{jcomments on}OMAR, AGNEWS, BXL, le 09 mai 2010 – www.moneyweb.co.za- May 09, 2010–The IMF expects developed countries to run debt to GDP ratios of 107% by 2014.
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ANGOLA :
Togo wins 1st stage of appeal to get back into African Cup after deadly gun attack
By Graham Dunbar (CP)/The Canadian Press/090510
ZURICH — Togo will return to the African Cup of Nations through a peace deal brokered by FIFA president Sepp Blatter.
Blatter persuaded African Football Confederation officials on Friday to withdraw a two-tournament ban they imposed on Togo after it left the 2010 finals following an attack on the team bus by Angolan gunmen.
“I am very pleased that we have been able to find a solution which is satisfactory for both parties,” Blatter said in a statement issued by the Court of Arbitration for Sport.
“The success today is for the entire football community, in particular for African football,” said Blatter, who acted in his role as a CAS mediator.
As part of the agreement following a 3-½ hour hearing, CAF president Issa Hayatou accepted to ask his executive committee to lift the sanction at a May 15 meeting.
The African confederation and Togo federation agreed that the suspension “did not comply with the CAF competition regulations,” the court said.
Hayatou declined to talk about the case as he left FIFA headquarters.
Two Togo team officials and a driver were killed in the Jan. 8 ambush by separatist rebels in Angola’s oil-rich Cabinda territory.
Togo’s government brought the traumatized team home before it played a match. Group rivals Ghana, Ivory Coast and Burkina Faso played on in a three-team pool.
CAF suspended Togo from the 2012 and 2014 tournaments for political interference in football’s affairs. It also fined Togo’s federation $50,000.
Togo appealed to CAS, sport’s highest court, which asked Blatter to mediate.
The tragedy led Togo’s best-known player, striker Emmanuel Adebayor, to announce his retirement from international football citing the emotional affects of the shooting.
Adebayor said last month he was “still haunted” by the attack.
“We were just (soccer players) going to play a (soccer) match and represent our country, yet we were attacked by people who wanted to kill us all,” he said. “It is a moment I will never forget and one I never want to experience again.”
If Togo’s victory on Friday is confirmed by the CAF executive, the African authority must redraw qualifying groups for the 2012 tournament which begin play in September.
The initial draw was conducted without Togo in February after CAS said there was time to reallocate teams should the west African country win its appeal.
The 2012 finals will be co-hosted by Gabon and Equatorial Guinea. The 2014 edition is scheduled in Libya.
SOUTH AFRICA:
South Africa Police Wary of Cup Visit by Obama
By THE ASSOCIATED PRESS/Published: May 9, 2010
South Africa’s police commissioner said on Friday that his job would be easier if the United States were knocked out of the World Cup in the first round, avoiding the security challenge of a possible visit by President Obama.
General Bheki Cele told a parliamentary police committee meeting in Cape Town that it was “50-50” whether Obama would visit, but that the police had been told Obama might visit if the Americans made the knockout stage of the tournament.
“One challenge is the American president, who is coming, not coming, coming, not coming,” Cele said. “Our famous prayer is that the Americans don’t make the second round. That they get eliminated and they go home.”
Cele, South Africa’s top police officer, said he had provisional confirmation that 43 heads of state would attend the World Cup, and “those 43 will be equal to this one operation” if Obama made the trip.
Cele said he had met with a senior F.B.I. official who said he did not know if Obama would travel to South Africa.
Mystery man ‘owns’ Bafana
May 9, 2010 / By Stephan Hofstatter and Rob Rose /www.timeslive.co.za
And he could make tens of millions as the fans snap up replica jerseys
A mystery Johannesburg businessman, Wayne Smidt, has emerged as owner of half of the company that controls the trademark of South Africa’s national soccer team, Bafana Bafana.
And no one – not even the South African Football Association (Safa) – can fully explain how this happened.
Ownership of Bafana rights is hidden behind opaque shareholding structures comprising shelf companies, complicated indirect stakes and confidential licensing agreements.
But the Sunday Times has established that Smidt, a 40-year-old sports clothing marketer who lives in the upmarket Johannesburg suburb of Melrose North, acquired a 49.9% stake in Slam.
Slam controls the Bafana trademark through a series of secretive deals – including one that may be linked to soccer bosses Kaizer and Bobby Motaung.
Slam earns royalties of up to 15% on each Bafana Bafana-branded clothing item sold and could make more than R80-million in revenues from the World Cup as replica jerseys fly off the shelves, according to Sunday Times estimates.
This means every time you cough up hundreds of rands for a replica Bafana jersey, a portion goes to the Smidt family – who refuse to disclose whether other private entities with an interest in the licence also stand to benefit.
