Global News Journal

Europe can’t put out the blaze

If the world thought that Europe’s finance ministers were running in to put out the blaze spreading through Athens and Rome this week, it might come as a surprise to learn they still don’t agree on the size of the fire or how to deal with it.

Any training course will tell you that if a small fire isn’t tackled quickly, it could make things a lot worse. The Greek crisis is like a small electrical fire that has grown into a dangerous inferno now threatening to gut Italy.

But ministers meeting in Brussels have clearly not been on any fire extinguisher training courses lately — they don’t know their water from their foam and their dry powder. In fact, they appear to be pouring oil on the fire.

Belgium’s Finance Minister Didier Reynders says it is best to try to smother the blaze with a small cloth soaked in a chemical called a financial transaction tax, while Sweden’s Anders Borg and Austria’s Maria Fekter say they can’t spare any of their CO2 extinguishers.

“Italy can achieve a lot from its own doing,” Fekter told reporters who were watching the fire grow closer. Borg, Fekter and others are sure the Italians in the burning building down the street will be able to sort things out themselves.

Spain’s Elena Salgado is meanwhile clearly upset that the smoke from that fire is billowing into her garden, but France’s Francois Baroin says there was no need to reach for a fire hose: “Tout va bien” (Everything’s going well), he said, wiping his brow from the heat. A combustible mix of hot air and faulty wiring seem to be one assessment of the causes of the euro zone flames, which no one is really willing to consider. But as the sound of emergency sirens grows louder, it may be time to remove the safety pin from the extinguisher marked “European Central Bank” — it may be the only way to remove all the oxygen feeding the fire.

Half time at the euro zone cup final

Covering a summit of European leaders is a bit like covering a soccer match with no ticket for the stadium and no live TV broadcast to watch. The only way you have an idea of the scoreline is from the groans and cheers from inside the ground.

With EU leaders meeting on Brussels on Sunday and again on Wednesday to try to resolve the region’s debt crisis, the emergency back-to-back summits look like a game of two halves.

A European Commission spokeswoman said as much on Monday, trying to explain why there had been no major announcements so far on solving the debt crisis: leaders had gone in for half time.

So who is playing whom? “Euro zone versus financial markets” would seem to fit the bill, although mostly it feels it is France against Germany, with European Council President Herman Van Rompuy the referee, and French President Nicolas Sarkozy getting caught out by Germany’s off-side trap every time.

Even from outside the stadium, you can hear the adulation from the Finnish and Dutch fans when they see coach Angela Merkel on the touchline, although some Greeks are angry she won’t pay for more first aid for their injured players.

The euro team has become infamous for own goals of late and the pressure is on to avoid regulation.

So at the second half on Wednesday, the euro squad will come back out onto the field to an impatient crowd and needing to win 3-0 to be certain of victory.

Waiting for Europe’s “appropriate response”

Will the euro zone finally act decisively?

Investors are hoping for something big from European leaders at the EU summit on Oct. 23 and of the Group of 20 on Nov. 3. But they also know the 17 nations of the euro have a habit of offering delayed, half-hearted rescues that have cost them credibility.

So there’s been a lot of “urging” and “warning” in Brussels lately — politicians and central bankers have all been demanding Europe act as international alarm grows that its sovereign debt problems may drag the world into recession. “Further delays are only aggravating the situation,” said European Central Bank President Jean-Claude Trichet on Tuesday in his last appearance at the European Parliament, before he hands over the post to Mario Draghi on Nov. 1.

A day earlier, Germany’s Deputy Finance Minister, Joerg Asmussen, at the parliament to promote his candidacy to join the ECB‘s board, made his call, saying “cooperation has to be increased,” across the euro members, divided as to who should pay to rescue the heavily indebted nations of southern Europe. “I want to see a solution for debt sustainability for Greece,” Asmussen said. So do so many others, especially Greek Prime Minister George Papandreou, who in Brussels on Thursday said it was a “crucial element to make the necessary decisions concerning Greece.”

