INTERNATIONAL

 

May 30 - June 05, 2005

 

1.INTERNATIONAL

2. PAKISTAN

 

US PANEL APPROVES ENERGY BILL

The Senate Energy Committee approved a wide-ranging energy bill last Thursday that includes repealing a Depression-era law limiting utility mergers in exchange for giving the Federal Energy Regulatory Commission more authority to review them.
The bill, which aims to boost domestic production of oil, natural gas, coal, ethanol and other energy sources, will go to the full Senate for a vote in early June. The US House of Representatives has already approved its version of an energy bill, which includes $8 billion in tax breaks and incentives.

 

 

The Senate panel finished writing its energy legislation with the utility merger issue, which comes amid rapid consolidation in the industry, including this week's sale of PacifiCorp to MidAmerican Energy for $5.1 billion.

Republican lawmakers have long pushed to repeal the Public Utility Holding Company Act (PUHCA), enacted in 1935 to protect consumers by requiring utilities to limit their operations to a single area or region. They contend it is an outdated law that discouraged investment in the electricity sector.

Some Democrats on the Senate panel agreed to eliminating PUHCA only if FERC was given more authority to approve mergers to prevent more Enron-type corporate wrongdoing.

The legislative language approved by the committee would expand FERC's authority to review the impact of utility mergers on competition and consumer rates. The measure was added to a broader energy bill that the committee debated over five days and finally approved in a 21-to-1 vote. Democrat Ron Wyden from Oregon was the lone dissenter.

FRENCH EU VOTE BATTLE NEARS END

French Socialists will hold rallies in support of the "Yes" vote on the final day of campaigning for Sunday's referendum on the EU constitution.

On Thursday President Jacques Chirac made a TV plea for the country to back the charter, in which he said it was in France's best interests to vote "Yes".

But the latest poll suggests that 54% of the French plan to vote "No".

Germany is set to ratify the charter with a vote in the upper house of parliament, or Bundesrat.

The EU constitution has to be ratified by all 25 member states to become law.

France is the second EU member to hold a referendum on the constitution. Spain's referendum resulted in a "Yes" vote, which was then ratified by both houses of parliament.

The BBC's Caroline Wyatt in Paris says politicians are far from certain that they will be able to shift public opinion on a vote which has divided France.

The latest opinion poll, by TNS Sofres-Unilog, shows the "No" camp on 54%, with "Yes" on 46%.

Mr Chirac said the vote was vital for the "future of France and the future of Europe".

A vote against the treaty would be a serious blow to the EU, he told viewers.

"It would open a period of divisions, doubts, uncertainties," he said.

The French president urged voters not to use the referendum as a vote against the government.

BUSH PLEDGES AID TO PALESTINIANS

US President George W Bush has pledged $50m in direct aid for the Palestinian Authority, at a meeting with Palestinian leader Mahmoud Abbas. Bush also reiterated his commitment to the roadmap for peace and the creation of a Palestinian state.

He said that Israel must not take any actions that violated its roadmap obligations and said all settlement expansion on the West Bank must stop. Abbas is the first Palestinian leader to be hosted by Bush.

He said that he was more confident about the role the US administration would play in achieving peace, but that time was short.

"Time is becoming our greatest enemy, we should end this conflict before it is too late," he said.

The new aid is part of a $350m package earmarked for the Palestinians.

It will go to fund housing and infrastructure projects in the Gaza Strip.

"These funds will be used to improve the quality of life of the Palestinians living in Gaza, where poverty and unemployment are very high," Bush said.

The BBC's Justin Webb in Washington says that while the money is a pat on the back for Abbas, the US does not want him to feel so comfortable that he fails to take actions it regards as necessary to guarantee Israeli security.

Abbas had asked Congress to channel financial assistance directly to the Palestinian Authority, instead of to NGOs.

US politicians have been reluctant to do that, accusing the PA of corruption, and preferring to fund aid agencies and non-governmental organisations.

