Greece and Turkey Spar Over Aegean Energy

Πηγή: Oil Price
By Alex Jackson
Feb 28 2013

The relationship between Turkey and Greece has improved immeasurably over the past few years. Once locked in a miniature Cold War, Ankara and Athens have now realised that they need to cooperate on a host of issues – particularly gas transit. But as many other countries have come to realise, natural gas is just as often a source of division as cooperation. A new row over offshore drilling rights, along with the ongoing disputes over eastern Mediterranean gas, is posing new difficulties for their relationship.

In January news reports began to circulate that Greece was planning unilateral drilling in disputed areas, prompting a cautious warning from Turkey. Not much more was heard until, in mid-February, Greek Prime Minister Antonis Samaras insisted that Greece has the right to explore for oil and gas anywhere within its territory and that it could declare an Exclusive Economic Zone (EEZ) for that purpose.

The following day, Greece submitted a note to the United Nations raising the issue of “Turkey’s granting of exploration permits [for oil and gas drilling] for areas of the Greek continental shelf” which, Athens said, violated the UN Convention on the Law of the Sea.

Ankara promptly responded by vowing to submit its own note to the UN and take appropriate counter steps. Turkey said that “the licenses that Turkey has given to the TPAO since 2007 are within the borders of the Turkish continental shelf in the Eastern Mediterranean and Turkey has sovereign rights concerning exploration and drilling for natural sources in these fields.”

The dispute over maritime boundaries in the Aegean and eastern Mediterranean has been rumbling on for decades, complicated by the presence of Greek islands near the Turkish coast. Both sides have threatened to use force if the other drills in what they see as their own waters.

As Turkey noted, TPAO has been granted exploration licences in the Aegean and Mediterranean since 2007, although activity since then has been limited. In 2008 Turkey conducted some exploratory work in Turkish waters and in late 2009 TPAO reportedly discovered gas in the area but little has happened subsequently. International investors are cautious until absolute clarity on continental shelf and EEZ rights can be assured.

So why has the dispute flared up again, and what does it mean for the regional gas picture? The answer to the first question is clearer. Samaras was speaking shortly after French President Francois Hollande visited Greece and expressed interest in French firms helping to explore for oil and gas in the Aegean. Total is reportedly keen to drill in the Aegean, which is believed to be extremely prospective but remains under-explored due to the political tensions. Reportedly Hollande is already encouraging Athens to lease two French frigates for the exploration, though whether as escorts or to be fitted with seismic equipment is unclear.

Samaras’s statement also came just a few weeks before he visits Ankara with members of his Cabinet for high-level meetings. Announcing Greece’s right to declare an EEZ and drill in the Aegean was a clear statement of intent to the Turks in advance of that trip, even if he hasinsisted that a peaceful solution must be found.

Greece is evidently laying its cards on the table and trying to force some movement on the Aegean border issue. Turkey, however, is unlikely to compromise. It is already at loggerheads with (Greek) Cyprus over natural gas issues in the eastern Mediterranean and sees Greece as the endpoint of an axis running from Israel and through Cyprus. Ankara has already warned the three states that a subsea pipeline isn’t going to happen; the fact that Total has recently signeda deal with Cyprus to drill offshore (a decision which blackballs it from working in Turkey) underlines the connection.

Given Turkey’s sense of a confrontation stretching from the Aegean to the Levant, and its efforts to increase its own offshore drilling, don’t expect Ankara to compromise on Greek demands. Samaras almost certainly knows this. But Greece’s economic woes have raised the stakes. Developing a new source of revenue whilst also flying the flag for sovereignty might be a popular move.

Worsening Turkish-Greek relations may have an impact on wider gas export patterns. Most obviously it would exacerbate existing tensions in the eastern Mediterranean between Turkey and Cyprus, as both relationships tend to influence each other. The chances of a rapprochement between Ankara and Nicosia on energy, or of a subsea pipeline from Israel, would get even slimmer.

Indirectly it could also affect the chances of the Trans-Adriatic Pipeline being chosen by the Shah Deniz consortium in June. Formally of course the decision of the consortium, in which TPAO has a small stake, is not supposed to be at all political. But in practice a political crisis over the Aegean, or a Turkish decision to suspend energy cooperation with Greece on existing gas pipelines, would raise serious questions about the viability of another pipeline crossing between them.

For now both sides are committed to dialogue and finding a constructive solutions. Greece and Turkey have come a long way in the past few years: this is not 1987, when attempted hydrocarbon exploration by Turkey almost led to a military confrontation. But the energy stakes in the Aegean could be very high, and both sides will try and take things down to the wire.

Greece and Spain helped postwar Germany recover. Spot the difference

People exchanging food for tickets in 1923 Germany. 'Many, including Keynes, argued that [reparations imposed on Germany following the Versailles treaty] led to the rise of the Nazis and the second world war.

Πηγή: The Guardian
By Nick Dearden
Feb 27 2013

Sixty years ago, half of German war debts were cancelled to build its economy. Yet today, debt is destroying those creditors.

Sixty years ago today, an agreement was reached in London to cancel half of postwar Germany's debt. That cancellation, and the way it was done, was vital to the reconstruction of Europe from war. It stands in marked contrast to the suffering being inflicted on European people today in the name of debt.

Germany emerged from the second world war still owing debt that originated with the first world war: the reparations imposed on the country following the Versailles peace conference in 1919. Many, including John Maynard Keynes, argued that these unpayable debts and the economic policies they entailed led to the rise of the Nazis and the second world war.

By 1953, Germany also had debts based on reconstruction loans made immediately after the end of the second world war. Germany's creditors included Greece and Spain, Pakistan and Egypt, as well as the US, UK and France.

German debts were well below the levels seen in Greece, Ireland, Portugal and Spain today, making up around a quarter of national income. But even at this level, there was serious concern that debt payments would use up precious foreign currency earnings and endanger reconstruction.

Needing a strong West Germany as a bulwark against communism, the country's creditors came together in London and showed that they understood how you help a country that you want to recover from devastation. It showed they also understood that debt can never be seen as the responsibility of the debtor alone. Countries such as Greece willingly took part in a deal to help create a stable and prosperous western Europe, despite the war crimes that German occupiers had inflicted just a few years before.

The debt cancellation for Germany was swift, taking place in advance of an actual crisis. Germany was given large cancellation of 50% of its debt. The deal covered all debts, including those owed by the private sector and even individuals. It also covered all creditors. No one was allowed to "hold out" and extract greater profits than anyone else. Any problems would be dealt with by negotiations between equals rather than through sanctions or the imposition of undemocratic policies.

Perhaps the most innovative feature of the London agreement was a clause that said West Germany should only pay for debts out of its trade surplus, and any repayments were limited to 3% of exports earnings every year. This meant those countries that were owed debt had to buy West German exports in order to be paid. It meant West Germany would only pay from genuine earnings, without recourse to new loans. And it meant Germany's creditors had an interest in the country growing and its economy thriving.

Following the London deal, West Germany experienced an "economic miracle", with the debt problem resolved and years of economic growth. The medicine doled out to heavily indebted countries over the last 30 years could not be more different. Instead, the practice since the early 1980s has been to bail out reckless lenders through giving new loans, while forcing governments to implement austerity and free-market liberalisation to become "more competitive".

As a result of this, from Latin America and Africa in the 80s and 90s to Greece, Ireland and Spain today, poverty has increased and inequality soared. In Africa in the 80s and 90s, the number of people living in extreme poverty increased by 125 million, while economies shrank. In Greece today, the economy has shrunk by more than 20%, while one in two young people are unemployed. In both cases, debt ballooned.

The priority of an indebted government today is to repay its debts, whatever the amount of the budget these repayments consume. In contrast to the 3% limit on German debt payments, today the IMF and World Bank regard debt payments of up to 15-25% of export revenues as being "sustainable" for impoverished countries. The Greek government's foreign debt payments are around 30% of exports.

