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Posts Tagged ‘European Union’

Protests continue in Spain as ruling Socialist Party suffers electoral defeat

Posted by Admin on May 24, 2011

by Paul Mitchell

Global Research, May 23, 2011

Tens of thousands of protestors continued to occupy Madrid’s Puerta del Sol and other centres in numerous cities and towns across Spain through the weekend, despite a government ban. Spain held regional and municipal elections on Sunday, which returned a big defeat for the Spanish Socialist Workers Party (PSOE) government of José Luis Zapatero.

The main driving force behind the PSOE’s defeat was the massive austerity measures imposed by the government, which have compounded the economic crisis. Early results showed the PSOE won less than 28 percent of the vote.

The biggest beneficiary of the collapse in support for the PSOE was its main rival, the right-wing Popular Party, which won 38 percent. The PP also supports the attack on the working class. The PSOE also lost control of the country’s second largest city, Barcelona, for the first time in more than 30 years, with a coalition including Catalan nationalists taking power.

“The results show that the Socialist Party has clearly lost today’s elections”, Zapatero said on Sunday. He blamed the economic crisis for the defeat, as if the policies of the PSOE government had nothing to do with the disastrous conditions facing Spanish workers and youth.

The elections were overshadowed by the protests, known as the M-15 movement, the day they were first called by social network and Internet groups. They have drawn a big response from younger workers, students, the unemployed and broad sectors of Spanish working people. Organisers have indicated that they will continue the protests past the election.

The protests were banned by various local electoral boards and the central election commission ahead of yesterday’s elections. Spanish law prohibits party political activity on election day and the preceding 24 hours, which are designated a “day of reflection”. This does not cover the M-15 protests, but has been the pretext for the ban. So far, the PSOE government has refrained from sending in police to enforce the ban, although there have been reports of police intimidation and violence.

The opposition right-wing Popular Party (PP) is demanding tough action to break up the “illegal” encampments that protesters have said will continue past the elections.

The majority of the demonstrators, dubbed “los indignados” [the angry ones], have been young people who have been hit especially hard hit by the crisis. Almost half of 18 to 25-year-old Spaniards are out of work, more than double the European Union average. Most of those that are able to find work end up on temporary contracts.

However, increasing numbers of families and older workers have joined the occupations in Madrid and other cities including Barcelona, Valencia, Seville, Zaragoza and Bilbao, in protest over unemployment, government austerity measures and a political system that serves only the banks and big business.

Those participating in the protests have said that they are hostile to all of Spain’s major political parties. Over the weekend, they urged people not to vote for either of Spain’s two main parties, the PSOE or the PP.

Puerta del Sol serves as one large assembly, with many discussions taking place over what to do after the elections. Some have called for the occupation to become permanent, and that the movement should be broadened by creating popular assemblies throughout Madrid. Several committees have been set up looking after food supplies, legal matters and communications.

The Puerta del Sol assembly has adopted a list of 16 demands, including the democratisation of the election process; the proclamation of basic rights, such as housing, health care and education; greater government control over banks and businesses; reduced military spending; and the renationalisation of privatised public enterprises.

One protester, Alejandro, told the BBC, “I hope this changes our situation. We have a right to regular jobs, a future and a decent salary, to more opportunities in life, the chance to get a house, to pay for that house without being enslaved, but especially a better quality of life”.

Carlos Gomez said, “We have no option but to vote for the two biggest parties in Spain, who are more or less the same. They are unable to solve any problem; it is just a nest of corruption. We are tired. In short, we want a working democracy. We want a change”.

Milena Almagro García added, “These protests are not only about unemployment. They are about the unfair political situation that exists in Spain. We protest against the political situation that allows more than 100 people who are accused of corruption across the country to stand in the next elections.

The demonstrations and the election results expose the vast gulf between the interests and sentiments of the majority of the population and the policies dictated by the financial elite and supported by all the official parties―in Spain and throughout Europe.

While the organising forces behind the protests have claimed to be apolitical, they do have a political perspective, namely that mass demonstrations by themselves can force the political system to change. This is false. As the European debt crisis enters a new stage, the ruling class is determined to enforce even more brutal austerity measures, which will increasingly require the abrogation of the most basic democratic rights.

The PSOE government has already imposed one of the most brutal programmes in all of Europe, introducing a €15 billion package of spending cuts that includes 5 to 15 percent cuts in civil servants’ salaries, attacks on pensions and reformed labour protection laws.

As part of the campaign to force deeper cuts, financial markets have sent Spanish interests rates to their highest level since January. Regional governments, which are responsible for one third of public spending, have carried out cuts in healthcare, education and other essential public services. There are indications that this week newly-elected regional governments will begin to reveal debts much higher than previously published, which will only escalate the pressure for more austerity.

To combat this drive, the working class needs its own organisations of struggle. Noticeably absent in the protests over the past week have been the official trade unions, which have worked closely with the PSOE in enforcing cuts and demobilising the mass resistance that erupted last year. These unions represent barely 14 percent of the workforce according to data from the Organization of Economic Cooperation and Development.

To carry forward a struggle, workers must build independent rank-and-file committees to unite all sections of the working class with unemployed youth.

Above all, a new political party must be built–on the basis of an uncompromising revolutionary and internationalist perspective. It is not only a question of protest, but of building a new leadership to fight for the socialist transformation of the economy in Spain, throughout Europe and internationally.

Global Research Articles by Paul Mitchell

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Regime Change at the IMF: The Frame-Up of Dominique Strauss-Kahn?

Posted by Admin on May 24, 2011

by Prof. Michel Chossudovsky

Global Research, May 19, 2011

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The arrest of IMF Managing Director Dominique Strauss-Kahn has all the appearances of a frame-up ordered by powerful members of the financial establishment, in liaison with France’s Nicolas Sarkozy, whose presidency has served the interests of the US at the expense of those of France and the European Union. While there is for the moment no proof of a plot, the unusual circumstances of his arrest and imprisonment require careful examination.

Immediately following Strauss Kahn’s arrest, pressures were exerted by Washington to speed up his replacement as Managing Director of the IMF preferably by a non-European, an American or a handpicked candidate from an “emerging market economy” or a developing country.

Since the founding of the Bretton Woods institutions in 1945, the World Bank has been headed by an American whereas the IMF has been under the helm of a (Western) European.

Strauss-Kahn is a member of elite groups who meet behind closed doors. He belongs to the Bildeberger. Categorized as one of the world’s most influential persons, he is an academic and politician rather than a banker. In contrast to his predecessors at the IMF, he has no direct affiliation to a banking or financial institution.

But at the same time he is the fall guy. His “gaffe” was to confront the Washington-Wall Street Consensus and push for reforms within the IMF, which challenged America’s overriding role within the organization.

The demise of Strauss-Kahn potentially serves to strengthen the hegemony of the US and its control over the IMF at the expense of what former Defense Secretary Donald Rumsfeld called “Old Europe”.

Blocking Strauss-Kahn, the Presidential Candidate

In recent years, a major shift has occurred in Europe’s political landscape. Pro-American governments have been elected in both France and Germany. Social Democracy has been weakened.

