuts to social programs, education and training.It would slash federal spending, reform entitlements and repeal Obama's landmark healthcare law. It also insists on no new taxes, despite aiming to pare down the $16 trillion national debt.Chris Van Hollen, top Democrat on the House Budget Committee, criticised the Ryan plan as "an uncompromising ideological approach to our budget issues."The Democrats introduced their own budget this week for the first time in four years, and with the Ryan plan rejected, the blueprint by Senate Budget Committee chair Patty Murray could be voted on as early as Friday.Murray is pushing what she says is a balanced approach to deficit reduction, including targeted spending cuts and new tax revenue."The House Republicans have doubled down on the failed policies" that lost them the 2012 election Murray said.An ideological battle is brewing, with House minority leader Nancy Pelosi accusing Ryan of seeking to line the pockets of the wealthy by hollowing out programs for seniors and the poor like Medicare, Medicaid and Social Security.Pelosi said she was ready to discuss ways to strengthen such entitlements, but warned: "If your goal, though, is to have them wither on the vine or be reduced in a way that does not meet their purpose, then them's fighting words."Boehner hinted that a battle over the debt ceiling loomed too, saying the only way the House would raise the ceiling before it is reached in May would be if Obama agreed to an equal amount in spending cuts."Dollar for dollar is the plan," Boehner told reporters. "The president has been clear that he's not going to address our entitlement crisis unless we're willing to raise taxes. I think the tax issue has been resolved.""So at this point then, I don't know how we're going to go forward."Asked if he saw the debt ceiling as leverage in getting Obama to agree to entitlement reform, Boehner said "there might be some there" but stressed: "I'm not going to risk the full faith and credit of the federal government."Meanwhile the Defense Department, thanks to the CR which tweaked the defense cuts, said it was delaying by two weeks this week's notices to 800 000 civilian workers that they would face rolling furloughs through September.

Airfares climb 25% - report

Airfares to some of the most popular U.S. and international destinations rose by 25% or more last year, and June was the most expensive month to travel, according to the website Kayak.com.The costs of flights from North America to Lima soared 33%, London fares were up 30% and tickets to New Orleans, Madrid, Munich and Sydney jumped 28%.Data compiled by the website, which compares hundreds of travel sites at once, showed a ticket to Paris, Beijing, Key West in Florida and Hong Kong was 25% more last year than in 2011, while the airfare to Toronto slumped 3%."We found that overall airfare increased 17% across the board from 2011 to 2012," said Maria Katime, a Kayak spokesperson."Toronto, of all the popular destinations that we looked at, was the only one where the airfare decreased," Katime added. Kayak did not analyze the reasons for the price increases.Despite the jump in airfare to London, which hosted the Olympics and celebrated Queen Elizabeth's Diamond Jubilee in 2012, was the top international destination for North American travelers, followed by San Juan, Cancun, Paris and Rome.Gambling mecca Las Vegas topped New York, Los Angeles, Orlando and San Francisco as the most popular US city to visit.Destinations that increased in popularity in 2012 but did not have hefty increases in airfare included Punta Cana and Santo Domingo in the Dominican Republic, Tokyo, Mumbai and Nashville.Kayak found that the cheapest flights were in January, February, September and October for domestic flights, and February and March for international fares. January was the least busy month to travel.The cheapest average airfares for domestic trips of up to one week are for flights leaving on Saturday and returning on Monday. For longer stays, leaving on Tuesday and returning on a Wednesday can lower airfares by an average of 10%.The website found the opposite for international trips. Prices were 21% lower than average for passengers on short trip of up to a week if they left on Tuesday and returned on a Wednesday, and 9% lower for longer stays with a Saturday departure and a Sunday return.

