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« Reply #5310 on: Mar 26, 2013, 06:57 AM »

March 25, 2013

Worries Over Violence Prompt Shutdown in Myanmar

By THOMAS FULLER
IHT

BANGKOK — A major commercial area of Yangon, Myanmar’s largest city, shut down on Monday after rumors spread there of sectarian attacks on Muslims. The shutdown reflected the nervous mood in the country after deadly rioting last week by Buddhist mobs.

The police in Yangon sent extra units to the area around Yuzana Plaza, which normally bustles with many Muslim shops, and to other neighborhoods in the city where false reports about attacks had spread, local news outlets reported.

Small-scale rioting and arson have been reported in at least three places in central Myanmar since last week, when violence broke out in the city of Meiktila and at least 32 people were killed.

Myanmar’s state news media reported on Monday that about 10,000 people were living in relief camps in Meiktila and the surrounding areas. The reports named more than 30 people who were suspected of inciting the riots, and said that some had been detained but that 10 suspects were still “on the run.”

Eleven Media, one of the country’s largest news organizations, quoted the head of the Mandalay region, U Ye Myint, suggesting that the riots had been orchestrated. “No one can deny that there are people or organizations that are involved behind the scenes,” Mr. Ye Myint was quoted as saying. “Concerned authorities have traced them, and they will be exposed.”

The government made similar claims after rioting killed more than 150 people, most of them Muslims, in western Myanmar last year. But the government has yet to publicly identify the groups that it believes are behind the violence.
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« Reply #5311 on: Mar 26, 2013, 06:59 AM »

March 25, 2013

China’s Leader Tries to Calm African Fears of His Country’s Economic Power

By CHRIS BUCKLEY
IHT

HONG KONG — China’s new president, Xi Jinping, sought to assure African countries on Monday that his government would heed complaints that relentlessly competitive Chinese companies were suffocating African efforts to nurture industry and jobs, and he promised aid, scholarships and technology transfers in an effort to counter those fears.

Mr. Xi delivered his defense of China’s economic stake in many African countries in a speech in Dar es Salaam, the seaside economic hub of Tanzania, where he arrived Sunday as part of his first tour abroad as national leader.

China has long boasted of its role under Mao Zedong as a supporter of African efforts to throw off Western colonialism, and Mr. Xi’s two-day visit to Tanzania has carried echoes of that past. On Sunday, he was greeted by hundreds of shouting well-wishers in an organized show of good will, Tanzanian and Chinese news reports showed.

But some African officials have voiced fears that China’s dominance as an exporter of cheap garments, appliances and other goods, and its appetite for unprocessed raw materials, have skewed economic ties and undermined African hopes to advance into industrial prosperity.

In his speech to Tanzanian politicians and officials, Mr. Xi contended that China was helping Africa to grow. But more candidly than his predecessor, Hu Jintao, he acknowledged that the relationship also faced strains.

“China frankly faces up to the new circumstances and new problems in Sino-African relations,” Mr. Xi told the audience, which regularly interrupted his speech with applause. “China has and will continue to work alongside African countries to take practical measures to appropriately solve problems in trade and economic cooperation so that African countries gain more from that cooperation.”

Mr. Xi spoke in a conference center built with Chinese loans and support, a symbol of the vaunted generosity he sought to emphasize, but potentially also of the competitive power that has irked some African politicians, trade unions and businesses.

China’s trade with all African countries, including North African nations like Libya and Egypt, reached $198 billion in total value in 2012, an increase of 19.3 percent from 2011, according to Chinese customs statistics. Oil, ore and other commodities from Angola, Nigeria and other resource-rich countries make up much of that trade. Trade unions and manufacturers in South Africa, Nigeria and other countries have said China’s relatively cheap manufactured goods are a threat to jobs and long-term growth.

“China takes our primary goods and sells us manufactured ones,” the governor of the Central Bank of Nigeria, Lamido Sanusi, wrote in The Financial Times this month. “This was also the essence of colonialism.”

Mr. Xi said China would abide by a promise made in 2012 to provide $20 billion in loans over three years for African infrastructure development, farming and businesses. He announced a plan to provide training for 30,000 Africans over the next three years, including 18,000 scholarships to study abroad — apparently in China, although Mr. Xi did not say so.

“We will strengthen mutually beneficial cooperation with African countries in agricultural, manufacturing and other spheres, helping these countries convert their resource advantages into developmental advantages,” he said in the address, broadcast on Chinese television.

Tanzania is the second leg of Mr. Xi’s first trip abroad since he was appointed president this month. That appointment completed a formal leadership succession that began in November, when he succeeded Mr. Hu as Communist Party chief.

China supported Tanzania after it emerged as a new state in the 1960s, and in the 1970s China helped build a railway line that linked Tanzania to Zambia, a project that came to symbolize Mao’s ambitions to spread his revolutionary fervor to Africa.

Mr. Xi flew to Tanzania from Russia, and he will next visit South Africa, where he will attend a summit meeting of the so-called Brics emerging countries: Brazil, Russia, India, China and South Africa. His final stop will be the Republic of Congo.

Since taking the top job, Mr. Xi has declared his ambitions to see China rise as a major power. But he told his audience in Tanzania that his government remained committed to strong ties with African countries.

“This will not change at all because of China’s own growth and rising international stature,” he said. “I can clearly tell all my friends here that under new circumstances, the importance of Sino-African relations will not decline, but will instead rise.”

Jeffrey Gettleman contributed reporting from Nairobi, Kenya.
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« Reply #5312 on: Mar 26, 2013, 07:00 AM »

March 25, 2013

Hong Kong Court Denies Residency to Domestics

By KEITH BRADSHER
IHT

HONG KONG — Hong Kong’s highest court ruled unanimously on Monday that a woman from the Philippines who had lived and worked here for nearly 27 years as a domestic helper was not entitled to permanent residency, ending an acrimonious legal fight over the immigration rights of migrant workers.

Public opinion surveys had shown that a large majority of Hong Kong citizens opposed granting permanent residency to the city’s domestic helpers, which would give them the right to live here for the rest of their lives and use the nearly free public health care system and other social services. Many residents and the local government feared that granting permanent residency would have resulted in increased social spending.

But activists for domestic helpers, along with Mark Daly, the lawyer who championed their cause in the legal battle, contended that denying permanent residency would cement lasting divisions in Hong Kong based on gender and race. Virtually all of the estimated 300,000 foreign domestic helpers in this city of seven million are women, and they are not mainland Chinese, who qualify for separate rules for permanent residency and passports under Hong Kong’s Basic Law, the city’s miniconstitution.

The decision on Monday by the Court of Final Appeal, Mr. Daly said, “is a regrettable decision; it basically entrenches their being second-class citizens.”

Lai Tung-kwok, Hong Kong’s secretary for security, welcomed the court’s decision, saying at a news conference that the government would rely on it in handling a recent surge in applications from domestic helpers for permanent residency. There were 1,067 such applications filed between September 2011, when the legal effort on behalf of foreign domestic helpers began attracting attention, and the end of last week, according to the city’s Immigration Department.

The Hong Kong decision coincides with debates in the European Union and the United States over what legal rights should be extended to illegal immigrants, as opposed to the contract workers in the dispute here.

The landmark case highlighted questions of judicial independence, with Hong Kong’s government having put heavy pressure on the court to reject permanent residency for foreign domestic helpers.

In an unusual and highly contentious move, the local government asked the court in advance to refer a central issue in the case to the Standing Committee of the National People’s Congress in Beijing, which could be expected to side with the Hong Kong government. In issuing its decision in the government’s favor, the court said that its ruling meant there was no need to seek a binding legal interpretation from Beijing.

Yet the ruling also made it clear that there could be circumstances in the future in which the court would seek such an interpretation.

With the decision, the judges “on the one hand maintain the authority of the Court of Final Appeal, and at the same time try not to be too aggressive to the National People’s Congress,” James Sung, a political science professor at the City University of Hong Kong, said in an interview outside the courthouse, a brick mansion downtown.

The decision had been watched around Asia as a sign of whether Hong Kong, a vast majority of whose population is ethnic Chinese, would embrace a more multiethnic future. Rimsky Yuen, Hong Kong’s secretary for justice, said that the territory would “certainly endeavor to maintain Hong Kong as a cosmopolitan society.”

The ruling also comes as China’s new president, Xi Jinping, has spoken in a series of speeches of a “China dream” that blends nationalism and socialism in calling for a muscular military combined with an economic rejuvenation of China under Communist Party guidance.

There was no immediate reaction to the ruling from the Hong Kong consulates of the Philippines and Indonesia, the two countries that provide the largest number of domestic helpers to Hong Kong. Both countries have also been warily watching China’s increasingly assertive territorial claims in the South China Sea and the East China Sea, which particularly affect Brunei, Japan, Malaysia, the Philippines and Vietnam.

The Basic Law provides that people who are “ordinarily resident” in the city for at least seven years are entitled to permanent residency. But Hong Kong’s immigration ordinance says that no matter how many years people live in the city as contract workers, they do not count as “ordinarily resident” during those years.

Mr. Daly and his clients, Evangeline B. Vallejos and Daniel L. Domingo, challenged the immigration ordinance as an unconstitutional violation of the Basic Law. A lower court had ruled in their favor, while an appellate court had ruled against them.

The Court of Final Appeal ruled against both of them. But because of rare and complex circumstances in Mr. Domingo’s case, the separate case on behalf of Ms. Vallejos, who has worked in Hong Kong since 1986 and will turn 61 this year, has been at the center of the broader controversy.

An important issue in the litigation lay in whether the “natural and ordinary meaning” of the language of the Basic Law should be paramount, most notably in interpreting the term “ordinarily resident,” or whether a broader statutory context should be considered. The court ruled that the broader context should be used.

In its lengthy decision, the court noted that foreign domestic helpers entered Hong Kong under visas that required them to return to their country of origin every two years before starting another two-year contract. The court also pointed out that the helpers were “told from the outset that admission is not for the purposes of settlement, and that dependents cannot be brought to reside in Hong Kong.”

Politicians opposed to granting permanent residency to domestic helpers had contended that it could result in the city’s being flooded by their dependents, who are not currently allowed to come to Hong Kong.

Christopher Chung, a member of Hong Kong’s legislature from the pro-Beijing Democratic Alliance for the Betterment and Progress of Hong Kong, welcomed the court’s decision, saying that “when these foreigners come to Hong Kong, their one and only aim is to be a domestic helper.”

In deciding not to seek a legal interpretation on citizenship issues from the Standing Committee in Beijing, the Court of Final Appeal left unresolved another acrimonious issue in Hong Kong: whether the children of mainland Chinese should continue to be entitled to full Hong Kong citizenship if born in the territory. Hong Kong’s strong educational system and excellent medical care, along with the visa-free access that Hong Kong passports provide to 146 countries and territories, led to a surge in mainland women who came to the city to give birth.

The local government has banned mainland mothers without a Hong Kong husband from scheduling births at Hong Kong hospitals since the start of January, and it said late Monday that it would continue to review legal measures that might make citizenship harder to obtain for the Hong Kong-born offspring of mainland couples.

The Hong Kong Bar Association issued a statement urging the local government to refrain from involving the National People’s Congress in the issue, cautioning that this would undermine the rule of law here.
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« Reply #5313 on: Mar 26, 2013, 07:04 AM »

March 25, 2013

Russian Authorities Raid Amnesty International Office

By DAVID HERSZENHORN and ANDREW ROTH
IHT

MOSCOW — The Russian authorities on Monday raided the local headquarters of the human rights group Amnesty International, the latest in a continuing series of office searches intended to put pressure on nongovernmental groups.

The head of Amnesty’s office in Russia, Sergei Nikitin, said in a telephone interview that officials from the general prosecutor’s offices and from the tax police arrived unannounced on Monday morning to conduct what they described as an “audit” and demanded a list of documents, most of which Mr. Nikitin said were already on file with the government.