WTO AGREES ENTRY TALKS WITH IRAN

The World Trade Organisation has agreed to allow Iran to begin membership talks after the US lifted its opposition to Tehran joining the body.

The move comes a day after Iran agreed a deal with European countries to maintain its suspension of nuclear activities and continue talks.

The US said in March it would drop its decade-long block on Iran to help those negotiations.

Iran applied to join the 148-member trade group in September 1996.

Following the WTO decision, Mohammad Reza Alborzi, Iran's ambassador to the United Nations in Geneva, was immediately invited to attend the WTO's General Council meeting, according to the Reuters news agency.

However, WTO officials have told the BBC they cannot say how long it will take for Iran to become a member.

President George W. Bush announced a major change in US policy towards Iran in March, saying that he would back European talks to resolve the stand-off over Iran's nuclear activities and was prepared to extend economic incentives to Tehran.

These included the lifting of a decade-long block on Iran's membership of the WTO, and objections to Tehran obtaining parts for commercial planes.

Washington accuses Iran of using its nuclear energy programme as a cover for developing nuclear weapons.

Tehran denies seeking nuclear weapons, but suspended uranium enrichment after negotiations with France, Germany and the UK.

OPEC ASKED TO MAINTAIN OUTPUT

The Organization of Petroleum Exporting Countries (Opec) must resist temptation to cut output and instead allow crude stocks to build further, the Centre for Global Energy Studies (CGES) said in its monthly report published last Monday. "Opec's resolve is now being tested as consumer-held oil stocks increase, with some members starting to bulk at lower prices and calling for output cuts," the CGES said.

The oil cartel's output meeting in Vienna on June 15 "will be the real mark of Opec's intentions and will show whether it is serious about allowing stocks to rise further, or whether Opec is targeting as high a price as it can get away with without provoking a response from customers."

"Stocks must be allowed to build up over the second and third quarters to allow peak winter demand to be met," according to the widely-respected CGES report.

"The stocks are needed as a cushion against higher demand during the coming (northern hemisphere) winter by an oil industry that has seen spare capacity, both upstream and downstream, eroded by global oil demand and insufficient investment in new oil production, transportation and refining capacity."

BD TRADE DEFICIT UP 71 PER CENT

Bangladesh's trade deficit shot up by 71.27 percent in the first eight months (July-February) of the current fiscal year, over the same period last fiscal year. The latest official figures show that trade deficit rose to $2.12 billion in February, up by 35 percent from January, compared to $1.2 billion during the same period a year back.

The trade deficit was 2.37 billion in the fiscal year 2003-04. Imports led by consumer goods, petroleum products and capital machinery grew at much faster rate in February as compared to the preceding months, shows the balance of payment data prepared by Bangladesh Bank, the central bank of the country.

During July-February, exports rose 13.3 percent to $5.38 billion while imports rose by 25.3 percent to $7.5 billion. It also shows that the trade deficit in services increased to $638 million as compared to $456 million a year back.

The growing trade deficit becomes the concern for the economy, especially the external trade management, as current account deficit increased further in February to $263 million as against a surplus position of $473 million a year back.

IRAQ CENTRAL BANK COMBATS INFLATION

Iraq's inflation rate may fall to 20 percent this year if sabotage attacks that deepened shortages in the economy ease, Central Bank governor Sinan al-Shabibi said last Saturday. Inflation reached 30 percent last year as mismanagement, lawlessness and attacks against refineries and supply lines drove up fuel and electricity prices and pushed overall prices and insurance rates higher, Shabibi told newsmen on the sidelines of a World Economic Forum meeting in Jordan.

We have seen the pressures ease so far this year and we are hoping for a faster pace of rebuilding that could a create a more desirable kind of inflation, Shabibi said. Anti-US insurgents have waged attacks against Iraq's food and fuel lines that managed to disrupt supplies, drive prices up and create a black market parallel to the subsidised prices, although government efforts in recent months have succeeded in easing the situation.