Franco-American relations have been redefined, with Washington playing a significant role in grooming a new generation of European politicians.

The presidency of Nicolas Sarkozy has, in many regards, become a de facto US “client regime”, broadly supportive of US corporate interests in the EU and closely aligned with US foreign policy.

There are two overlapping and interrelated issues in the DSK frame-up hypothesis.

The first pertains to regime change at the IMF, the second to Strauss-Kahn as a candidate in France’s forthcoming presidential elections.

Both these processes are tied into the clash between competing US and European economic interests including control over the euro-currency system.

Strauss-Khan as a favorite of the Socialist Party, would have won the presidential elections leading to the demise of “Our Man in Paris” Nicolas Sarkozy. As documented by Thierry Meyssan, the CIA played a central undercover role in destabilizing the Gaullist party and supporting the election of Nicolas Sarkozy (See Operation Sarkozy: How the CIA placed one of its agents at the presidency of the French Republic, Reseau Voltaire, September 4, 2008)

A Strauss-Kahn presidency and a “Socialist” government would have been a serious setback for Washington, contributing to a major shift in Franco-American relations.

It would have contributed to weakening Washington’s role on the European political chessboard, leading to a shift in the balance of power between America and “Old Europe” (namely the Franco-German alliance).

It would have had repercussions on the internal structure of the Atlantic Alliance and the hegemonic role of the US within NATO.

The Eurozone monetary system as well as Wall Street’s resolve to exert a decisive influence on the European monetary architecture are also at stake.

The Frame-Up?

Fifty-seven percent of France’s population, according to a May 17 poll, believe that Strauss-Kahn was framed, victim of a set-up. He was detained on alleged sexual assault and rape charges based on scanty evidence. He was detained based on a complaint filed by the Sofitel hotel where he was staying, on behalf of the alleged victim, an unnamed hotel chamber-maid:

The 32-year-old maid told authorities that she entered his suite early Saturday afternoon and he attacked her, New York Police Department spokesman Paul J. Browne. She said she had been told to clean the spacious $3,000-a-night suite, which she thought was empty.

According to an account the woman provided to police, Strauss-Kahn emerged from the bathroom naked, chased her down a hallway and pulled her into a bedroom, where he began to sexually assault her. She said she fought him off, then he dragged her into the bathroom, where he forced her to perform oral sex on him and tried to remove her underwear. The woman was able to break free again and escaped the room and told hotel staff what had happened, authorities said. They called police.

http://www.chron.com/disp/story.mpl/business/7565485.html#ixzz1MfFWFlnY

Wednesday CFR.org Roundup: U.S. pressures Strauss-Kahn to resign

Challenging the Washington Consensus

What is at stake in the immediate wake of Strauss Kahn’s demise is “regime change” at the IMF.

The Obama administration has demanded his replacement by a more compliant individual. U.S. Treasury Secretary Timothy Geithner, former CEO of the New York Federal Reserve Bank is pushing for the replacement of Dominique Strauss-Kahn, “suggesting he can no longer perform his duties” as IMF Managing director.

“Geithner called for greater formal recognition by the IMF board that John Lipsky, the fund’s second-in-command, will continue serving as temporary managing director for an interim period. Although Strauss-Kahn has yet to resign, sources say the IMF is in touch with his legal counsel to discuss his future at the organization.”

What lies behind the frame-up scenario? What powerful interests are involved? Geithner had a close personal relationship with Strauss-Kahn.

On the floor of the US Senate (May 18), Senator Mark Kirk of Illinois, called for the resignation of DSK while calling upon the IMF’s deputy managing director John Lipsky to “assume full responsibility of the IMF” as interim managing director. The process of “permanent replacement should “commence at once,” he said. John Lipsky is a well connected Wall Street banker, a former Vice Chairman at JPMorgan Investment Bank.

While the IMF is in theory an intergovernmental organization, it has historically been controlled by Wall Street and the US Treasury. The IMF’s “bitter economic medicine”, the so-called Structural Adjustment Program (SAP), imposed on countless developing countries, essentially serves the interests of creditor banks and multinational corporations.

The IMF is not the main architect of these devastating economic reforms which have served to impoverish millions of people, while creating a “favorable environment” for foreign investors in Third World  low wage economies.

The creditor banks call the shots. The IMF is a bureaucratic entity. Its role is to implement and enforce those economic policies on behalf of dominant economic interests.

Strauss Kahn’s proposed reforms while providing a “human face” to the IMF did not constitute a shift in direction. They were formulated within the realm of neoliberalism. They modified but they did not undermine the central role of IMF “economic medicine”. The socially devastating impacts of IMF “shock treatment” under Strauss-Kahn’s leadership have largely prevailed.

Dominique Strauss Kahn arrived at the helm of the IMF in November 2007, less than a year prior to September-October 2008 financial meltdown on Wall Street. The structural adjustment program (SAP) was not modified. Under DSK, IMF “shock treatment” which historically had been limited to developing countries was  imposed on Greece, Ireland and Portugal.

Under the helm of DSK as Managing Director, the IMF demanded that developing countries remove food and fuel subsidies at a time of rising commodity prices on the New York and Chicago Mercantile exchanges.

The hikes in food and fuel prices, which preceded the September-October 2008 Wall Street crash, were in large part the result of market manipulation. Grain prices were boosted artificially by large scale speculative operations. Instead of taming the speculators and containing the rise in food and fuel prices, the IMF’s role was to ensure that the governments of indebted developing countries would not in any way interfere in the “free market”, by preventing these prices from going up.

These hikes in food prices, which are the result of outright manipulation (rather than scarcity) have served to impoverish people Worldwide. The surge in food prices constitutes a new phase of the process of global impoverishment.

DSK was complicit in this process of market manipulation. The removal of food and fuel subsidies in Tunisia and Egypt had been demanded by the IMF. Food and fuel prices skyrocketed, people were impoverished, paving the way towards the January 2011 social protest movement:

Fiscal prudence remains an overarching priority for the [Tunisian] authorities, who also see the need for maintaining a supportive fiscal policy in 2010 in the current international environment. Efforts in the last decade to bring down the public debt ratio significantly should not be jeopardized by a too lax fiscal policy. The authorities are committed to firmly control current expenditure, including subsidies,… (IMF Tunisia: 2010 Article IV Consultation – Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Tunisia)

“[The IMF] encouraged the [Egyptian] authorities to press further with food and fuel subsidy reforms, and welcomed their intention to improve the efficiency and targeting of food subsidy programs. [meaning the selective elimination of food subsidies].

“Consideration should be given to introducing automatic adjustment mechanisms for domestic fuel prices to minimize distortions [meaning dramatic increases in fuel prices without State interference], while strengthening cash-based social programs to protect vulnerable groups. (IMF Executive Board Concludes 2008 Article IV Consultation with the Arab Republic of Egypt Public Information Notice, PIN  No. 09/04, January 15, 2009)

Under the helm of DSK, the IMF also imposed sweeping austerity measures on Egypt in 2008, while supporting Hosni Mubarak’s “efforts to broaden the privatization program”.(Ibid)

The Frank G. Wisner Nicolas Sarkozy Connection 

Strauss-Kahn was refused bail by Judge Melissa Jackson, an appointee and protégé of Michael Bloomberg, who in addition to his role as Mayor is a powerful figure on Wall Street.

