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 5. TRADE  6. GULF



Dec 31, 2001 - Jan 06, 2002

Japan approves austere budget

The Cabinet of Japan's prime minister, Junichiro Koizumi, has approved an austere budget plan for the next fiscal year which starts in March.

The draft budget of 81,230bn yen ($630m; 443m) represents a 1.7% cut from this year's initial budget, and is the smallest proposed budget in four years.

"With this fiscal 2002 budget, the administration has made a strong first step towards implementing reforms," Mr Koizumi said.

"We boldly took the initial step of reform-implementation budget."

Mr Koizumi promised sweeping reforms in order to try and revive the stagnated economy when he came to power.

But many critics say his reforms have so far not proved far-reaching enough.

The tight budget has been approved despite calls for extra spending in order to shore up Japan's ailing economy.

The government said that while spending has been cut overall, initial funds have been allocated to areas that will promote structural reform.

Spending on public works will fall by 10% while the money-guzzling state corporations will receive 1,000bn yen less.

Social security costs will be capped and foreign aid programmes trimmed.

Argentina seeks help

Argentina has called for other governments to help it resolve its financial crisis, just days after interim President Adolfo Rodriguez Saa vowed to suspend payments on the country's $132bn debt and promised to introduce a new currency.

"We are going to seek support from governments," foreign minister Jose Maria Vernet said.

Separately, IMF's managing director, Horst Koehler, wrote to Mr Rodriguez Saa to express his support.

"I wish to assure you, Mr President, that the International Monetary Fund remains ready to work closely with your government to develop a sustainable solution to Argentina's economic problems," he wrote.

"Once we have the support of the governments we will sit down to start rescheduling the debt," Mr Vernet said.

"Negotiations will not begin directly with the creditors."

Mr Vernet delivered Argentina's cry for help following a meeting between Mr Rodriguez Saa and the visiting Spanish foreign minister Josep Pique.

Spain has vowed to back Argentina throughout this crisis, both politically and economically.

But the country must put in place "serious, rigorous, foreseeable policies that respect the rules of the game" in order to restore the confidence of the international financial system, Mr Pique insisted.

He warned against "searching for short-term policies for problems that have to be resolved over the medium and long-term".

Mr Pique's comments came soon after revelations that the country's new currency, the argentino, could be in circulation by the middle of January.

The new currency is central to Mr Rodriguez Saa's economic plan, aimed at lifting the country's economy out of a four-year recession.

CBI boss calls for reform in Europe

A fresh drive for economic reform is badly needed across Europe if countries are to recover from a "deeply painful" global slowdown, the director general of the CBI has warned.

Digby Jones said the European Union was at a crossroads, claiming that the single market remained "seriously fragmented".

In his New Year message, Mr Jones said a fresh effort was needed to get Europe back on course to a dynamic, flexible economy.

Meanwhile, TUC general secretary John Monks urged the government to set a date for a referendum on euro membership next year.

US normalises trade with China

After years of carrot-and-stick games with trade terms, the US has finally granted China permanent status as a normal trading partner.

President George W Bush signed a proclamation setting the decision in stone from 1 January 2002 at his ranch in Texas.

The move follows a Congressional vote last year ending an annual ritual of confirming trading rights, despite strong opposition from human rights groups and unions.

In previous administrations, normal trading confusingly dubbed "most favoured nation" status despite referring to the vast majority of trading partners was contingent on advances in human rights, or concessions on import opportunities to China.

But China's accession to the World Trade Organisation, which brings a package of market-opening concessions, sealed the switch to unconditional relations.

The deal under which China joined the WTO was at least as good as any the US has negotiated itself, according to both the US administration and Congress.

Canada timber felled by crisis

Timber is at the centre of a US-Canada trade dispute By the BBC's Ian Gunn in British Columbia Canada's lumber producers are hoping the new year brings relief from some of the hardest economic times the industry has ever seen.

The forest sector has long been one of Canada's economic mainstays - particularly in the western forests of British Columbia.

But the industry has been stumbling in recent months and along with it have fallen the fortunes of many small towns and tens of thousands of jobs.

The problems are many and the situation in Canada's woods may get worse before it gets better.

Turkey aid hopes boost shares

Turkey's stock market has soared to close to its highest level this year after the government said it expects fresh cash injections worth $16bn (11bn) from international agencies.