Safa owns the remaining 50.1% of Slam, but appears to have been unsettled by the extent to which the little-known Smidt family will share in the World Cup windfall.
Leslie Sedibe, who replaced Raymond Hack as chief executive of Safa in January, said this week his organisation was investigating the deal. “I have requested further particulars from Slam to help me understand the nature of the agreement between Safa and Slam,” he said.
Sedibe has no idea how much Safa will earn from the deal by the end of the World Cup and has yet to receive any financial statements from Slam.
Vivian Casaletti, CEO of Slam and former brand manager of Kaizer Motaung’s club, Kaizer Chiefs, said she expected “at least” 1.6-million items to be sold this year as “the country has gone Bafana Bafana mad”.
Besides replica shirts, which are sold at stores for R599, Slam’s website is selling “official” Bafana Bafana shirts for R731, and “official supporters flags” for R450.
“It’s the most successful licensing programme in Africa,” Casaletti said last week.
Casaletti refused to say how much money it expected to make during this World Cup year.
Smidt also refused, but said the Sunday Times estimate of more than R80-million over the World Cup was “quite wrong”.
However, if 1.6 million Bafana Bafana-branded clothing items are sold this year, and Slam makes at least R50 on each, this would easily account for that figure. As some jerseys are being sold for around R600, a 15% royalty would amount to R90.
Edgars sells Bafana jerseys for between R399 and R599, while supporter shirts sell for R89. One Edgars store said that “about 25%” of sales were for the more expensive jerseys. Western Cape Internet retailer sasportswear.co.za sells replica jerseys for R799, including delivery, and can’t keep up with orders.
Clothing retailers in Soweto’s Maponya Mall are doing a roaring trade. Said one sales clerk: “Whatever we stock that’s Bafana, it’s flying, baba.”
The Sunday Times was able to establish that through a complicated web of entities, Smidt’s shelf company, Friedshelf 668, will be one of the big winners from Slam’s exclusive deal to sell Bafana Bafana merchandise during the World Cup.
The shares in Slam now held by Smidt have been shunted around in a series of deals whose terms have never been made public.
Though Smidt is an unknown quantity his father’s company, Stanton Woodrush, won a lengthy legal battle against Safa in 2002 for ownership of the Bafana Bafana trademark for clothing.
Some time between 2002 and 2005, Stanton Woodrush sold the rights to use the brand to a company called Blue Label Investments, a forerunner to the JSE-listed Blue Label Telecoms.
Then, in 2005, Hack signed the deal granting Slam the exclusive rights to use the national team’s brand with Blue Label CEO Mark Levy.
“It was a discussion with a gentleman called Mark Levy,” Hack said this week. “They (Blue Label Investments) were doing various club replicas that people sell outside the stadiums. That’s how the whole thing started.”
He confirmed the deal came about through Stanton Woodrush’s court battle with Safa. “Safa had registered rights to all merchandising, except (Stanton) claimed the rights to (clothing). Blue Label bought those rights from that company so we said ‘okay, let’s put everything in one basket – then we can at least maximise the exposure and the revenue that the association would get.'”
Contacted this week, Smidt confirmed he had bought the 49.9% of Slam from Blue Label Investments in 2007 through Friedshelf 668.
He said details of the sale were “private matters which are not in the public domain, and are commercially sensitive”.
Levy also refused to provide any details, saying the terms remained “confidential”.
While Levy said that Blue Label Investments no longer had any share in Slam, company records show that Levy is still a director of Slam. On this point, Levy said: “I was asked by Safa to remain on as a director of Slam and agreed to do so.”
Why the half-ownership of the commercial rights to South Africa’s national soccer brand should remain confidential remains unclear.
Smidt said: “I object to you drawing sinister motives from the refusal of a private company to divulge its revenue and profit information.
“Slam has nothing to hide and it is a pity that you seem to want to draw that inference from Slam’s refusal to supply you with its private financial information.”
However, the deal raises questions. Blue Label’s empowerment shareholder is Nthwese Investment Holdings, which is part-owned by Bobby and Kaizer Motaung’s company, Kaizer Holdings. This would appear to present a conflict of interest, as the Motaungs are blue-blooded members of South Africa’s soccer aristocracy.
Motaung is known to be close to World Cup local organising committee (LOC) chairman Irvin Khoza, and was a director of Safa’s development trust when the Slam deal was signed – a deal that ultimately benefited Blue Label Investments. He is also a director of the LOC and the Premier Soccer League.
Bobby Motaung manages team Kaizer Chiefs, and is chief executive of Lefika, the company hired by Mbombela municipality to build its R1-billion World Cup stadium.