Manhattan District Attorney Cyrus Vance Jr. charged (using scanty evidence) Strauss-Kahn “with seven crimes, including attempted rape, sexual abuse, forcible touching and unlawful imprisonment”.

Who is Cyrus Vance Jr.?

He is the son of the late Cyrus Vance who served as Secretary of State in the Carter administration.

But there is more than meets the eye. Nicolas Sarkozy’s step father Frank G. Wisner II, a prominent CIA official who married his step mother Christine de Ganay in 1977 served as Deputy Executive Secretary of State under the helm of Cyrus Vance Senior, father of District Attorney Cyrus Vance Junior.

Is it relevant?

The Vance and Wisner families had close personal ties. In turn Nicolas Sarkozy had close family ties with his step father Frank Wisner (and his half brothers and sisters in the US and one member of the Wisner family was involved in Sarkozy’s election campaign).

It is also worth noting that Frank G. Wisner II was the son of one of America’s most notorious spies, the late Frank Gardiner Wisner (1909- 1965), the mastermind behind the CIA sponsored coup which toppled the government of Mohammed Mossadegh in Iran in 1953. Wisner Jr. is also trustee of the Rockefeller Brothers Trust.

While these various personal ties do not prove that Strauss-Kahn was the object of a set-up, the matter of Sarkozy’s ties to the CIA via his step father, not to mention the ties of Frank G. Wisner II to the Cyrus Vance family are certainly worth investigating. Frank G, Wisner also played a key role as Obama’s special intelligence envoy to Egypt at the height of the January 2011 protest movement.

Did the CIA play a role?

Was Strauss-Kahn framed by people in his immediate political entourage including President Obama and Secretary of the Treasury Tim Geithner?

District Attorney Cyrus Vance Junior, son of the late Cyrus Vance, Secretary of State in the Carter administration

Sarkozy’s Step Father Frank G Wisner II, Deputy Executive Secretary of State (1976-79)
under Cyrus Vance Senior during the Carter administration

In this courtroom drawing, Dominique Strauss-Khan, centre, stands next to his lawyer Benjamin Brafman, in front of Criminal Court Judge Melissa Jackson during his arraignment at the Manhattan Criminal Court for the alleged attack on a maid at his penthouse suite of a hotel in New York. Photo: AP

In this courtroom drawing, Dominique Strauss-Khan, next to his lawyer 

Benjamin Brafman, in front of Criminal Court Judge Melissa Jackson during his arraignment at the Manhattan Criminal Court (AP)

File:Strauss-Kahn, Geithner (IMF 2009).jpg

DSK and Timothy Geithner

DSK and Timothy Geithner


Fair Trial?

Innocent before proven guilty? The US media has already cast its verdict. Will the court procedures be manipulated?

One would expect that Strauss-Kahn be granted a fair trial, namely the same treatment as that granted to thousands of arrests on alleged sexual aggression charges in New York City.

How many similar or comparable alleged sexual aggressions occur on a monthly basis in New York City?  What is the underlying pattern? How many of these are reported to the police?  How many are the object of police follow-up once a complaint has been filed?

What is the percent of complaints submitted to police which are the object of police arrest? How many of these arrests lead to a judicial procedure? What are the delays in court procedures?

How many of these arrests lead to release without a judicial procedure?

How many of the cases submitted to a judicial procedure are dismissed by the presiding judge?

How many of the cases which are not dismissed are refused bail outright by the presiding judge? What is the basis for refusing bail?

How many are granted bail?  What is the average amount of bail?

How many are imprisoned without bail based on scanty and incomplete evidence?

How many of those who are refused bail are sent to an infamous maximum security prison on Rikers Island on the orders of  Michael Bloomberg.

Diplomatic Immunity

Press reports state that full diplomatic immunity does not apply to officials of the United Nations and the Bretton Woods institutions, namely that the US did not ratify the protocol.

“U.N. convention on privileges and immunities for international agencies that most countries have ratified. It gives the heads of U.N. agencies broad immunity in the countries where they are based. But the U.S. government never became a party to that treaty. Employees of international agencies are covered by a U.S. statute that gives only limited immunity.”

The relevant question is how has this limited immunity provision been applied in practice?  Namely how many people with limited immunity (UN officials, officials of the Bretton Woods institutions) have been arrested and sent to a high security prison?

Has Strauss Kahn been given the same treatment as those arrested under the provisions of “limited immunity”?

Does the Strauss Kahn arrest fit the pattern? Or is Strauss Kahn being treated in a way which does not correspond to the normal (average) pattern of police and judicial procedures applied in the numerous cases of persons arrested on alleged sexual assault charges?

Without a frame-up instrumented by very powerful people acting in the background, the head of the IMF would have been treated in an entirely different way. The mayor of New York Michael Bloomberg and Timothy Geithner would have come to his rescue.  The matter would have been hushed up with a view to protecting the reputation of a powerful public figure. But that did not happen.


Rikers Island Prison where DSK was imprisoned.

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Yemen thrust into deeper uncertainty after Gulf deal falls through

Posted by Admin on May 15, 2011

http://news.yahoo.com/s/csm/20110513/wl_csm/383902;_ylt=AgmCcA6REr_zMOzYxWmC7SZvaA8F;_ylu=X3oDMTJkYzI3dTZlBGFzc2V0A2NzbS8yMDExMDUxMy8zODM5MDIEcG9zAzMxBHNlYwN5bl9hcnRpY2xlX3N1bW1hcnlfbGlzdARzbGsDeWVtZW50aHJ1c3Rp

Sanaa, Yemen – When demonstrations began in February aimed at toppling long-ruling President Ali Abdullah Saleh, they were of a humble size, filling only the area immediately outside the entrance to Sanaa University, an area now known as Change Square.

Now as the movement enters its fourth month, the sit-in has swollen to a veritable tent city that stretches nearly two miles, shutting off traffic in a large portion of the nation’s capital and resembling a shantytown. Many tents there have a permanent look, wired for electricity, satellite television and, in many cases, wireless Internet service.

Still, the demonstrators seem no closer to achieving their goal. A supposed agreement that would have had Saleh resign, brokered by the Gulf Cooperation Council, appears to have fallen through, with neither the demonstrators nor Saleh willing to support it.

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“How can anything headed by the GCC lead to democracy,” commented Abdulrahman Abdullah al Kamadi, a demonstrator who has been camped out in the square for over two months.

“The emirates and kingdoms of the GCC are the enemy of any revolution. They cannot even admit what is going on here. This is not a political crisis: this is a revolution.”