“They’re sitting and waiting for me to bring the originals and copies,” Mr. Nikitin said. “This is ongoing because we, of course, were not expecting them today.”

He added: “They don’t have any concrete complaints. They say it’s a regular check and other cliché phrases.”

Last week, the authorities conducted a similar raid at the offices of Memorial, an international historical society and human rights group that has operated in Russia and other post-Soviet states for more than two decades.

Pavel Chikov, a member of Russia’s presidential human rights council, said offices of dozens of nonprofit organizations had been searched across Russia in March, including at least 20 organizations on Monday.

“We can definitely say it’s been the most active day for these searches so far,” he said in a telephone interview.

The Kremlin has taken steps in recent months seeking to clamp down on nonprofit organizations, particularly those that receive financing and other support from abroad, and the Russian Parliament has adopted a battery of legislation including various new restrictions and requirements.

Depending on how they are financed, certain groups, for instance, are now required to register as “foreign agents.” And certain types of nonprofit groups working in the political realm are barred from employing foreigners in leadership positions.

A representative for the Ministry of Justice told the Interfax news service on Monday that information from the raids would be used to check compliance with the new law on foreign agents. The ministry has not made any charges under the new law since its adoption last year.

Some groups that received substantial financing from abroad, including organizations that worked with the United States Agency for International Development, have moved their offices out of Russia. In September, the Kremlin ended its cooperation with U.S.A.I.D., which had included more than 20 years of partnership on various projects, including public health and civil society campaigns in Russia.

In the past, Russian officials have used a number of bureaucratic tactics, including complex registration schemes and even accusations of software piracy, to disrupt the activities of nonprofits they do not trust.

In February, President Vladimir V. Putin cautioned top officials in Russia’s security services, the F.S.B., to beware of nongovernmental organizations that may “meddle” in the country’s internal affairs.

In Moscow, Mr. Nikitin said the prosecutors and tax police were accompanied by a crew from the government-controlled NTV television channel, which is known for producing salacious reports about critics of the government.

“Right behind them came employees from the state television NTV, who aren’t leaving and are trying to break in,” he said. “They’re knocking, calling, and this is creating additional difficulties for us in this unpleasant situation.” He added that the officials on site professed no knowledge of how NTV had learned of the raid.

On Thursday, NTV showed footage from a raid at the offices of Memorial, in a segment titled “Memorial Is Hiding Its Revenue From the General Prosecutor.”

But Mr. Nikitin said the government’s actions were far more concerning. “All of this is a form of scaring us. It’s a way for them to show that they aren’t taking their eyes off of us,” he said. “You can call it a toughening of the government’s relationship to rights organizations, because in the past we have never faced these smear campaigns.”

******

 SPIEGEL ONLINE
03/26/2013 01:10 PM

A Threat to Relations: Germany Irate over Russian NGO Raids

Russian authorities have targeted German non-profit organizations as part of a crackdown on "foreign agents." Officials are not happy, with Foreign Minister Guido Westerwelle's office saying that interfering in their work could create "a sustained effect on bilateral relations."

Russia's recent large-scale crackdown against organizations designated as "foreign agents" has now been extended to German political foundations. Russian state prosecutors have launched investigations of the Konrad Adenauer Foundation (KAS), a political think tank aligned with Chancellor Angela Merkel's conservative Christian Democratic Union party, and the Friedrich Ebert Foundation (FES), the think tank of the center-left Social Democratic Party, according to German daily Süddeutsche Zeitung.

At the Moscow headquarters of the FES, officials from the public prosecutor's office and tax authority reportedly demanded various documents for several hours. The KAS St. Petersburg office received a questionaire with more than 20 inquiries about its staff and events. Lars Peter Schmidt, the head of the KAS, confirmed on Tuesday to SPIEGEL ONLINE that Russian investigators also seized a computer without a court order or explanation. Representatives of both foundations were reportedly asked to appear before the public prosecutor.

Reinhard Krumm, the FES's head of operations for Central and Eastern Europe, told the Süddeutsche Zeitung that the company viewed the investigation as "a routine check." "It's an investigation without an accusation," Krumm continued. "We are assuming that we can proceed with our work."

Nevertheless, German Foreign Minister Guido Westerwelle called the recent actions of Russian authorites against German organizations unacceptable. A spokesman from his ministry told the Süddeutsche Zeitung: "Hindrance of the activities of German foundations could have a sustained effect on bilateral relations."

Philipp Missfelder, the foreign policy spokesman for Merkel's party in the lower house of parliament, the Bundestag, has also leveled criticism of the recent activities. "The German foundations have always behaved correctly. I have no sympathy for the Russian actions," the conservative politician told SPIEGEL ONLINE on Tuesday.

A Loaded History

For years, non-governmental agencies operating in Russia -- including those of Russian origin -- have been required to register as "foreign agents" if they receive money from outside of the country. Since last Thursday, more than 2,000 offices of various NGOs have been searched.

On Monday, the Moscow office of the global human rights organization Amnesty International was raided by prosecutors and tax investigators. The official reason for the raid was to make sure that the NGO is in compliance with the law. But some fear that the crackdown is part of a larger effort to stigmatize NGOs and bring their employees into disrepute.

The term "foreign agent" has had a loaded history in Russia since the Stalinist era, when those designated as such were often shot or sent to labor camps. During the Cold War, dissidents where often labeled foreign agents.

With reporting by Severin Weiland


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« Reply #5314 on: Mar 26, 2013, 07:08 AM »


Boris Berezovsky and the dangers of being a Russian exile in the UK

Boris Berezovsky was the Kremlin's bogeyman for many years. He's not the only Russian exile in the UK to meet a suspicious death – so is Putin really silencing his enemies in Britain?

Luke Harding   
The Guardian, Monday 25 March 2013 18.56 GMT   

The circumstances of Boris Berezovsky's tragic death seem clear enough. A depressed man, a locked bathroom, bruises on the neck. Berezovsky's bodyguard discovered him lying fully dressed on the floor, 17 hours after he had last seen Boris alive. There was no note.

The bodyguard became concerned when he spotted Berezovsky's mobile phone lying on the table. Uncharacteristically, there were missed calls. He went upstairs, broke down the door, and found his boss on the floor. "He touched Boris's hand. It was cold. He called the police," Berezovsky's friend Yuli Dubov, who arrived at the scene at 5pm that day, says.

On Sunday, Thames Valley police gave their provisional account of what had befallen the 67-year-old Russian oligarch. Detectives said they were talking to his friends and family – code for the fact that he had been visibly depressed, following his crushing high court defeat to Roman Abramovich last year. (In another twist, Abramovich was wrongly reported to have been arrested in the US on Monday.)

Most crucially, they ruled out "third-party involvement at this stage". Their findings, expressed in cautious police prose, all point to suicide rather than foul play. Berezovsky's swirling problems – personal, political and financial – had conjoined and driven him to the desperate act of taking his own life, the police hinted.

And yet, three days after his death, some of the tycoon's grieving family and friends remain deeply unconvinced by this version of events. Rather, they strongly suspect he was murdered. "I will never believe in the natural death of Boris Berezovsky," Nikolai Glushkov, a Russian exile and close friend, says.

Gluskov adds: "The idea that he would have taken his own life is bullshit. I saw him the day that Mrs Justice Gloster handed down her judgment in Boris's case. He was full of life even then, talking about a certain young lady who was waiting for him in the house. Latterly he had managed to resolve his financial issues."

Glushkov said Berezovsky's ex-wife, Galina – who rushed to the house on Saturday afternoon – was also sceptical that her ex-husband had died naturally. The pair were on good terms, with Berezovsky moving into her Ascot home after he was forced to sell his Surrey mansion. She believes he may have been strangled; a scarf was found next to his body. By the time she arrived, police were there; they kept Galina, her two kids and the bodyguard in the kitchen.

Others who spoke to Berezovsky in his final months cast doubt on the official version. "When we recently spoke for the last time, Boris was looking to the future. He did not appear to be suicidal," his friend Yuri Felshtinsky says, adding that Boris had been looking for private schools in the US for his daughter. Felshtinsky goes on: "Boris understood that the Kremlin aimed to destroy him."

The suspicions are understandable. The Kremlin, after all, has a nasty track record of eliminating its enemies abroad, of whom Berezovsky was undoubtedly one. The British government is convinced that Berezovsky's friend Alexander Litvinenko was murdered in 2006 by Kremlin agents, sent by Moscow to London. The Litvinenko row plunged UK-Russian relations to their worst since the cold war.

Scotland Yard believes two former KGB officers, Andrei Lugovoi and Dmitry Kovtun, slipped radioactive polonium into Litvinenko's tea during a meeting at a London hotel. Polonium-210 is an unusual substance. Its use as a murder weapon, government sources suggest, is the most compelling proof of Russian state involvement.

There are divergent opinions over Litvinenko's assassination. One version says his gruesome killing – he lingered for three weeks – was a demonstrative act, designed to send a message to Berezovsky and to others like him who dare to oppose the Russian state.

Another says that the killing was meant to be the perfect crime. Polonium is virtually undetectable, and in this case was only found at the very last moment. Moreover, Litvinenko was an obscure Russian émigré whose death, his killers wrongly assumed, would provoke little police interest or official reaction.
Alexander Litvinenko Alexander Litvinenko pictured shortly before his death in 2006. Photograph: Natasja Weitsz/Getty Images

The truth of Litvinenko's murder may emerge in October, when an inquest is held. Berezovsky had expressed keenness to attend – another reason they find his death baffling. Friends, meanwhile, point out that since then the bodies of UK-based Russian exiles keep piling up. In 2008, Berezovsky's long-time business partner and fellow exile Badri Patarkatsishvili suddenly dropped dead. A postmortem concluded he died of a heart attack.

Glushkov and others are unconvinced by that explanation. "You have the deaths of Boris and Badri over a short period of time. Too many bodies are happening. I would say this is a little bit too much," Glushkov says.

Meanwhile, last March, the Russian banker German Gorbuntsov who had fled to London following a series of business disputes was gunned down in Canary Wharf. He survived, just, and the alleged shooter, a Moldovan man, was recently arrested in Moscow.

In November another Russian fugitive, Alexander Perepilichnyy, collapsed and died outside his Surrey mansion. Perepilichnyy had passed documents to Swiss investigators on corrupt Russian officials. Two autopsies have yet to uncover a cause of death.

Those of a suspicious disposition suggest the Kremlin was preternaturally well prepared over the weekend to respond to Berezovsky's sudden demise. Dmitry Peskov, Vladimir Putin's press spokesman, claimed that Berezovsky had written to Russia's president in the past few months, begging forgiveness and saying sorry.

A Russian reporter for Forbes magazine then claimed to have interviewed the tycoon at the Four Seasons Hotel the evening before his death. Berezovsky allegedly told him he yearned for Moscow and had "over-estimated" the west. He also drank a cup of tea with honey – echoes, some think, of the poisoned cuppa that finished off Litvinenko.

Friends angrily dismiss these Moscow-inspired media reports as self-serving junk. (In essence, they amount to a Kremlin morality tale. It says that if you oppose legitimate Russian power, you end up exiled, broke, friendless, and ultimately dead.) Russian officials said Berezovsky's relatives want him buried back in Moscow – a lie, a source close to the family says.

The Kremlin's true feelings on the issue are probably best expressed by Nikolay Kovalyov, the former head of the FSB, Putin's old spy agency. Speaking on Russian TV, he said that Berezovsky had got what he and other traitors to the motherland deserved under the KGB's unforgiving code – a nasty death.
Vladimir Putin Berezovsky was a toxic figure for the Russian government and for Putin personally. Photograph: Nikolsky Alexei/ITAR-TASS Photo/Corbis

All agree that Berezovsky was a toxic figure for the Russian government and for Putin personally. Putin isn't a man who likes criticism, especially from an oligarch instrumental in giving him the job of prime minister and then president. For over a decade Berezovsky had taunted him from afar, seemingly protected by British law.