When debts have been "restructured", they are only a portion of the total debts owed, with only willing creditors participating. In 2012, only Greece's private creditors had debt reduced. Creditors that held British or Swiss law debt were also able to "hold out" against the restructuring, and will doubtless pursue Greece for many years to come.

The "strategy" in Greece, Ireland, Portugal and Spain today is to put the burden of adjustment solely on the debtor country to make its economy more competitive through mass unemployment and wage cuts. But without creditors like Germany willing to buy more of their exports, this will not happen, bringing pain without end.

The German debt deal was a key element of recovering from the devastation of the second world war. In Europe today, debt is tearing up the social fabric. Outside Europe, heavily indebted countries are still treated to a package of austerity and "restructuring" measures. Pakistan, the Philippines, El Salvador and Jamaica are all spending between 10 and 20% of export revenues on government foreign debt payments, and this doesn't include debt payments by the private sector.

If we had no evidence of how to solve a debt crisis equitably, we could perhaps regard the policies of Europe's leaders as misguided. But we have the positive example of Germany 60 years ago, and the devastating example of the Latin American debt crisis 30 years ago. The actions of Europe's leaders are nothing short of criminal.

Al-Baghdadi al-Mahmudi suffers torture in Libya prisons

Human rights not guaranteed in new Libya

Πηγή: Middle East Online 

Feb 27 2013

Τunisian lawyer says Mahmudi is in critical condition as result of torture he has suffered, adding ‘he could die’.

TUNIS - Al-Baghdadi al-Mahmudi, the last premier of deposed Libyan leader Moamer Gathafi, is in critical condition after being tortured in a Libyan prison, his Tunisian lawyer said on Wednesday.

Mahmudi "is in critical condition as a result of the torture he has suffered," said Mabrouk Kourchid, adding that "he could die".

The lawyer did not provide any further details nor reveal his sources for fear they could suffer reprisals.

Mahmudi fled to neighbouring Tunisia in September 2011, shortly after rebels seized Tripoli and effectively put an end to more than four decades of Gathafi's iron-fisted rule.

He was arrested there and extradited to Libya last June, despite warnings from rights groups that he could face the death penalty.

He went on trial in November for what the prosecutor general's spokesman said were "prejudicial acts against the security of the state and financial crimes."

In July, Mahmudi protested his innocence to journalists visiting his prison.

"I am not guilty, not guilty, not guilty," he told reporters during a visit organised by the authorities in an apparent bid to quash rumours he had been tortured.

A physician by training, Mahmudi was loyal to Gathafi until the end, serving as premier from 2006 up to the final days of his regime.

Along with Seif al-Islam, the toppled dictator's most high-profile son who is also on trial, Mahmudi is one of the few remaining keepers of the many state secrets under Gathafi, who was captured and killed by rebels in October 2011.

Mexico: Drug war has led to 26,121 disappearances

Πηγή: CBSNews
Feb 26 2013

Mexico's new administration says an official count shows at least 26,121 people were reported missing during the term of former President Felipe Calderon, who launched the country's offensive against drug cartels.

Lia Limon, the Interior Department's subsecretary for human rights, says the list used data from local prosecutors across Mexico, and includes people reported missing for any reason during the previous administration. It doesn't include information collected after November 2012.

The list has been a subject of controversy in Mexico for weeks. After Limon said last week that some 27,000 were missing, a member of Calderon's administration disputed the figure, saying the only registry on disappeared people contains 5,319 names. Limon said the government would work to compare the official list with others assembled by government agencies and rights groups.

Just last week, a new Human Rights Watch report called Mexico's anti-drug offensive "disastrous" and cites 249 cases of disappearances, about 149 of which include evidence of being carried out by the military or law enforcement.

The report says the forced disappearances follow a pattern of security forces detaining people without warrants at checkpoints, homes, workplaces or in public. When families ask about their relatives, security forces deny the detentions or instruct them to look elsewhere.

"Virtually none of the victims have been found or those responsible brought to justice, exacerbating the suffering of families of the disappeared," Human Rights Watch said in a press release.

The report accused former President Felipe Calderon of ignoring the problem, calling it "the most severe crisis of enforced disappearances in Latin America in decades."

Mexico's Interior Department oversees domestic security and it declined to make an immediate comment about the report.

The newspaper Reforma, one of several media outlets that count murders linked to organized crime, said that in December, the first month of the new government, there were 755 drug-related killings, compared to 699 in November. In Calderon's six-year term, some 70,000 people lost their lives to drug violence, the newspaper reported, with at least 20,000 believed missing.

It's difficult to say if drug violence has risen in Mexico under the new regime of President Enrique Pena Nieto, because the government no longer provides numbers, something that started under Calderon, who last released drug-war death statistics in September 2011.

Chinese Foreign Direct Investment (FDI): Going On A ‘Shopping Spree’ In Europe

Πηγή: IBT
By Moran Zhang
Feb 27 2013

With trillions of dollars in foreign-exchange reserves, China is gradually diversifying from its custom of simply parking that wealth in low-risk government bonds. The Chinese are now buying up depressed assets on foreign soil. And their favorite destination is Europe.

Since 2008, China has been allocating an increasing share of its $3.18 trillion worth of foreign-exchange reserves, the world’s largest, to both Europe and the U.S.

The world's second-biggest economy’s outbound direct investment from non-financial firms in January totaled $4.9 billion, up 12.3 percent from a year ago, according to China Commerce Ministry data released last Wednesday.

The debt crisis in Europe presents the prospect of discounted prices, while an increasingly strong yuan is making European (and American) assets look more attractive. Just seven years ago, the Chinese yuan (CNY) traded at 8.23 to the dollar. Now the CNY trades at 6.23 and continues to strengthen.

(Photo: Rhodium Group) Annual Chinese foreign direct investment in the U.S. and Europe.

After a similar take-off phase, patterns diverged in the past two years, with Europe receiving almost twice as much investment as the U.S., according to a new report from the Rhodium Group.

Annual flows to the European Union grew from less than $1 billion annually before 2008 to an average of $3 billion in 2009 and 2010, before tripling to more than $10 billion in the past two years. Ten years ago, there were fewer than 20 cross-border deals. But that has changed: 573 deals have been done between 2000 and 2011, with Germany in the leading position.

Meanwhile, in the U.S., Chinese investment surged from less than $1 billion in 2008 to $5 billion in 2010, before dropping again to $4.7 billion in 2011. In 2012 investment reached a new record of $6.5 billion, but values remained below the levels seen in the EU in the past two years.

(Photo: Rhodium Group) Chinese FDI in the U.S. vs. E.U. by industry

“Chinese investors seized opportunities to buy into cash-strapped European industrials and assets promising stable long-term returns such as utilities and other infrastructure,” the Rhodium report said.

Geographically, Chinese investment is concentrated in a few large EU economies – namely, France, the UK and Germany.

China's foreign-exchange regulator has been actively but quietly investing in British property and infrastructure, the Wall Street Journal reports. Since last May, U.K.-registered Gingko Tree Investment Ltd., a wholly owned unit of China's State Administration of Foreign Exchange, has invested more than $1.6 billion in at least four deals, including a water utility, student housing, and office buildings in London and Manchester.

Rhodium Group researchers Thilo Hanemann and Adam Lysenko found that U.S. security reviews have killed some deals and likely dissuaded other investors.

By contrast, European officials welcomed Chinese investment in sensitive, high-profile assets like airports, electricity grids and ports. Including utilities, Chinese firms spent close to $6 billion on European infrastructure assets.

Investments in U.S. infrastructure assets would make commercial sense for Chinese state enterprises and sovereign investment vehicles as well, but the reactions to similar earlier investments such as the Dubai Ports World controversy in 2006 seem to have made Chinese investors cautious about U.S. infrastructure plays.

National security concerns are also affecting investment in high-tech sectors. Chinese telecommunications equipment firms, for example, spent more than three times as much in Europe than in the U.S., where the Committee on Foreign Investment in the United States (CFIUS) has interfered with several deals and firms have seen their business prospects diminished by intervention from U.S. government officials, members of Congress and security agencies, according to the report.