The fresh funds would help lift the country, which has suffered torrential rain and flash floods in recent days, out of its worst recession since 1945.

The International Monetary Fund (IMF) and the World Bank are expected to lend Turkey the money over the next three years, Deputy Prime Minister Mesut Yilmaz said.

"Part of the funds are those designated earlier by the IMF and part of it is finance from the World Bank," Mr Yilmaz told the Anatolia news agency.

The index of leading shares listed on the Istanbul stock exchange gained 4.1% on the prediction, closing at 13,609.

The IMF has already injected $15.5bn into the Turkish economy since 1999.

Japan jobless rate continues to rise

The unemployment rate in Japan has, for the fourth successive month, hit a record high, and there are few signs that it will fall again in the near future.

The November jobless rate, at 5.5%, was the highest since records began in the 1950s, up from 5.4% in October and 5.3% in September.

Yahoo buys HotJobs

Internet portal Yahoo has won a bidding battle for the online career site HotJobs.com Yahoo will pay $436m after the owner of HotJobs rival Monster.com failed to raise an all-share offer made six months ago.

Argentine leader promises new jobs

Rodriguez Saa (centre) was cheered by the unions Argentina is well on the way to creating a million new jobs within a month, the country's new President Adolfo Rodriguez Saa has said.

He promised his supporters in the trade unions, that the jobs would be paid for with the new currency his government is creating.

The new tender, the argentino, would be backed with all available state property, including the presidential palace and foreign embassies, he announced.

Mr Rodriguez Saa said the argentino which has been criticised by the leader of his own Peronist party, former President Carlos Menem was the only way to avoid dollarisation or devaluation.

British shops urged to accept euro

British shops and businesses are being urged to accept the European single currency notes and coins when they are introduced on 1 January.

Europe Minister Peter Hain says he wants UK retailers to gain from the currency change in Europe.

In an interview with The Independent, Mr Hain said it was striking that shops and retail outlets were rushing to use the euro.

Finnish wallet firms eye euro boost

Last year it was mobile phones; this year the people of Finland are snapping up leather wallets during the festive season.

Shrewd Finnish entrepreneurs are making money out of the changeover to the euro.

They're busy producing and selling thousands of new wallets, designed especially to fit the new euro banknotes.

Markku Teckenberg owns one of the leather goods companies making euro-size wallets.

He's having to turn down new orders from shops because his factory is hopelessly overstretched.

A decade of economic reform

Ten years ago, as their country launched itself into economic reform, few Russians could have foreseen the amount of difficulty ahead.

For some, the past decade has been a complete disaster.

In that period, the country has lost its superpower status; millions have seen their jobs and life savings vanish; everything worth stealing has ben stolen, critics say; hospitals, schools and all the infrastructure is in tatters; talented youngsters have fled overseas; and the security and pride of the Soviet era has all-but disappeared.

But aside from nostalgia, as well as the very real failures of the past 10 years, it is easy to forget what the country looked like in 1991, the year the Soviet Union collapsed.

Some things, maybe even most things, have changed for the better.

On 25 December 1991, Mikhail Gorbachev, the first and the last Soviet president, stepped down, and the USSR was formally dissolved.

The once mighty superpower was falling apart; food shortages and rationing reached Moscow.

For almost two centuries, Russia's rulers had been able to keep the capital fed.

Film industry tax relief rockets

The amount of money spent on tax breaks for high earners who invest in UK film-making is set to exceed the Treasury's budget plans by more than five times.

The tax relief was first introduced by the government in 1997, and allows investors to get immediate 100% tax relief on money invested in UK films.

It is estimated that in 1999/2000 the scheme generated some 500m worth of film production.

But the cost to the taxpayer has grown more rapidly than Chancellor Gordon Brown had planned.

The tax relief has cost 400m in this tax year, accountancy firm Grant Thornton has told the BBC.

This is up from an average of less than 70m in previous years.

Taiwan jobless

The number of jobless fell from the record high of 5.33% in October to 5.28% in November.

But an official was quick to warn that the improved figures were merely a blip since factory closures are still on the rise.

And the official predicted that the jobless rate would fall back to between 5.2% and 5.3% in December.

Taiwan is officially in a recession and is on course to report its first ever full-year economic contraction.

And unemployment figures have soared to their highest levels since records began in 1978.