‘We have no fear of violence’

On Wednesday, gunfire broke out here as army troops loyal to Saleh moved against the demonstrators in what appeared to be an effort to push them back from the huge swath of territory they’ve claimed over the weeks. More than a dozen protesters were killed in the four-hour firefight, but the pro-Saleh forces gained no ground, and protesters were putting up new structures Thursday.

“We have no fear of violence,” said Bassem Moghram, one the leaders of the young people who make up the heart of the protest movement. “Freedom is not cheap.”

Increasing hardship, uncertainty

Where the protest movement will go is uncertain. Similar tent cities have sprung up in other Yemeni cities, and the political turmoil is showing itself in growing hardship for the average Yemeni.

Gas rationing, water shortages and power outages have become commonplace in many parts of the country; and the cost of food has risen, as the value of the Yemeni rial has plunged.

RELATED: As Yemenis run low on gas and food, revolution could take off

Yemen’s oil industry has been particularly affected; with production dropping nearly 50 percent, the result of damaged pipelines and the temporary closure of some oil facilities.

Amir al Aydarous, the country’s oil minister, recently told the state-run news agency that continued unrest could lead to “catastrophe beyond imagination.” Yemen’s modest oil reserves provide nearly 70 percent of the government’s revenues.

A largely leaderless movement

The movement itself remains largely leaderless. While some of the demonstrators are affiliated with opposition parties, most continue to fiercely assert their independence. Images of slain former President Ibrahim al Hamdi, who ran the country from 1974 to 1977, far outnumber images of current opposition leaders.

“We will talk about parties when we are talking about elections,” said Ibrahim Yayha al Kulani. “Until then, we will remain one united front, not differentiating between party, region or sect.”

Various self-described “revolutionary youth committees” have sprouted in different areas of Yemen. Notably, the past weeks have seen growing cooperation between groups in different cities, culminating in the formation this week of a single, nationwide “Media Council of the Revolution.” Another group, the Supreme Coordination Council of the Revolution, has called for a series of marches, strikes and camp expansions, culminating in a march Tuesday on the Presidential Palace.

US role

For its part, the US, for which Saleh has been a key ally in the war on terror, and the European Union remain supportive of the GCC plan, which would grant Saleh immunity from prosecution for the hundreds of deaths suffered in the crackdown on the protests. The young people who’ve remained camped out in protest reject that idea in particular, and many Yemen observers believe the GCC plan is doomed.

“It is a mistake for the United States to continue to let the GCC take the lead on this, both for the future of Yemen as well as for U.S. security interests,” commented Gregory Johnsen, a Yemen scholar at Princeton University. “The US must take the lead in constructively shaping a post-Saleh Yemen.”

Others say the US support for any plan makes it unworkable.

“This is not even just a GCC plan,” said Feris al Areeqi, a professor of engineering at Sanaa University. “This is a GCC-EU-USA plan. How can they intervene positively when they have supported Saleh?”

(Baron is a McClatchy special correspondent.)

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Basel III rules could spell potholes, literally

Posted by Admin on April 24, 2011

http://in.finance.yahoo.com/news/Basel-III-rules-spell-reuters-1529902422.html

On Tuesday 19 April 2011, 9:40 PM

By Greg Roumeliotis, European Infrastructure Correspondent

AMSTERDAM (Reuters) – Rules designed to spare the world’s taxpayers from paying for a future financial crisis could also make it more difficult to build and replace infrastructure such as the roads they drive on.

The rules, known as Basel III, will weigh on the ability of banks to provide project finance loans on which cash-strapped governments and developers of power plants, pipelines and renewable energy such as wind farms rely to fund schemes.

“Banks have been the stalwart of privately financed projects. If long-term lending requires more capital to back it, it affects the enthusiasm of banks to provide it,” said Andrew Davison, senior vice president at credit rating agency Moody’s.

In Europe, this will hamper efforts to attract private funds into transport, energy and communication networks that are key to economic growth as well as providing jobs at a time when many European countries are struggling with unemployment.

Construction accounts for 7.1 percent of Europe`s total employment, according to the European Construction Industry Federation. The European Union (EU) says Europe’s infrastructure investment needs to 2020 could be up to 2 trillion euros.

Project finance loans are also big business for banks, having grown from a $110.8 billion global industry in 2000 to $208.1 billion in 2010, according to data compiled by Thomson Reuters Project Finance International.

This rise, driven by the private sector’s increasing participation in the funding of infrastructure, is at risk under Basel III, which will make project finance loans scarcer and more expensive due to the way they are accounted for.

“There is an expectation that the volume of project finance loans will drop very significantly over the coming years under Basel III,” said Timothy Stone, chairman of the global infrastructure and projects group at accounting firm KPMG.

Under Basel III, a short-term liquidity buffer, known as the liquidity coverage ratio, will include liquid forms of debt such as government bonds and top-notch corporate paper, but not project finance loans, seen as among the most illiquid.

A second ratio, the net stable funding ratio, makes the provision of long-term debt such as project finance more expensive for banks by requiring them to match their liabilities with their assets in terms of funding.

While not all banks will abandon project finance as a result, their business will be severely affected, said Noburu Kato, EMEA head of structured finance at Sumitomo Mitsui Banking Corporation.

“I believe project finance by banks will continue because there is an increasing need for it, from governments that need to invest in infrastructure and companies that do not want to use their balance sheet. But costs will increase,” Kato said.

Although Basel III is to be implemented between 2013 and 2018, bankers say the impact on project finance will be felt before the rules kick in as banks compete to show investors they are well positioned for the new capital requirements.

“I would expect most of the impact of Basel III on project finance to be priced in by 2014,” said KPMG’s Stone.

In the European Union (EU), project finance accounts for slightly less than ten percent of total infrastructure finance, according to a 2010 European Investment Bank study. The European Commission is exploring initiatives such as backing project bonds to compensate for any drop in project finance loans.

Bonds made up only 9 percent of global project finance activity in 2010 according to Project Finance International. The market for project bonds suffered after the woes of monolines — companies that insure bonds — in the credit crisis of 2007.

But some financiers see opportunities to create new instruments to replace the monolines that can lift a project bond’s credit rating from the BBB range into the A category, attracting a wide poll of institutional investors.

Such a market is still in its infancy but has the potential to fill the gap left by the Basel III-hit project finance industry, its advocates say. Last year, British insurer Aviva partnered with Hadrian’s Wall Capital, an advisory firm, to create a debt fund dedicated to such instruments.

“Our form of credit enhancement can help the project finance bond market take off. We are looking to raise approximately 1 billion pounds with our fund and with that we should be able to provide around 10 billion pounds in financing,” said Hadrian’s Wall Capital Chief Executive Marc Bajer.