The story of their friendship and subsequent bitter enmity is well known. Berezovsky plucked the untested Putin to run the country, only for them to quarrel in 2000 when it became clear Putin was no democrat. At Putin's behest, Russian prosecutors opened numerous criminal cases against Berezovsky, enthroned as enemy number one.

When I arrived in Moscow in 2007, as the Guardian's correspondent, Berezovsky was the Russian state's omnipresent bogeyman, a baddie responsible for all evils. State media blamed him for the murders of Anna Politkovskaya and Alexander Litvinenko, and accused him of fomenting jihadist rebellion in the North Caucasus. Viewed as a flippant historical analogy, he was Trotsky to Putin's Stalin.

Just how hated Berezovsky was I learned first-hand. In April 2007, two colleagues interviewed him in London. In self-dramatising style, he told them he was plotting a violent revolution to overthrow Putin, his friend-turned-enemy. The Guardian put the story on its front page. My name also appeared after I asked Peskov – then, as now, Putin's spin doctor – for a quote.

The following day the FSB, the KGB's paranoid successor agency, fell on me. Strange young men tailed me through the streets of Moscow; emails tagged "Berezovsky" vanished from my inbox; FSB goons broke into my Moscow flat. The agency summoned me for interrogation. I reported to Lefortovo, the KGB's detention centre. A young FSB colonel began his interrogation by plonking in front of me a colour photocopy of the Guardian article featuring Berezovsky's photo.

But if the FSB did finally catch up with Berezovsky, how was it done? According to Boris Karpichkov, a former KGB agent who defected to the UK in the late 1990s, the agency has a great number of clandestine methods. In particular, Karpichkov says, Russian spies are adept at using sodium flouride, an odourless substance that can be lethal in certain doses.

Typically, he adds, the KGB has used poisons that can induce heart attacks but don't show up in postmortems. He explained: "The substance is colourless and without smell. It can be applied to personal items – like a pen, phone or door handle – or to places where the target inhales it. It dissolves in the 'mark's' body. It's undetectable in any postmortem carried out."

It might sound far-fetched – were it not for the fact that Litvinenko died from a similarly ingenious and invisible poisoning. Certainly, Thames Valley police were taking no risks over the weekend, carrying out a series of chemical, biological and radiation tests at Berezovsky's rustic country house in Berkshire, near the M25. So far they have found nothing.

Whatever the truth, Russian exiles opposed to Putin are convinced his regime is capable of anything, and they wonder who might be next. With Berezovsky, Litvinenko and Patarkatsishvili gone, the list is getting smaller. "I don't see anyone left on it apart from me," Glushkov says gloomily. As we speak there is a Moscow-style click on the phone: someone is listening in.

Luke Harding's Mafia State: How one reporter became an enemy of the brutal new Russia is published by Guardian Books. Buy it for £13 at guardianbookshop.co.uk


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« Reply #5315 on: Mar 26, 2013, 07:20 AM »

Cyprus banks remain closed to prevent run on deposits

Planned opening of Bank of Cyprus and Laiki delayed for at least two days to ensure the whole system functions 'smoothly'

Josephine Moulds, Helena Smith in Nicosia, Ian Traynor in Brussels, Miriam Elder and Jill Treanor   
guardian.co.uk, Tuesday 26 March 2013 11.35 GMT   

Banks in Cyprus will remain closed at least until Thursday and will then be subject to strict controls to prevent a bank run in the wake of the island's €10bn (£8.5bn) bailout.

All but the country's two biggest banks were slated to open on Tuesday, but the central bank now says all lenders will remain closed to ensure the banking system functions "smoothly". Asked whether Cyprus's banks will reopen on Thursday, Cyprus's finance minister Michalis Sarris said: "Yes, I think they will."

Speaking on Radio 4's Today Programme, Sarris said capital controls will be imposed on Cyprus "for several weeks", restricting the flow of money around the system.

The freezing of the Cypriot banking system follows an international rescue deal that involves restructuring the country's two largest lenders, with heavy losses for wealthy savers. President Nicos Anastasiades acknowledged on Monday that the country had come "a breath away from economic collapse" before its last-minute bailout.

This involved an agreement to radically restructure the country's largest lender, the Bank of Cyprus, and shut down its second largest bank, Laiki, in return for a €10bn bailout from the European Union, the European Central Bank and the IMF.

In a radical departure for a eurozone bailout, depositors in Laiki Bank could lose any savings above €100,000. Bigger savers in Bank of Cyprus will also be forced to contribute to the lender's recapitalisation. Sarris suggested on Monday they could face losses of around 40% on their assets.

After an initial rally on relief that Cyprus had secured a deal, markets took fright when the head of the group of eurozone finance ministers indicated that the rescue could be a template for similar situations.

The euro dropped 1% against the dollar on Monday and remained below $1.29 in early trade on Tuesday. Shares across the eurozone regained some of their losses. The FTSE 100 was up 0.1% and the German DAX was 0.3% higher, but Spain's IBEX was 0.4% lower in early trade.

Jeroen Dijsselbloem, the Dutch finance minister who heads up the euro group, said the relative market calm in recent months, coupled with the lack of market panic following the decision to force private investors and depositors to pay for the bailout of two large Cypriot banks, allowed the eurozone to go after private money more aggressively when banks failed. He later attempted to water down these remarks, indicating that Cyprus was a unique case.

The deal is designed to shrink the Cypriot banking sector, which had grown to eight times the country's €17bn economy. Finance minister Sarris said to Bloomberg on Monday: "We acknowledge that we allowed things in Cyprus to get out of hand."

But he said Cyprus was disappointed by the reaction of some of its eurozone partners, when faced with the potential meltdown of its economy. "This is the European Union. It is supposed to be a community, where you get support from your partners. We got some from some partners; there was a definite hardline from others."

The atmosphere in the negotiating room on Sunday night was, he said, "very, very tense". He added: "We felt under tremendous pressure. When you know that the alternative to reaching a solution would be that your economy is destroyed, that it turns into ruins, you clearly are at a definite disadvantage."

Cypriots had reacted to the agreement with relief as it appeared that at least deposits below €100,000 had been spared the levy. In the streets and cafes of Nicosia, and on TV chat shows, the feeling was that the country had been saved but at a high price. On Tuesday, schoolchildren spilled onto the streets to protest against the bailout deal.

There were warnings the impact could reach beyond Cyprus, particularly with repercussions from Russia, where the prime minister, Dmitry Medvedev, speaking on Monday, said: "They are continuing to steal what has already been stolen." This was a phrase Lenin used to answer the allegation that the Bolsheviks were thieves. Russian officials have repeatedly compared the Cypriot bank levy to Soviet-era expropriation.

"For sure there is anger," said Marios Cosma, head of K Treppides, a firm that serves international clients, mainly rich Russians. "For the first time in Europe, you have a situation where depositors are being called to 'bail in'."

While the Cyprus banking sector has exploded, other countries have even larger banking sectors relative to GDP. Malta's banking sector is relatively larger, and Luxembourg's is more than 20 times its GDP. Malta's finance minister wrote an article in the Malta Times expressing concern about what would happen if it encounters similar problems in the eurozone.

In Cyprus there were calls for a referendum on the bailout package. "It is illegal and undemocratic," said Christos Tombazos, general secretary of the Pancyprian Federation of Labour. "We're talking about massive changes to the banking system. It should go to referendum for the Cypriot people to decide."

Russian officials tried to assuage fears over its nationals' investments in Cyprus. Russian Commercial Bank, a wholly owned subsidiary of state-owned bank VTB, would "not be affected or its losses will be insignificant", said Igor Shuvalov, a deputy prime minister.

The Bank of Cyprus is 9.7% owned by Dmitry Rybolovlev, a Russian based in Monaco whose wealth is estimated at $9.1bn, according to Forbes.

One Russian oligarch, Alexander Lebedev, played down the amount he stood to lose in Cyprus as no more than $10,000. "It's not worth talking about," he said. "Cyprus was always a transit jurisdiction – money would pass through and then go to Lithuania, Latvia, Belize, Switzerland, everywhere. There are plenty of ways [to avoid capital controls], they can split accounts."

The multimillionaire owner of the Evening Standard and Independent expressed doubts that capital controls to be imposed by the Cypriot government in order to stem a bank run would work. "Certain schemes can be put into place," Lebedev said by telephone from Moscow. "This is how Cyprus was making money."

***********

Markets take fright at idea that Cyprus savings raid could become bailout model

Markets spooked as finance chief suggests Cyprus rescue could set the template for future eurozone bailouts

Helena Smith in Nicosia, Ian Traynor in Brussels, Miriam Elder and Jill Treanor   
The Guardian, Tuesday 26 March 2013   

Fears that bank accounts could be raided in any future eurozone bailouts spooked markets on Monday, as Cypriots prepared for their banks to reopen for the first time in over a week on Thursday following a deal to secure a €10bn lifeline.

Markets took fright after the head of the group of eurozone finance ministers indicated that the Cyprus rescue could be a template for similar situations. Cyprus is the first of five bailouts in the eurozone where depositors have been hit.

"What we've done last night is what I call pushing back the risks," Jeroen Dijsselbloem, the Dutch finance minister, told Reuters and the Financial Times after clinching an agreement for Cyprus. "If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders," he said.

Bank of Cyprus and Laiki, the two largest domestic banks, will remain shut until Thursday while the latter is split into a good and bad bank and a levy – of potentially 40% – is imposed on accounts of more than €100,000.

A big percentage of those deposits belong to Russians. On Monday the Russian president, Vladimir Putin, said there would be a deal to rework the terms of a €2.5bn loan to the Mediterranean island, which had become attractive for its low tax regime and lax vetting laws.

Cyprus president Nicos Anastasiades made a televised address in which he admitted that measures would be in place to stop money pouring out of the banks when they reopen. "The central bank will implement capital controls on transactions. I want to assure you that this will be a very temporary measure that will gradually be relaxed," he said.

Markets were initially buoyed by news of the "painful" bailout for Cyprus, clinched late on Sunday night following threats by the European Central Bank to switch off liquidity to Cypriot banks, which, carried by international deposits, had grown to eight times the €17bn economy.

But markets reacted badly later in the day after Dijsselbloem's remarks. As markets tumbled, he issued a clarification insisting that bailout programmes were "tailor-made" and that "no models or templates are used".

Nevertheless, all markets erased their early gains to close down on the day. The FTSE 100 index lost 0.2% and the German stock market fell 0.5%. Bank shares fell across Europe while the euro, which had nudged up through $1.30 initially, fell back to below $1.29. US markets, which had largely shrugged off the Cypriot problem, were also lower, with the Dow Jones Industrial Average down over 70 points, 0.5%.

Cypriots had reacted to the agreement with European leaders with relief as it appeared that at least deposits below €100,000 had been spared the levy.

In the streets and cafes of Nicosia, and on TV chat shows aired in homes across the nation state, the feeling was that the country had been saved but at a high price.

Interior minister Sokratis Hasiko encapsulated the mood, describing the EU-IMF-backed bailout as the best of a bad range of choices.

"We had got to the point where we were discussing a [depositor] haircut of between 50 and 60%," he said, adding that the Cypriot parliament's rejection of the first accord, with its highly controversial levy on depositors big and small, had been hugely negative for the country's banks. "So this is the best we could get."

There were warnings the impact could reach beyond Cyprus, particularly with repercussions from Russia, where the prime minister, Dmitry Medvedev, said: "They are continuing to steal what has already been stolen." This was a phrase Lenin used to answer the allegation that the Bolsheviks were thieves. Russian officials have repeatedly compared the Cypriot bank levy to Soviet-era expropriation.

"For sure there is anger," said Marios Cosma, head of K Treppides, a firm that serves international clients, mainly rich Russians. "For the first time in Europe, you have a situation where depositors are being called to 'bail in'."