US GROWTH FIGURES REVISED UPWARDS

The US economy fared better in the first quarter of the year than originally estimated, thanks to a decline in the country's trade deficit.

Gross domestic product, a measure of economic output, grew 3.6% in the three months to March on an annualised basis, higher than the 3.1% forecast.

The 3.6% figure represents a slight dip on the 3.8% growth seen in the last quarter of 2004.

A rise in exports reduced the trade deficit to a six month low in March.

America's trade balance was boosted by the weakness of the US dollar and a decline in Chinese imports.

Nevertheless, the deficit still stands at more than $55bn.

Recent indicators have pointed to a slight softening in the world's largest economy after the strong growth enjoyed throughout 2004.

The rate of job creation eased in March to its lowest level since last July, although more than 270,000 new jobs were created in April, ahead of market forecasts.

EU 'WON'T REVIVE CHINESE QUOTAS'

 

 

The European Union's (EU) trade chief has said any measures to curb Chinese exports will be temporary.

Peter Mandelson said any measures would merely aim to offer European firms time to adapt to changes to trade brought in at the start of the year.

The comments came as the two sides held talks over how to curb surging Chinese textile imports.

Following discussions, the EU set a May 31 deadline for China to take steps to slow the boom in its clothing exports.

However, Mandelson said that the threat of such measures did not mean a return to quotas.

He told the BBC's Newsnight programme that instead he would be looking at ways to restrict the "very dramatic growth" in China's textile exports.

TRADE PACT FOR JAPAN, MALAYSIA

Japan and Malaysia say they have reached a basic deal on a free trade pact covering most economic sectors.

The announcement came after a meeting in Tokyo between Japan's Prime Minister Junichiro Koizumi and his Malaysian counterpart, Abdullah Ahmad Badawi.

The deal includes moves to open up the sensitive Malaysian car market to Japanese firms, in exchange for Japan's help in training Malaysian car workers.

Japan has so far signed just two other such pacts, with Singapore and Mexico.

It has also reached a broad agreement on a free trade deal with the Philippines.

In the past, Japan has been reluctant to sign free trade agreements because of pressure from its inefficient agricultural sector, analysts say.

TSUNAMI PUTS SRI LANKA IN SURPLUS

Aid given to Sri Lanka since December's tsunami disaster is set to put the country's balance of payments into surplus, its central bank has said.

Substantial amounts in remittances from Sri Lankans abroad after the disaster helped produce a first-quarter balance of payments surplus of $179m, it said.

The bank forecast an overall surplus for 2005 after a deficit of $205m (112m) last year, but gave no figure.

Nearly 31,000 people were killed when the tsunami struck Sri Lanka's coast.

Sri Lanka has been promised $2bn in aid pledges to help rebuild infrastructure devastated by the sea surge, which also made one million people homeless.

GOLD BARELY CHANGED IN EUROPE

Gold marked time with very little change near three-month lows in Europe last Monday, with dealers looking for the market to probe lower as dollar strength bruised sentiment. Spot gold stood at $417.50/418.25 per troy ounce compared with $417.40/418.15 late on Friday in New York when the market touched a low of $416.40 last seen on February 11.

Gold looks like it wants to go lower the dollar is quite strong and if it gets to $1.2500 against the euro, you've got to say that gold will move to $415 or less, a dealer said. Silver was at a pivotal point after sliding sharply on aggressive fund selling. It will be interesting to see if there is residual demand left over, Standard Bank said.

Platinum eased slightly to $858.00/862.00 from $860.00/865.00, while palladium stood at $187.00/191.00 from $186.00/190.00.

EU TRADE CHIEF WANTS SERVICES DEAL WITH ARAB WORLD

European Union Trade Commissioner Peter Mandelson said last Saturday he wanted to begin discussions with Arab countries on freeing trade in services as part of moves to make the region a more robust economy. Speaking at a World Economic Forum meeting in Jordan, Mandelson said that although the EU was the major trading partner for the region, trading patterns were weak.