Bobby Motaung was only appointed Nthwese director a few days before the Blue Label listing in 2007. But the company’s pre-listing statement, which notes that Nthwese was formed specifically to invest in Blue Label, lists Kaizer Holdings as a shareholder of Nthwese.
This week, the Motaungs denied that they had played any role in helping Blue Label Investments get the initial shares in Slam. “We never got involved with it – we own no stake in Slam,” Bobby Motaung said. “We were not part of this.”
Blue Label Investments sold its stake in Slam to Smidt in 2007. Motaung said Kaizer Holdings did not benefit from the sale.
But other questions remain, especially Slam’s relationship with Richmark Holdings, a company run by controversial businessman Gavin Varejes. Varejes is a close friend of former police chief Jackie Selebi, who is on trial for corruption.
Smidt says Richmark does not own shares in Slam but man
ages its “financial and administrative affairs”.
Smidt also disclosed that Richmark has an indirect shareholding in Stanton Woodrush, but refused to clarify whether Stanton or Richmark stood to benefit indirectly from Slam’s royalty revenues.
Several attempts to reach Varejes to clarify the terms of Richmark’s deal with Safa were unsuccessful.
AFRICA / AU :
UN /ONU :
USA :
Catholics sent predator priest to remote village
By MICHELLE FAUL and CARLEY PETESCH (AP)/090510
MAKANKA, Sierra Leone — A rutted red dirt track leads to the “bar,” a couple of homemade wood benches in the shade of an old tree dripping with wild mangoes. Within easy reach, there’s a yellow plastic jerry can of the fiery palm wine the American priest loved.
A 40-year-old schoolteacher now charges that the Rev. James Tully gave the palm wine to teenage boys to make them more susceptible to his advances.
This faraway corner of West Africa — with no electricity or piped water — is where the Roman Catholic Church sent Tully, twice. The teacher told The Associated Press that Tully abused him and other boys repeatedly during his first stint in Sierra Leone, from 1979 to 1985. After a conviction in the U.S. for giving minors alcohol and groping them, the church sent Tully back to Sierra Leone for a second stint from 1994 to 1998.
Tully’s story is an example of how the church transferred abusive priests from country to country, in a scandal now emerging worldwide. But it also shows the deep reluctance to come out against a Catholic priest in many parts of Africa.
Catholic Archbishop Buti Tlhagale of Johannesburg cautioned this month that the scandals in the church were not particular to the United States and Europe.
“It simply means that the misbehavior of priests in Africa has not been exposed to the same glare of the media as in other parts of the world,” Tlhagale said.
___
The shade and occasional breeze are the only relief from the unrelenting 100-degree (38-degree Celsius) heat matched by 100 percent humidity that has men lifting their shirts to fan bellies and black skin glistening with sweat. The only sound is the chirping of long-billed birds attracted to a nearby rice paddy.
It was in these villages that Tully demanded oral sex, called “lollipopping” in the Krio dialect, the teacher said.
“He would want us to play with his penis, to arouse him; not even to just play with it but to put it in your mouth,” said the teacher, who asked to remain anonymous because he works at a Catholic school and fears he could be fired.
Asked if the sex had gone any further, tears welled in the teacher’s eyes and he turned away: “I don’t want to remember that. After all these years, I still can’t talk about it. It makes me hot all over.”
Tully would not comment about these accusations when approached by The Associated Press in New Jersey, where he now lives. The Catholic Church says it never received any complaints about Tully’s behavior in Sierra Leone.
“No family member or friends or associates of any victim that was sexually abused has come forward to inform or report to me that he has been sexually abused by Father Tully,” said Bishop Giorgio Biguzzi of Makeni, who was bishop through all the years Tully was based in his northern diocese.
Such responses do not surprise the Sierra Leonean schoolteacher.
“Who would believe a young village boy over a white priest?” he asked.
He complained about the abuse to his uncle, who had helped bring him up after his father died. “My uncle pleaded with me, asking me if I couldn’t ‘cope’ with this thing since it was the only way for me to get an education.”
At least one boy refused to put up with it, according to a police officer from Kamakwei, a northern town near the border with Guinea.
The officer, who asked not to be identified because he is Catholic and fears being shunned by the church, said his cousin and several other youngsters lived in the parish priest’s house in Kamalo, where Tully was based in the 1980s.
His cousin lived there for two years with other boys who were receiving scholarships from Tully. The compound was always filled with boys, sometimes playing soccer, and Tully rode around with them on the back of his pickup truck.
That was a familiar sight in many villages, according to more than two dozen people interviewed by the AP. Tully took boys with him on weekend trips to villages where he built up schools and churches, and stayed overnight so he could say Mass on Sundays.
Tully had picked the cousin out as the brightest student in Kamakwie when he was about 14, and told the family he would take care of his education if they let him come to Kamalo. But after two years “(my cousin) ran away and came home. He told us that the priest was always calling him to lie in his bed and urging him to caress him.”
