The German economics..... [ 639 ]

German economic recovery falters

Germany has recently seen a recovery in exports BBC,11:00 GMT, Friday, 12 February 2010 Germany's recovery from recession faltered in the final quarter of 2009, according to preliminary figures released on Friday. The German economy failed to grow at all in the last three months of the year, with GDP unchanged compared with the previous quarter. Meanwhile, France reported a 0.6% rise in GDP for the same three-month period - better than analysts expected. Figures also showed the eurozone economy grew 0.1% in the same quarter. ANALYSIS Hugh Pym, BBC chief economics correspondent Economic growth in the eurozone has slowed to a crawl - and that's bad news for the UK as much as it is for member states. The 0.1% growth figure for the fourth quarter of 2009 was worse than expected and puts into perspective the UK's similarly anaemic performance over the same period. Germany has hit the buffers after relatively strong growth in the second and third quarters - its performance then may have been over-dependent on stimulus measures such as the car scrappage scheme, since withdrawn. Italy, meanwhile, has lurched back to declining output. Double-dip recession is the fear. That cannot help UK exporters who sell more than half their goods and services in other EU economies. This represents a slowdown in the economies of the 16-nation zone, which grew by 0.4% between July and September last year. Official first estimates indicated that the Italian economy shrank by 0.2% after growing by 0.6% in the previous quarter. They also showed that Spain and Greece remained in recession, with the Greek economy contracting by 0.8%. On Thursday after a summit in Brussels, EU leaders said Greece had to take further measures to tackle its huge debts and cut its budget deficit by 4% this year. They agreed in principle on Thursday to support Greece, but no specific commitments on aid were agreed. Greece's debt crisis has put pressure on the euro, making markets nervous. Following the German GDP figures, the euro fell further against both the pound and the dollar. Worse than feared The stall in German growth follows two consecutive quarters of growth in Europe's largest economy. Germany emerged from recession last summer thanks to a recovery in its exports - on which it largely relies. We no longer have a slump, but rather a very weak recovery Gerd Hassel, economist, BHF Bank Greek drama, bruised Germany "Exports were the only positive contribution," said the Federal Statistical Office. The BBC's Tristana Moore in Berlin said the figures were "worse than expected". Analysts were surprised by the figures, with the majority expecting modest growth in the last three months of the year. Year-on-year, the economy shrank by 1.7%, the figures showed. "We no longer have a slump, but rather a very weak recovery," said Gerd Hassel, economist at BHF Bank. "The first quarter will probably turn out weak too." Data earlier this month showed a strong rebound in German exports, with exports up for the fourth month in a row in December. That was despite an 18.4% fall in exports for 2009 as a whole - the biggest year-on-year fall since 1950, losing it the title of world's biggest exporter to China. Meanwhile another quarter of growth in the French economy added to optimism over the strength of France's recovery from recession. "I think [0.6%] is really a satisfactory result that proves that the stimulus measures we took ... were efficient," said Christine Lagarde, the French economy minister, speaking to a French radio station.

EU ready to help Greece over debts[ 638 ]