While much of the world, including Europe, is embracing China’s telecommunications giant Huawei Technology Co. Ltd. (SHE:002502), the U.S. market is wary.

A House Intelligence Committee report released in October urged the U.S. government to block acquisitions or mergers by Huawei and ZTE Corporation (HKG:0763), China’s two largest phone-equipment makers, for fear that this will provide opportunities for Chinese intelligence services to tamper with U.S. telecommunications networks for spying.

The congressional report concluded that with their ties to the Chinese government, neither of these companies can be trusted with infrastructure of such critical importance.

“The risks associated with Huawei’s and ZTE’s provision of equipment to U.S. critical infrastructure could undermine core U.S. national security interests,” the report said.

“As the Chinese economy matures and firms become more experienced at doing business abroad, Chinese interest in advanced economy assets will continue to be strong in coming years,” the Rhodium report states. “The political response will be critical for future deal-making in both economies.”

Blackwater in Greece: Fears of Coup as Mercenaries Drafted for Guarding Govt, Overseeing Police

Πηγή: Darker Net
Feb 25 2013

Blackwater mercenaries are currently overseeing the police in Greece as rumours of a coup abound. We understand the situation is extremely tense and that the mercenaries are there mainly to protect the Government and parliament should trouble break out either in the form of a revolution or counter-revolution. Already, a destabilisation plot involving the far-right and police has been uncovered. More below…

Over the last 12 months or more Greece has seen wave after wave of mass demonstrations, riots, battles between police and protesters, armed attacks on Government premises, attacks by fascists (i.e. Golden Dawn ) on migrants, as well as, of course, the complete collapse of the economy. The Government has been beset by scandals (e.g. secret bank accounts in Switzerland) and journalists have been arrested. Most people now exist day by day via co-operatives ; workers are taking over the factories .

As we have said, there is a revolution taking place – a messy revolution . And it’s going to get messier, for the situation in Greece has now entered a critical phase – here is a summary (with further details below):

* Strategy of tension has already commenced
* Government is under siege and is protected by mercenaries
* Military coup is now talked of openly
* Insider warns that revolution (or counter-revolution) is imminent

Strategy of tension

A few days ago we reported on a plot by the police in collusion with the far-right to instigate a massacre of police, which would then be blamed on anarchists – presumably this would then be used as an excuse to introduce martial law or a state of emergency. The plot may have been foiled (23 persons were arrested) by Blackwater working in conjunction with police officers who are loyal to the Government. Blackwater are expected to continue monitoring police operations generally, to identify those officers who may be involved in other, similar plots.

Note… The term strategy of tension came about in Italy in the 1970s and 1980s when bombings of civilian were committed by neofascist organisations such as Ordine Nuovo , Avanguardia Nazionale or Fronte Nazionale ).

Mercenaries protecting Government under siege

The Greek Government signed a contract with Academi (the new name for Blackwater) in November last year, though this was a secret agreement and you will not find details about it on the Academi website ). News of the contract leaked out end of January when the Greek ambassador to Canada, Leonidas Chrysanthopoulos, let slip about it in an interview, which was then published in a blog (see highlighted sentence in red). The contract with Academi was confirmed a few days later via the Greek military news site Defencenet.

Blackwater/Academi are infamous as the company that ran mercenary operations during the last Iraq War and were engaged in unnecessary fire fights in urban areas, taking civilian lives. They currently have a forward ops base in Afghanistan.

We understand their principal role in Greece is two-fold. One is to oversee police operations. They have been contracted to do this because the Government are aware that the police have been comprehensively infiltrated by members of the fascist Golden Dawn and so cannot trust the police to stay loyal. Their other role is to act as a neutral force to provide full protection to the Government against assault from any quarter. In effect, the Greek Government is under siege.

Coup possibility

Recently the Government secured an agreement from the army that under no circumstances would they resort to a coup (as happened in 1967, leading to the junta of 1967-1974 ). Whether this agreement will be honoured remains to be seen. As Greece is now part of the European Community a coup will be unlikely, but in the event of heightened tension martial law could be declared with curfews etc.

Warning of revolution/counter-revolution

According to Ambassador Chrysanthopoulos in his interview, “At a certain moment, quite soon, there will be an explosion of social unrest. It will be very unpleasant.” He then referred to fifteen armed incidents in the previous ten days, including the firebombing of the offices of the governing parties and the homes of pro-government journalists, the machine-gunning of the headquarters of the prime minister’s conservative New Democracy party, and a bomb explosion at a shopping mall belonging to the country’s second wealthiest citizen. Chrysanthopoulos predicts the trouble will begin when new tax bills arrive (soon)…

Fed Faces Explaining Billion-Dollar Losses in QE Exit Stress

Chairman of the Federal Reserve Ben Bernake speaks during a press briefing at the Federal Reserve in this file photo.

Πηγή: Bloomberg
By Craig Torres, Josh Zumbrun & Caroline Salas Gage
Feb 26 2013

Federal Reserve Chairman Ben S. Bernanke’s efforts to rescue the economy could result in more than a half trillion dollars of paper losses on the central bank’s books if interest rates rise abruptly from recent levels.

That sum is the difference between the value of securities in the Fed’s portfolio on Dec. 31 and what they may fetch in three years, according to data compiled by MSCI Inc. (MSCI) of New York for Bloomberg News. MSCI applied scenarios devised by the Fed itself for stress-testing the nation’s 19 largest banks.

MSCI sees the market value of Fed holdings shrinking by $547 billion over three years under an adverse scenario that includes an economic contraction and rising inflation. MSCI puts the Fed’s mark-to-market loss at less than half that, or $216 billion, if the economy performs in line with consensus forecasts of gradually rising growth, inflation and interest rates.

The potential losses are unprecedented in the Fed’s 100- year history. Bernanke began describing in detail the risk of lower payments to taxpayers for the first time today in his monetary policy testimony before the Senate Banking Committee saying that “remittances to the Treasury could be quite low for a time” if interest rates “were to rise quickly.” Bernanke didn’t describe the overall interest-rate risk to the portfolio or potential mark-to-market losses. He said the Fed is “confident” it has tools to tighten monetary policy.

Where’s Money?

“You can easily imagine a naive congressional response, which is ‘Where did the money go?’ ” said Sarah Binder, a senior fellow at the Brookings Institution who researches the relationship between the Fed and Congress. “Even if there’s a perfectly logical explanation and the normalization of the balance sheet is a good thing in the long term, the headlines will probably generate congressional scrutiny,” said Binder. “That’s never a good thing from the Fed’s perspective.”

The risk of mark-to-market losses under some scenarios is the price of Bernanke’s battle to overcome the deepest recession since the Great Depression as the Fed embarked on three rounds of so-called quantitative easing. The benefit is more jobs and higher growth, Fed officials say.

“To the extent that monetary policy promotes growth and job creation, the resulting reduction in the federal deficit would dwarf any variation in the Fed’s remittances to the Treasury,” Bernanke said in today’s testimony.

Corker Inquiry

Senator Bob Corker, a Republican from Tennessee, sent Bernanke a follow-up letter this afternoon asking for the central bank to provide further details about how losses would affect the Fed’s operations.

“Do we have a serious policy problem brewing here, or is this simply an optics problem about which we should not be concerned?” Corker asked.

The Fed doesn’t mark its portfolio to market, and its losses may be only a fraction of MSCI’s totals because the central bank could hold the bulk of its assets to maturity. The central bank cannot go bankrupt and can continue to operate with losses on its books.