The family did nothing, the policeman said, “because we were not sure whether we should believe the boy, and also the status of the man was high.” He said Tully was the top-ranking Catholic in the area, and headmasters at Catholic schools there reported to him.
He said his cousin completed his education at the Catholic school in Kamakwie but was killed by rebels during the war.
Tully left Sierra Leone for the United States in 1985. There, a seminarian in Milwaukee, William Nash, accused Tully of abusing him between 1986 and 1988. In 2005, Nash received a $75,000 out-of-court settlement from the Xaverians, though Tully did not admit to any wrongdoing.
“I had my own experience and I was horrified about it. I’m angry that the church has allowed a man to function in the church in this religious order for 30 years. And that’s criminal,” Nash told the AP in a telephone interview from his home in western Massachusetts.
In the early 1990s, Tully also was accused of escorting three teenage boys to a baseball game in Franklin, Wisconsin, giving them alcohol and groping one of the youths. Tully signed an affidavit that said, “”I am pleading no contest because I understand what I am charged with and believe I would be found guilty.”
He was convicted of disorderly conduct in 1992. He was sentenced to two years’ probation and barred from unsupervised contact with juveniles.
Tully was transferred to the Institute of the Living in Hartford, Connecticut, which specializes in sexual disorders and has treated hundreds of priests. There he received psychotherapy and made “very good progress,” according to a letter from the institute to the Wisconsin court.
“He has never denied responsibility for his sexual behavior and has come to realize the damage that this has inflicted on the others,” says the May 1992 letter.
The Rev. Carl Chudy, current U.S. superior of the Xaverian Missionaries order based in Wayne, New Jersey, said Tully’s therapist said he could return to Africa so long as he had supervised encounters with youth, therapy and ongoing support.
“I assume Sierra Leone agreed to this because when his probation was over, he left,” Chudy said.
Yet the church sent him back to Sierra Leone apparently without ever investigating his activities there. And most of his work was with teenagers — organizing soccer teams, drama clubs and choirs in scrabble-poor villages.
He left in 1998, when he was evacuated during the nation’s brutal 10-year civil war.
The Xaverians finally laicized Tully in February 2009, after Nash, the Wisconsin seminarian, went on a mission to have him defrocked. Chudy said the decision was Tully’s and was approved by the pope last year.
Chudy said there is a very strict policy in place today: “In the past obvious missteps were made due to what was known at the time. We are quite committed to protecting young people from the few who have caused such great damage,” he said.
Rev. Carlo Girola, an official of the Xaverians’ general administration in Rome, said there were no accusations or suspicions regarding Tully’s first stay in Sierra Leone to make the Xaverians feel they had to investigate.
Girola said the regiona
l supervisor in Sierra Leone, Father Piero Lazzarini, was informed about the “situation and conditions” imposed for Tully’s return to the country. Lazzarini spoke of this to Father Luigi Brioni, the pastor in Magburaka where Tully was then sent. According to Girola, Brioni “never informed Lazzarini of any incidents related to this problem.”
Some who worked with Tully for years in Sierra Leone praised his good works.
“I know him as someone who was always assisting children, paying their school fees, helping them get into college,” said Ahmed Polo Samura, a human rights activist and child protection officer in Kamakwie who knew Tully from the time he was an altar boy in church.
Mark Saidu, a farmer in Makali, said Tully converted him from Islam when he was 14 years old in 1984 and helped pay for his education at Catholic schools.
“Father Jim had lots and lots of friends. He was a man who loved to socialize,” Saidu said. “And he was popular around here because he would travel around with a generator and show films in the villages. And with the soccer competitions, that could be the only entertainment people would have for months.”
Augustine Sorie Bangura is described by many as Tully’s greatest friend in Sierra Leone. Bangura, 48, said Tully encouraged him to write letters to the priest’s friends in the United States to garner donations that built the first health clinic to the village. Before that, people had to walk 16 miles (26 kilometers) to the hospital in Kamalo.
Bangura and many others spoke of Tully’s love of strong liquor, some said to the point of incoherent drunkenness.
“He would use palm wine to get people together to evangelize them, and he would also use palm wine to encourage the youths to join us in singing. That man loved palm wine,” said choir master John Abdulai Kamara.
Some, though, say Tully’s use of palm wine was more sinister: “He would take us boys to go palm wine drinking and would always encourage us to drink, saying, ‘It’s nice. Have some more.’ You could say he lured us into drinking, and that stuff is so strong that just one sip can make your head spin,” said the teacher who told the AP Tully molested him.
The teacher said he has long been disillusioned with the Catholic Church. “They shattered my dreams,” he said.