"The countries of the Middle East and North Africa together have few non-oil exports than a country like Hungary," he said. He added that foreign direct investment and trade flows from the EU were also small.

GERMANY TO RATIFY EU CONSTITUTION

Germany is to complete the process of ratifying the European Constitution with a vote in the upper house of parliament, the Bundesrat.

The vote follows overwhelming approval by the lower house two weeks ago.

It has been timed to provide support for the failing "Yes" campaign in Sunday's French referendum.

Former French President Valery Giscard d'Estaing, who helped draft the constitution, will address the Bundesrat ahead of the debate. The German ratification process is now speeding to a smooth conclusion.

CBI CUTS ECONOMIC GROWTH ESTIMATE

The CBI has cut it forecast for UK economic growth in 2005 to 2.5% from its previous 2.7% estimate.

The business organisation's decline in confidence for the UK economy comes after its latest manufacturing survey showed a big growth in pessimism.

Manufacturers are now more downbeat about output levels than at any time in the past five months.

The CBI's figure comes a day after official data showed that UK GDP is now growing at an annual rate of 2.7%.

Gross domestic product (GDP) is a measure of economic health.

Both the Confederation of British Industry's 2.5% prediction and the 2.7% figure from the Office for National Statistics are below Chancellor Gordon Brown's forecast of growth between 3% and 3.5% this year.

TAX EVASION AND FRAUD CRACKDOWNS

The British government has introduced its first finance bill of the new Parliament, with a number of measures designed to tackle tax avoidance.

It modifies measures first introduced in this year's Budget, but now makes them more precisely targeted.

The government said it was responding to claims from business that the new rules might penalise the innocent.

Meanwhile, eight existing fraud offences are to be replaced by one general offence, ministers announced.

The Fraud Bill should make it easier to convict those who carry out sophisticated scams, including offences carried out over the Internet such as "phishing".

GOLD MINING 'KEY TO POOR NATIONS'

Gold mining is becoming more and more important to developing countries, the World Gold Council (WGC) has said.

In its report A Touch Of Gold the WGC said exports of gold output from heavily indebted countries had surged by 84% between 1994 and 2004. In 2004, developing countries produced 72% of the global output of gold.

RENAULT TO BUILD MEGANE IN IRAN

French carmaker Renault is to build its Megane saloon model in Iran from 2006.

The firm's joint venture with Iran's Industrial Development and Renovation Organisation and two leading carmakers will make about 15,000 Meganes a year.

The car is the second to be introduced by Renault to Iran following the Logan, a stripped-down version of the Clio Supermini, also due for a 2006 release.

The venture is 51% owned by Renault, despite a law passed this year banning foreign firms from majority ownership.

The law, passed in September 2004, imposed a retroactive 20 March cut-off point. Renault signed its deal for Renault Pars.

AUSTRALIA SEEKS WORKPLACE REFORMS

The Australian government has unveiled proposals to radically reform labour laws in an effort to enhance productivity and competitiveness.

The measures include the creation of a new body to set the minimum wage and the exemption of firms with less than 100 workers from unfair dismissal laws.

Prime Minister John Howard said the reforms were needed to ensure the country's continuing prosperity. But critics said the changes would disadvantage low-income families.

GERMAN CONFIDENCE AT TWO-YEAR LOW

German business confidence has fallen to its lowest level since August 2003, according to research institute Ifo.

Munich-based Ifo's confidence index fell from 93.3 in April to 92.9 in May, its fourth straight month of decline.

The news follows similarly weak German data from economic think tank ZEW and the Organisation for Economic Co-operation and Development (OECD).

Chancellor Gerhard Schroeder is facing increasing economic pressure ahead of a vote of confidence on July 1.

