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  DEPARTMENTS
 

IN THE NEWS
. INTERNATIONAL
. PAKISTAN
 

 

 

 

 
  INTERNATIONAL

Dec 19 - 25, 2005

EU SEEKS TO END BUDGET DEADLOCK

European leaders are gathering in Brussels in an attempt to reach a deal on the EU's next seven-year budget.

Ahead of the summit, Britain's last ditch proposals to break the deadlock on the issue were rejected by key EU states, including France and Germany.

European Commission President Jose Manuel Barroso added that the offer was "wholly inadequate" and "not enough".

The offer included an increase in the budget, more money to new member states but no new cuts to the UK's own rebate.

In theory, EU leaders have until March to hammer out a deal, but planning for long-term projects could be hurt, the BBC's Oana Lungescu in Brussels says.

Europe is already in crisis after the rejection of its first constitution earlier this year, our correspondent says.

If its leaders fail to agree on the budget now, they will find it hard to agree on almost everything else, she adds.

The new UK proposal would increase the 2007-13 budget by a total of 2.5bn euros (1.7bn) compared with its first proposal, issued a week ago.

It leaves untouched the earlier proposal to cut the rebate by 8bn euro (5bn) over seven years, increasing the UK's net contribution to the budget.

Britain says it will offer no further concessions unless France agrees to at least allow the possibility of serious reform of agricultural policy in three years time.

The new proposal includes sweeteners for a number of countries, but there is nothing for France, Germany or Italy.

French Foreign Minister Philippe Douste-Blazy said on Wednesday that the offer "provides no basis for an agreement acceptable to all".

US TRADE PLUNGES FURTHER INTO RED

The gap between US exports and imports has surged unexpectedly, as the US economy has sucked in oil.

In October, the trade deficit was a record $68.9bn (38.9bn), up 4.4% from the month before, the Commerce Department said.

Although the price of oil fell during October, the volume of oil imported soared 9.3%, with industrial goods also entering the US at record levels.

Economists warned it could signal slower growth.

Most had forecast the deficit would shrink, to about $63bn.

The news comes as the US is embroiled, with much of the rest of the world, in negotiations in Hong Kong over a new set of global trade rules.

At the heart of the talks has been the tension between developing countries, which want their richer neighbours to slash massive agricultural tariffs and subsidies, and rich nations, which want to lock in greater market access for their service sectors.

So far, the Hong Kong talks appear to have shifted services talks onto the back burner.

The US managed a slim $5bn surplus in services - dwarfed by the $73.9bn deficit on goods.

The most politically sensitive segment of the deficit, however, is with China - of which Hong Kong is part.

The deficit grew 2.1% from September to a record $20.5bn - up a fifth over the past 12 months.

Earlier this week, China announced its own trade surplus was at $90.8bn for the first 11 months of 2005, three times the level of the previous year.

KAZAKH-CHINA OIL PIPELINE OPENS

Kazakhstan and China have inaugurated a 1,000km-long (620-mile) oil pipeline to supply Kazakh oil to energy-hungry western China.

It is the first major export pipeline from the landlocked Central Asian republic which does not cross Russia.

It will eventually export oil to feed China's booming economy from huge reserves around the Caspian Sea.

Kazakhstan wants to become one of the world's top oil exporters in the next decade or two.

Kazakh President Nursultan Nazarbayev pushed a ceremonial button to start filling the new pipeline with Kazakh crude, marking a new stage in his country's emergence as an oil exporter.

Construction began last year on the pipeline from Atasu in central Kazakhstan to Alashenkou on the Chinese border.

It should be fully operational by the middle of next year, providing a new source of oil for China to develop its western Xinjiang region.

RICH NATIONS CRITICISED ON TRADE

Developing countries have urged the US and European Union (EU) to offer fresh concessions on agriculture to break a logjam in the trade talks.

The G20 grouping of middle-sized economies said the EU must set a date for ending its farm export subsidies.