S&P cuts Cyprus rating

Ratings firm Standard & Poor's dealt a further blow to reeling Cyprus on Thursday, cutting its credit rating as the eurozone country struggles to avoid a banking sector meltdown.S&P lowered Cyprus's rating to 'CCC' from 'CCC+' as the country raced under a tight deadline to formulate an acceptable rescue plan with the European Union.The lowered credit rating would make it more costly for Cyprus to borrow, further exacerbating the stricken nation's woes.The US ratings firm warned the outlook was negative for the country, and that the rating could be lowered further if critical financing was not secured "soon."While a bailout deal is possible, S&P said, "In light of building economic and financial stability pressures, the terms of any support package are likely to be unpopular and challenging to implement in the context of a severe, protracted economic downturn and an extended bank holiday.""As a consequence, we believe that risks of a sovereign default are rising."S&P said that neither Cyprus's government nor bank shareholders appeared capable to meet the pressing capital needs of its teetering banks."In the absence of foreign private or official capital injections into the Cypriot banks, we see few means to recapitalise the distressed portion of the system without converting bank liabilities, including deposits, into equity claims," it said in a statement.The S&P downgrade came as the Cyprus cabinet, meeting in a crisis session, was attempting to approve an alternative bailout plan after parliament rejected an agreement with the EU and International Monetary Fund because it included a heavy tax on bank deposits.The European Central Bank, ratcheting up the pressure, said that Cyprus must agree a bailout deal by Monday or it will withdraw emergency financing of Cypriot banks.Standard & Poor's warned: "We would likely lower the rating if Cyprus's government fails to obtain a financing program soon."The CCC rating is three notches above sovereign default.S&P discounted speculation that the crisis may force Cyprus to exit the eurozone."Our baseline expectation is that Cyprus will remain a member of the European Economic and Monetary Union," it said.

Eurozone ready to discuss Cyprus bailout

Eurozone finance ministers extended a Cypriot olive branch late on Thursday, as their leader said currency partners were willing to work with Nicosia on new plans to make work a bailout that re-draws the island's stricken banking sector."The Eurogroup stands ready to discuss with the Cypriot authorities a draft new proposal, which it expects the Cyprus authorities to present as rapidly as possible," Eurogroup chairperson and Dutch Finance Minister Jeroen Dijsselbloem said in a statement after a two-hour conference call with peers.As the ministers huddled around their video screens, the Cyprus cabinet was in crisis session bidding to approve a "Plan B" after an earlier agreement with the EU and IMF collapsed amid anger over a weekend raid on savers that Dijsselbloem says should have been understood as a "wealth tax" aimed principally at mainly Russian oligarchs' investments.The European Central Bank has given Cyprus until Monday to find a way out of a crisis that has left Moscow furious over frozen government agency accounts with banks in the offshore finance centre shut for a full week, the worst affected imposing radically lowered cash withdrawal limits.With EU sources semi-openly floating a willingness to cut Nicosia loose if it doesn't clobber a finance industry Germany and others associate openly with the onward eurozone circulation of ill-gotten money-laundering gains, and a nervous crowd gathered outside the Cypriot parliament, Dijsselbloem's remarks served as an inducement to lawmakers there."The Eurogroup would subsequently, on the basis of a Troika analysis that needs to be undertaken, be prepared to continue negotiations on an adjustment programme," Dijsselbloem added, teeing up a tense weekend of negotiations from Moscow to Nicosia and Brussels or Berlin.However, in what analysts have warned is a dangerous game of Russian roulette, he also underlined that any new plan to fill a €6bn hole and so unlock up to €10bn in eurozone and IMF loans between now and 2016 would need to "respect" other demands already made by creditors.Rapid passing of legislation then provides a further hurdle in a race against time to prevent a collapse in the island's banking sector - one heavily based on deposits rather than credit, and so potentially more vulnerable than other victims during the debt crisis to runs on weak banks.As the political point-scoring continued, Dijsselbloem finished by insisting that ministers "reaffirmed the importance of fully guaranteeing deposits" below the sensitive threshold of €100 000 - the cut-off point for European Union legal protections.