“There’s a cost to very significant stimulus -- and that’s OK if the stimulus is a good investment -- and I think a lot of what the Fed has done is a very, very good decision,” said Representative John Delaney, a Maryland Democrat and member of the House Financial Services Committee, where Bernanke testifies tomorrow. “Their actions right now are having diminishing returns and increasing the severity of this future loss that will be incurred as rates go up.”
Bernanke’s Legacy

Bernanke’s legacy will be judged in part by how the Fed exits from its emergency policies, a prospect that is already troubling the Federal Open Market Committee and some members of Congress. Bernanke, 59, ends his second four-year term as Fed chairman on Jan. 31, and he hasn’t said whether he wants to stay in the job after that.

Four economists, including Frederic Mishkin, a former Fed governor and co-author with Bernanke, argued in a paper presented in New York on Feb. 22 that the central bank’s grip on policy may weaken if losses coincide with high U.S. budget deficits and an inability of Congress and the White House to put fiscal policy on a sustainable path.

“This mix could induce a bias toward slower exit or easier policy, and be seen as the first step toward fiscal dominance,” the economists said in the paper, presented at the U.S Monetary Policy Forum, referring to fiscal influence on monetary policy. “It could thereby be the cause of longer-term inflation expectations and raise the risk of inflation overall.”

Fed’s Flexibility

In response, Fed Governor Jerome Powell said at the conference that policy makers “have the flexibility to normalize the balance sheet more slowly” to avoid taking losses and causing market disruptions. He said there’s “no reason” to expect the Fed won’t act to prevent inflation.

Boston Fed President Eric Rosengren said that “this discussion does not do justice to the policy trade-offs” of the central bank’s quantitative easing, because the stimulus boosts growth and also improves the fiscal outlook by lowering borrowing costs.

Now, it’s Bernanke’s turn to convince lawmakers.

“When they start losing money -- that is going to be a big issue” on Capitol Hill, said Hester Peirce, a former senior counsel to Republican staff on the Senate Banking Committee who is now a senior research fellow at the Mercatus Center at George Mason University in Arlington, Virginia. “There will be more pressure to watch the Fed closely.”

Bernanke is implementing the most aggressive monetary policy in the central bank’s history to support growth and employment. After the Fed’s benchmark rate was cut to a range of zero to 0.25 percent in December 2008, the chairman began buying more bonds to lower longer-term financing costs for home buyers, companies and consumers.

Total Assets

Three rounds of quantitative easing, including the current phase where the Fed is buying $85 billion in longer-term Treasury bonds and mortgage-backed securities a month until the labor market shows substantial improvement, have pushed the Fed’s total assets to more than $3 trillion, from $869 billion in mid-August 2007 when the financial crisis began.

Fed officials say the portfolio’s size and even potential losses are a byproduct of its pursuit of stable prices and maximum employment, the two policy goals mandated by Congress.

At the same time, they have encouraged the public to view the portfolio in profit-and-loss terms by emphasizing its earnings in recent years. Officials in conference calls with reporters describe how returns on the expanding balance sheet have generated higher profits that the Fed gives back to taxpayers in the form of remittances to the U.S. Treasury. Vice Chairman Janet Yellen, in Feb. 11 remarks in Washington, said the strategy benefits the economy as well as federal finances.

‘Credit Easing’

The Fed creates money to buy Treasury debt, mortgage-backed securities and federal housing-agency debt. Bernanke calls the policy “credit easing.” As prices rise on the bonds the Fed purchases, yields fall and investors seek higher returns in other fixed-income securities, pushing a broad array of financing costs lower throughout the economy.

The Fed’s cost of funds is low because there is no interest expense for it to issue currency, and it pays banks just 0.25 percent on reserves the central bank creates to buy assets. This helps maximize the return on the Fed’s portfolio.

After paying for its own expenses and making capital adjustments, the Fed returns the remainder of its earnings to U.S. taxpayers. The Fed remitted a record $88.9 billion to the Treasury in 2012 and $75.4 billion in 2011, compared with $31.7 billion in 2008.
Enriching Treasury

The earnings that are enriching the Treasury now may shrink as interest rates rise, driving down returns from the Fed’s holdings. Remittances may even disappear for a few years, according to Fed researchers who published a paper on the balance sheet last month.

At the same time, the Fed’s portfolio will be shrinking in value as the higher rates erode the market price of the securities it contains.

Representative Jim Jordan, an Ohio Republican who chairs a subcommittee of the House Committee on Oversight and Government Reform, asked Bernanke in a Feb. 19 letter for more details about the portfolio’s risks.

“Such a large portfolio could cause significant problems when the Federal Reserve begins to unwind,” he said in his letter.

Sustained Growth

“The Federal Reserve has played and is currently playing a major role in fostering the sustained economic growth we’ve seen over the past few years,” said Matthew Cartwright, a Pennsylvania Democrat and ranking member on the House Oversight Committee’s subcommittee on economic growth, job creation, and regulatory affairs. “The role of the Federal Reserve is to stabilize the economy and help it grow at a healthy rate through the enactment of monetary policy, balancing interest rates with unemployment--its role is not to make money.”

The Fed’s own exit strategy calls for selling mortgage- backed securities after it begins to raise interest rates. The Fed only records a loss on its bond holdings if they are sold. If losses from bond sales, and the interest the Fed pays to banks to fund its assets, exceeds income, the Fed accounts for it as a “deferred asset.”

Political Backlash

“The political backlash could be particularly acute given that a good portion of the funds that would otherwise be remitted to the Treasury would be transferred to large financial institutions in the form of interest paid on reserves,” said Laurence Meyer, a former Fed governor and co-founder of Macroeconomic Advisers LLC in St. Louis. “This could present a significant communication challenge for the Fed and adversely impact its reputation.”

MSCI calculated potential losses and gains to the central bank’s portfolio by running the same three scenarios the Fed is using this year to stress-test the capital of the 19 largest banks.

The baseline scenario is similar to a consensus forecast for the economy’s performance in which growth continues. Under the adverse scenario, the economy contracts for six quarters while inflation rises, with the consumer-price index reaching 4 percent. In a severely adverse scenario, the economy falls into a deep recession and interest rates decline.

MSCI provides investment, analytic and risk-management tools to some 6,200 clients around the world, operating in 22 countries with more than 2,700 employees. Its products include a suite of portfolio-risk and performance analytics, stock indexes and corporate governance tools such as proxy research. One of the firm’s brands, RiskMetrics, developed the widely-known value-at-risk model, or VAR, in 1994.

10-Year Yields

MSCI’s data showed the greatest losses under the adverse scenario, as 10-year Treasury yields jump to 5.4 percent by the end of 2015 and three-month rates rise to 4 percent. The 10-year yield was 1.86 percent yesterday, and the three-month rate was 0.117 percent.

Because the Fed deliberately lengthened the maturity of its portfolio by selling short-term notes and bills and buying bonds from September 2011 until December 2012 in a program dubbed Operation Twist, “Treasury performance dwarfs what is happening in the other books” of agency and mortgage debt, said Ron Papanek, executive director of MSCI.

“They have a lot of long bonds that are going to be hit in a rising rate environment,” Papanek said.

Portfolio Loss

Losses on the Fed’s portfolio rise steadily under the adverse scenario to $547 billion by the fourth quarter of 2015 in the MSCI analysis, which is purely a measure of interest-rate risk in the portfolio starting from bond prices at year end. It does not take account of purchases or sales the Fed may conduct in the future. The calculations are mark-to-market losses on the portfolio that take account of yield, amortization, accretion, and funding costs.

The Fed portfolio also loses money under the baseline scenario, in which economic growth accelerates to a 3 percent annual pace in the final quarter of 2015 and the inflation rate is 2.4 percent. This compares with Fed officials’ own estimate of 3 percent to 3.7 percent growth in 2015 and inflation of 1.7 percent to 2 percent. With three-month Treasury bill rates at 1.9 percent and 10-year yields at 3.9 percent, the Fed’s portfolio losses rise to $215 billion in the fourth quarter of 2015, according to MSCI’s analysis.

Because the Fed’s severely adverse scenario envisions a deep recession, little movement in short-term rates and a gradual rise in long-term rates, its portfolio posts a mark-to- market gain of $84 billion by the fourth quarter of 2015 in MSCI’s analysis.