While Cyprus' banking sector has exploded, other countries have even larger banking sectors relative to GDP. Malta's and Luxembourg's banking sectors are relatively larger, more than 20 times' GDP in the case of Luxembourg. Malta's finance minister wrote an article in the Malta Times expressing concern about what would happen if it encounters similar problems in the eurozone.

In Cyprus there were calls for a referendum on the bailout package. "It is illegal and undemocratic," said Christos Tombazos, general secretary of the Pancyprian Federation of Labour. "We're talking about massive changes to the banking system. It should go to referendum for the Cypriot people to decide."

Russian officials attempted to assuage fears over Russian investments on the Mediterranean island. Russian Commercial Bank, a wholly owned subsidiary of state-owned bank VTB, would "not be affected or its losses will be insignificant", said Igor Shuvalov, a deputy prime minister.

The Bank of Cyprus is 9.7% owned by Dmitry Rybolovlev, a Russian based in Monaco whose wealth is estimated at $9.1bn according to Forbes.

One Russian oligarch, Alexander Lebedev, played down the amount he stood to lose in Cyprus as no more than $10,000. "It's not worth talking about," he said. "Cyprus was always a transit jurisdiction – money would pass through and then go to Lithuania, Latvia, Belize, Switzerland, everywhere. There are plenty of ways [to avoid capital controls], they can split accounts."

The multimillionaire owner of the Evening Standard and Independent expressed doubts that capital controls to be imposed by the Cypriot government in order to stem a bank run would work. "Certain schemes can be put into place," Lebedev said by telephone from Moscow. "This is how Cyprus was making money."

************

Cyprus bailout deal: at a glance

The essential points of the deal, including the closure of Laiki Bank, and what this means for savers and the eurozone

Hilary Osborne and Josephine Moulds   
The Guardian, Monday 25 March 2013 18.38 GMT   

Cyprus struck a last-minute bailout deal in the early hours of Monday morning, aimed at preventing the island becoming the first country forced out of the single European currency.

• Crucially, the new programme spares deposits below €100,000 (£85,500), unlike last week's proposals, which sparked outrage with a 6.75% tax on all bank depositors.

• Cyprus's second-largest bank, Laiki Bank will be closed. Its €4.2bn in deposits over €100,000 will be placed in a "bad bank", meaning they could be wiped out entirely. Those with smaller deposits at Laiki will see their accounts transferred to the Bank of Cyprus.

All lenders to Laiki will see their investments wiped out, in a first for a eurozone bailout. In other bailouts, holders of higher-rated bonds have not faced such losses.

• Bank of Cyprus survives the axe, but faces huge restructuring. No bailout money will be used to recapitalise the bank. Instead its shareholders and bondholders will be hit. It is thought depositors with over €100,000 at the bank will also be involved in the recapitalisation and face losses of around 30%.

Getting the bank up to healthy EU-mandated capital levels will be made harder by the fact that Bank of Cyprus will inherit a €9bn debt Laiki had with the European Central Bank.

Is my money safe in a UK branch of Laiki Bank?

The bank is saying it is "business as usual" for individuals and companies with money in its four UK branches.

It says its customers will not be transferred to Bank of Cyprus, even though it set up as a branch rather than a subsidiary. It is not restricting withdrawals and says customers should not panic.

But what if the bank had to close?

Customers are covered by the Cyprus deposit protection scheme up to €100,000. Laiki Bank UK is in talks with the Bank of England and Financial Services Authority about the status of savers with more.

What about Bank of Cyprus customers in the UK?

Bank of Cyprus's UK operation is a separate entity, incorporated in the UK, so customers are unaffected by any of the arrangements made in Cyprus. Customers are covered by the UK's Financial Services Compensation Scheme, so if anything did get wrong they would get the first £85,000 of their holdings returned, possibly within days.

How does the deal differ from the one on the table last week?

Two key differences: first, small depositors have been protected – with the EU's €100,000 legal guarantee upheld. Second, the plan does not have to be approved by the Cypriot parliament because losses on large depositors will be achieved by restructuring Cyprus's two largest banks and not by levying a "tax" on its citizens.

Who are the biggest losers?

Russian nationals are estimated to hold more than €20bn of the €68bn deposited in Cypriot banks and many have deposits over €100,000.

Laiki Bank was 84% owned by the Cypriot government, following a €1.8bn bailout in June last year. The rest is owned by private and institutional investors, including bank staff.

Laiki bondholders will be wiped out and lenders to the Bank of Cyprus will face heavy losses in the recapitalisation.

Thousands of staff at both Laiki and the Bank of Cyprus will lose their jobs.

What will happen when the banks open in Cyprus?

There will still be very tough restrictions on bank account access and the movement of cash out of Cyprus, to help prevent a bank run. The European commission said these capital controls will only be enacted "exceptionally and temporarily", as requested by the Cypriot authorities.

The fear is that Cypriot savers will be sufficiently worried by the past week's events that, when they are finally allowed to, they will take their money out regardless of the guarantee that deposits up to €100,000 are safe.

Will this be the end of Cyprus's problems?

No. In fact, analysts say it is only the beginning. Cyprus has benefited for years from attracting the deposits of wealthy individuals from around the eurozone. That business model is now broken and the country has nothing to replace it with. Tellingly, the EU gave no economic projections for Cyprus in its statement.

Gary Jenkins of Swordfish Research said: "The economy is crushed for the next God knows how many years. As soon as people can take their money out the banks, they will take it out. Confidence has disappeared. Who's going to want to do business with Cypriot corporates right now?"

Will Cyprus need another bailout?

Possibly. The €10bn bailout raises Cyprus's debt to around 143% of GDP. With GDP likely to fall dramatically over the next few years, that ratio could start to look even more perilous.

A deal to restructure Cyprus's debt by hitting private bondholders would go against EU promises that the Greek deal of that kind was an exception.

All of which prompts analysts at UBS to suggest Cyprus's eurozone partners might have to get involved again some time in the future. They write: "In other words, we see a risk that this bailout for Cyprus might not have been the last one."

Will this be the model for future bailouts?

It is impossible to say. So far, no two eurozone bailouts have been the same. Policymakers appear to react to events, rather than follow a fixed plan. The danger is that no one is paying attention to the unintended consequences.

What could the unintended consequences of this particular plan be?

With their initial plan to tax all depositors, policymakers made it clear that they would, in certain circumstances, be prepared to take that money. Even though they did not go through with it, this will likely shake confidence in the banks if the financial crisis re-escalates in other countries, such as Spain or Italy.

Meanwhile, larger depositors and foreign companies with money in Spain and Italy are likely to start shifting that elsewhere, fearing that the Cyprus deal will be a model for future bailouts, further damaging already weak financial institutions.

***********

Cyprus bailout: Europe's love just got even tougher

Getting tough on Cyprus was sensible. Elsewhere in the eurozone, a much softer touch is needed

Bill Emmott   
The Guardian, Tuesday 26 March 2013   

Once again the euro has been saved, but the eurozone continues to stumble towards disaster. The distinction matters, even if European finance ministers emerged from their late-night negotiations talking proudly of having kept Cyprus inside the euro and – though they didn't say this explicitly of course – of having stiffed Russian fatcats. For while southern European debtors are the problem for the euro, it is northern European creditors who are the problem for the eurozone.

In technical terms, the ministers have reason to be pleased. With the Cyprus deal, they have achieved two things. They have proved that member countries will do almost anything to stay inside the single currency, rather than suffer the ignominy and economic cardiac arrest that an exit would bring. If neither Greece nor Cyprus will leave, then no one will, short of revolution.

Second, they showed that the German-led emphasis on running the euro through tough love still works. And toughness is right when faced with banking crises, which is what Cyprus's troubles amounted to: ever since the great Walter Bagehot coined the phrase "lender of last resort" in the 1860s, it has been evident that financial rescues must be mixed with punishment.

In 2008-09, amid panic after the Lehman collapse, there was too little punishment of bankers, shareholders and creditors who had let their institutions take reckless risks. Rescuing the financial system took priority. The same was true during the European bailouts for Ireland and Spain. The Cyprus deal improves on that, and sets a helpful new precedent.

Those who deposited large sums in Cypriot banks were not just tax-evaders in their home countries, though often they were that; they were also lenders to these banks who enabled them to act recklessly in Greece and elsewhere. A bank deposit is the same as a loan. So making depositors of €100,000 or more pay for part of the rescue is just the same as defaulting on debt.

Nevertheless, the Cypriot deal is a sensible reinforcement of tough love. The real problem with it at least as a focus of eurozone policy and politics, or as a cause of back-slapping satisfaction, is that it misses the bigger point. It is all about tough, and not at all about love. For the love part is what the eurozone now needs to focus on. Not for Cyprus, specifically, but across the whole single-currency area.

A currency can be saved, rather as in the 1920s the gold standard was preserved, but it is the countries that really matter. If the eurozone economies spiral further into in recession, their politics are going to turn nastier and nastier. The 25% vote in Italy's election for the anti-establishment Five Star Movement led by the former comedian, Beppe Grillo, is a foretaste. And Italy may well have a second election in the next few months, in which the rebellion against austerity, the euro and above all Germany is likely to intensify.

Banking crises in countries such as Greece, Cyprus and Spain do pose genuine dangers. But a never-ending recession, with youth unemployment at 36% in Italy and over 50% in Spain, is a much greater hazard. And the tragedy is that it is avoidable – if only Germany and the other northern Europeans would drop their insistence on fiscal austerity for all and in every circumstance.

This week the International Monetary Fund advised the Netherlands that it really did not need to keep on cutting its budget deficit. It was good advice, and the same applies to Germany. They should be stimulating demand, not repressing it in a fit of sado-masochism.

The hope has to be that German policy will change once the federal elections are safely out of the way in September. Yet by then, Italy, the zone's biggest sovereign debtor and its third-largest economy, might have elected a vehemently anti-German government, led either by Grillo or by the man he calls "the psycho dwarf", Silvio Berlusconi. If the prospect of that doesn't make the northern Europeans see sense, then nothing will.

******************

After Cyprus crisis, here comes Slovenia

First there was the economic turmoil in Cyprus. Now, the latest country to spark concern in Europe is Slovenia.

By Dylan Matthews
The Washington Post
03/26/13

As soon as policymakers averted a crisis in Cyprus, another appears to be brewing. The latest country to provoke concern is Slovenia.

The small former Yugoslav republic — wedged between Italy, Austria, Hungary and Croatia and best known for its exceptional skiers and philosopher Slavoj Zizek — took a beating Friday, with long-term bond yields spiking to 5.4 percent amid fears the country would need a bailout.

Those aren’t crisis-level rates — Cyprus’ yields are around 7 percent, for comparison — but it’s in the danger zone.

How did Slovenia get here, and why?

It’s a small, open economy that joined the European Union in 2004 and quickly pegged its currency, the tolar, to the euro. In 2007, it adopted the euro.

During most of the 2000s, it outperformed the eurozone on growth. But it had a correspondingly large amount of debt.

Unlike many countries, which overdosed on housing debt, Slovenia had a problem with corporations financing operations through high levels of debt. A European Union review found that in 2007 alone, private-sector debt grew by 23.5 percent and nonfinancial private sector debt grew more than 40 percent.

A lot of that debt went bad when the financial crisis hit in 2008. Slovenia’s economy took a sharp dive during the initial downturn — taking a bigger hit than the eurozone as a whole — and has underperformed relative to its monetary union partners during the recovery.

An International Monetary Fund report filed last week blamed “a negative loop between financial distress, fiscal consolidation, and weak corporate balance sheets” for the country’s woes.

Because corporations took out such large quantities of debt and are having trouble repaying it, banks are suffering too. For example, the IMF report notes that at Slovenia’s three biggest banks, the share of loans that are “nonperforming” — that is, in default or near default — grew from 15.6 percent in 2011 to 20.5 percent in 2012. Nearly a third of those loans went to private companies.