The man studied to become a monk and teacher with the Irish-based Christian Brothers order, but said he left when the head of the seminary tried to abuse him.
The teacher said that if victims of sexual abuse by priests were assured they would not be punished for telling the truth, “you would see many, many, many people coming forward.”
Carley Petesch reported from Johannesburg. Associated Press writer Frances D’Emilio in Rome and David Porter in Wayne, New Jersey contributed to this report.
On the Net:
Xaverian Missionaries in Sierra Leone: http://www.xaviermissionaries.org/M_Life/WorldPlaces/Africa/SL_Main.htm
Arizona’s immigration law is degrading
By Julie Lynem/ jlynem@thetribunenews.com /www.sanluisobispo.com/Sunday, May. 09, 2010
An African-American teenager was driving home when a police cruiser pulled up from behind, stopping him in front of a home in a predominantly white St. Louis suburb.
After he produced his license showing that he lived at the spot where the traffic stop occurred, his car was searched, the contents strewn on the neatly manicured lawn as the neighbors watched. The officer even went a step further, asking him if he was a drug dealer or gang member.
That young man, a high school honor student 20 years ago, is now my husband. The incident mentioned above was just one of many such stops, always for alleged minor infractions such as failure to yield or rolling a stop sign, and they rarely resulted in a citation.
When I met him in college, he was wary of law enforcement because he knew that he could be pulled over, questioned and searched at any time, regardless of whether he did anything illegal.
Racial profiling existed then and it continues to plague black and brown people of every socioeconomic background across this country. Ask anyone who has been profiled, and they will tell you that it is not only unfair and discriminatory but degrading.
If Arizona’s new immigration law goes into effect this summer, thousands of Hispanic men and women in that state will be subjected to the same painful humiliation and intimidation.
Understandably, SB 1070 has been the subject of much heated debate since Arizona’s governor signed it into law, with many supporters arguing that it has been the federal government’s inability to enforce illegal immigration laws that led to the state’s action.
Those in favor also cite an influx of immigrants into the border state, a sore point for some residents who blame them for an increase in crime and for draining Arizona of its resources.
Critics, however, have questioned its constitutionality and say that it creates the potential for a police state as it invites officers — unfairly burdened with this law in my view — to arbitrarily stop anyone they suspect of being in the country unlawfully.
Citizens and noncitizens alike will have no choice but to carry documents proving they are in the country legally to avoid being detained. It’s a move that is eerily reminiscent of Pass Laws under South Africa’s apartheid era, which made it a criminal offense for black South Africans not to carry identification with them at all times.
While the Arizona legislation states that law enforcement officials may not solely consider race, color or national origin when deciding when to make a stop, it’s unclear how those tasked with upholding the law will determine whom to pull over without taking race or national origin into account.
Will they simply look at people’s skin color, listen to see if they have command of the English language, or check out the way they are dressed?
One disgruntled Arizona resident recently quoted in a New York Times article said, “You are going to look different if you are an alien, and cops know.”
Really? What does someone who is suspected of being in the country illegally look like?
My husband and other young African-American men I’ve known who have been stopped do not come anywhere close to fitting the profile of dope dealers or gang bangers intent on breaking the law. And yet, some officials routinely engage in this behavior because of bias and misperceptions.
Few people would dispute that illegal immigration is a concern for our country and a polarizing issue that must be seriously addressed in a meaningful way.
But the Arizona law, the most aggressive in the nation, is not how we get there.
It serves only to further divide our country at a time when we’re already coming apart at the seams.
CANADA :
Tories play politics with women’s lives
By MINDELLE JACOBS, QMI AGENCY/www.calgarysun.com/ May 9, 2010
If Prime Minister Stephen Harper’s Conservatives are trying to woo mainstream Canada and gain enough trust to win another election, they have a funny way of doing it.
First, they insist they don’t want to get into an abortion debate in the lead-up to June’s G8 summit in Ontario. Then they deliberately wade into the issue.
It’s as if they get a kick out of committing political suicide.
After weeks of obfuscation, the Conservatives finally declared that Canada won’t fund abortion under our G8 maternal and child health initiative.
To top it off, International Co-operation Minister Bev Oda made the bizarre statement that “Canada has never funded a procedure that included abortion.”
Uninformed
This must be a surprise to the International Planned Parenthood Federation (IPPF) which has received funding from Canada, through the Canadian International Development Agency (CIDA) for three decades.
In 2008-09, for instance, the IPPF delivered 67 million health services around the world, including about one million abortion-related services (counselling, abortions and post-abortion care for women who have undergone unsafe terminations).
The federation also trains abortion providers.
Is Oda just ill-informed about where some of CIDA’s money has gone all these years or is she a secret Liberal plant, on a mission to make the Conservatives look silly?