(Editing by David Cowell)

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Comments – Prof S P Garg Wed 20 Apr 2011 12:16 AM EDT Report Abuse

Basel II requirements and their strict compliance has protected the major banks and financial institutions worldwide.International Bank for Settlement (IBS) is doing a remarkablec job by way of stipulating the necessary capital requirements ina very prudent manner.The developing countries ,in the initial years might have faced the difficulties in its implementation but results are praiseworthy. The stringent measures must go on and Basel III is a welcome step.
Infrastructure projects and other long term investments would require higher capital requirements but for maintaining the robust health of the banks it is needed.The Central banking system of each country would take necessary steps to augument their caital is these activities have to be pushed in a big way.Not only this, there is a long time gap in implementation and during this period, each institution is needed to take strong steps to boost their capital needs to cater the needs of these sectors.As such, there should be any apprehension that development process would suffer dur to Basel III.Robustness of the financial institutions is to be maintained.
In India, the regulatory framework is so strong which has given a big support to the banks in comliance matters, governance and reporting system.The RBI has shown the path to other countries,Regulatory bodies and central banks that how to grow even in difficult times alongwith maintaining strong standards of compliance.

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NATO general: ‘We’re doing a great job’ in Libya

Posted by Admin on April 12, 2011

http://news.yahoo.com/s/ap/20110412/ap_on_re_eu/libya_diplomacy;_ylt=AqKenJswHYuJzvqlFth6Hh9vaA8F;_ylu=X3oDMTJrNm03bm42BGFzc2V0A2FwLzIwMTEwNDEyL2xpYnlhX2RpcGxvbWFjeQRwb3MDMQRzZWMDeW5fYXJ0aWNsZV9zdW1tYXJ5X2xpc3QEc2xrA25hdG9nZW5lcmFsdw–

A wounded rebel fighter is carried away toa hospital on the outskirts of Ajdabiya, Libya.

1 hr 13 mins ago

BRUSSELS — A NATO general is rejecting French criticism of the operation in Libya, saying the alliance is performing well and protecting civilians.

France’s foreign minister said earlier Tuesday that NATO needed to do more to take out the heavy weaponry that has repeatedly checked the advances of opposition forces. Alain Juppe told France-Info radio, “NATO has to play its role in full.”

Dutch Brig. Gen. Mark Van Uhm says the alliance was successful in enforcing an arms embargo, patrolling a no fly zone and protecting civilians.

Van Uhm says, “I think with the assets we have, we’re doing a great job.”

NATO took over command of the operation over Libya from the U.S. on March 31.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

LONDON (AP) — Libya’s former Foreign Minister Moussa Koussa is traveling to Doha to share his insight on the workings of Moammar Gadhafi‘s inner circle, British government officials said Tuesday, as NATO searches for solutions following weeks of international airstrikes.

Koussa has been asked to attend the conference on Libya being held in Qatar as a valuable Gadhafi insider, according to the official, who spoke on condition of anonymity because of the sensitivity of the situation. News of his trip came as France’s foreign minister said NATO needed to do more to take out the heavy weaponry that has repeatedly checked the advances of opposition forces.

“NATO has to play its role in full,” Alain Juppe told France-Info radio.

Alliance officials in Brussels did not immediately respond to the criticism, but France’s frustration with the developing stalemate on the ground, where Libyan rebels have struggled to capitalize on Western air attacks, has been echoed across Western capitals.

British government officials say they hope that Koussa’s trip to Doha, where Arab and Western leaders are meeting to chart the way forward on Libya, will help give participants a better idea of how to force Gadhafi out of office.

“He’s a Gadhafi insider. He may be able to offer solutions where others are falling short,” one of the officials said, who spoke on condition of anonymity because of the sensitivity of the situation.

In a statement, Britain’s Foreign Office confirmed that Koussa was “traveling today to Doha to meet with the Qatari government,” as well as Libyan rebel officials, adding that Koussa was “a free individual, who can travel to and from the U.K. as he wishes.”

Koussa had been held at a safehouse since he fled to Britain late last month, but agents from Britain’s external intelligence agency MI6 stopped questioning Koussa last week, according to the official. Koussa had been staying in a safehouse until late Monday night, according to Noman Benotman, an ex-member of the Libyan Islamic Fighting Group and relative of Koussa who has been in regular contact with the former foreign minister since he fled to Britain.

Although Koussa was provided with legal advice, Benotman said he believed he had “cleared most of the legal hurdles in the U.K.” surrounding his alleged involvement in the 1988 Lockerbie bombing and arming the Irish Republican Army.

Meanwhile France and Britain sent out conflicting signals about the need to provide succor to the rebel-held city of Misrata, which has been subjected to weeks of punishing bombardment by Gadhafi forces. Juppe said in his interview that the EU had to do more to get humanitarian aid to Misrata, but British Foreign Secretary William Hague told reporters that aid was still getting through.

Speaking ahead of Tuesday’s meeting of EU foreign ministers in Luxembourg, Hague said the aid already delivered there did not need any military backing so far.

“Humanitarian assistance is getting through to Libya, including to Misrata. That, so far, has not needed military assistance to deliver it,” Hague said.

The European Union said over the weekend it is ready to launch a humanitarian mission in Misrata soon, with possible military support, if it gets the necessary backing from the U.N.

Meanwhile, IHH, an Islamic aid group in Turkey, said it will send an aid ship to Misrata on Wednesday, carrying food, powdered milk, infant formula, medicines and a mobile health clinic.

The IHH has a self-declared mission to assist Muslims in the region. It deployed dozens of activists, including doctors, two days after the Libyan uprising began in February and established a tent city and a soup kitchen at the border crossing with Tunisia.

Last year, Israeli commandos killed nine Turkish activists, including one American dual national, in a raid on Mavi Marmara, an IHH-sponsored ship that was trying to breach Israel’s blockade of the Gaza Strip carrying aid supplies.

The soldiers said they opened fire after coming under attack by a mob of activists wielding clubs, axes and metal rods. The activists said they were defending themselves.

Angela Charlton in Paris, Raf Casert in Luxembourg and Selcan Hacaoglu in Turkey contributed to this report.

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IMF chief to activate crisis fund next week

Posted by Admin on March 27, 2011

http://in.finance.yahoo.com/news/IMF-chief-activate-crisis-reuters-2530807212.html

On Friday 25 March 2011, 5:01 AM

 

By Lesley Wroughton

WASHINGTON (Reuters) – The head of the International Monetary Fund will seek to activate a $580 billion crisis fund next week, a confidence-building step at a time of heightened global uncertainty.

“The biggest worry is the high risk of contagion from Portugal and general global uncertainty will trigger a new wave of borrowing from the fund,” a source familiar with the plan said. Two other sources also said economic worry spots were behind the expected move.

The IMF confirmed that IMF chief Dominique Strauss-Kahn would seek to activate the fund — New Arrangements to Borrow — but said it was a “natural consequence of ratification of NAB on March 11, which was previously announced.”

Still, the global worry list has expanded in recent weeks because of Japan’s earthquake and nuclear crisis, as well as unrest spreading in the oil-producing Middle East and North Africa.

Concerns about Portugal’s debt crisis increased on Wednesday after the sudden departure of its prime minister made it likely that the country may not avoid turning to the European Union and IMF for financial help.

Sources emphasized that Portugal had not requested IMF bailout money and insists it is adamantly opposed to requesting IMF help. The country first has to request IMF help to trigger formal discussions on a rescue loan and program.