Meanwhile, Slovenia followed the austerity fever spreading across the continent. Janez Jansa, Slovenia’s former prime minister, approved an austerity package early last year including cuts to government employee wages and social benefits that he promised would cut the deficit to 3.5 percent of gross domestic product (GDP) in 2012.

It hit that target — excluding the cost of recapitalizing banks. But, in the meantime, the plan also caused tax revenues to fall as austerity measures battered incomes and reduced the tax base.

The latest round of worries follows the election of a new center-left government that replaced Jansa earlier this year. The new prime minister, Alenka Bratusek, has made it clear she cares more about helping the country grow than about reducing its debt load. That has led to fears that the country’s credit rating could be cut as its debt load stays the same or grows. That factored into Friday’s spike in bond yields.

The IMF says that the country needs about $3.8 billion in bond funding this year, about a third of which may go toward recapitalizing suffering banks. If bond yields stay high, raising that kind of money at a reasonable price could be difficult.

That could force the government to look to the European Central Bank (ECB), or the European Commission, or the IMF — or all of them — for a loan with below-market interest rates. In other words, a bailout.

Marko Kranjec, who serves on both the Slovenian central bank and the ECB, doesn’t think a bailout will be necessary, and, to be sure, it’s a less dire situation than in Cyprus.

Cypriot bank deposits are about 800 percent of GDP, compared with about 125 percent in Slovenia.

Government debt was only 52.7 percent of GDP last year and is set to rise to 69 percent by the end of 2014. Compared with countries with their own currencies like the United States, and certainly compared to countries actually in crisis like Greece, that’s a pittance.

If Slovenia had its own currency, it would be a relatively easy problem to solve. But it doesn’t and so it finds itself on the brink.






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 SPIEGEL ONLINE
03/25/2013 01:17 PM

Lessons from Cyprus: Euro Crisis Poses Grave Dangers to EU Unity

Cyprus has been saved. But the euro zone may ultimately be the biggest loser. The tough negotiations clearly demonstrated that Europe's north and south no longer understand each other -- and the political differences could soon become more dangerous than the currency crisis. By SPIEGEL Staff

It has been only four weeks since German Chancellor Angela Merkel had nothing but nice things to say about her "very esteemed" counterpart in Cyprus. In a telegram to newly elected President Nicos Anastasiades, she "warmly" congratulated him on his election victory and wrote that she looked forward to their "close and trusting cooperation."

That was then, as Merkel conceded last Friday in a speech to the parliamentary group of her center-right Christian Democratic Union (CDU) at the Reichstag in Berlin. Although her intent was not to set an example, she said, Germany also would not "give in." She added that there would be "no special treatment" for Cyprus. And over the weekend, she lived up to her word.

The island republic in the eastern Mediterranean is about as economically significant as the German city-state of Bremen, and yet the attention of citizens and politicians alike was focused on the debt-ridden country on the continent's periphery last week and through the weekend. Since Cypriot parliament rejected the initial bailout plan, one crisis meeting followed the next in Berlin, Frankfurt and Brussels as concepts were presented, revised, rejected and resubmitted. In the end, the European Central Bank (ECB) imposed an ultimatum on the country. The message from ECB President Mario Draghi was that either Cyprus agree to the bailout conditions or it could be the first member of the euro zone to declare a national bankruptcy.

In the end, Nicosia agreed. The country's oversized banking industry is to be radically downscaled, one of its biggest banks, Laiki, is going to be dissolved and those holding accounts there will see volumes over the €100,000 insured limit potentially vanish. A worsening economy will almost certainly be the result. The deal came just a day before the ECB ultimatum -- a cessation of emergency liquidity for the country's banks -- was set to become reality, a move that would have resulted in a messy crash of the country's financial system.

Smoldering and Flaring

Despite the deal, Cyprus was making preparations for the reopening of banks this week. Financial institutions there have reportedly hired extra security in preparation for an onslaught of furious customers. For the last several days, they experienced what it's like for a country to literally run out of money. Many service stations only accepted cash, and some kiosk owners closed up shop when they ran out of cash to make change. Bank machines over the weekend were only giving out €100 per day, per customer.

Smoldering and flaring for the last three years, the euro crisis has reached a new stage. For the first time, a parliament rebelled against the requirements of international creditors, and for the first time euro-zone taskmasters tried to take a slice of the savings of ordinary citizens, prompting people throughout the continent to wonder whether their money is still safe. The unprecedented showdown led many in Europe to speculate over the national character of the Cypriots, and wonder: Are they especially jaded, desperate or simply nuts?

Finding the right answer was the perplexing task for leaders in Brussels, Paris and Berlin. How far can one bend to demands from a teetering country like Cyprus without losing one's credibility? At what point does a debt-ridden country endanger the entire financial system, and how can allowing it to go bankrupt still be the right approach? Finally, how does one rescue a country that doesn't want to be rescued?

It was a matter of risk and confidence, of European solidarity and of Merkel's crisis management. In recent months, the chancellor seemed to have stopped the impending collapse of the common currency with her recipe of aid in return for reforms. Investors had calmed down, capital was flowing back into Southern European economies and in recent weeks German Finance Minister Wolfgang Schäuble (CDU) seemed as relaxed as the markets.

But a monetary union, at its core, is not held together by budget figures or austerity programs, nor by the statements of finance ministers and the heads of central banks, no matter how well-received they are in the markets. The most important glue holding together a monetary union is the mutual confidence of its members, and that has declined drastically in recent months. While many in the north question the willingness of politicians in Rome and Athens to bring about reform, citizens in the south are increasingly furious over the austerity diktats from Berlin, Brussels and Frankfurt.

Different Planets

There are predetermined breaking points all across the continent, but they are more apparent in Cyprus than anyplace else. Lawmakers in Berlin see the small country as a haven for the illegal money of wealthy Russians that urgently needs to be shut down. In contrast, island residents see themselves as the innocent victims of a ruthless bailout policy. Cypriots and other Europeans spent nine months in Brussels hammering out a solution to the crisis, but all the while it seemed as if they were living on different planets.

Seen in this light, the debacle over the debt-ridden island nation is more than just another financial crisis along Europe's southeastern edge. It is emblematic of the entire monetary union. If the euro zone collapses, it will be because of both its economic contradictions and its members' inability to reach agreement. Last week, European politicians involved in the bailout were calling Cyprus a "special case." And perhaps it is. But there was a very real danger that the crisis on the island could have ultimately become the straw that broke the euro's back -- a back which is still fragile indeed.

Depending, of course, on whom you listen to. Klaus Regling, head of the euro bailout fund European Stability Mechanism (ESM), has been giving presentations around the globe for months. Last Monday, he stood on a small stage at the Friedrich Ebert Foundation in Berlin, exuding indefatigable optimism. The euro zone is on a difficult path, Regling admitted, but "relevant data shows that the strategy is working."

Those in the audience were shaking their heads in disbelief, but the 62-year-old allowed the facts to speak for themselves. His slides showed colorful graphs indicating how much debt-ridden euro-zone member states had cut spending in recent years. Both Italy and Spain have packages of cuts and tax increases worth dozens of billions of euros in recent years.

Long-Overdue Reforms

Thanks to an aggressive consolidation strategy, many of the hardest hit countries have managed to drastically reduce their budget deficits. Greece, for example, has managed to reduce its deficit by almost 10 percentage points relative to gross domestic product within three years, a record among the world's developed countries. Were Germany to have done the same, some €250 billion in federal, state and municipal spending would have had to have been cut.

In addition to the austerity measures, governments across the Continent have tackled long-overdue reforms. Portugal eased access to previously protected professions and eliminated some holidays and vacation days. Spain relaxed protections against employee termination. In Greece, the government reduced the minimum wage by almost a quarter, and by a third for younger workers. The government in Rome raised the retirement age.

Even more importantly, these policies produced the desired results. Throughout Southern Europe, citizens have purchased fewer imported goods and exports have risen. Current account deficits in Southern European countries have declined to just a few percent of their GDPs. These countries are even exporting more goods now than they were before the crisis began.

"To be honest, I sometimes don't understand why this progress is often not noticed in Germany," says Regling.

The problem is that while Europe has become more economically harmonized, it is drifting apart politically. The reforms have made the southern part of the continent more competitive, but people are not necessarily benefiting from these economic successes. On the contrary, unemployment remains at record high levels, and poverty is on the rise. At the most recent EU summit, outgoing Italian Prime Minister Mario Monti spoke of a "time lag."

Monti knows what he's talking about. After all, that time lag explains why he was unceremoniously voted out of office a month ago. Monti claims that, even though he explained his policies at length, anti-European forces won the Italian elections.

Yet people are turning away from Europe in almost all countries that have suffered economic upheaval recently. Anti-austerity protests are increasing again in Greece, even though the government hasn't even implemented certain reforms yet. Social conflict is likewise on the increase in Spain, where half of all young people are now unemployed and the government of Prime Minister Mariano Rajoy is under fire because of a corruption scandal. In France, President François Hollande has seen his popularity drop to a new low -- to the point that he has been overtaken in the polls by Marine Le Pen, head of the far-right National Front.

Deep-Seated Mistrust across Euro Zone
The anti-European mood in the south, in turn, has spurned the euro-skeptics in the north. Many Germans, Finns and Dutch long felt that Mediterranean countries were incapable of economic reform. As proof, they can now point to Italy's election winners, Beppe Grillo and Silvio Berlusconi, both of whom are publicly contemplating a withdrawal from the common currency.

There is deep-seated mistrust in all of Europe, but the suspicions run particularly deep between the Germans and the Cypriots. For months, the euro-zone leaders sought a solution for the debt-ridden country, but in the end the country still lacked €5.8 billion of the €7 billion it was supposed to contribute to its own bailout.

One of the primary hurdles is the Cypriot conviction that they are more victims of the crisis than they are perpetrators. After all, the main reason their largest banks are in trouble is that Europe ordered a debt haircut for Greek government bonds, many of which were held by Cypriot banks.

Now they feel like laboratory rats, say the Cypriots. They are convinced that the kind of bank account levy conceived of for depositors in Cyprus would never have been attempted on any other euro-zone member state. The prevailing feeling is that because Cyprus is small and weak, Europe felt it could get away with it.

The Cypriots were quick to assign blame. A cartoon in the Cypriot daily O Phileleftheros portrayed Merkel, Schäuble and International Monetary Fund (IMF) President Christine Lagarde as Huns with their swords drawn. A journalist with the same paper referred to as "fascist" Schäuble's characterization of the Cypriot business model as "no longer sustainable."

The German finance minister has become a symbol of the almost insurmountable differences between the Mediterranean country and Germany. "Unfortunately, the mutual perception of our countries is totally distorted," complains a Cypriot diplomat who lived in Germany for a long time. "Nowadays the German public only associates us with money laundering, the Russian mafia and oligarchs."

Victims or Perpetrators?

No Cypriot disputes that the island is a safe haven for foreign capital from around the world. They are convinced, however, that their country's business model differs only slightly from those of other financial centers like Ireland, Luxembourg and Great Britain. Island residents find it outrageous that Schäuble views Cyprus's low-tax model as a failure while a number of German companies profit from precisely that model. For instance, of the 80 foreign shipping companies in the port city of Limassol, 36 are German and only three are Russian.

"Many see Cyprus as nothing but a problem island that is bringing down the euro zone," says Andreas Athinodorou, who runs a tax and corporate consulting business in Nicosia. Last Wednesday, Athinodorou received more than 200 emails from concerned investors who "wanted to know whether their money is still safe with us, and yes, I was able to reassure them," he says. The "Cypriot business model," with the lowest corporate tax rate in the EU, will remain in place for now, says Athinodorou.