Whatever the case, it makes the Tories look like fools.
If the government wants its G8 focus to be on things such ase nutrition, immunization, clean water and training front-line health workers, great.
Hundreds of thousands of women die annually from complications related to pregnancy and childbirth — far more than the number who die from unsafe abortions.
Still, the government has been curiously silent about whether it will continue funding the IPPF.
The federation’s last contract expired in December.
CIDA explains that it is “currently reviewing its programs to ensure that its priorities align with the government of Canada’s aid effectiveness agenda.”
Is this just an unusual delay in renewing the IPPF’s contract or is it a dangerous sign that George W. Bush-style Republican politics are creeping north?
Will the IPPF and other international aid groups be denied funding if they offer abortion or abortion counselling abroad?
That was the case in the U.S. under Bush with the so-called gag rule, but the policy has since been reversed by Barack Obama.
The IPPF is often the only health provider in a community, delivering a vast array of programs.
“Loss of (Canadian) funding will have … devastating consequences on our ability to continue to provide these desperately needed services,” warns IPPF spokesman Paul Bell.
The World Health Organization estimates that in Africa, one in every seven maternal deaths result from unsafe abortion.
Of the 5.6 million abortions in Africa in 2003, only 100,000 were performed under safe conditions.
Desperate
Desperate women in the Third World will do anything to terminate an unwanted pregnancy — from drinking bleach or tea made with livestock manure to poking themselves internally with sticks or bones.
Women will have abortions whether it’s legal or not.
The abortion rate in Africa, where abortion is illegal in many circumstances in most countries, is the same as it is in Europe where abortion is generally permitted on broad grounds, according to the Guttmacher Institute.
The Conservatives have some explaining to do.
Do we save as many women as possible or only some women?
mindy.jacobs@sunmedia.ca
AUSTRALIA :
EUROPE :
SA amidst sovereign debt contagion
www.moneyweb.co.za/Annabel Bishop*/09 May 2010
The IMF expects developed countries to run debt to GDP ratios of 107% by 2014.
As the European sovereign debt crisis deepened due to the lengthy delays in granting Greece’s rescue package, the euro weakened to EUR1.32/USD. Since the bailout at the beginning of May the euro has continued to plunge (on lack of clarity over Portugal and Spain), reaching EUR1.27/USD and likely to fall further (we expect toward parity). Greece’s €110bn (R1.1trillion) rescue package covers only half its total debt, but is based on the assumption Greece will be able to borrow affordably from markets by 2012. The bailout rescues German and French government backed banks -large holders of Greek debt, as they profit from moral hazard. If Greece cannot borrow from the markets, and it will involve turning its structural deficit1 around, Portugal (which has a slightly higher debt level than Greece) will likely be mired in its own sovereign debt crisis, and then Spain. Spain, newly emerged from recession, but with over four times the debt level of Greece, is a large holder of Portuguese sovereign debt. Both Portugal and Spain have unsustainable fiscal positions1, which will be worsened if Greece defaults on its debt. Portugal additionally has low prospects for growth and productivity improvements which can bring it back to fiscal health; it needs to cut expenditure and raise taxes but is battling to implement these austerity measures. With uncertainty that Greece will be able to continuously stomach interest payments approaching 10% of GDP and run a sizeable primary surplus in the face of a likely economic slump, the sovereign debt crisis in Europe is far from over. The flight to perceived ‘quality’ has seen emerging market currencies trade weaker against the dollar as concerns that the Greek rescue package will be insufficient spread.
The Greek bailout has set a precedent for similar bailouts for Portugal and Spain, indeed part of the sharp rise in risk aversion recently is that markets fear the IMF and EU will attempt to cobble a loan together for the Portuguese, taking at least as long as the Greek loan. The euro area can afford to bail Greece out, but not Portugal and Spain as well, given the sheer size of the Spanish economy – such a move would likely plunge the region back into recession, with some of the triple A rated members’ ratings slip. By granting Portugal alone, whose tiny economy is similar in size to Greece’s, a financial rescue package, the fallout for Spain could be lessened as Spain is a key holder of Portuguese debt. But to quell market fears the leaders must still show a workable solution for Portugal and Spain.