Some Fed officials are wary of how the central bank intends to account for the losses and how Congress might react.

‘Appearance Issue’

“I am concerned about this issue,” St. Louis Fed President James Bullard said in a Feb. 1 interview in Washington. Bullard advocates holding some remittances back in the form of reserves now to serve as a buffer against losses later. “The appearance issue is a serious one and we should take it seriously,” he said.

The practice of accounting for losses as a deferred asset is among questions congressional leaders are raising.

“I don’t think we will buy that,” said Republican Representative John Campbell of California, a certified public accountant who chairs a monetary policy subcommittee on the House Financial Services Committee. Fed portfolio losses are “a legitimate concern and something we will be watching.”

Fed officials say the portfolio losses should be viewed in comparison with the Fed’s cumulative remittances to the Treasury, which have totaled $448 billion over the past decade.

Staff Paper

In the past, officials have warned that they are taking on interest-rate risk, and a recent paper by Fed Board staff attempted to quantify how that would affect their payments to the Treasury.

The analysis led by Seth B. Carpenter, senior associate director in the Fed Board’s Division of Monetary Affairs, shows that, assuming another $1 trillion of bond purchases under the current quantitative-easing program, remittances to the Treasury will fall to zero for about four years under a baseline economic outlook with gradually rising interest rates.

The Fed’s portfolio had $249 billion in unrealized gains as of the end of September, according to the paper.

Under a more aggressive interest-rate increase scenario, remittances are halted for about six years, as “higher short- term interest rates make interest on reserves more costly, and higher long-term rates make selling MBS more costly,” according to Carpenter’s analysis.

Yellen Speech

“There is a chance when we could go through a period of time in which our income falls and we could even take losses if we decide to sell,” Yellen said in response to audience questions after a Feb. 11 speech. “It is possible that in the course of trying to carry out monetary policy that there will be a period of a year, or even several years, in which those remittances fall to zero.”

Minutes from their January meeting show “many participants” on the FOMC worrying about how to exit from the bond portfolio with “several” noting the Fed could be exposed to “significant capital losses.”

The Fed wouldn’t be the first central bank to lose money from its policies, said Nathan Sheets, formerly the Fed’s top international economist.

Central banks in Switzerland, Chile, Mexico have taken losses that did not prevent them from conducting monetary policy, he said.

There is a good news side to the story as well, he added.

“It’s often thought that if you incurred a loss you made a mistake and didn’t handle resources properly,” said Sheets, now global head of international economics at Citigroup Inc. in New York. “In central banking that presumption is turned on its head,” Sheets said.

“If recovery occurs then bond prices may fall,” he said. “But it’s not a failure in your policy, it would reflect a success of your policy” as economic growth picks up and the Fed can finally st
age an exit.

IMF: 'World Economy Could End as We Know It ...'

Πηγή: The Daily Bell
Feb 25 2013

Christine Lagarde: "2013 Will Be Make or Break" Christine Lagarde, managing director of the International Monetary Fund, cautioned at the World Economic Forum in Davos that Europe must continue to guard against a relapse in 2013. Speaking at an event honoring women leaders hosted by Credit Suisse in partnership with Newsweek and The Daily Beast, Lagarde was joined by Egyptian human rights activist Dalia Ziada, who discussed the challenges women face in the Middle East. "2013 will be a make or break year," Lagarde said. "2012 was tough. A lot happened in Europe, a lot happened in the U.S. and there is clearly a lot happening in Asia." – The Financialist

Dominant Social Theme: If we don't make it in 2013, the world as we know it will disappear.

Free-Market Analysis: While this speech was made a while ago at Davos, we think it is worth noting as Ms. Christine Lagarde is enunciating a significant dominant social theme – that the West is surely destined to perish if savvy officials don't make the proper decisions.

The West is in terrible trouble anyway, economically, most from the decisions of this self-appointed elite that has used central banking as a weapon of creative destruction. Having obtained the awesome power of money printing, elites printed too much of it, probably on purpose, and thus crashed economies first in the US and then in Europe.

Now, Ms. Lagarde indicates (and surely she will repeat this meme) that the same mechanism and leadership that brought us to our current situation are to be entrusted with critical decisions in 2013. Here's more from the article:

Policymakers have to stay focused on the medium-term plan to reduce debt. The same goes for Japan," Lagarde said. In Europe, although 2012 saw many policy actions such as the institution of the European Stability Mechanism, more work remains. "We need to make sure we guard against relapse – which will happen if we don't keep at it. More importantly, it's not time to relax." "

Ingredients for a Stable Economy Trust and con?dence are crucial to avoiding a relapse and seeing the course for global economic stability, Lagarde explained. "Trust is a crucial factor for the economy. It has been eroded, and in order to rebuild it you need to face reality constantly. You need to tell people the truth – that's what they want."

If Ms. Lagarde wanted to tell the truth, she would explain to people how the fiat-money business cycle works. Monopoly central banks overprint money and cause first a boom and then a bust. By increasing or decreasing money printing, a handful of people can shake the economic world.

There is no direct evidence, of course, of their strategic decisions but we have noted in the past that the economic environments the most adversely affected in the past years have been Western ones. The so-called BRICs, including Brazil, India and China have boomed.

If one subscribes to the idea that the powers-that-be have in mind both a world currency and world government, then such economic adjustments make sense. Down goes the West, up go other large economies. Gradually, perhaps on purpose, the dollar's dominance is eroded. Additional currencies become strengthened.

This all seems coincidental of course, merely the outgrowth of economic affairs. But for believers in directed history, none of it may be a coincidence. The idea may be to make a global economy easier to integrate.

If this is the case, Ms. Lagarde is not telling the truth on several levels. First, the West's "crisis" may be in a sense manufactured, the result of a global central banking economy that need to be adjusted and reduced. Second, the decisions made in the current environment are not necessarily significant.

Obviously, she is framing the argument as if there are only two choices. Either abandon economic "discipline" and suffer the consequences or continue with quasi-austerity measures – high taxes, monopoly privatization and lower federal benefits – and reap the rewards.

There are plenty of other ways to fix Western economies, including repudiating bank debt as those in Iceland did, introducing gold-backed currencies and generally diminishing the power of monopoly central banking. If Ms. Lagarde wanted to be honest, she'd discuss these options as well.

Conclusion: Instead, she is framing the discussion in a certain way. This was a more fruitful strategy in the 20th century than the 21st.

Red Cross to send less blood to Greece

Around 250,000 Swiss donate blood every year

Πηγή: Swissinfo
Feb 25 2013

The Swiss Red Cross (SRC) has decided to provide significantly less blood to Greek hospitals after delays in payments, even though Greece relies on imports from Switzerland to make up for shortfalls from local donations.

The SRC's non-profit transfusion service says it prefers to reduce its exposure and focus on helping the Greeks improve their own blood distribution service.

Annual shipments of around 28,000 blood pockets to Greece have been considered part of the SRC’s humanitarian mandate. Around ten per cent of the Greek population suffers from thalassaemia, an inherited blood disorder that results in the excessive destruction of red blood cells. This in turn leads to anaemia.

People suffering from thalassaemia cannot donate blood, so the Greek authorities rely on Swiss imports to make up for blood shortfalls, given that most European countries do not export. Some patients require transfusions every three to four weeks, often relying in Greece on family and friends as donors.

However, two months ago, the Swiss transfusion service signed a new contract with the Greek health ministry that will become effective in 2015 andwill see the number of blood pockets delivered eventually halved from 28,000 by 2020.

Greece, struggling with a major financial crisis and huge debt, has failed in the past to meet payments for the blood supplies, with arrears worth several million francs.

While the bills were eventually paid, Rudolf Schwabe, head of the SRC’s non-profit transfusion service, said that it had decided to lower its financial exposure and reduce exchanges with the Greeks.