But that is precisely what Germany wanted to prevent. Berlin sees the Cypriots not as innocent victims but as being largely responsible for their current predicament. It is, after all, true that Cypriot banks lured billions into the country with low taxes, attractive interest rates and lax regulation -- and much of that money came from dubious sources. Cyprus was known for the fact that no one wanted to know exactly where the money had come from.

Late last year, a report by the BND, Germany's foreign intelligence agency, attracted attention when it portrayed Cyprus as a hub for money laundering. Wealthy Russians in particular were attracted to the favorable conditions and invested billions in Cyprus, often circumventing the Russian tax collector. According to the BND, 80 Russia oligarchs have sheltered their money on the island.

But citizens of other countries, especially Great Britain, also value Cypriot discretion. There is about €70 billion deposited in savings accounts with Cypriot banks. More than half of that, €39 billion, is in accounts with balances in excess of €100,000. European leaders were anxious to trim the island's banking sector to tolerable levels as quickly as possible. But Nicosia was keen to keep its financial industry intact.

Rigidity in Berlin

That desire goes a long way toward explaining President Anastasiades' stubbornness during the negotiations. To protect his banks and their major foreign investors, he initially opposed the Euro Group's plan to introduce a mandatory levy on savings deposits to bridge the funding gap. Ultimately, he acquiesced, but insisted that small deposits also be levied, only to claim afterwards that the hardliners from Germany had supported the inclusion of ordinary savers. In fact, it was Anastasiades who had insisted that large investors be protected as much as possible.

European leaders were astonished when, last Tuesday, not a single member of the Cypriot parliament voted in favor of the bailout package that included the one-time levy on deposits: 6.75 percent for accounts worth between €20,000 and 100,000, and 9.9 percent for those above that level.

Veteran European politicians also attribute the failure of the deal to the rigid position of the German government. "Other countries also have legitimate interests, which isn't sufficiently appreciated in Germany," says Luxembourg Foreign Minister Jean Asselborn. "We also accept that Germany sells a disproportionate number of weapons. In return, Berlin could show a little more understanding for the special situation of smaller countries."

Meanwhile, Berlin rejects all blame for the debacle, saying that those who don't want to be rescued simply cannot be helped. The ESM and the IMF cannot contribute more than the proposed €10 billion in bailout loans, says Berlin, arguing that this is the only way to achieve a debt level of 100 percent of GDP by 2020, as the IMF requires.

For this reason, the troika and the German Finance Ministry also discarded the Cypriots' proposed solution last week, which was to establish a bailout fund, using government and church property as collateral, which could then issue bonds independently. But critics unanimously agreed that the construct would simply amount to Cyprus taking on additional debt. "The proposal is worthless," sources associated with the troika said bluntly.

The Haves and the Have Nots

Instead, the ECB stepped in last Thursday, acting with unprecedented severity in giving a member state an ultimatum. Had Cyprus not submitted to the EU bailout program, the ECB would have cut off funding on Tuesday. To reinforce the threat, the ECB promptly froze its liquidity aid at the current level of €11.4 billion.

Even Southern European countries, normally in favor of generosity, agreed with the hard-line position. And the threat worked, with the Cypriot parliament and other leaders working tirelessly to come up with a deal.

Still, the real loser in the Mediterranean game of poker was the euro zone. Once again, leaders have demonstrated their inability to balance the interests of the currency union "haves" with those of the "have nots." Depositors, for their part, learned that legal protections on their savings accounts are not as concrete as they thought. And international financial markets learned that the term "systemically relevant" is extremely relative.

German Chancellor Merkel has likewise not emerged unscathed. In much of Europe, her image is that of an overbearing, heartless know-it-all who cares little for the suffering of average people. And at home, voters were likewise less than impressed. In the most recent public opinion polls, her Christian Democrats have lost two percentage points of support.

BY SVEN BÖLL, CHRISTIAN REIERMANN, MICHAEL SAUGA, CHRISTOPH SCHULT, ANNE SEITH and DANIEL STEINVORTH

Translated from the German by Christopher Sultan


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« Reply #5317 on: Mar 26, 2013, 07:25 AM »

 SPIEGEL ONLINE
03/25/2013 05:58 PM

Stubborn and Egotistical: Europe Is Right to Doubt German Euro Leadership

A Commentary by Jakob Augstein

The drama over Cyprus has made clear that the euro-zone crisis is developing into a struggle over German hegemony in Europe. On the surface, Merkel and Schäuble seem to be working to stabilize the economy. In actuality, they're binding other nations with the shackles of debt.

Throughout Cyprus's financial crisis, German power has been on display. But Germany is pursuing the wrong ojectives, showing how it's incapable of wielding its power correctly. Cypriot leaders came up with the idea to make their own small-scale savers liable for the bankruptcy of the banks -- with the approval of Germany -- because they wanted to hold true to their principles of crime and punishment.

All of Europe, indeed the entire world, took notice. Despite deposit insurance and Chancellor Angela Merkel's own promises, in the end it's the common people who suffer? The plan was withdrawn, and now the burden is falling mostly on wealthy Russians. But the damage is done, confidence undermined. What is the chancellor's word actually worth? Cyprus has shown once again that Europe can't rely on the Germans.

Fortunately the Euro Group has now made the right move. Those with smaller deposits are safe, one bank goes bankrupt and another is downsized. But the theatrics of the past week fit well into the image Europe is projecting right now: Irresponsible bankers gamble away the money of even richer money-launderers, and the politicians help both groups to save themselves as best they can -- at the expense of the common people, who have neither the resources nor the influence to bring themselves to safety. And all of that takes place under German domination.

That was a sign. The chancellor indulges herself and the Germans in the luxury of navel-gazing. Historical memory is essentially wiped away, good for little more than cozy evenings when we wrap ourselves in blankets and ogle at the moral failures depicted in World War II TV dramas, like the recent German miniseries "Our Mothers, Our Fathers."

But this means nothing for the present. Just like twice before in our recent history, the Germans are falling deeper and deeper into conflict with their neighbors -- regardless of the cost. It's a path that could easily lead to fear of German political hegemony on the Continent. Indeed, Merkel's idea of European integration is simply that Europe should bend to Germany's political will.

Surrounded by Idiots?

As the Cyprus ordeal intensified, a truth about German politics was revealed: They are characterized by a stubbornness that Germans see as sticking to their principles, but what is in fact nothing more than self-righteousness. With her European political maneuvering, Merkel has broken all West German traditions. And she did so with less squeamishness than she had in breaking the traditions of her own party. Merkel's chief adviser for European affairs, Nikolaus Meyer-Landrut, laid it out for her in the summer of 2011. Everything for which Brussels is responsible works just fine, he told her, while areas that fall to member states are in disarray. Thus it would be logical to grant Brussels more power. But Merkel decided otherwise.

Under Angela Merkel's leadership, the Europe of nation states has been revived -- a trend against which former Chancellor Helmut Schmidt issued a stark warning. "The German Federal Constitutional Court, the Bundesbank and Chancellor Merkel are acting like the center of Europe, to the exasperation of our neighbors," he said, and a portion of the public opinion is prone to a "national-egotistical view" of Germany. Schmidt, who lived through all of Nazi Germany and World War II, is not one to use these words lightly.

Nikolaus Blome, deputy editor-in-chief of the mass-circulation tabloid Bild, wrote an editorial that called Cypriot parliamentarians "Cypr-IDIOTS" because they voted against the EU plan to tax bank deposits. But if we've learned anything from the best-selling "Diary of a Wimpy Kid" children's book series, it's that those who see themselves surrounded by idiots are usually idiots themselves. Out of this euro crisis is emerging a conflict over German hegemony in Europe. It looks to be based on economics, when in fact it is based on the politics of power.

The Germans bind the European people with the shackles of debt -- an action American anthropologist and Occupy Wall Street activist David Graeber judges as pernicious. "If history shows anything, it is that there's no better way to justify relations founded on violence, to make such relations seem moral, than by reframing them in the language of debt -- above all, because it immediately makes it seem like it's the victim who's doing something wrong," he wrote in his 2011 book "Debt: The First 5,000 Years."

Germany Pays for (and Profits from) Crisis

As in the past, underdogs today are being ridiculed. Whoever has debts is guilty of their own crime.

That line of thought leaves room for both accusations and self-pity, as evidenced by conservative columnist Hugo-Müller Vogg. "Without German guarantees, there would be no bailout," he wrote in a Bild column last week. "Yet of all people, we Germans are the subject of criticism, even outright hatred, in crisis-plagued countries. The chancellor is denigrated with the Hitler moustache, German flags are torn apart and we Germans are the evil ones to be blamed for all misery." From this proceeds a conversation in bars and at dinner tables, among proletarians and professorials -- who could hand a glowing success in upcoming federal elections to the new right-wing populist party "Alternatives for Germany."

This is all a lie. Germans haven't just paid for the crisis, they've also profited from it. The savings in interest payments, which Germany have enjoyed since the beginning of the crisis, amounted to €10 billion last year alone. Plus there are the interest payments from debtor nations. The reality of the euro crisis is this: The poor of Athens are paying the rich in Germany.

Such experiments failed in the past, and they will fail in the future. Europeans will not allow it. As Germans keep cheering on their chancellor, they should mark the words of former Euro Group chief Jean-Claude Juncker: "Anyone who believes that the eternal issue of war and peace in Europe has been permanently laid to rest could be making a monumental error. The demons haven't been banished; they are merely sleeping."


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« Reply #5318 on: Mar 26, 2013, 07:26 AM »

 SPIEGEL ONLINE
03/25/2013 01:33 PM

Euro Bailouts: Savers Be Warned - Your Money's Not Safe

A Commentary by Armin Mahler

Germans are right to be worried about their savings because the euro bailouts will make most of them poorer in the long term -- through higher inflation and lower payouts from life insurance and pension schemes. Why can't crisis-hit nations follow the Cypriot example and make rich depositors pay a share?

Nearly half of all Germans fear for their savings -- and with good reason. At times like these, the only thing that is certain is that nothing is certain.

Not even savings accounts are safe, as was recently seen in Cyprus. Such deposits are actually guaranteed to up to €100,000, but the euro rescuers cared little about this as they desperately searched for funds. Cypriot small savers may have escaped this time around, but the realization remains, even beyond Cyprus, that a state teetering on the edge of bankruptcy will resort to all available means to raise money -- and a guarantee is only worth something as long as the entity that stands behind it remains solvent.

Nothing is safe from being seized by the state, no savings account, but also no house or apartment. The Germans experienced this after World War II, when they were charged an extra real estate tax in the form of compulsory mortgages. Governments have even banned the possession of gold during currency crises, forcing citizens to exchange the precious metal for the national currency.

So far, people in the debt-ridden countries of the euro zone haven't had such levies imposed on them. But why not? According to a recent study by Germany's central bank, the Bundesbank, for instance, Spaniards hold more wealth, on average, than Germans.

Greece and Cyprus have millionaires and billionaires of whom many profited from the artificial boom fueled by low interest rates after the introduction of the euro -- a boom that subsequently went bust. Why shouldn't they help finance efforts to deal with the aftermath? Is it fairer to place the burden on the euro bailout fund, and thus distribute it among the taxpayers of other countries?

The Benefits of Levying Assets

A levy on assets would immediately reduce the debts of crisis-stricken countries, whereas bailout packages pool risks and shift them to the future.

Those risks can become dangerously explosive. The more countries that have to be bailed out, the fewer countries remain that have to bear the burden -- as long as they are able to. This could even prove to be too much for Germany at some point.

There is no reason to panic. But Germans should be concerned. After all, the bill for managing the euro crisis will ultimately have to be paid, and they will have to shoulder a large portion of this.

If the bailout fails, the bill will be enormous. But no one should succumb to the illusion that the mission won't cost anything if it succeeds.

Germans' savings are already shrinking in real terms because the European Central Bank (ECB) has flooded the market with money and lowered interest rates to nearly zero. Many Germans have already noted with dismay that their life and retirement insurance policies will pay out much less than what was originally promised. Many of them now realize that they will have to tighten their belts when they retire.