The European Roundtable of Industrialists, a business lobby of multinationals ranging from French car maker Renault to Spain’s Telefonica, has also come through Brussels to make its point. The group’s head, Leif Johansson, who is also chairman of Swedish phone maker Ericsson, warned that if European leaders fail to act, businesses could see a repeat of the liquidity freeze that followed the collapse of U.S. investment bank Lehman Brothers.

“The worst element of the 2008/2009 crisis was when liquidity froze,” he said. “The worst scenario we have right now is that that could happen again … and there is a real downside risk.” 

The Oct. 23 summit is being billed as a make-or-break event where Germany and France, the main powers in the euro zone, must come up with the solutions investors want. A meeting last Sunday between German Chancellor Angela Merkel and French President Nicholas Sarkozy, and their promise of a comprehensive strategy, suggests there will be a serious attempt to put forward a framework to try to resolve the crisis.

Hope and Fear at the World Bank

It was early March and Kristalina Georgieva, the European Commissioner of International Cooperation Humanitarian Aid and Crisis Response, was traveling in Asia. Her plan was to attend a 7.5 magnitude earthquake simulation that would hit Indonesia and generate a tsunami. A few things, however, changed in her itinerary: The destination turned out to be Japan, the earthquake was 9.0 and it not only generated a huge tsunami, but also a nuclear catastrophe. Plus, it was real.

“Usually our fears are bigger than reality. In this case our reality was worse than our fears,” Georgieva said recently at a World Bank panel on the climate, food and financial crises the world is facing today and the way they all intertwine. Georgieva’s strong Slavic optimism brightened the gloomy panel, but the data she threw in didn’t back up her positive view:

Hold on for a second. How can these disasters have such a devastating impact on us when cutting-edge technology, extensive knowledge and interconnectedness are here to help us mitigate them?

This question left the representatives of Uganda – who followed the event via webcast — puzzled. So they raised the simplest but toughest question for the panel:

“We seem to know the problem and we also seem to know the answer. The question is then: Why are we not responding?”

No one on the panel disagreed with World Bank’s managing director, Ngozi Okonjo-Iewala, who wasn’t shy to name those she blamed and to evoke “the fear of God” in them:

from MacroScope:

APEC’s robots stealing the show

A guide at the "Japanese Experience" exhibition talks to Miim, the Karaoke pal robot, on the sidelines of the APEC meetings in Yokohama, Japan on Nov. 10. REUTERS/Yuriko Nakao

    Miim is one of the more popular delegates at the APEC meetings in Yokohama Japan. She sings. She dances. She tosses her shoulder length hair. She may not be able to spout an alphabet soup of APEC acronyms like the other Asia-Pacific delegates. But she's still pretty lively. For a robot.

    This week's meetings of the Asia-Pacific Economic Cooperation forum have been earnest and most comprehensive . Foreign and trade ministers issued a 20-page statement about all the things they talked about -- a giant free trade zone, protectionism, the Doha round, easing restrictions on businesses, simplifying customs procedures, promoting green industries, cooperating on health and security, you name it. They also have been, and pardon my French here, excruciatingly dull. So far, the meetings and their stupefying statements have been a testimonial to Japan's skill at stating the ambiguous. Call it the opaque meetings. Journalists from around the Pacific rim have been desperately trying to find news as the 21 APEC leaders gather for their annual pow-wow this weekend.

     The annual "silly shirts"  photo shoot, in which leaders don native attire for the class picture of their summit is usually good news fodder, but is going to be a  big let-down this year. The leaders are merely being asked to show up wearing "smart casual" for the photo shoot on Saturday night, before they head inside for a Kabuki show.

   Which brings us back to Miim, the karaoke robot. She, er it, is one of 130 exhibits on display at  "Japan Experience", a government-sponsored exhibition in  the Pacific Yokohama convention center where the APEC meetings are taking place. The exhibit also features "personal mobility vehicles",  a cyborg suit named HAL that enables the wearer to lift really heavy stuff and perform heroically in disaster relief, a talking delivery robot, cute robotic seal pets for use in pediatric therapy, and much other cool stuff . 

    "Welcome to APEC Japan 2010," the anatomically correct Miim says. "This exhibition shows Japan's strengths and attractions. Please see, feel and touch advanced technology and initiatives of Japan."