So far, Portugal has managed to finance itself in capital markets although government borrowing costs spiked on Thursday and rating agency Fitch cut Portugal’s credit rating by two notches to A- saying risks to the country had risen after parliament failed to pass fiscal consolidation measures.

The concern is that Portugal’s debt woes has wider repercussions, with neighboring Spain holding about one-third of Portuguese public debt.

In a statement on March 11 announcing the NAB had taken effect, the IMF called it a tool to “provide supplementary resources to the IMF when these are needed to forestall or cope with a threat to the international monetary system.”

The NAB was expanded ten-fold from $53 billion last year to include 13 new contributors, among them large emerging market economies like China, Brazil, India, Russia and Mexico.

The United States is the largest contributor to the fund through a $100 billion credit agreement approved by President Barack Obama in 2009.

The move was in response to a call by the Group of 20 leading economies in 2009 to triple the IMF’s lending resources to shore up confidence in its ability to respond to crises.

The IMF has been at the center of the response to the financial meltdown and recession as the global lender of last resort, recently approving emergency loans to Ireland and Greece.

(Editing by Dan Grebler, Bernard Orr)

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West moves to help Libya uprising, Gadhafi digs in

Posted by Admin on February 28, 2011

http://news.yahoo.com/s/ap/20110228/ap_on_re_af/af_libya

TRIPOLI, Libya – The U.S. military deployed naval and air units near Libya, and the West moved to send its first concrete aid to Libya’s rebellion in the east of the country, hoping to give it the momentum to oust Moammar Gadhafi. But the Libyan leader’s regime clamped down in its stronghold in the capital and appeared to be maneuvering to strike opposition-held cities.

In Washington, Defense Department spokesman Col. Dave Lapan said the naval and air forces were deployed to have flexibility as Pentagon planners worked on contingency plans, but did not elaborate. The U.S. has a regular military presence in the Mediterranean Sea.

The European Union slapped an arms embargo, visa ban and other sanctions on Libyan leader Moammar Gadhafi’s regime, as British Prime Minister David Cameron told British lawmakers Monday he is working with allies on a plan to establish a military no-fly zone over Libya, since “we do not in any way rule out the use of military assets” to deal with Gadhafi’s embattled regime.

In the most direct U.S. demand for Gadhafi to step down, Secretary of State Hillary Rodham Clinton said the Libyan leader must leave power “now, without further violence or delay.”

France was sending two planes with humanitarian aid, including medicine and doctors, to Benghazi, the opposition stronghold in eastern Libya, French Prime Minister Francois Fillon said. That would be the first direct Western aid to the uprising that has taken control of the entire eastern half of Libya. Fillon said it was the start of a “massive operation of humanitarian support” for the east and that Paris was studying “all solutions” — including military options.

The two sides in Libya’s crisis appeared entrenched in their positions, and the direction the uprising takes next could depend on which can hold out longest. Gadhafi is dug in in Tripoli and nearby cities, backed by security forces and militiamen who are generally better armed than the military. His opponents, holding the east and much of the country’s oil infrastructure, also have pockets in western Libya near Tripoli. They are backed by mutinous army units, but those forces appear to have limited supplies of ammunition and weapons.

In the two opposition-held cities closest to Tripoli — Zawiya and Misrata — rebel forces were locked in standoffs with Gadhafi loyalists.

An Associated Press reporter saw a large pro-Gadhafi force massed on the western edge of Zawiya, some 30 miles (50 kilometers) west of Tripoli, with about a dozen armored vehicles and tanks and jeeps mounted with anti-aircraft guns. An officer said they were from the elite Khamis Brigade, named after the Gadhafi son who commands it. U.S. diplomats have said the brigade is the best equipped force in Libya.

Residents inside the city said they were anticipating a possible attack.

“Our people are waiting for them to come and, God willing, we will defeat them,” one resident who only wanted to be quoted by his first name, Alaa, told AP in Cairo by telephone.

In Misrata, Libya’s third largest city 125 miles (200 kilometers) east of Tripoli, Gadhafi troops who control part of an air base on the city’s outskirts tried to advance Monday. But they were repelled by opposition forces, who include residents armed with automatic weapons and army unites allied with them, one of the opposition fighters said.

He said there were no casualties reported in the clashes and claimed that his side had captured eight soldiers, including a senior officer.

The opposition controls most of the air base, and the fighter said dozens of anti-Gadhafi gunmen have arrived from further east in recent days as reinforcements.

Several residents of the eastern city of Ajdabiya said Gadhafi’s air force also bombed an ammunition depot nearby held by the opposition. One, 17-year-old Abdel-Bari Zwei, reported intermittent explosions and a fire, and another, Faraj al-Maghrabi, said the facility was partially damaged. The site contains bombs, missiles and ammunition — key for the undersupplied opposition military forces.

State TV carried a statement by Libya’s Defense Ministry denying any attempt to bomb the depot. Ajdabiya lies about 450 miles (750 kilometers) east of Tripoli along the Mediterranean coast.

Gadhafi opponents have moved to consolidate their hold in the east, centered on Benghazi — Libya’s second largest city, where the uprising began. Politicians there on Sunday set up their first leadership council to manage day-to-day affairs, taking a step toward forming what could be an alternative to Gadhafi’s regime.

The opposition is backed by numerous units of the military in the east that joined the uprising, and they hold several bases and Benghazi’s airport. But so far, the units do not appear to have melded into a unified fighting force. Gadhafi long kept the military weak, fearing a challenge to his rule, so many units are plagued by shortages of supplies and ammunition.

Gadhafi supporters said Monday that they were in control of the city of Sabratha, west of Tripoli, which has seemed to go back and forth between the two camps the past week. Several residents told The Associated Press that protesters set fire to a police station, but then were dispersed. Anti-Gadhafi graffiti — “Down with the enemy of freedom” and “Libya is free, Gadhafi must leave” — were scrawled on some walls, but residents were painting them over.

In the capital, several hundred protesters started a march in the eastern district of Tajoura, which has been the scene of frequent clashes. After the burial of a person killed in gunfire last week, mourners began to march down a main street, chanting against the Libyan leader and waving the flag of Libya’s pre-Gadhafi monarchy, which has become a symbol of the uprising, a witness said.

But they quickly dispersed once a brigade of pro-Gadhafi fighters rushed to the scene, scattering before the gunmen could fire a shot, the witness said. He and other residents in the capital spoke on condition of anonymity for fear of retaliation.

There were attempts to restore aspects of normalcy in the capital, residents said. Many stores downtown reopened, and traffic in the streets increased.

Tripoli was in turmoil on Friday, when residents said gunmen opened fire indiscriminately on protesters holding new marches. But since then, the capital has been quiet — especially since foreign journalists invited by Gadhafi’s regime to view the situation arrived Friday.

Long lines formed outside banks in the capital by Libyans wanting to receive the equivalent of $400 per family that Gadhafi pledged in a bid to shore up public loyalty.