Financial Repression

Economists have a term for this form of creeping expropriation: They call it financial repression. Actually, given the current situation, it's amazing that only just under half of all Germans are worried about their money.

Things could actually get worse when the large quantity of money that the ECB is printing to finance the euro rescue starts to drive up prices. An annual inflation rate of only four to five percent, which economists say is entirely probable, would reduce people's savings by 50 percent within just 15 years.

But while inflation eats up savings, it also reduces debts. You don't have to be a conspiracy theorist to suspect that this is precisely what many politicians are hoping for. After all, how else should the euro countries, but also the US, Britain and Japan, ever shrug off the crushing weight of their debts?

The outlook is grim for savers, who are caught in a trap. Only genuinely wealthy individuals can place their money in the hands of a fund manager, who can spread the risk and find safe havens by investing on different continents and in different types of assets.

Not surprisingly, some people will emerge from the euro crisis having increased their assets, or at least maintained them -- while the vast majority will be significantly poorer.

Translated from the German by Paul Cohen
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« Reply #5319 on: Mar 26, 2013, 07:29 AM »

 SPIEGEL ONLINE
03/25/2013 05:51 PM

Cyprus Fallout: Moscow Accuses Euro Zone of Theft -- and Worse

By Benjamin Bidder in Moscow

Russia has sharply criticized the bailout deal for Cyprus, with Prime Minister Dmitry Medvedev accusing the EU of theft. Russian state television even likened the forced levy imposed on wealthy investors -- many of them Russian -- to the expropriation of Jews by Nazi Germany.

The verdict of Russian state television on Europe's effort to save Cyprus was damning. The last week "will enter the history books of the EU as a destructive one," said Dmitry Kiselev, the presenter of the popular news program Vesti Nedili on the Rossiya channel.

Kiselev heaped criticism on the forced levy to be imposed on bank deposits in Cyprus. He said the last time a Western European government proceeded so recklessly was when Adolf Hitler expropriated the Jews.

Nazi propaganda at the time described the money held by Jewish people as "dirty," said Kiselev. That was precisely how Europe was talking about Russian assets deposited in Cyprus, he added.

"The new world order is being founded against Russia, at Russia's costs and on the rubble of Russia," said a Rossiya correspondent from the Mediterranean island nation.

The Kremlin feels it has been sidelined in the tug-of-war over the Cypriot bailout, European Commission President José Manuel Barroso visited Moscow for talks last Friday, but just a few days later, Europe's new attempt to avert a financial meltdown in Cyprus has elicited fierce criticism from Moscow.

Oligarchs May Face Losses Up to 30 Percent

"The stealing of what has already been stolen continues," Prime Minister Dmitry Medvedev was quoted by news agencies as telling a meeting of government officials. He was referring to investments by Russian oligarchs that now face major levies to pay for the Cypriot share of the bailout in return for €10 billion in international aid.

Medvedev ordered Deputy Prime Minister Igor Shuvalov to closely monitor the situation on Cyprus to assess "the consequences for the international finance and currency system and for our interests."

Reports say creditors, shareholders and deposit holders with over €100,000 ($130,000) held in banks on Cyprus may face losses of up to 30 percent. That is likely to hit many Russian business people hard. Oligarch Dmitry Rybolovlev, for example, has a stake of at least 5 percent in the Bank of Cyprus.

Former Finance Minister Alexei Kudrin also criticized Europe's crisis management. "The EU and its supervisory authorities carry the main responsibility for the situation in Cyprus," he wrote on Twitter. But he backed the planned requirement that investors contribute to the bailout. "The private sector must contribute to solving the problems, otherwise it will lose even more," he wrote.

In the meantime it has emerged that the Kremlin might be willing to provide Cyprus with financial assistance after all. President Vladimir Putin ordered his government to support the efforts of the Euro Group, made up of euro-zone finance ministers, said Kremlin spokesman Dmitry Peskov. Russia plans to extend the terms of the €2.5 billion loan Moscow granted to Cyprus in 2011.

"President Putin considers it possible that the efforts of the Cypriot president and of the European Commission could be supported," said Peskov. Last Friday, Moscow declared that negotiations with Cypriot Finance Minister Michalis Sarris had been concluded without an agreement.


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« Reply #5320 on: Mar 26, 2013, 07:34 AM »

 SPIEGEL ONLINE
03/25/2013 04:20 PM

Trans-Atlantic Trade: 'We Need a New Structure for the Global System'

The planned trans-Atlantic free trade agreement between Europe and the US must be senstive to agricultural concerns, says former World Bank President Robert Zoellick in a SPIEGEL interview. If successful, it could set a global economic precedent, he predicts.

SPIEGEL: Mr. Zoellick, many Europeans thought Europe had the worst behind it in terms of the euro crisis, yet the crisis in Cyprus has triggered new anxiety.

Zoellick: That is hardly surprising. Notable economists point out that when you have a downturn caused by a financial crisis, the recoveries are very long and on average take 10 years. So, by that measure, we are about halfway through.

SPIEGEL: Have European crisis managers made any tangible progress?

Zoellick: The steps that Mario Draghi, president of the European Central Bank, took last August had a stabilizing effect on the financial markets, but the monetary policy can only buy time. It does not deal with the fundamentals. The real question is about politics as much as it is about pure economics, and when you look at election results in Greece, Italy, Spain or the banking crisis in Cyprus, there is the question about whether these countries can persevere with their rescue efforts. My sense is that the German public will continue to support their euro-zone neighbors as long as they continue to try to make reforms. But if the others quit trying, German public support will drop.

SPIEGEL: But we are seeing populist sentiments in Germany, the formation of an anti-Europe party being one of the more visible examples. Many German citizens are simply fed up with having to bail out other European Union member states.

Zoellick: I believe that where the Germans are correct is that countries have to undertake structural reforms of their budget and their competitiveness. But there is often a gap between the time reform actions are taken and the benefits. That is where Draghi took important action by showing that he would be willing to support the bonds of troubled member states as they roll over the debt. One of the other challenges is that in Germany you do not have the same sense of crisis that you do elsewhere in Europe.

SPIEGEL: Yet Chancellor Angela Merkel could be voted out of office in September.

Zoellick: My view of governance is that the sole purpose is not to be re-elected. You are there to do things. Sometimes you have to take unpopular steps. Actually, Chancellor Merkel has shown leadership and also remained popular.

SPIEGEL: That makes her an exception among her European counterparts.

Zoellick: I think it is also a question for the European system. I recall the age of Helmut Kohl and Francois Mitterrand, when you also had Jacques Delors as influential President of the European Commission. That helped Kohl, because Delors was very supportive of what Kohl was trying to do. In some respects, because the national governments have weakened some of these European posts, they now have weaker partners in Brussels.

SPIEGEL: You mean the current European Commission President José Manuel Barroso has too little influence?

Zoellick: You cannot just blame one person. The member states signal what sort of leaders they want there, so they got what they asked for.

SPIEGEL: This is particularly worrisome because more leadership is urgently needed in Europe. The traditional Franco-German alliance is eroding and Paris is weakened.

Zoellick: France could be the new sick man of Europe and lose its competitiveness. At the time of German unification, there were worries about Germany being the new power in Europe, but for 20 years, you had France, Britain or Italy that all had their own combination with Germany. Now it is quite clear that Germany is dominant. It does not want to be seen as dominating, though, so that is a challenge for German politics. But the reality is that Germany is the driver and engine of Europe.

SPIEGEL: Germany backs the creation of a trans-Atlantic free trade agreement between the EU and the US. But President Barack Obama felt so lukewarm about the project that a reference to it was reportedly included in his State of the Union address only at the very last minute.

Zoellick: If you look at President Obama's actions on trade in his first term, it was not a priority. It took him a long time to simply pass three free trade agreements that he inherited with Colombia, Korea, and Panama. When he came into office, Obama's trade representative said he did not want to have "deal fever." He accused his predecessors, including me, of wanting to do too many things.

SPIEGEL: How could Obama show some fresh resolve?

Zoellick: One important signal would be his choice of a new US trade representative. There are some candidates who are more prone to intellectualize and some more prone to actually get a deal done. And it is not just a matter of the trade representative and his staff. They have to be supported by the President.

SPIEGEL: What are the potential pitfalls of a free trade agreement?

Zoellick: The farm community in the United States is important in trade politics, because we have two senators per state, and we have a lot of farm states. And the American farm community has told me how frustrated they have become with the Europeans. According to them, the US negotiated to open up the European beef market, but then it was blocked by European concerns about hormones. The US negotiated to open up the poultry market, and that was blocked by debates about chickens disinfected with chlorine. The US negotiated to open up the grains market, and then his was blocked by discussions about genetic engineering.

SPIEGEL: Is it just up to the Europeans to adjust, though? Many EU concerns about US food standards are well justified -- and some American markets have been closed off as well.

Zoellick: I know these are sensitive issues, so I am not trying to pick sides. I am just saying that this agreement will have to do something on agriculture if you are going to get the support of the American farm community.

SPIEGEL: Tariffs between the US and the EU are already quite low. Real progress in trade can only be made if regulatory issues are addressed, too.

Zoellick: Regulatory issues are way more important, but they are harder to achieve because you move beyond the traditional ministries that make trade decisions to regulatory authorities, and a lot of the regulatory authorities are sensitive to their prerogatives. They think, "We are doing it the right way, and why should we change?"

SPIEGEL: You sound pessimistic. Is there not an approach you can recommend from your experience as a former US trade representative?

Zoellick: Here is the way I would do it: It turns out the US negotiated a free trade agreement with South Korea. The EU then did a slight variation of that agreement with South Korea. So rather than start from scratch, I would compare the two agreements and find out where you have the differences, and then try to resolve the core differences.

SPIEGEL: But agriculture, the biggest issue in a trans-Atlantic agreement, is not as important in the agreement with South Korea.

Zoellick: True. I do not think you will be able to exclude agriculture in the discussions between the EU and the US. But looking at the approach with Korea could smooth the way for the trickier negotiations.

SPIEGEL: Why should Europe even want to team up with the US, which is mired in record public debt of more than $16 trillion?

Zoellick: About 5 years after the crisis, the United States has recovered the lost output from the recession. The euro zone by contrast has only recovered about 60 percent. So the US recovery, while not good enough, has been far better. The US has other pluses, such as the innovations in energy that are really transforming the cost of energy and will improve the American trade position. The demographics in the United States are better than they are in Europe, and they are better than they are in China and Japan. I do not mean to suggest that the US does not have problems, such as its fiscal problem which has not been properly addressed, but if you look at the world economy, I think the US is likely to come out of this ahead of Europe.

SPIEGEL: Does this mean that Europe needs America's help to retain its position in the world?

Zoellick: Just look at the numbers: In the past 5 years, two-thirds of global growth has come from developing and emerging countries. For 60 years, the world economy was guided by the US, Europe, and Japan. Today, Europe is preoccupied, Japan is struggling and the US has to get its act together. We need to create a new structure for the global system.

SPIEGEL: And all this can best be achieved by a closer trade partnership between Europe and the US?

Zoellick: This could set a precedent. An EU-US trade agreement, if completed, could be a great facilitator and set some good standards for the global economy. But both sides must stand together to achieve this.

Interview conducted by Gregor Peter Schmitz and Christoph Schult


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« Reply #5321 on: Mar 26, 2013, 07:37 AM »

 SPIEGEL ONLINE
03/25/2013 03:08 PM

Sarkozy Scandal: An 'Unflattering Picture' of French Democracy

Former French President Nicolas Sarkozy is under investigation for exploiting the country's richest woman to raise campaign funds. Edwy Plenel, founder of Mediapart, the online news magazine that broke the scandal, tells SPIEGEL that there could be more such cases to come.

