INTERNATIONAL

 

Aug 05 - 11, 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

BUSH WINS VICTORY ON US TRADE BILL

The US Senate has voted to grant President George W Bush full trade negotiating powers.

The result was seen as a long-awaited victory for the White House, which has been seeking such powers for the President since he was elected in November 2000.

 

The Senate, which was expected to approve the bill, voted 64-34 to restore the trade powers which had expired in 1994 and not renewed since then.

"[The bill] boosts the economy, it protects the American worker and it restores American trade prestige," said Senator Max Baucus, chairman of the Senate Finance Committee.

Separately, the Senate also passed on Thursday a $355.4bn bill to fund a massive US military expansion.

The Senate decision on the trade bill follows an earlier vote to pass the bill by the House of Representatives last Saturday.

The House voted 215-212 to support a compromise agreement on the Trade Promotion Authority Bill, which gives so-called 'fast track' powers to the president in future trade talks.

This latest vote by the Senate also means that Mr Bush has clinched the presidential trade negotiating powers that eluded his predecessor. Congressional Republicans voted not to renew the 'fast track' authority in 1994.

Without those powers, any trade deal negotiated by the United States would be subject to revision by Congress, undermining the President's authority.

Mr Bush is expected to waste little time signing the bill into law.

Mr Bush personally lobbied Congress to pass the bill before leaving for the August break.

He argued that it would help promote economic growth and revive the business community's flagging confidence.

KOIZUMI BACKS AWAY FROM REFORM

Japan's parliament session has finished on a low note, with the prime minister admitting that the country's stubbornly moribund economy is forcing him to relax key reforms.

Junichiro Koizumi told a press conference to mark the end of the 192-day Diet session that early tax cuts were on the agenda.

"If we can secure sufficient income in future years we will be able to go ahead with tax cuts now," he said.

But at the same time he admitted that keeping a 30 trillion yen ($252bn; 161bn) cap on government borrowing till now seen as essential was going to be impossible.

And he further stirred speculation that the government's commitment to ending full guarantees on bank deposits is being watered down.

The end of the guarantee is seen as vital to bring Japan's financial sector groaning under immense bad loans handed out during the boom years of the 1980s in line with international standards.

But the plan has met with widespread concern, not least from ruling party lawmakers worried about grassroots support and their own backers in the banking industry.

Earlier this week Mr Koizumi ordered his financial services minister, Hakuo Yanagisawa, to look for ways of making sure smaller banks do not face a surge of savers moving their money to supposedly safer large city banks.

"We have to take necessary measures to avoid creating unnecessary fear," he told reporters.

Surprisingly, though, while the indications of weakening on the guarantees worried observers, some found the plan to remove the cap on borrowing to be a positive one.

With domestic spending firmly in the doldrums, government spending could make the difference between sustaining a fragile recovery and returning to the decade-long downturn as long as it is not simply spent on unproductive public works programmes.

EURO RATE FREEZE CONTINUES

Interest rates in Europe are staying at 3.25% for the tenth month in a row, amid mounting concerns about Europe's recovery that outweighed any lingering worries about inflation.

The decision, which came as little surprise to observers, followed a teleconference of the European Central Bank's council.

After July's decision, bank chief economist Ottmar Issing said the bank was following a "wait-and-see" policy.

In the intervening weeks, the wild stock market gyrations, dampened consumer sentiment and fears that weakness in France and Germany could hammer European growth have apparently done little to change the board's mind, economists said.

EU HIT BY ACCOUNTING ALLEGATIONS

The 98bn euro (62bn; $95bn) budget of the European Union is an accountant's nightmare, riddled with mistakes and full of loopholes, according to one of its own former auditors.

In an interview with the BBC, Marta Andreasen who was ditched from her post as chief accountant at the European Commission in May says the Commission's numbers fail even to meet minimum accounting standards.

Officials can change numbers without leaving any kind of electronic trail, offering a standing temptation to fiddle the figures, Ms Andreasen said.

The charges come at an embarrassing time, just as the world is trying to tighten the rules after a spate of accounting irregularities committed by large private corporations.

WORLD BANK UPS ITS LENDING

The global economic slowdown, a series of financial crises and the rebuilding of Afghanistan have increased the amount of money being lent by the World Bank.

The Bank's loans to developing countries rose to $19.5bn in the financial year that ended in June, 13% higher than a year earlier.

Turkey was the top borrower in the aftermath of its financial crisis, more than doubling the Bank's hand-outs to the European and Central Asian region.

In sharp contrast, the tough stance adopted with Argentina following its meltdown meant that overall financing to Latin America eased by 18%.

Unlike the International Monetary Fund (IMF), its sister organisation, the World Bank does not provide macro-economic support, instead targeting lending at projects on the ground.

SENATE BACKS BUSH'S DEFENCE BUDGET

The United States Senate has approved a $35bn increase in defence spending, paving the way for the biggest expansion of the US military in two decades.

President George W Bush had asked lawmakers for the extra funding to pay for his ongoing war on terror.

Subject to final approval, the overall defence budget for the next financial year will be more than $350bn.

America already spends more on defence than any nation in history.

Its military budget exceeds the combined spending of its nine closest competitors and now there is more on the way.

GOLD PRICE FALLS BELOW $300

Gold prices fell below 300 dollars on Thursday for the first time in over three months, pressured by a firmer dollar and the recent recovery in world stock markets.

An ounce of gold fell to a low of 298.95 dollars per ounce before recovering slightly to 302.5 dollars. That still left it down 2.60 dollars from Wednesday evening.