Some view restructuring of its debt (creditors take less than full value) as a useful solution for Greece but the EU waited too long to act and deepened the crisis, with ratings agencies playing a similar role to their part in the sub-prime credit rises. Now, as Greece can no longer raise affordable funding in the markets, it has to accept the bailout. If it did not, it would have to default on its debt obligations as it cannot make the interest payments. Indeed, Greek restructuring would be viewed as a potential path for Portugal, Spain and Italy, just the fear of this has contributed to the sharp jump in risk aversion levels and worry that Greek’s sovereign debt problems will spread, sparking contagion. But there is no reason for the Greek economy to restructure its debt if the global economy recovers well as Greece should be able to repay its debts and grow as well. It is expected that Greece will not experience growth until 2012, and the IMF’s aims to tackle both its debt and competitiveness problems. In particular the economy needs to be opened up, modernised and pro-growth policies followed. In addition, costs need to be controlled and inflation reduced so Greece can regain price competitiveness. But Greek citizen’s resistance to the imposition of a now €30bn austerity plan will make it a bumpy ride for the economy. Indeed, with the country’s current leaders likely to be voted out at the first opportunity, Greece may well opt to attempt to leave the EU, but will still be responsible for debt valued in euro’s so this may not be the best move for it. Germans’ unhappiness with likely tax increases off an already high tax base may make their leaders’ time short-lived. Indeed, the enthusiasm for having a common currency is being tempered by the fallout from having neither uniform, or at least synchronised, fiscal policies nor clear rules determining financial rescue packages for member countries.
Are there solutions for the euro zone? Perhaps. Getting Greece to willingly withdraw from the Eurozone, which should be easy as the politicians who approve the austerity measures are voted out and the new leaders likely win the election on the strength of the country leaving the euro. Indeed, if Greece has its own currency it can eventually devalue (inflate) its way partially out of its current mess, but this will take a very long time as the debt will remain in euros. Iceland, which before Greece was hardest hit by the credit crisis, avoided Greece’s meltdown because it had its own currency, inflating its way out of trouble. Ireland and Greece have implemented severe austerity measures to reduce debt levels, while Portugal, Spain and Italy will need to do the same, lowering the growth outlook for the region. But exports will be increasingly competitively priced, a particular win for Germany, aided by its endless tarrying over signing off Greece’s rescue package.
South Africa recently received a rating upgrade, from R&I and may still be in line for ones from other agencies. SA is rated BBB+ by S&P and Fitch and A3 by Moody’s. SA plans to reduce its fiscal deficit to 4.7% of GDP by 2012/13 from its current 6.8% of GDP. With a debt level of only 36% of GDP SA compares well with India (80% of GDP) and Brazil (64%) and is in a higher league (the reason for the risk rerating in emerging market’s favour) to Greece (its debt to GDP ratio for 2010 is expected at 124.9%), Italy (at 116.7%), Portugal (84.6%), Ireland (82.9%) and Spain (66.3%). The IMF expects developed countries to run debt to GDP ratios of 107% by 2014. SA’s is only likely to inch up to 40%. We may have to wait for a rating’s upgrade, but as South Africa works its fiscal deficit down to 3-4% of GDP on the back of rising growth and a relative degree of fiscal conservatism it will be rewarded by improved risk ratings, which will lower its borrowing costs and strengthen its growth and employment path. The current high degree of corruption, one of the key reasons for the failure in service delivery, is a huge stumbling block for South Africa. Only once this wastage and inefficiency is stopped (if left unchecked it will multiply), through new and strengthened laws which are rigorously enforced, will the majority of South African’s be included in the economic net. Or in other words, only then will SA be on a sustainable path to reducing its current unemployment rate from 25.2% (above 35% if the expanded definition is used) to below 10% – and reap the additional economic growth and tax revenues this will yield.
* Annabel Bishop, Investec Group Economics
India bailed out China from US-EU ambush at Copenhagen: Ramesh
9 May 2010/PTI/economictimes.indiatimes.com
BEIJING: India bailed out China from isolation during the Copenhagen climate talks and saved it from getting ambushed by the US and EU which wanted
it to sign an agreement on verification of emission levels much against its wishes, Environment Minister Jairam Ramesh said on Sunday.
“Chinese leaders continue to harp on Copenhagen spirit because we were critical to China during the climate negotiations. At the Copenhagen talks Chinese in their heart of hearts know we saved them from isolation,” Ramesh, who is on a visit here, said addressing the Foreign Correspondents’ Club of China.
Asked how India was critical to China for a sustained relationship, he said New Delhi had not yet reached a stage where it was critical to Beijing. But the Chinese leaders were well aware of benefits of friendship with India as established during the last year’s climate negotiations.
During the climate talks, both the US and EU countries were determined to ambush China and get it sign a legally binding treaty, the minister said.
“The strategy of the most of the countries was to ambush China because it is the largest emitter of green house gases,” amounting to 23 per cent of the global emissions, he said.
The US has not ratified Kyoto Protocol saying that they would not do unless the Chinese do so.
The strategy, Ramesh said, was to get China sign on “some international agreement to give legal status” but “it did not happen.”