SPIEGEL: Last Tuesday, French Budget Minister Jerome Cahuzac stepped down. On Thursday Sarkozy was put under formal investigation. Both scandals were uncovered through research by Mediapart. Satisfied?

Plenel: I am satisfied, because the seriousness of our work was confirmed, and because the independence of the judiciary and the press prevailed. But both cases painted an unflattering picture of democracy in France, and you can't be satisfied with that.

SPIEGEL: In the case of Sarkozy, the research began with a Dictaphone.

Plenel: Yes, 21 hours of conversation, which were recorded by Madame (Liliane) Bettencourt's butler, indicated that illegal monetary gifts had indeed been given to Sarkozy's party. We received a copy of the recording, which we evaluated, and then we spoke with the billionaire's staff, who reported that Sarkozy had made several thank-you visits to the house.

SPIEGEL: What exactly are the prosecutors' accusations against the former president?

Plenel: We know today from the opinions of experts that by 2007 Madame Bettencourt was no longer in full possession of her mental powers. So the accusation claims that Sarkozy took advantage of her mental weakness in order to get her to partially finance his campaign.

SPIEGEL: Sarkozy has vehemently denied this. Do you believe the case will make it to trial?

Plenel: I think he will be brought before a court. Of course his lawyers will lodge an appeal. But this is not the only scandal that could get Sarkozy into trouble. There's still the Karachi affair over dubious campaign financing in 1995, and then there's the question of whether Sarkozy received campaign contributions from Libyan dictator Moammar Gadhafi.


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« Reply #5322 on: Mar 26, 2013, 07:41 AM »


Italy: ‘Bersani: “We need a miracle”’

26 March 2013
La Stampa,

A month after general elections, talks on forming a government seem deadlocked.

Pier Luigi Bersani, whose Democratic Party won a majority in Italy’s lower parliamentary chamber, but not in the upper, is struggling to find sufficient support to form a government.

Ex-comic Beppe Grillo has refused to give broad support to Bersani, and is blocking MPs from his Five Stars Movement, the second largest party in terms of seats won, from supporting Bersani’s pledge to form an apolitical team.

Fearing political instability could push up unemployment, trade unions have asked Bersani to avoid fresh polls early, and accepting any coalition with the former prime minister, Silvio Berlusconi.

Full Story:

Bersani rejects the offer of Berlusconi
"Alfano vice? Let's talk serious "

Rome

Pier Luigi Bersani Prime Minister and Deputy Prime Minister Angelino Alfano. It is one of the assumptions made by Silvio Berlusconi, according to reports, the parliamentary groups of the PDL. We sit at the table, he said the Knight, if it comes to a government together: for example, Bersani premier and vice Alfano and with the participation of the normal forces expressed by the voters.

CONSULTATIONS

Meanwhile, tomorrow will continue the consultations of the President of the Board responsible Bersani on Thursday is expected to Colle by Napolitano to report on the outcome of the meetings. The Secretary of the Democratic Party today met with the delegations of the CGIL, CISL, UIL and UGL, followed by Network Companies Italy and a representative of the environmental world. Trade unions call Bersani immediately to give a government the country. "We contrarissimi to a return to vote. Italy is likely to end up like Weimar for serious damage to the stability of democracy. Would extend the populism that leads only authoritarian attitudes. For this we should make a government, do it at all costs. We do not understand the differences in not wanting to ally. The situation is dramatic and politics is the art of the Agreement. It's what makes a shrewd political class, "says the leader of the CISL, Raffaele Bonanni. Susanna Camusso, secretary of the CGIL, Bersani asked to "remove the IMU payment on the first house up to a value of 1000 euro." Among the main demands of Angeletti, leader Uil, cutting taxes at work: "A plan to reduce taxes on labor, which is the core of the government's economic policy." The leader of the Democratic Party speaks of a "dramatic situation". "Did you see what he said Confindustria?" He says, explaining that even the unions that met today has been expressed the same concern. Thus, according to the secretary of the crisis is "still ahead" and for this you need a government, "contrary - he smiles - would need a government that works wonders."

APPEAL TO THE PARTIES

No war in the morning hugs and in the afternoon, then alerts the appointed premier, rejecting the proposal as Berlusconi. "I hope that this time we have given to the reflection of the parliamentary forces, which took 48 hours during the meetings with the social partners, have been useful to get to assume responsibility - he adds -. I must make serious talk, now it's the forces and policies so tomorrow we will start the meeting with all the representatives parliaments according to the line more than once described trying to find a solution under the circumstances. " Tomorrow, however, when it will start consultations with the parties, the theme "Quirinale" is banned: "All we need to discuss this, they will be discussed in due time and there is no need to mix the issues."

RENZI: "DO THE MAYOR"

In the afternoon it was also the time of Don Luigi Ciotti who denied the possibility of becoming a minister in any government Bersani. "It's 42 years that are in the church minister of God, but it is not my task to," he said. "I'm happy to collaborate with each other and shared paths, I do it with Libera," he noted, but "I am a former minister of the Church." Matteo Renzi, meanwhile, said that today will not go to the national leadership of the Democratic Party, "Nn go for a very simple reason: it was called at the last minute, and I'm in Florence to make the mayor."

President Giorgio Napolitano yesterday urged to "think the general interest of the country", words which are interpreted as a solicitation to Pier Luigi Bersani not exclude forms of collaboration with the PDL, this proposed scenario, the Secretary of the Democratic Party as well as some of the social partners, who he met yesterday. The interested party has responded to the controversy by avoiding words PDL, but reiterating the terms of its proposal which is addressed "to the whole House." Meanwhile, Berlusconi returns to the fray. "As I told our 300,000 supporters in the square or the Democratic Party line changed to 180 degrees and is made available to a government with the PDL and simultaneously declare they want a moderate hill or to a return of the vote as soon as possible," explains "The phone call".

THE KNOT QUIRINALE

The Knight in hopes an agreement on Quirinale: "There must be two things, not just one, since the elections have resulted in two equal forces we ask that there is a government with the inclusion of the PDL and also a President of the Republic moderate. " Then the warning: "The left has occupied all offices and if he does the same for the Quirinale us with our senators will block the Senate and then the Parliament and carrying the protest to the streets because this would be a coup in Italy." Berlusconi meanwhile, shows clear on the premises of the alliance with the Northern League: "The League is with us as it is logical and will get along with consultations with Bersani." According to Knight, "it is absurd that Bersani continue to pursue grillini who have already said no several times with jeers twice, three times a day."

THE ALTERNATIVE CRICKET

The alternative would be to seek the consent of Bersani M5S. But yesterday Beppe Grillo on his blog addressed to the Secretary-new insults Pd and also the presidents of the Senate and House, Pietro Grasso and Laura Boldrini. Of course, on the same blog Cricket fans who ask for an agreement are as numerous as those against. But the former comedian has cut short the first accused to be "paid" by the parties. In PD there are those who hope that the same division occurs between the senators 5 Star, but this should be obtained within 48 hours in order to push Napolitano to give Bersani a full charge. The PDL have come to Bersani calls for a government of broad understandings: "We are a big part of the country, can not do without us," he wrote on Twitter Angelino Alfano. Bersani after the consultation has avoided harsh words against PDL and Berlusconi, and stated that its proposal is for "the whole of Parliament, and is based on a scheme that allows each parliamentary strength to recognize themselves."

SCENARIOS

The pattern is always the double register: institutional reforms and election, which bring together the consent of PDL and "montiani" (to turn in an uproar), and government action oriented "change". But to be accepted by the PDL, this scheme requires the guarantee that once established, the government does not approve rules "anti Knight." On the other hand pdl would always have the knife by the handle: if hostile measures were approved, it would be enough to table a motion of no confidence to put an end to the government Bersani. In short, he admitted Bersani still a "narrow road" but "the most sensible," because the others are "more complicated." The grand coalition urged by some respondents met today would mean "a party shut themselves in the fort, and at that point - said Bersani - Grillo take the Bastille."


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« Reply #5323 on: Mar 26, 2013, 07:46 AM »

 SPIEGEL ONLINE
03/25/2013 04:53 PM

Neo-Nazi Killings: Terror Trio's Network May Have Been Bigger

The three members of the NSU neo-Nazi terrorist cell may have had well over 100 supporters. Authorities have added more than two dozen names to a list of people believed to have had contact with the trio that murdered 10 people of Turkish and Greek origin.

The National Socialist Underground (NSU), the right-wing terrorist cell uncovered by chance in 2011, may have had more supporters than previously thought.

Members of a parliamentary committee investigating the failure of the security services to track down the neo-Nazi killers for over a decade received a list on Friday containing the names of 129 people believed to have been part of the network surrounding the terrorist trio, Bild am Sonntag newspaper reported on Sunday.

The list had previously contained some 100 people who were believed to have been in contact with NSU members Uwe Böhnhardt, Uwe Mundlos and Beate Zschäpe.

"It's a list of people who were in contact with the three and is constantly being expanded, though originally it was known as the Hundred List," Wolfgang Wieland, a lawmaker for the opposition Greens party on the investigative committee, told SPIEGEL ONLINE.

Another committee member, Eva Högl of the opposition Social Democrats, said: "I welcome the fact that the number has been increased and that attempts are being made to find out how big the support network really was."

It is unclear whether the people were active supporters or just had contact with the three neo-Nazis.

The NSU is alleged to have murdered nine immigrants of Turkish and Greek origin and one German policewoman between 2000 and 2007, and to have committed other crimes including a nail bomb attack in 2004 in a district of Cologne where many Turkish immigrants live, injuring 22 people.

Mundlos and Böhnhardt committed suicide after a botched bank robbery in November 2011. The landmark trial of Zschäpe and four alleged accomplices starts on April 17 in Munich.

Zschäpe has been charged with being an accessory to the murders and bomb attacks carried out by the NSU, as well as arson, founding a terrorist organization and facilitating robbery.


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« Reply #5324 on: Mar 26, 2013, 07:52 AM »

Protestors call for resignation of official after she blames the family for a child’s rape in day care

By Agence France-Presse
Monday, March 25, 2013 18:30 EDT

Protesters on Monday demanded the resignation of Tunisia’s minister for women’s affairs, Sihem Badi, accusing her of defending a children’s nursery where a three-year-old girl was raped.

The protesters, among them relatives of the victim, gathered outside the ministry in Tunis shouting slogans against Badi, including “Minister of shame, get out!” and “Ministers who protect paedophiles have no place among us.”

The young girl was raped repeatedly by the caretaker of the nursery in La Marsa, an upscale suburb of the capital, according to the police.

The suspect was arrested on Saturday.

On the same day, Badi, who as minister of families as well of women’s affairs is responsible for children’s nurseries, said a member of the girl’s family was to blame and that no measures against the nursery were needed.

“Three weeks ago, my life turned into a nightmare. When I imagine my daughter, who weighs 11 kilos, in the hands — and on several occasions — of this 55-year-old caretaker, I have only one wish, to die,” the father of the victim told AFP.

“The children’s nursery is still open despite what happened to my daughter,” he added, his voice welling with emotion.

An official at the ministry for women’s affairs said later that the kindergarten had finally been closed on Monday.

“The ministry took the decision to close this nursery several days ago, and it was closed this afternoon,” Maher Souilem told AFP.

The minister herself, who is a member of President Moncef Marzouki’s Congress for the Republic party, was on a trip to Qatar with Marzouki on Monday and not reachable for comment.

Badi has for months been strongly criticised by civil society activists because of her warm ties with Ennahda, the ruling Islamist party which secular opposition groups in particular accuse of seeking to curtail women’s rights.

Her ministry on Monday announced the creation “of an emergency commission to follow the developments of this case” and tasked with identifying “preventative measures… to confront violence, aggression and threats (against children), whatever form they take.”

If found guilty, the rape suspect risks the death penalty, even though no executions have been carried out in Tunisia since 1991.

The last person to be put to death was a rapist and child serial killer.


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