ITALIAN SENATE PASSES DISPUTED BILL

Italy's Senate has backed a law that opposition members say will help Prime Minister Silvio Berlusconi avoid corruption charges.

After a tempestuous debate in the Italian upper chamber, the bill was passed by 162 to nine votes amid cries of "shame" from opponents.

Dozens of opposition members of parliament walked out before the vote, while others wore blindfolds in protest.

The bill will allow defendants to request that court cases be annulled or moved to another court if they have a "legitimate suspicion" that the judges are biased against them.

ASIAN SHARES CATCH WALL STREET COLD

Asian shares were falling on Friday as investors battered by bad news about the US economy awaited fresh numbers which are likely to reinforce their concern.

Thursday had brought word of a deteriorating performance by US manufacturing industry. Together with poor results from oil giant ExxonMobil, the news pushed Wall Street shares to a close 2.6% down on the day.

Japan's Nikkei 225 index was down 0.6%, having earlier slid perilously close to a fresh 18-year low before investors arrested the fall.

Elsewhere in Asia, though, the falls were more marked, with the Hong Kong Hang Seng down 1.76% and Korea's Kospi dropping 1.4%.

NIGERIA TO STAY IN OPEC

Nigeria has scotched rumours it is planning to pull out of the oil exporters' organisation, Opec.

The country's senior oil policy advisor, Rilwanu Lukman, who is also the current chairman of Opec, said Nigeria wished to remain an active member of the cartel.

The headline which set alarm bells ringing "Nigeria Set to Leave Opec" appeared 10 ten day ago in the British newspaper, Independent on Sunday.

RUSSIA ABANDONS KEY OIL FLOAT

The Russian government has abandoned the sale of a stake in oil giant Lukoil its biggest privatisation of the year.

The flotation of 6% of the country's largest oil firm was expected to raise $600m.

UK INTEREST RATES

The Bank of England has left rates at 4%, their lowest level for 38 years.

The decision followed a string of data showing a slowdown in retail sales growth, which has been credited with saving Britain from a severe economic slowdown.

Economists have also become increasingly worried over the effects of the fall in stock prices, with the benchmark FTSE 100 share index falling by 16.5% over June and July.

CHIP SALES BOOST KOREAN EXPORTS

The world is buying more and more electronic goods from South Korea, giving the country's economy a welcome boost amid the international doom and gloom.

Strong sales of chips and mobile phone handsets meant that exports in July this year were 19.9% higher than in the same month of 2001 at $13.7bn, way above the 0.1% annual rise seen in June and better even than the most optimistic predictions.

IRISH ECONOMY BACK ON THE UP

Latest figures have pointed to signs of recovery in Ireland's economy after it suffered a heavy drop over the last 12 months.

A report from the Central Statistics Office on Wedneday showed that Ireland's gross domestic product (GDP) had grown 2.9% in the first quarter of 2002 compared with the same three months in 2001.

Ireland is still the fastest growing economy in Europe but its speed of growth has slowed considerably in the last year.

SURPRISE WEAKNESS IN US ECONOMY

The US economic recovery is losing momentum fast, according to new figures.

They showed that the economy was growing at an annual rate of 1.1% during April, May and June much slower than the 5% growth rate enjoyed during the previous three months.

The figures are much lower than had been expected, and cast new doubts about whether the recovery will last.

And a survey of the economy by the US Federal Reserve, also released on Wednesday, found growth growing "modestly" and a subdued jobs market.

The GDP figures make it harder to reach the target set last weekend by US Treasury Secretary Paul O'Neill, who said he expected the economy to grow at 3% to 3.5% during 2002.

AOL ACCOUNTS

Media giant AOL Time Warner has conceded that its accounts are being investigated by the US Justice Department.

The world's largest media firm is already under investigation by the Securities and Exchange Commission (SEC).

AIB SHRUGS OFF ALLFIRST FRAUD

Allied Irish Banks has unveiled a jump in first-half profits, shrugging off a $700m trading fraud at its US subsidiary Allfirst earlier this year.

The company said on Wednesday that profits for the first six months of the year came in at 703m euros, 5% up on the same period last year.

CRISIS-HIT TURKEY AGREES EARLY POLL

Turkey's parliament has voted in favour of early elections, ending weeks of political uncertainty.

The poll will now take place on 3 November, nearly 18 months ahead of schedule.

Members of parliament voted overwhelmingly for the early poll, one day after a constitutional commission cleared the way for the move.

NIGERIA TO SEEK INCREASED OIL OUTPUT

Nigeria has said it is to lobby the Organisation of Petroleum Exporting Countries (Opec) oil cartel to allow it to increase its oil production quota.

The country's Junior Finance Minister Jubril Martins-Kuye said that President Olusegun Obasanjo would be seeking to meet key Opec members.

HONG KONG MARKET 'MANIPULATED'

Claims that a group of Hong Kong brokers manipulated the market to spark a sell-off of so-called penny stocks are being investigated by the stock market regulator.

The Securities and Futures Commission has been making enquiries after Friday's sharp fall in the low-priced shares, according to several anonymous brokers quoted by the South China Morning Post.

Penny shares plunged after the Hong Kong Stock Exchange announced plans to delist penny stock which trades below 50 Hong Kong cents for 30 days in a row.

MALI FEARS COTTON SHORTFALL

The West African country of Mali is likely to produce almost 20% less cotton than it had previously expected after poor rains disrupted the sowing season.

This year's crop is forecast to be less than 500,000 tonnes, down from state cotton company CMDT's previous prediction of 604,500 tonnes.