FINES AIM TO CUT PHONE 'SLAMMING'

Fixed-line phone operators who switch consumers to their service without consent, a practice called "slamming", face hefty fines from Thursday.

UK telecoms regulator Ofcom has said it aims to stamp out the practice.

Over the past six weeks operators have been drawing up their own code of practice, based on Ofcom rules, to stop the activity.

BROWN HAILS EU AID AGREEMENT

Chancellor Gordon Brown says "huge progress" has been made after the European Union agreed to double its development aid to poorer nations.

In five years time, the EU's aid to poor countries will be worth an extra 14bn annually.

The deal was signed in Brussels, but Germany, Italy and Portugal say they may not be able to afford the increase.

It comes as Britain prepares to put the fight against world poverty at the top of its G8 summit agenda this summer.

The 15 richest EU member states have agreed to set a new spending target at least 0.51% of their national wealth on the developing world by 2010.

The other 10 poorer, mostly eastern European member states who joined the EU last year agreed a 0.17% target.

GIANT CASPIAN OIL PIPELINE OPENS

Oil is set to flow from the Caspian Sea direct to the Mediterranean for the first time after a $3.6bn (2bn) pipeline opened last Wednesday.

Starting in Azerbaijan, the 1,600km (1,000 mile) pipeline will pass through Georgia to the Turkish port of Ceyhan.

The project has taken more than 10 years to finish and will unlock one of the world's biggest energy reserves.

It has not been without controversy, however, and there have been protests about the impact on the environment.

Some demonstrators were beaten and arrested earlier, with Azeri authorities saying that they acted because the protest was too close to the pipeline.

DEUTSCHE BOERSE FACES INVESTORS

Deutsche Boerse shareholders piled into the Frankfurt stock market's first annual general meeting since its failed bid to buy the London Stock Exchange.

It comes just over a fortnight after shareholders opposed to the bid ousted the exchange's top two bosses.

Interim boss Mathias Hlubek told investors that acquisitions remained part of the exchange's business plan.

But he gave no hints on who would eventually run Deutsche Boerse or what its strategy would be.

WEAK DOLLAR 'A THREAT TO GROWTH'

A sudden drop in the value of the dollar poses a threat to the global economy, the OECD has said in a report.

"Co-operative adjustment" to the value of some Asian currencies would help reduce the danger, the body said.

Growth in the industrialised world this year already will miss forecasts, held back by a sluggish Europe and Japan.

The OECD called on the European Central Bank to cut interest rates, saying the war in Iraq, strong euro and high oil prices were only partly to blame.

FRESH JITTERS HIT EU BUDGET RULES

EU rules governing the budgets of eurozone member states the subject of fierce criticism from some governments are coming under fresh strain.

Portugal, whose budgets have frequently come in for criticism from Brussels, admitted that its deficit could hit 6.8% of gross domestic product in 2005.

This is more than twice the 3% eurozone ceiling, and would represent the biggest breach so far in the rules. And Brussels said Italy had miscounted its budget figures in 2003 and 2004.

US RATES UPPED ON INFLATION FEARS

Fears of increasing inflationary pressures prompted the US central bank to raise rates.

The Federal Open Market Committee (FOMC) opted to take action amid concern over rising prices, minutes of the meeting show. But while there had been an "upcreep" in short term inflation it remained worried about slowing economic growth.

As a result, the FOMC opted to maintain its "measured pace" of rates rises, increasing rates by 0.25% to 3.0%.

UK CONTINUES DEFENCE OF EU REBATE

The UK's controversial 3bn EU rebate is set to overshadow budget discussions in Brussels for a second day.

UK Foreign Secretary Jack Straw appeared isolated but defiant after several hours of talks among EU ministers.

The issue is not officially on Monday's agenda, but looks likely to dominate informal discussions in the corridors.

The UK won the rebate 21 years ago as it gets paid fewer subsidies than other European Union members.