The service, owned by the SRC, relies on sales of CHF200 million ($215 million) to cover collection, analysis, storage and staff costs. Its previous contract with Greece was worth CHF5 million alone a year.

Unused reserves

Around 250,000 people donate blood at no cost in Switzerland each year. While most of it is sold to Swiss hospitals or to the domestic pharmaceutical industry, the SRC’s blood transfusion service has also been providing supplies to Greece, drawn from unused reserves.

Usually ten per cent of donated blood is set aside for emergency situations, but, more often than not, it is not used. Since the 1970s, some of this reserve has been sold to the Greeks. The United States also purchased Swiss blood until the 1990s, but stopped imports after the European mad-cow disease crisis.

Under the new deal, the Swiss will provide a lower volume of blood, but will also help the Greeks to improve their own blood donation service, which according to experts requires some reorganisation to function more efficiently. The details are still somewhat murky.

“We are still discussing with the Greeks what exactly they would like from us,” Schwabe said.

Greek personnel would most likely receive training in Switzerland and knowledge sharing would also take place in Greece.

Eurozone split on how to handle Cyprus

Πηγή: Business World
By Reuters
Feb 25 2013

European policymakers are split over how to handle a bailout of Cyprus, with Germany and some other countries pushing for bank depositors to bear part of the cost and many other member states worried such a move will cause a bank run.

Euro zone officials say momentum has built in recent days behind the idea of "bailing-in" Cypriot bank shareholders and depositors, although the specifics of how such an operation would be carried out have not been pinned down.

Discussion over the bailout will resume in earnest this week following the election of Nicos Anastasiades as Cyprus's new president on Sunday.

Germany, Finland and the Netherlands are among those who say taxpayers cannot be expected to go on financing euro zone bailouts, saying it is time for owners and depositors in risk-laden banks to accept losses on investments.

The concern is that announcing such a move will provoke the immediate, large-scale withdrawal of deposits from all Cypriot banks, where a large number of international investors, including many Russian and British companies, hold accounts.

Euro zone finance ministers will discuss options at a meeting in Brussels on March 4 but no decisions are expected, officials say, making a further meeting later in March likely.

Thomas Wieser, who heads the group of senior officials who prepare decisions of euro zone finance ministers, told Reuters last week an international bailout should be ready by the end of March.

While Cyprus is the euro zone's third smallest economy with annual GDP of only around 18 billion euros, a bank run could have repercussions across the single currency bloc and re-ignite the debt crisis, officials warn.

"We have to consider that risk," said one euro zone officials whose country is undecided about whether a bail-in of depositors is the right course of action. "It's a real option but some countries don't want it."

The difficulty with Cyprus is finding a way to make a bailout sustainable so any money leant to it is repaid.

The island needs up to 17 billion euros, including 8-10 billion to recapitalise its banks and 7 billion to repay loans and finance ongoing government operations. That is equivalent to virtually its entire annual GDP.

Such a rescue would increase Cyprus's debts to around 145 percent of GDP, a level considered unsustainable. Greece's bailout calls for it to cut its debt-to-GDP ratio to 120 percent by 2020, but that would also be unsustainable for Cyprus.

The International Monetary Fund and EU finance officials say Cyprus needs to cut its debt to 90-100 percent of GDP before the country is capable of paying back what it owes.

Cheney-Linked Company to Drill in Occupied Golan Heights

Richard Cheney, K. Rupert Murdoch and Lord Jacob Rothschild are in the Genie's Board of Diectors.

Πηγή: Oilprice
By Daniel J. Graeber
Feb 24 2103

The Israeli government awarded a local subsidiary of U.S.-based Genie Energy the rights to explore for oil and natural gas in about 150 square miles of the southern section of the Golan Heights. The United Nations last year extended the mandate for the region's U.N. Disengagement Observer Force mission, one of the oldest peacekeeping missions, for another six months. U.N. Secretary-General Ban Ki-moon said keeping Blue Helmets stationed in the area was essential to peace given the potential for conflict spilling out of the Syrian civil war. Genie Energy said there may be a significant amount of oil and natural gas in the license area. When Israel set its sights on offshore natural gas, Hezbollah warned that Israel shouldn't encroach on Lebanese territory. If recent concerns about Hezbollah's influence are any indication, the Shiite resistance movement may focus its guns onshore amid expanding Israeli energy interests. With former U.S. Vice President Dick Cheney serving as an adviser to Genie, however, the implications may go beyond immediate worries over Hezbollah.

Genie Energy said there may be "significant quantities" of natural resources in the region. The license area encompasses about 150 square miles of the southern portion of the Golan Heights, considered territory occupied by the Israeli military.

"Genie Energy intends to conduct an exploration program to further investigate the size and quality of the resource in the new license area," the company explained in a statement.

Last year, Israeli Energy Minister Uzi Landau said the government was looking to open the territory up for oil and natural gas exploration. Israel claims the territory as its own after capturing the region in a 1967 war with Syria. In November, UNDOF peacekeepers monitoring the 1973 cease-fire between Israel and Syria came under fire near Damascus during a troop rotation. U.N Secretary-General Ban Ki-moon said he was concerned the Syrian civil war could spillover the borders given the latest escalation of violence. Last month, the United Nations expressed further concern amid reports that Israeli planes flew over the region to conduct an air strike on Hezbollah territory in southern Lebanon.

Landau's comments last year came amid optimism about natural gas reserves located off Israel's coast. The Tamar natural gas field is said to hold as much as 8.4 trillion cubic feet of natural gas. The Leviathan field may hold nearly twice that, with an estimated 16 trillion cubic feet of natural gas. Located more than 50 miles off the Israeli coast in the Mediterranean Sea, Lebanon contends some of that natural gas may lie in its territorial waters. Two years ago, Hezbollah warned that it wouldn’t tolerate any company working offshore where sovereignty is uncertain.

"The Israeli enemy cannot drill a single meter in these waters to search for gas and oil if the zone is disputed," it warned.

Hezbollah claimed victory in a 2006 war with Israel. Since then, Hezbollah has come under fire for ties to a terrorist attack on Israeli tourists in Bulgaria. Last week, former Lebanese Prime Minister Rafik Hariri saidhe was concerned the Lebanese government was ceding military control over the southern borders to the Shiite movement, which holds Cabinet-level positions in the Lebanese government.

Israel has faced increasing isolation for its settlement activity in the West Bank and for violating the border of its northern neighbors. A 1993 foreign policy doctrine from Israel's ally Washington, meanwhile, linked U.S. national security interests as they relate to oil and natural gas tacitly to Israel's security.

"The United States is committed to the security of Israel and to maintaining the qualitative edge that is critical to Israel's security," it read.

That document was drafted with the help of then Defense Secretary Dick Cheney. He's serving as an adviser to Genie as it plans work in an area encompassing about 30 percent of the Golan Heights. U.S. President Barack Obama, meanwhile, has plans to visit Israel next month. Cheney expressed recent concern that the Middle East was "as dangerous now as it has ever been" under Obama's leadership. With Cheney working the back channels, that "qualitative edge" may manifest itself in drilling operations in the occupied Golan Heights, a powder keg for potentially broad-based war in the Middle East.

Lies, Damned Lies, And Banks: Deutsche Bank Caught Again

Πηγή: Tetosterone Pit
Feb 24 2013

Deutsche Bank, long coddled by the German government, is mired in a swamp of costly “matters,” such as the Libor rate-rigging scandal or the carbon-trading tax-fraud scandal that broke with a televised raid by 500 police officers on its headquarters. It’s writing down assets and setting up reserves to settle these allegations.

Co-CEO Jürgen Fitschen insinuated more gloom was to come. The bank, he said, would “be confronted with more developments in these and other matters”. And now, one of these other matters seeped to the surface: the bank had known for years about the impact of commodities speculation on food prices and the havoc it wreaked on people in poor countries. And it had lied to the German Parliament about it.

On June 27, 2012, David Folkerts-Landau, head of Deutsche Bank’s DB Research,educated a parliamentary commission about the dire consequences of food price inflation—and what didn’t cause it.