“Given our English skills and our more cussedness in negotiating skills we bailed the Chinese out of many a difficult situations. Chinese know India was absolutely essential for the fact that China did not get isolated at Copenhagen,” he said, adding that but for the agreement which was signed by BASIC along with US President Barrack Obama, Washington would have launched a tirade against Beijing for scuttling climate talks.
“Had the agreement with Obama was not signed he would have gone back to the US and painted China a villain of peace. The fact that he signed (accord), it gave Chinese a way out. They realised that,” he said.
Ramesh also refuted allegations by European commentators that India and China scuttled Copenhagen talks. He said developing countries like India and China could have never signed a binding agreement without firm binding commitment from developed countries.
Part of the frustration of the Europeans was that they were completely bypassed by Obama and BASIC — Brazil, South Africa, India and China — during the climate talks, he said.
“Europe has not got used to the fact it completely got bypassed in the last two days of the talks. Frankly Copenhagen Accord was President Obama’s accord with the BASIC group facilitated by India and China,” the Environment Minister said.
Ramesh, who yesterday was openly critical of the Indian Home Ministry accusing it of stalling the import by India of the Chinese telecom equipment
and raising “alarmist” security concerns, defended the emerging rapprochement between the two countries.
The area of cooperation of climate change has given both India and China an opportunity to work together in a field that has significance across the developmental spectrum.
“When we are talking of climate, we are talking of energy, forestry, transportation and industry. Climate change is an entry point in a whole set of areas,” he said, adding that it has led to cooperation in the fields like forestry.
Ramesh also argued that while India may not be critical to China, India’s massive expansion of infrastructure offered a big scope for Beijing to invest and reap benefits.
India would have been ‘no use’ for China had its GDP remained very low. But the fact that India too was developing rapidly with 8.5 per cent growth rate offering billions of dollars of worth of business for Chinese investment, which already crossed $30 billion, made a difference, he said.
“We are offering a large market to Chinese companies … 80 per cent of infrastructure by 2030 is waiting to be built. 20 per cent of power generating capacity to be built by 2012 will come from Chinese equipment. We are not yet critical for them but they are critical to us,” he said.
India’s leadership in software is also proving advantageous. The Chinese have not yet figured out why India is continuing to lead in software, the minister said.
“They are ahead of us in hardware, we are far ahead of China in software. If we are able to develop the leadership, they will come to us and we will be important,” he said, adding that some of the provinces close to Indian borders are also recognising the benefits of close relations.
“We are important to certain provinces like Yunnan in southwest China. There the mindset is quite different as it is contiguous with India. They are trying to build new markets for their province,” he said.
CHINA :
China reiterates climate change principle of “common but differentiated responsibility”
English.news.cn /Xinhua/2010-05-09
BEIJING, May 8 (Xinhua) — To achieve equitable development globally, China adheres to a principle of “common but differentiated responsibility” on climate change, a senior official said here Saturday.
Xie Zhenhua, vice minister of the National Development and Reform Commission (NDRC), made the remarks at the International Cooperative Conference on Green Economy and Climate Change.
Xie’s comments came a day after Chinese Premier Wen Jiabao said that according to the principle of “common but differentiated responsibility,” the international community should further clarify the mandatory reduction targets for developed countries and mitigation actions for developing nations.
“Developed countries discharged a great amount of greenhouse gases during their industrialization in the previous two centuries. That is the main cause of global warming,” said Xie, one of China’s leading negotiators for climate change talks. “That’s why they should take most of the responsibility to reduce carbon emissions.”
Developed countries have already overused the earth’s atmosphere for emissions, occupying what should be emission quotas for developing countries who are developing to meet their citizens’ basic needs, he said.
“Developing countries are now beginning to industrialize. It is unfair to limit their development,” Xie added.
Xie said developed countries should transfer environmentally friendly technologies to developing nations and increase their aid to poor nations.
Although a challenging task, China was likely to lower its energy consumption per unit of gross domestic product (GDP) by 20 percent at the end of this year compared with the 2005 level, he said.
China would work to play a constructive role to promote a successful Cancun conference and further enhance dialogue and cooperation with the international community in terms of tackling climate change and promoting sustainable development of the world, he said.
Five months after the Copenhagen talks and seven months before the Cancun conference, Saturday’s conference was recognized as a platform to promote the materialization of pledges in the Copenhagen accord and urge for a fruitful Cancun conference.
With a theme of “Low carbon, New energy and Sustainable development,” the conference was organized by the China Center for International Economic Exchanges. The conference has invited top leaders, environment officials and entrepreneurs from both China and countries including Brazil, India, Mexico and South Africa.
Editor: Wang Guanqun
INDIA :
BRASIL:
EN BREF, CE 09 mai 2010 … AGNEWS / OMAR, BXL,09/05/2010