Poorer countries have attacked new EU tariffs on bananas while criticising the US's stance on cotton subsidies.

Squabbling between the US and EU over support for farmers has dominated the talks in Hong Kong so far.

The US has urged the EU to go further in cutting food import tariffs, but the EU has reiterated that farming is just one factor in the negotiations.

Speaking on the third day of talks, EU Trade Commissioner Peter Mandelson launched an attack on US subsidies for cotton farmers.

He accused US negotiators of "using a general smokescreen to dodge a specific commitment" to curb the annual $4bn in aid given to cotton farmers.

BUSH SEES IRAQ ECONOMY IMPROVING

US President George W Bush has said "tangible progress" has been made in rebuilding Iraq's economy, but this had "not always gone as well as we hoped".

In a speech aimed at winning US public support ahead of the Iraqi general election next week, Mr Bush focused on the rehabilitation of public services.

The cities of Najaf and Mosul had seen improvement, he said, but poor security had hampered reconstruction efforts.

Mr Bush has come under growing pressure from Democrats on the issue of Iraq.

Opinion polls give him the lowest approval of his presidency and suggest waning public support for the Iraq mission.

PUTIN RESISTS FOREIGN BANK MOVES

Vladimir Putin has insisted foreign banks should not be allowed to open their own branches in Russia despite strong opposition from the US.

The Russian president said foreign bank branches should be "forbidden", partly because of fears over money laundering and also the need to fight terrorism.

Russia's stance is at odds with global trade rules at a time when it is trying to join the World Trade Organization. The US has insisted Russia change its position if it wants to join the WTO.

AFRICAN TRIBE BUYS PLATINUM STAKE

South Africa's Bafokeng tribe is to buy a significant stake in one of the world's largest mineral producers in a major black empowerment deal.

The 800-year old tribe, which lives in the North West Province, will control 9% of Implats after the 3.4bn rand ($540m; 304m) deal.

The Bafokeng's homeland is rich in platinum reserves, currently being developed under lease by Implats.

Under law, firms must give black South Africans a stake in their businesses.

By 2016, mining firms must ensure that 26% of their domestic assets are owned by black interests.

The Bafokeng has held a small stake in Implats since 1998 when the two resolved a long-standing dispute over the rights to mine reserves on Bafokeng land near Rustenburg.

BOEING SECURES $10BN QANTAS DEAL

Boeing is to supply Australian airline Qantas with 65 Dreamliner 787 passenger jets in a deal worth $10bn (5.7bn).

Qantas said it had ordered 45 twin-aisled 787 planes from the US aircraft maker, with options to buy an additional 20.

The airline's decision is a blow to Boeing's arch European rival Airbus, which had been pushing Qantas to choose its A350 passenger jet.

Qantas said it expected to take delivery of its first 787 jet in 2008.

The Australian airline said it could eventually buy up to 115 of the long-range aircraft.

 

G8 EVENT 'MADE 5M FOR SCOTLAND'

Scotland gained a net profit of 5m by hosting the G8 summit, according to an report for the government.

The study was commissioned by the Scottish Executive and carried out by SQW Economic Development consultants.

It calculated the cost to the executive as 60m, while spending directly linked to the summit was worth 65m to the Scottish economy.

However Scottish Nationalists argued that pictures of police in riot gear had damaged Scotland's global image.

More than 350 people were arrested during trouble related to the July summit, which was attended by world leaders from the United States, Canada, Russia, France, Italy, Germany and Japan. The total cost of the event was 90.9m, with 72m spent on policing.

GUS BUYS PRICEGRABBER

UK retail group GUS has bought US online cost-comparison firm Pricegrabber.com for $485m (274m).

The privately-owned Pricegrabber, set up in 1999, allows users to check the cost of thousands of products ranging from anoraks to laptops.

SLOW START FOR XBOX 360 IN JAPAN

Microsoft's next generation Xbox 360 has got off to a slow start in Japan.