“In developing countries where often up to 90% of the income must be spent on food,” he said, “price increases of wheat, corn, and soybeans in the years 2007-2008 and 2010-2011 had devastating consequences.” Volatility made it worse. “Even spikes of only a few months are a serious threat to food security.”

While the volume of options and derivatives in agricultural markets had been ballooning in recent years, “primarily in search of higher yields,” he said, there was “hardly any sound empirical evidence” for the assertion that any of it “led to price increases or higher volatility.”

He cited the big players. The US Commodity and Futures Trading Commission (CFTC) had received “no reliable economic analysis” that showed that excessive speculation influenced the markets. US Department of Agriculture came to the same conclusion in 2009. And the Bank for International Settlements (BIS) pointed out as early as 2007 that there was “no convincing causal relationship” between speculation and price increases. That the BIS would say that makes sense: it groups together 58 central banks, including the most prodigious money printers. On its board: Fed Chairman Ben Bernanke, NY Fed President William Dudley, ECB President Mario Draghi, etc. etc.

Thus inspired, Folkerts-Landau concluded that “commodity prices are primarily determined by fundamental demand and supply factors,” not speculation.

Alas, foodwatch, an independent non-profit, has obtained four studies by DB Research and two studies by German insurance and finance conglomerate Allianz that showed that both companies had known for years that commodity speculation—one of their major business activities—drove up food prices.

In September, 2009, a DB Research study pointed out: “Speculation has also contributed to price increases.”

A year later, DB Research found that speculation could be “distorting the normal functioning of the market,” which “can have grave consequences for farmers and consumers and is in principle unacceptable.” It argued that it was important for the proper “functioning of the food chain” that commodity derivatives serve their original purpose of price discovery and hedging against volatility. And it suggested that more regulation of derivatives would “be helpful in avoiding excesses.”

In January, 2011, DB Research—shocked that high food prices had at least in part triggered social unrest in a number of countries in Latin America, Asia, and Africa—admitted that “in some instances speculation might have added to the price movement.”

Two months later, DB Research acknowledged that in developing countries where “consumers spend over 50% of their income on food,” price increases can be devastating and “hollow out the right to food.” While there was no consensus on the role of derivatives, the study nevertheless fingered speculation: “When speculation drives prices to a level that is no longer consistent with fundamental data, this can have serious consequences for farmers and consumers.”

Hence another scandal: large banks have known for years that commodities speculation and related products that they sold to their clients caused immense damage to people in developing countries and hurt people even in rich countries. foodwatch points out that even short price spikes can cause permanent damage to already mal-nourished children—and can lead to death. Yet banks “deceive the public, even lie to Parliament, to continue without scruples to profit at the expense of those who are starving.”

But the banks are just a link in the chain. Central banks have cranked up their printing presses and flooded the world with speculative capital, causing asset bubbles left and right. Their stated policy goal is to cause inflation, but when food-price spikes wreak havoc around the world, it’s of course someone else’s fault.

Deutsche Bank is flailing to get this under control. There have already been noisy demands that it remove those financial products from the markets that bet on price changes of agricultural commodities. But the bank is the bedrock of the German economy, and Germany must soldier on. All hopes rest on it: its vibrant economy teeming with globalized, ultra-competitive, export-focused companies is supposed to drag France and other Eurozone countries out of their economic morass. But then, there’s an ugly reality.

Tom Gross: The UN’s willful ignorance of modern-day slavery

Tom Gross, left, moderates a panel at the Geneva Summit.

Πηγή: National Post
By Tom Gross
Feb 24 2013

The UN Human Rights Council (UNHRC) begins its annual session in Geneva today by once again disgracing itself through the appointment of the West African country of Mauritania as its vice-president for the next year.

The UNHRC is the organization that, in the past, has cozied up to the Gaddafi and Assad regimes in Libya and Syria; that praised Sri Lanka’s human-rights record shortly after that country’s military killed more than 40,000 Tamil civilians; and that still exhibits at the entrance to its meeting hall, two pieces of art, one donated by Egypt’s Mubarak regime, the other with a plaque that reads, “A statue of Nemesis, Goddess of justice, donated by the Syrian government.”

It also appointed Alfred De Zayas as one of its leading advisors last December, despite the fact that his books on the Second World War portray Germans as victims and the Allies as perpetrators of “genocide.” De Zayas, while not denying the Holocaust himself, has nonetheless become a hero to many Holocaust deniers, and his sayings are featured on many of their websites. He has called for Israel to be expelled from the UN, while defending the ruthless Iranian regime.

And now Mauritania has been chosen by the UNHRC to help preside over worldwide human rights for the next 12 months. Mauritania, although all-but ignored by mainstream human-rights groups, is a country that allows 20% of its citizens, about 800,000 people, some as young as 10, to live as slaves.

An estimated 27 million people worldwide still live in conditions of forced bondage, and every year at least 700,000 people are trafficked across borders and into slavery, according to figures compiled by the U.S. State Department, the International Organization for Migration and other reliable sources.

But nowhere is slavery still so systematically practiced as in Mauritania, an Islamic republic where imams often use their interpretations of Sharia law to justify forcing the darker-skinned black African Haratine minority to serve as slaves to the Arabic Moor population.

“The situation is every bit as bad as it was in apartheid South Africa, and in many ways it is worse,” Abidine Merzough, the European coordinator for the anti-slavery NGO Initiative for the Resurgence of the Abolitionist Movement in Mauritania, told the fifth annual Geneva Summit for Human Rights and Democracy last week.

“Officially, the Mauritanian authorities have abolished slavery on five separate occasions. But in reality, it exists exactly as before, backed up by imams and other clergy who write laws and issue fatwas justifying slavery,” said Merzough, who was born to slaves in Mauritania but is a rare example of someone who managed to escape and now lives in Germany.

“Slaves are their masters’ property, often from birth. Women slaves are allowed to be sexually abused whenever their masters want. The masters can buy or sell slaves or loan out parts of their bodies for use — arms, legs, vaginas, mouths. The slaves must obey. This is Islamic law as it exists in Mauritania today,” Merzough told the Geneva Summit, which (to their credit) was this year attended by a small number of UNHRC ambassadors from democratic countries (including Canada).

Last year I attended both the Geneva Summit and the opening session of the UN Human Rights Council. The contrast could hardly be greater. I watched the UN ambassadors arrive in chauffeur-driven Mercedes, and then congratulate themselves while ignoring human-rights abuses throughout the world. The Geneva Summit, by comparison, is put together on a very modest budget by 20 NGOs, headed by UN Watch, an organization that does such good work for human-rights issues that the UNHRC should hang its head in shame.

At this year’s Geneva Summit, I moderated a panel that included Mukhtar Mai, an extraordinarily brave woman who was gang raped on the order of a tribal court in Pakistan after it was alleged (wrongly) that her brother had acted immodestly. And after the rape, instead of committing suicide (which is common after such experiences in Pakistan), she has fought a 10 year legal battle in an effort to bring the perpetrators to justice.

Other speakers at this year’s Geneva summit included dissidents, torture survivors and witnesses from Congo, Iran, Tibet, Syria, North Korea and elsewhere — as well as Pyotr Verzilov, the husband of the jailed lead singer of the Russian band Pussy Riot.

When Britain’s Foreign Secretary, William Hague, and other dignitaries assemble in Geneva to open the annual session of the UNHRC today, they might want to ask why these dissidents were not invited to address them. And they might want to ask why Mauritania, instead of being held to account, has been appointed the organization’s vice-chair.

Tom Gross is a former foreign correspondent of the London Sunday Telegraph.

Greece: "A promise from the army has been obtained to not intervene against a civil uprising"

Demonstrators throw fire bombs at riot police during violent protests in central Athens on 12 February, 2012

Πηγή: New Statetsman
By LEIGH PHILLIPS
Feb 24 2013

It is always enlightening to hear the frank assessment of a diplomat upon leaving the service, once unshackled from "the patriotic art of lying for one's country", as 19th Century American journalist Ambrose Bierce described the craft.