EU ready to help Greece over debts

Mr Van Rompuy: "We fully support the efforts of the Greek government" BBC18:52 GMT, Thursday, 11 February 2010 EU leaders say they are ready to act to shore up Greece's finances and ensure stability in the eurozone - but they have made no specific promise of aid. Greece must take further measures to tackle its huge debts and cut its budget deficit by 4% this year, the EU leaders said after a Brussels summit. The statement did not spell out what was meant by "determined and co-ordinated action, if needed". Greece's debt crisis has put pressure on the euro, making markets nervous. Financial markets initially rose on the news of EU support for Greece, then fell back as analysts questioned the lack of detail. There was a sense that painful decisions will have to wait Gavin Hewitt BBC Europe editor Read more in Gavin's blog Stephanomics: Deal no silver bullet Why Greece's problems matter Europe's PIGS: Country by country Other countries with big deficits in the 16-nation eurozone, such as Portugal and Spain, are seen as vulnerable if Greece's problems are not tackled resolutely. Greece's deficit is, at 12.7%, more than four times higher than eurozone rules allow. For years Greek spending has ballooned while tax revenue has diminished. The President of the European Council, Herman Van Rompuy, stressed that Greece had not asked for financial aid. The summit statement said: "We fully support the efforts of the Greek government and their commitment to do whatever is necessary, including adopting additional measures to ensure that the ambitious targets set in the stability programme for 2010 and the following years are met. "We call on the Greek government to implement all these measures in a rigorous and determined manner to effectively reduce the budgetary deficit by 4% in 2010." Greek Prime Minister George Papandreou said his country was ready to take the extra action needed to reduce its deficit. "If it is necessary we are committed to take these additional measures to achieve our targets," Mr Papandreou told reporters in Brussels after the summit. Unpopular measures German Chancellor Angela Merkel said Greece "will not be left on its own, but there are rules and these rules must be adhered to". ANALYSIS By Nigel Cassidy Europe business reporter If the financial market riposte to the Greek bailout is anything to go by, we're not yet out of the woods. The euro gained... but then fell back more. European currency traders soon twigged that this was only an accord in principle, with most of the costly details still to be worked out. Many, including Britain, would have preferred the IMF to have brokered some kind of rescue. But here the reputation of the euro was on the line. For heads of state, avoiding armageddon for Brussels' single most important achievement took priority over the unfortunate side-effect - our old friend moral hazard. The unfortunate but potent side effect of this rescue is that it sends the message to the rest of the pack that if euro nations keep spending beyond their means for long enough, Germany and France will ride to the rescue. The BBC's Dominic Hughes in Brussels says the details of any EU help for Greece may not emerge until Monday, when eurozone finance ministers will meet. It is the first big test for Mr Van Rompuy, who wanted the summit to focus on a new strategy for jobs and growth - a blueprint for the next 10 years. But defending the euro is now a more pressing issue. EU rules prevent the eurozone from collectively bailing out Greece, but the debt crisis has forced EU leaders to seek ways to help nevertheless. UK Prime Minister Gordon Brown stressed that "the discussions at the moment are within the euro area", when asked if UK taxpayers' money would be part of any EU aid. The markets remain sceptical that Greece will be able to pay its debts. Any EU budget support for Greece is likely to come with stringent conditions, to ensure that Athens fulfils its austerity plans and to reassure European voters that their taxes will not be diverted to propping up Greece. Thursday's talks followed a public sector strike that brought many services to a standstill in Greece. GREEK AUSTERITY PLAN Cut budget deficit below EU ceiling of 3% of GDP by 2012, from 12.7% in 2009 Freeze public sector salaries and cut bonuses Replace only one in five of people leaving civil service Raise average retirement age by two years to 63, by 2015 Raise taxes on fuel, tobacco, alcohol and property Q&A: Greece's economic woes Greeks' aversion to taxes Jobless rate in Greece hits 10% The government's decision to freeze public sector salaries and raise the retirement age are among the austerity measures that have angered Greek trade unions. Its debt is about 300bn euros ($419bn; £259bn), and the government estimates it will need to borrow about 53bn euros this year to cover budget shortfalls. Debt servicing is now costing Greece 11.6% of its gross domestic product and it has to pay more interest on loans now because its credit rating has been downgraded. Wary of IMF help Analysts say that powerful eurozone members such as Germany may be able to help by buying Greek government debt or by providing loan guarantees. HAVE YOUR SAY Since the Greek debt problem put them some three times over what the EU is supposed to allow I can't see the justice in this nothins_ever_easy, Belfast Send us your comments In addition, the European Commission may decide to disburse regional aid to Greece earlier than planned. But EU leaders appear reluctant to call on the International Monetary Fund to shore up the Greek economy. That would be a big blow to pride in the single currency. They have asked the European Commission to draft additional measures to be taken by Greece, "drawing on the expertise of the IMF". The EU will assess Greece's implementation of the austerity plan next month. The Commission is also working on a blueprint for the EU's long-term recovery and growth, called Europe 2020, which is expected by early March. It will replace the Lisbon Strategy, launched in 2000, which became a victim of the global financial crisis and of fiscal rule-breaking by EU governments

Iranians are rallying....[637 ]