One resident said pro-Gadhafi security forces man checkpoints around the city of 2 million and prowl the city for any sign of unrest. She told The Associated Press that the price of rice, a main staple, has gone up 500 percent amid the crisis, reaching the equivalent of $40 for a five-kilogram (10-pound) bag.

Bakeries are limited to selling five loaves of bread per family, and most butcher shops are closed, she said.

Some schools reopened, but only for a half day and attendance was low. “My kids are too afraid to leave home and they even sleep next to me at night,” said Sidiq al-Damjah, 41 and father of three. “I feel like I’m living a nightmare.”

Gadhafi has launched by far the bloodiest crackdown in a wave of anti-government uprisings sweeping the Arab world, the most serious challenge to his four decades in power. The United States, Britain and the U.N. Security Council all slapped sanctions on Libya this weekend.

In Geneva, U.S. Secretary of State Hillary Rodham Clinton was meeting Monday with foreign ministers from Britain, France, Germany and Italy, pressing for tough sanctions on the Libyan government. A day earlier, Clinton kept up pressure for Gadhafi to step down and “call off the mercenaries” and other troops that remain loyal to him.

“We’ve been reaching out to many different Libyans who are attempting to organize in the east and as the revolution moves westward there as well,” Clinton said. “I think it’s way too soon to tell how this is going to play out, but we’re going to be ready and prepared to offer any kind of assistance that anyone wishes to have from the United States.”

Two U.S. senators said Washington should recognize and arm a provisional government in rebel-held areas of eastern Libya and impose a no-fly zone over the area — enforced by U.S. warplanes — to stop attacks by the regime. But Fillon said a no-fly zone needed U.N. support “which is far from being obtained today.”

Sabratha, 40 miles (65 kilometers) west of Tripoli — a city known for nearby Roman ruins — showed signs of the tug-of-war between the two camps. On Monday, when the journalists invited to Libya by the government visited, many people were lined up at banks to collect their $400. When they saw journalists, they chanted, “God, Moammar and Libya.”

Ali Mohammed, a leader from the Alalqa tribe, the main tribe in the area, said in previous days Gadhafi opponents burned the main police station, an Internal Security office and the People’s Hall, where the local administration meets. “I then held a meeting with the protesters to stop these acts the people said they will control their children and since then there has been no problems,” he said.

“The thugs and rats were roaming the streets and they attacked the police station and then they disappeared,” said resident Taher Ali, who was collecting his $400. “They are rats and thugs. We are all with Moammar.”

An anti-Gadhafi activist in Sabratha told The Associated Press in Cairo by telephone that the opposition raided the police station and security offices last week for weapons, and had dominated parts of city. But then on Sunday, a large force of pro-Gadhafi troops deployed in the city, “so we withdrew,” he said.

“The city is not controlled by us or them. There are still skirmishes going on,” he said.

In Tripoli, a government spokesman blamed the West and Islamic militants for the upheaval, saying they had hijacked and escalated what he said began as “genuine” but small protests demanding “legitimate aand much needed political improvements.”

“On one hand, Islamists love to see chaos … this is paradise for them,” he said. “The West wants chaos to give them reason to intervene militarily to control the oil.”

“The Islamists want Libya to be their Afghanistan … to complete their crescent of terror,” he said. “This is not the first time the Islamic militants and the west find common cause.”

___

AP correspondents Hamza Hendawi, Bassem Mroue and Ben Hubbard in Cairo, and Angela Charlton in Paris contributed to this report.

 

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Ireland swallows bitter pill, asks EU for loan

Posted by Admin on November 22, 2010

Image representing Associated Press as depicte...

Associated Press

Irish Prime Minister Brian Cowen, left, and The ...
AP – Irish Prime Minister Brian Cowen, left, and The Minister for Finance, Brian Lenihan speak to the media
By SHAWN POGATCHNIK, Associated Press – Sun Nov 21, 9:34 pm ET

 

DUBLIN – Debt-crippled Ireland formally applied Sunday for a massive EU-IMF loan to stem the flight of capital from its banks, joining Greece in a step unthinkable only a few years ago when Ireland was a booming Celtic Tiger and the economic envy of Europe.

European Union finance ministers quickly agreed in principle to the bailout, saying it “is warranted to safeguard financial stability in the EU and euro area.” But all sides said further weeks of negotiations loomed to define the fund’s terms, conditions and precise size.

Ireland’s crisis, set off by its foundering banks, drove up borrowing costs not only for Ireland but for other weak links in the eurozone such as Spain and Portugal. Ireland’s agreement takes some pressure off those countries, but they still may end up needing bailouts of their own.

The European Central Bank — which oversees monetary policy for the 16-nation eurozone and first raised alarm bells about a renewed cash crisis in Dublin banks — said the aid would “contribute to ensuring the stability of the Irish banking system.” Sweden and Britain, not members of the euro currency, said they also were willing to provide bilateral loans to Ireland.

Irish Finance Minister Brian Lenihan spent much of Sunday talking to other eurozone financial chiefs about conditions they would place on the emergency aid package taking shape.

Lenihan said Ireland needed less than euro100 billion ($140 billion) to use as a credit line for its state-backed banks, which are losing deposits and struggling to borrow funds on open markets. He said the loan facility could last anywhere from three to nine years.

International Monetary Fund director Dominique Strauss-Kahn said his organization “stands ready to join this effort, including through a multiyear loan.” He said IMF experts already in Dublin would “hold swift discussions on an economic program with the Irish authorities, the European Commission, and the European Central Bank.”

Ireland has been brought to the brink of bankruptcy by its fateful 2008 decision to insure its banks against all losses — a bill that is swelling beyond euro50 billion ($69 billion) and driving Ireland’s deficit into uncharted territory.

The country had long resisted a bailout, but Lenihan said it was now painfully clear that Ireland needed “financial firepower” immediately to complement its own cutthroat plans for recovery.

This country of 4.5 million now faces at least four more years of deep budget cuts and tax hikes totaling at least euro15 billion ($20.5 billion) just to get its deficit — bloated this year to a European record of 32 percent of GDP — back to the eurozone’s limit of 3 percent by 2014.

The European Central Bank and other eurozone members had been pressing behind the scenes for Ireland — long struggling to come to grips with the true scale of its banking losses — to accept a bailout that would reassure investors the country won’t, and can’t, go bankrupt.

The economically struggling governments of Spain and Portugal, in particular, had criticized Ireland’s recent determination to keep going it alone. Ireland’s inability to stop its financial bleeding has fueled investor fears of wider eurozone defaults and driven up those countries’ borrowing costs on bond markets.

But even with Ireland seeking aid, financial analysts say Spain and Portugal remain on course for potential bailouts of their own. Spain is fighting Europe’s highest unemployment rate and Portugal is seen as doing too little to restructure an unusually uncompetitive economy.

Ireland’s move comes just six months after the EU and IMF organized a euro110 billion ($150 billion) bailout of Greece and declared a euro750 billion ($1.05 trillion) safety net for any other eurozone members facing the risk of imminent loan defaults. It demonstrates that creating the three-layered fund didn’t, by itself, reassure global investors that it would be safe, or smart, to keep lending to the eurozone’s weakest members.