Leonidas Chrysanthopoulos was a career diplomat with the Greek foreign ministry. As a junior officer with the service in the 1970s, he helped assure the then freshly democratic nation's accession to the European Union (at the time the EEC). He was at different times Athens' ambassador to Poland, Albania and Canada, and finally the director general of EU Affairs in the ministry.

Last year, he finally resigned as secretary general of the Black Sea Cooperation organisation, and entered the private sector, and now feels free to speak openly about his fury at what he says Europe and international lenders are doing to his country.

“At a certain moment, quite soon, there will be an explosion of social unrest. It will be very unpleasant,” he says, referring to 15 armed incidents in the previous ten days. In the past few weeks, offices of the governing parties have been firebombed as well as the homes of pro-government journalists. The headquarters of the prime minister's conservative New Democracy party was machine-gunned, and days later a bomb exploded at a shopping mall belonging to the country's second wealthiest citizen, although no one has been badly injured by the attacks.

“It is an escalation of activities,” he worries, adding that he expects the "explosion" to occur sooner rather than later. He predicts the spark will be when new, retroactive and sizeable tax bills come due in the coming months that people simply cannot pay. “There will be further increases in armed actions. There will be bloody demonstrations.”

“These actions are condemnable, of course, but I feel that this sort of armed activity will increase as long as the government continues to impose oppressive measures against the Greek people.”

Belgian Prime Minister Elio di Rupo in Davos said that Europe should change course from austerity within six months if there is no sign of recovery. These are hopeful words to Chrysanthopoulos, but he fears it would still be too late for his country.

“We do not have six months. If the EU is going to change something, they need to change it yesterday. We even have problems burying the dead because people cannot afford the funeral expenses.” Refrigerators in the morgue were filling up with bodies until the church said that it would offer free burial for some families.

“We are heading down the road of destruction.”

Last summer, the social-democrat-conservative coalition led by Antonis Samaras launched a major crackdown on irregular migrants, rounding up 60,000 individuals out of which just 4,200 were arrested for infractions – a move that has been criticised by Amnesty International and other human rights groups.

Chrysanthopoulos says that the government has hired Blackwater, the American private military firm infamous for its activities in Iraq, which now goes by the name "Academi", along with five other international for-profit security outfits. Explaining why this has happened, he says bluntly: “The Greek government does not trust the police whose salaries have also been cut.”

There is some good news however that he hears from the contacts he maintains amongst his former colleagues and politicians. He is confident that there will be no military coup, as there was in 1967.

“There are contacts by certain politicians with elements in the armed forces to guarantee that in the event of major social unrest, the army will not intervene.”

“I don't want to go into too much detail here though as it is a delicate issue,” he continues. “But as a result of these contacts, I think this is going to be successful.”

He laments what has happened to the EU in which he spent so much of his career: “I was part of the negotiating team as a junior diplomat that brought Greece into the EU. The EU that we joined in 1981 doesn't exist any more.”

“We need a change of plan.”

£17m bonus bonanza for top Barclays bosses despite string of scandals

Πηγή: This is Money
By JAMES SALMON
Feb 18 2013

Five top bosses at Barclays will share a jackpot worth up to £17million despite being tainted by a string of scandals.

Those in line for the ‘wildly misjudged’ bonanza include chief executive Antony Jenkins and Rich Ricci, the controversial investment bank boss.

They could pocket up to £2.2million and £6million respectively from deferred shares bonuses awarded in 2010.

A portion of this will be paid out in May, with the remainder triggering at the end of the year and dished out the following May.

Finance chief Chris Lucas, under investigation over Barclays’ 2008 emergency fund-raisings in the Middle East, could receive up to £5m. This includes a tranche of his 2011 bonus which pays out this May.

The other four are in line for a portion of their 2011 bonuses too, but the bank does not disclose who gets what.

The awards threaten to plunge Barclays into another row about pay as it attempts to rebuild its reputation.

Luke Hildyard, of campaign group the High Pay Centre, said: ‘Multi-million pound payments to bankers are unjustifiable and unnecessary at the best of times, but in the aftermath of the Libor scandal they look wildly misjudged.

‘Banks do have some capacity to withhold performance-related bonuses at their own discretion, and Barclays should certainly think about exercising these powers.’

Barclays last night stressed the awards are linked to performance, so it is not yet clear how much its top brass will receive. It added that over the last five years an average of just under 40 per cent of the maximum was paid.

Jenkins has pledged to deploy special ‘clawback’ powers to recoup deferred bonuses after a spate of scandals, including Libor-rigging and the mis-selling of payment protection insurance. It is not clear if 2010 awards will be affected.

Barclays has attempted to defuse a row over bonuses ahead of its annual report detailing its pay awards in March.

Jenkins forfeited around £1million for last year, while Lucas and Ricci also gave up 2012 bonuses after the bank was fined £290million for manipulating interest rates. But news of huge pay-outs from other years threatens to undermine efforts to break with the past.

Ricci is a hugely divisive figure who helped run the investment bank while traders bragged about manipulating Libor interest rates. Critics see him as the epitome of the aggressive ‘casino’ culture under former boss Bob Diamond.

Lucas has seen his tenure overshadowed by probes into emergency fund-raisings with Qatar investors. He, along with three current and former executives, are being investigated over fees paid as part of the deal. Any windfall for Tom Kalaris, head of stockbroking and investment arm Barclays Wealth, could also prove highly controversial.

The division’s chief operating officer Andrew Tinney quit last month after it emerged he suppressed an explosive dossier which described it as ‘out of control’.

The independent report described a ‘broken culture’ of fear and intimidation under Kalaris, where problems were ignored or buried.

Jenkins could also come under fire if he receives a substantial award. The bank is still counting the cost of the PPI mis-selling scandal which occurred under his watch as the former head of Barclaycard.

A big award for Robert Le Blanc – chief risk officer since 2004 – could expose the bank to criticism.

All the scandals which have left Barclays fighting for its reputation occurred during his tenure.

The 2010 performance-related awards include a long-term incentive plan, which is paid in May next year, and two separate deferred share awards which pay out in equal tranches over three years.

Indonesian police to quiz Nat Rothschild over Bumi data theft

Πηγή: This is Money
By ROB DAVIES
Feb 15 2013

Indonesian police want to question billionaire financier Nat Rothschild over the alleged theft of data that sparked an investigation into financial irregularities at war-torn coal miner Bumi.

The miner launched an internal probe last year into ‘financial irregularities’, complicating an acrimonious row between co-founders Rothschild and Indonesia’s powerful Bakrie family. Bumi later called in City of London police after discovering evidence that the information that triggered the probe was obtained by email hacking.

Indonesian police spokesman Brigadier General Boy Rafli Amar said on Friday that Rothschild would probably be summoned for questioning over the data theft.

It comes as Rothschild and the Bumi board prepare for a weekend charm offensive among investors ahead of next Thursday’s crucial vote on the firm’s future.

Rothschild is trying to oust 12 of 14 directors, saying they are under the influence of the Bakries.

The Bumi board countered that it has proposed the only viable plan to secure the Bakries’ exit from the company, whose share price has been battered by public brawling. A source close to the situation said: ‘Every vote counts at this stage.’ Bumi’s share price has tumbled 58 per cent in the space of a year, despite its ownership of the highly lucrative Berau coal asset in Indonesia.

Shareholders have been put off by the public war of words between Rothschild, the Bumi board and the Bakrie family. The Bumi board has put forward a plan that it says would see the Bakries leave the company for good.

The Bakries are to put a £32million deposit down, before cancelling their 24 per cent Bumi shareholding in exchange for 10pc of subsidiary Bumi Resources. Bumi (down 28.7p to 377.3p) will then sell its remaining 19 per cent of Bumi Resources to the Bakries for £178million.