Iranians rally to mark revolution

People gather at Tehran's Azadi square BBC, 14:02 GMT, Thursday, 11 February 2010 Hundreds of thousands of pro-government Iranians are rallying to mark the 31st anniversary of the nation's revolution. President Mahmoud Ahmadinejad used the rally to attack the West, and said Iran had produced its first stock of 20% enriched uranium. The opposition is trying to mount counter-demonstrations, but faces a huge security crackdown and two of its leaders have reportedly been attacked. The anniversary is the most important day in Iran's political calendar. The government has warned protesters will be dealt with. Official events are being held across Iran, but the main gathering is at Tehran's Azadi Square. State TV showed tens of thousands of people filling the streets. Mr Ahmadinejad told the crowds Iran was now a "nuclear state" and would soon treble output of 20% enriched uranium. ANALYSIS Jon Leyne, BBC Tehran correspondent, reporting from London In the media battle, so far today has certainly been a victory for the Iranian government. It's not clear, though, whether today's events will do anything to break the deadlock between government and opposition. The opposition reports a security presence in Tehran perhaps unprecedented in recent years, with roads blocked, and layers of police and members of the Basij militia, all designed to prevent them gathering or getting near the official demonstration. Those who have made it to central Tehran have been confronted with riot police, tear gas, possibly even gunfire. It indicates that the authorities are still deeply nervous about their support, and the government could still be vulnerable if there are new problems with the economy, or if they attempt to round up the leaders of the opposition. The battle for the future of Iran continues. John Leyne on cyber wars He added that Western countries were hampering genuine reform in Iran. BBC Tehran correspondent Jon Leyne says the anniversary could be the largest confrontation since the disputed election last June, and the government and opposition have chosen to make the day a huge trial of strength. Our correspondent says the government is very nervous about the opposition demonstrations, but its own supporters have drawn a good crowd. Meanwhile, reports from the micro-blogging site Twitter and pro-opposition websites said opposition Green Movement supporters were holding rallies, one of them in the city's Saddeqiya Street. The opposition is trying to bring more people into central Tehran but is being confronted by a large number of the government's Basij militia, the reports say. Security forces are armed with tear gas, live rounds - which they are firing into the air - and paint balls to mark protesters. Witnesses say they have been loading opposition supporters onto buses. Amateur footage purportedly showing opposition protests has been appearing on the video-sharing website YouTube, including at least one rally in the Tehran underground. We are closely watching the sedition movement, and several people preparing to disrupt the rallies were arrested Esmail Ahmadi Moghaddam Police chief US expands Iran Guards sanctions More sanctions on way for Iran? In pictures: Iran revolution rallies Iranians: revolution anniversary Iran claims uranium 20% milestone Opposition leader Mehdi Karroubi had been intending to attend the Saddeqiya street rally, reports say, but his bodyguards were attacked by members of the Basij as he emerged from his car. His son was arrested as he tried to intervene. The reformist former President Mohammad Khatami was also reportedly attacked. His brother, Mohammed Reza Khatami, and his wife, Zahra Eshraghi, the granddaughter of the late Supreme Leader Ayatollah Ruhollah Khomeini, were arrested but later released. Other opposition sources said security forces had fired shots and tear gas at supporters of Mir-Hossein Moussavi, Mr Ahmadinejad's main rival in last June's elections. Advertisement Protesters thought to be in Tehran - This video, posted on YouTube, has not been verified by the BBC There are also reports of opposition protests in the cities of Tabriz, Shiraz and Isfahan. Anti-government websites urged marchers to display green emblems or clothes - the colour adopted by the opposition movement after the disputed election on 12 June last year. 'Ready for trouble' Deadly clashes erupted after the poll, and have taken place sporadically since then. Ahead of the commemorations, police chief Esmail Ahmadi Moghaddam said the Revolutionary Guards and Basij Islamic militia were ready for any trouble. "We are fully prepared for holding a safe and glorious rally," he told the semi-official Fars news agency, according to Reuters news agency. "We are closely watching the activities of the sedition movement, and several people who were preparing to disrupt the 11 February rallies were arrested," he said. Our correspondent says the situation is now a stalemate, with the opposition showing it is still around and cannot be kept off the streets. The government is not used to such protests and is infuriated by this, he adds, although opposition support appears not to be enough to overthrow the government. There are reports that internet access has been restricted. Web giant Google says its e-mail traffic in Iran has dropped sharply, even though its networks were working properly. Google said users of its Gmail service had experienced difficulties following a newspaper report about official restrictions. "Whenever we encounter blocks in our services we try to resolve them as quickly as possible," the California-based company said in a statement. "Sadly, sometimes it is not within our control." Twitter and other social networking sites were used extensively during the post-election protests.

Greece hit by nationwide strike...[ 636 ]

Greece hit by nationwide strike over austerity measures

Protesters take to the streets in Athens

(BBC)14:57 GMT, Wednesday, 10 February 2010

Thousands of Greeks have rallied against deficit-cutting measures during a national public sector strike.

Flights have been grounded, many schools are closed and hospitals are operating an emergency-only service.

The prime minister, who wants to freeze pay, gather more taxes and reform pensions, insisted that the proposals would be fully implemented.

EU leaders will discuss Greece's difficulties on Thursday amid concern the crisis could threaten the euro.

European finance ministers are also due to hold a teleconference on Wednesday to talk about the issue.

Public anger

Despite heavy rain, there have been rallies across Greece throughout the day, with thousands of striking workers and pensioners gathering in the capital, Athens.

Several thousand people were also reported to have protested in Greece's second city, Thessaloniki.

The rallies have been mainly peaceful, but in one incident police fired tear gas at rubbish collectors who tried to drive through a police cordon.

It's a war against workers and we will answer with war Union member Christos Katsiotis In pictures: Protests in Greece Q&A: Greece's economic woes Flanders: Lessons for Europe? Mason: Europe's crisis UK press views on Greek crisis

Some demonstrators threw stones at the police but the trouble was quickly defused.