Economists question whether the economies of Ireland, Portugal, Spain and Greece will grow sufficiently to build their tax bases and permit them to keep financing, never mind paying down, their debts. The euro, however, has shown some resiliency in the tumult so far, remaining relatively strong against the U.S. dollar.

Lenihan said Ireland most needed a “contingency” fund from which Irish banks could borrow. He said the funds would “not necessarily” be used and emphasized that the government’s own operations are fully funded through mid-2011.

The rapid pace of Sunday’s humiliating Irish U-turn surprised many analysts, given how Lenihan and Ireland’s deeply unpopular prime minister, Brian Cowen, appeared in recent days to be in denial that Ireland needed a cent of foreign aid.

More than 30 banking experts from the IMF, ECB and European Commission began arriving in Dublin only on Thursday to begin poring over the books and projections of the government, treasury and banks, a mammoth task expected to take weeks.

Ireland’s precipitous fall has been tied to the fate of its overgrown banks, which received access to mountains of cheap money once Ireland joined the eurozone in 1999. The Dublin banks bet the bulk of their borrowed funds on rampant property markets in Ireland, Britain and the United States, a strategy that paid rich dividends until 2008, when investors began to see the Irish banking system as a house of cards.

When the most reckless speculator, Anglo Irish Bank, faced bankruptcy in September 2008, it and other Irish banks persuaded Lenihan and aides that they faced only short-term cash problems, not a terminal collapse of their loan books.

Lenihan announced that Ireland would insure all deposits — and, much more critically, the banks’ massive borrowing from overseas investors — against any default, an unprecedented move.

At the time, Lenihan billed his fateful decision as “the cheapest bailout in history” and claimed it wouldn’t cost the Irish taxpayer a penny. The presumption was that confidence would return and Ireland’s lending would resume its runaway trend.

But in the two years since, Lenihan has nationalized Anglo and two other small banks and taken major stakes in the country’s two dominant banks, Allied Irish and Bank of Ireland. The flight of foreign capital began accelerating again in the summer amid renewed doubts that the government understood the full scale of its losses.

Lenihan and the Irish Central Bank responded in September by estimating the final bill at euro45 billion to euro50 billion ($62 billion to $69 billion). Investors, initially relieved to have a figure, quietly resumed their withdrawal from Irish banks and bond markets in mid-October, driving up the borrowing costs for Portugal and Spain, which face their own deficit and debt crises.

Over the past two months Cowen and his 15-member Cabinet have been drafting a four-year austerity plan for Ireland that is expected to be unveiled later this week.

It seeks to close the gap between Ireland’s spending, currently running at euro50 billion, and depressed tax revenues of just euro31 billion. It proposes the toughest steps in the 2011 budget, when euro4.5 billion will be cut from spending and euro1.5 billion in new taxes imposed — steps that threaten to drive Ireland’s moribund economy into recession and civil unrest.

Both Cowen and Lenihan have stressed that Ireland’s 12.5 percent rate of tax on business profits — its most powerful lure for attracting and keeping 600 U.S. companies with bases in Ireland — will not be touched no matter what happens.

France, Germany and other eurozone members have repeatedly criticized the rate as unfair and say it should be raised now given the depth of Ireland’s red ink.

However, IMF and EU leaders negotiating the bailout terms with Ireland have said they don’t intend to dictate any specific tax reforms to Ireland, only to ensure that targets for cutting spending and raising taxes overall are met. Ireland’s right to set its own tax rates also has been enshrined in a series of EU treaties, making any strong-arm tactics now unlikely.

Ireland’s 2011 budget, however, could yet be torpedoed by its own divided lawmakers.

The budget faces a difficult passage through parliament when it is unveiled Dec. 7. Cowen has an undependable three-vote majority that is expected to disappear by the spring as byelections, or special elections, are held to fill seats.

Cowen and his long-dominant Fianna Fail party are languishing at record lows in opinion polls. The latest survey published in the Sunday Business Post newspaper said Fianna Fail has just 17 percent support, whereas the two main opposition parties, Fine Gael and Labour, command 33 percent and 27 percent respectively. Those two parties are widely expected to form a center-left government after Cowen loses his majority, which would force an early election.

Reflecting the national mood, the Sunday Independent newspaper displayed the photos of Ireland’s 15 Cabinet ministers on its front page, expressed hope that the IMF would order the Irish political class to take huge cuts in positions, pay and benefits — and called for Fianna Fail’s destruction at the next election.

“Slaughter them after Christmas,” the Sunday Independent’s lead editorial urged.

___

Associated Press Writers Raphael G. Satter in London and Gabriele Steinhauser in Brussels contributed to this report.

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Hungary Toxic Sludge Could Cause Long-Term Environmental Damage

Posted by Admin on October 8, 2010

Toxic Sludge

Hungary - Toxic Sludge

by: Phil Cain  |  The Christian Science Monitor | Report

Kolontár, Hungary – Workers with red-stained hands covered this town and others in southwest Hungary on Wednesday, cleaning the toxic sludge that remains from the wave of red mud that poured out of a nearby alumina refinery’s reservoir Monday.

The heavy rains, which pushed the dam at one of the Ajkai Aluminia Refinery’s 10 containment pools beyond its limits, have subsided. Now, clean-up crews are trying to limit the damage from the 35 million cubic feet of spilled toxic muck, which is the byproduct of the alumina refining process, that has left a thick, rust-red icing for miles around.

Officials worry that the highly caustic spill, which has already been blamed for four deaths and scores of injuries, will contaminate drinking water supplies, rivers, crops, and ecosystems throughout southwest Hungary. Officials are also searching for at least three people who remain missing.

On Wednesday, Hungary opened a criminal investigation into the cause of the spill and the European Union called for authorities to take every measure to contain the environmental damage.

As the sludge dries, officials say, fine particles that make up the red sludge could become airborne and inhaled. Environmentalists say they hope the disaster will bolster their arguments that storing the sludge, which contains heavy metalsin open reservoirs should be outlawed.

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While officials are concentrating on cleaning up the affected towns, there appears to be little attention paid to the acres of spoiled fields.

Hungarians living in the most seriously affected areas have been evacuated, but the authorities allowed them back Wednesday to collect belongings not ruined in the flood.

In a community center in Devecser, officials handed out rubber boots and rations of cheese and bread rolls in plastic bags.

Zita Soha, who is helping distribute clean water and food, says there was no warning before the sludge swept through her town. Their only clue that the refinery’s dam had burst was the sound of water. “At 12:30 on Monday, we heard the sound of rushing water,” she says. “What will happen next? We just don’t know.”

Hungarian Prime Minister Viktor Orban said authorities were caught off guard by the disaster since the plant and reservoir had been inspected only two weeks earlier and no irregularities had been found.

The huge reservoir, which is more than 1,000 feet long and 1,500 feet wide, was no longer leaking Wednesday but a triple-tiered protective wall was being built around its damaged area.

IN PICTURES: Hungary sludge flood

Associated Press material was used in this report.

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