According to a study by leading Japanese game magazine Famitsu, less than half of the estimated 159,000 360 consoles in stores sold in the first weekend of sales.

VODAFONE BUYS TURKISH MOBILE FIRM

Vodafone is buying Turkey's second biggest mobile telephone operator, Telsim, for $4.5bn (2.5bn).

It outbid Kuwait's MTC to win the auction for state-owned Telsim, which holds about 25% of the Turkish market with 9 million customers.

Vodafone will provide $1bn in extra funding for Telsim, which is expected to make a loss in the short term.

The privatisation of Telsim will give further impetus to Turkey's economic case for membership of the EU.

BRAZIL TO PAY OFF IMF DEBTS EARLY

Brazil has said it plans to pay off its entire $15.5bn (8.7bn) debt to the International Monetary Fund (IMF) by the end of the month.

The move will clear the country's obligations to the Washington-based lender two years ahead of schedule.

The Brazilian government said the early repayment reflected the improving performance of the country's economy.

It marks an economic turnaround for Brazil, which obtained IMF loans in 2002 to avoid defaulting on its debts.

Finance Minister Antonio Palocci said Brazil would fund the early repayment of its IMF debt from its reserves, which have swelled to $66.7bn from just $15bn two years ago.

Brazil had been expected to repay $7.03bn to the IMF in 2006 and $8.43bn in 2007, the Finance Ministry said.

FRENCH ROAD SALE REAPS 15BN EUROS

France has raised 14.8bn euros (10bn), by selling its stakes in three motorway operators, more than had been expected.

French, Spanish and Australian companies won separate auctions to buy the state's stakes in the three firms.

The proceeds from the controversial privatisation - criticised by opposition parties - will be used to bolster France's public finances.

France is home to Europe's largest motorway network, which stretches for 4,800 miles.

The government had been hoping to raise between 11bn and 13bn euros from the sale.

UK INFLATION LEVEL FALLS TO 2.1%

UK inflation has fallen for the second month in a row, to 2.1% in November from 2.3% the previous month, the Office for National Statistics says.

Lower petrol prices and cheaper air fares helped to push the rate down.

Although the Consumer Prices Index (CPI) measure fell, it still remains above the Bank of England's 2% target.

The underlying rate of retail price inflation fell to 2.3% from 2.4%, while the headline rate - which includes mortgages - fell to 2.4% from 2.5%.

If inflation has peaked it could pave the way for a cut in interest rates next year.

FED PUSHES US RATES UP TO 4.25%

The US Federal Reserve has raised interest rates by a quarter-point to 4.25% but signalled that the current cycle of hikes may be nearing its end.

Most analysts had forecast the rise - the 13th consecutive increase - since the central bank wants to keep the lid on inflationary pressures.

In a statement the Fed said further monetary tightening would be needed.

But it also moderated its previous language, leading experts to suggest that rates may have nearly peaked.

RUSSIA THREATENS UKRAINE GAS CUT

Russia's gas giant, Gazprom, has threatened to cut off gas supplies to Ukraine if a new contract is not in place by the beginning of next year.

Ukraine receives heavily discounted gas from Russia, offsetting the price against fees levied for transporting Russian gas through its pipelines.

Gazprom says it will not compromise over its demand that Ukraine pays what it says are appropriate market rates.

The company says a three-fold increase is both overdue and justified.

Ukraine's economy is in a much better condition than five years ago, when the current contract was signed.

UK POOR FALL TO LOWEST SINCE 1987

Fewer people are poor in the UK than at any time since 1987, according to the Joseph Rowntree Foundation.

The charity's latest report on poverty and social exclusion says 12 million people in 2005 are poor - two million below the early 1990s peak.

The foundation examined 50 different indicators of poverty and found that while 20 had improved in the past year, only two had got worse. But the report highlights problems for disabled people, 30% of whom are poor.

 
 

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