The unions regard the austerity programme as a declaration of war against the working and middle classes, the BBC's Malcolm Brabant reports from the capital.

He says their resolve is strengthened by their belief that this crisis has been engineered by external forces, such as international speculators and European central bankers.

"It's a war against workers and we will answer with war, with constant struggles until this policy is overturned," said Christos Katsiotis, a union member affiliated to the Communist Party, at the Athens rally.

Others in the capital either see the cuts as necessary or argue that the strike is politically motivated.

"We have to implement the austerity measures, or the country will not be able to get out of this crisis," said Katerina, a private sector employee. "We have to pay for the mistakes of the past."

On Tuesday, Prime Minister George Papandreou's socialist government announced that it intends to raise the average retirement age from 61 to 63 by 2015 in a bid to save the cash-strapped pensions system.

The move comes on top of other planned austerity measures, including a public sector salary freeze and a hike in petrol prices, announced last week.

Deficit and debt

Further government measures include the non-replacement of departing civil servants, and tax collectors recovering billions of euros lost to tax evasion.

Mr Papandreou, who was in Paris on Wednesday for talks with President Nicolas Sarkozy, pledged to "take any necessary measures" to reduce Greece's deficit.

"The stability programme will be implemented in every measure," he said.

Mr Papandreou has already faced down a three-week protest by farmers demanding higher government subsidies.

These protesters referred to "The Pigs" - Portugal, Italy, Greece and Spain

Public sector workers will not be hit as hard as they have been in the Irish Republic, but they complain that some of the lowest paid will suffer while the rich dodge tax with impunity, says BBC Europe correspondent Jonny Dymond.

Financial markets around the world and politicians from across Europe will be watching the situation carefully, he reports from Athens.

Greece's deficit is, at 12.7%, more than four times higher than eurozone rules allow. Its debt is about 300bn euros ($419bn; £259bn).

The markets remain sceptical that Greece will be able to pay its debts and many investors believe the country will have to be bailed out.

The uncertainty has recently buffeted the euro and the problems have extended to Spain and Portugal, which are also struggling with their deficits.

The possibility of Greece or one of the other stricken countries being unable to pay its debts - and either needing an EU bailout or having to abandon the euro - has been called the biggest threat yet to the single currency.

Ahead of the talks between EU leaders in Brussels on Thursday, some business media reported that Germany is preparing to lead a possible bail-out, supported by France and other eurozone members.

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USA:attempts to call Iran's bluff[ 635 ]

U.S. ready to offer Iran alternative to nuclear plan

From Jill Dougherty, CNN Foreign Affairs Correspondent

February 9, 2010 8:48 p.m. EST

Washington (CNN) -- In what appears to be an attempt to call Iran's bluff on its nuclear program, the United States is poised to offer Tehran a way to obtain medical isotopes that Iran says it desperately needs to treat cancer patients, according to the State Department.

The United States, along with "other countries," will present a new proposal to the International Atomic Energy Agency to provide Iran with those isotopes, State Department spokesman P.J. Crowley said Tuesday.

"Our point is, if Iran feels it has a specific need, we are willing to engage constructively and try to identify ways in which the international community and potentially the United States can meet that need," Crowley said.

The move appeared to be a response to Iran's announcement Monday that it will carry out its own uranium enrichment to 20 percent to provide fuel to make the isotopes. The United States, along with other countries, questioned Iran's motives for that enrichment, saying it increases Iran's ability to produce fuel for a nuclear weapon.

Crowley told reporters that under the new proposal, the international community would "facilitate Iran's procurement of medical isotopes from third countries."

"There are alternatives," Crowley said. "The Iranian decision to improve their processing to 20 percent is an unnecessary step." Providing the opportunity to buy the isotopes directly, Crowley said, would be the "fastest and cheapest" way for Iran to avoid running out of isotopes and could help "build confidence."

Tehran separately has rejected an IAEA proposal under which it would ship most of its low-enriched uranium out of the country for further enrichment by Russia. France would process that uranium into fuel rods that would then be returned to Iran.

The new offer from the United States comes as Washington and other major countries move closer to imposing harsh new sanctions on Iran over its nuclear program, which those countries say is designed to develop a nuclear weapon. Iran says its nuclear program is exclusively for peaceful purposes.

President Obama told reporters on Tuesday that the international community will try to pressure Iran more if Iran is not willing to cooperate.

"What we are going to be working on over the next several weeks is developing a significant regime of sanctions that will indicate to them how isolated they are from the international community as a whole," Obama said.

Presenting details of the latest proposal, the State Department spokesman said, "We stand ready to work with Iran, we stand ready to address its legitimate needs, but we need to see Iran come to the table prepared to address our concerns and the concerns of the international community regarding its nuclear ambitions."