Whatever happened to Europe’s debt crisis?

If people stop commenting on the financial crisis, does it still exist?

A month ago, Europe was in the throes of fretting about Greece’s debt problems and whether they were going to spill over to Portugal and Spain, bringing down the euro and a decade of monetary union with it. At the same time there was intense anxiety about impending results from stress tests on nearly 100 European banks.

Every day — and sometimes several times a day – European Union officials, ministers, leaders or central bank governors would say something about the crisis, providing more fodder for frazzled financial markets to make another round of cliff-hanging calls over whether things were getting better or worse.

The market gyrations would prompt more questioning of officials, adding more verbal fuel to the fire, keeping the merry-go-round twirling.

Of course, decisions were also being taken that helped calm fevered brows — Greece took steps to cut government spending, the stress test results largely proved reassuring, and Portugal and Spain financed their debts through the markets without too much disruption.

But mostly, officials just stopped commenting on the crisis. Why? In large part because European went on holiday.

The European Union effectively shuts down in August — the Commission holds no briefings, the European Parliament is in recess and there are no leaders’ summits. This year most headed for the beaches in the last week of July.

Managing in a crisis, EU style

Never let it be said that the European Union doesn’t get things done.

It may have a slightly maddening way of going about it — last-minute, late-night summits, hours and hours of sweaty, closed-door negotiation, multiple conflicting plans put forward by the likes of the Finns, the Italians and, who knows, the Estonians – and then, hey presto, like the proverbial rabbit out of a hat, at 2 in the morning, a $1 trillion deal to haul the world back from the debt-crisis abyss. All in the name of European unity.

As one Brussels policy analyst put it somewhat delphically : “The EU is not crisis resistant, but perhaps it is crisis proof.” 

But is it any way to run a region of 27 countries and 500 million people, the world’s largest trading bloc, with a gross domestic product of more than 12 trillion euros — nearly a quarter of the world’s output?

There is a difference between crisis management and getting things done only in a crisis, and the EU sometimes appears to have a tendency towards the latter. Think of the mammoth, three-day negotiations over the Nice treaty in 2000, the running battle to get the Lisbon reform treaty approved last year, and the way the  EU President Herman Van Rompuy and foreign affairs chief Catherine Ashton were appointed after backroom dealing last November.

EU gets new Commission, but little to cheer yet

There was more a sense of relief than joy when the European Union finally got its new executive on Tuesday. These are difficult times for the EU and there is little to celebrate.

The new European Commission is taking office in a tough economic climate, with the 16-country euro zone facing its hardest test since the single currency came into being 11 years ago.

The EU’s image has taken a battering in the past few months, first as the 27-country bloc struggled to secure the approval of the Czech Republic to complete ratification of the Lisbon treaty, a charter intended to reform its institutions and make decision-making easier, and then after it chose two low-key leaders as its first full-time president and foreign policy chief.

U.S. President Barack Obama caused EU leaders further embarrassment by deciding not to attend an EU-US summit in Madrid in May, and the EU failed to force through its more radical ideas at the Copenhagen climate talks in December. An additional problem is media criticism of foreign policy chief Catherine Ashton, who has been under fire over the EU’s perceived slow response to the Haiti earthquake.

The European Parliament’s approval of the new Commission is just one piece in the jigsaw for rebuilding the EU’s image, but nevertheless an important one.

Its strong policy-making, regulatory and legislative powers mean it could quickly give impetus to new initiatives such as the 2020 strategy, a new 10-year plan for boosting economic growth and making the EU more competitive. EU leaders will discuss the programme on Thursday.

The Commission’s promises to reinforce the bloc’s single market are widely seen as vital to its credibility. It has long been at the vanguard of efforts to combat global climate change and it should continue to be so, despite the disappointment of Copenhagen.

from FaithWorld:

Pope urges bold world economic reform before G8 summit

Pope Benedict issued an ambitious call to reform the way the world works on Tuesday shortly before its most powerful leaders meet at the G8 summit in Italy. His latest encyclical, entitled "Charity in Truth," presents a long list of steps he thinks are needed to overcome the financial crisis and shift economic activity from the profit motive to a goal of solidarity of all people.

Following are some of his proposals. The italics are from the original text. Do you think they are realistic food for thought or idealistic notions with no hope of being put into practice?

• "There is urgent need of a true world political authority. .. to manage the global economy; to revive economies hit by the crisis; to avoid any deterioration of the present crisis and the greater imbalances that would result; to bring about integral and timely disarmament, food security and peace; to guarantee the protection of the environment and to regulate migration... such an authority would need to be universally recognized and to be vested with the effective power to ensure security for all, regard for justice, and respect for rights."
• The economy needs ethics in order to function correctly - not any ethics whatsoever, but an ethics which is people-centred..."
• "Financiers must rediscover the genuinely ethical foundation of their activity, so as not to abuse the sophisticated instruments which can serve to betray the interests of savers. Right intention, transparency, and the search for positive results are mutually compatible and must never be detached from one another."
• "Without doubt, one of the greatest risks for businesses is that they are almost exclusively answerable to their investors, thereby limiting their social value... there is nevertheless a growing conviction that business management cannot concern itself only with the interests of the proprietors, but must also assume responsibility for all the other stakeholders who contribute to the life of the business: the workers, the clients, the suppliers of various elements of production, the community of reference... What should be avoided is a speculative use of financial resources that yields to the temptation of seeking only short-term profit, without regard for the long-term sustainability of the enterprise, its benefit to the real economy and attention to the advancement, in suitable and appropriate ways, of further economic initiatives in countries in need of development."
• "One possible approach to development aid would be to apply effectively what is known as fiscal subsidiarity, allowing citizens to decide how to allocate a portion of the taxes they pay to the State."

Follow FaithWorld on Twitter at RTRFaithWorld

Post card from Nigeria

This is one in a series of post cards from Reuters correspondents across Europe, Middle East and Africa.

“Watch out for watermelons” was the ominous warning long given to visitors arriving by night in Lagos. The Third Mainland Bridge, Africa’s longest, snaking over the lagoon and into town from the airport, was notorious for armed robbery. A watermelon embedded with nails and rolled in front of your car was enough to stop you, allowing gunmen to relieve you of your possessions.

Times seem to have changed. Foreign executives are still swept into town under armed escort, sirens blaring, but the state governor has made fighting crime a priority, with some success. The biggest hassle is now police checkpoints and the notorious “Lagos shake-down” – the long arm of the law (usually waving an AK-47) begging “something for the boys”, a bribe to see you on your way and top up low wages. Security may have improved, but corruption remains endemic.

Glancing down from the bridge as it sweeps towards the skyscrapers of the banking district, the neighbourhoods of Iwaya and Ebute Metta swing in to view. Wooden shacks on stilts stand over the murky water, a reminder that this city of 14 million, one of the fastest growing in the world, is bursting at the seams – and that the gap between rich and poor in Africa’s most populous nation is cavernous.

Imported inflation is the biggest impact of the global crisis here. Despite being the world’s eight biggest crude oil exporter, Nigeria is almost entirely dependent on imports of refined fuel. Cargo ships light up the horizon like a floating city at night, waiting to berth with everything from diesel to rice. A weakening currency means fuel and food prices are rising, but there’s little sign of popular unrest – a decade out of military rule, this is a population used to graft and mismanagement. It expects little from government.

The banks have been suffering, although you wouldn’t know it from the champagne flowing in the upscale bars of Ikoyi and Victoria Island – Nigeria’s elite have a proud reputation for conspicuous consumption to maintain. But newspapers brim with speculation about bank collapses and stock market bailouts. Jobs have been lost and supermarket owners complain imported luxury foods are flying off shelves less quickly than before.

But on the street, the hustle continues unabated. Boys selling phone recharge cards in the notorious traffic jams are cashing in on the huge and rising number of mobile users, while the army of motorcycle taxi riders seems to grow by the day. And foreign exchange controls meant to defend the naira currency thriving business for some in the informal economy: the black market money changers have never been so busy.