Afghan minister blasts IMF on stopped $70M payment

Washington Examiner

Afghanistan's finance minister has blasted the International Monetary Fund for stopping a $70 million payment after the near collapse of nation's largest private bank.

Hazrat Omar Zakhilwal told journalists Monday that the IMF focused on minor issues and was "not a willing partner" to resolve issues surrounding the Kabul Bank crisis.

Zakhilwal says even if Afghanistan met all the requirements, the IMF would find something else to criticize the nation about.

The IMF has said that trust fund donors made the decision to stop the payment.
The Kabul Bank scandal has stalled a large chunk of donor funding to Afghanistan as allies wait until they are confident the government has fixed the financial crisis.

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Nobel Prize winner argues austerity measures limit growth; message aimed for Brussels or Washington?

Advisor One
Gil Weinreich

Joseph Stiglitz (left) in 2001 receiving his
Nobel Prize in economy from
Swedish King Carl XVI Gustaf.

Nobel Prize-winning economist Joseph Stiglitz said that countries adopting an austerity-based economic policy were sure to fail. Speaking in Copenhagen on Friday, he accused European leaders of what he called “deficit fetishism,” arguing that budget cutting in lean times retards rather than encourages economic growth.

Bloomberg News quotes the Stiglitz, a Columbia University professor, paraphrasing the famous Einstein quote about insanity. Said Stiglitz: “Austerity is an experiment that has been tried before with the same results.”

The Stiglitz criticism comes on the heels of first-quarter economic results that proved stronger than expected for Europe’s leading economies, Germany and France. Even Greece, whose solvency issues triggered Europe’s economic crisis, eked out its first economic expansion in three years, with growth of 0.8% for the quarter, which matched the EU average.

Possibly bolstering the economist’s case, the U.K. and Spain, two prominent budget cutters, posted quarterly growth of 0.5% and 0.3%, respectively.

The Stiglitz comments may also be aimed at influencing the economic policy debate currently raging on Capitol Hill, ahead of expectations the U.S. will reach its debt ceiling limit of $14.3 trillion on Monday. The current consensus in Washington is that the deficit must be reduced, but Democrats and Republicans agree on little else. Before the 2010 midterm elections that brought a House Republican majority, the Democratic administration favored a stimulative fiscal policy in contrast to Republican budget cutting preferences.

Now the differences lie in how deep budget cuts should be, with Republicans wanting to take on large entitlement programs and Democrats seeking tax hikes. Some officials, including Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke, have stated that failure to lift the debt limit could wreak havoc in the bond markets. A Gallup poll released Friday confirmed months of earlier polling suggesting the American public opposed raising the debt ceiling.

Strikes over austerity measures paralyze Greek capital

Deutsche Welle

Greeks have staged a nationwide strike against government austerity measures and spending cuts, prompting clashes with police in the capital, Athens. Transit, education and news services have been frozen as a result.

Clashes broke out in the Greek capital, Athens, on Wednesday as police fired tear gas at stone-throwing youths and demonstrators marched against the government's strict austerity measures.

At least 10 people were reported injured and a further five detained as some 20,000 took to the streets to voice their disapproval of public and private spending cuts to be voted on later this month worth an estimated 23 billion euros ($32 billion).

The 24-hour nationwide strike has closed schools and brought public transit to a halt around the country, particularly affecting train and ferry services.

Air traffic controllers have also staged a walkout, grounding flights for four hours. The two main Greek operators, Olympic and Aegean, were forced to cancel or delay nearly 50 flights at the start of the busy tourist season.

Television networks and radio broadcasters also took part in the walkout, cancelling programs and playing back-to-back music. Printing presses also shuddered to a halt as the country’s newspapers decided not to publish until Friday.

Financial inspection

Greeks staged the walkout as officials from the European Union and International Monetary Fund (IMF) began running an eye over the country's crumbling finances on Tuesday, continuing the meeting into Wednesday.

EU leaders, including German Chancellor Angela Merkel, have said they would await the results of the inspection before deciding on granting Athens improved loan terms and more aid to avoid restructuring its debt mountain.

Greece avoided insolvency last year by accepting an EU-IMF package worth 110 billion euros.

Despite vows to enact strict austerity measures, Athens eventually overshot its deficit-reduction goals when its economy shrank faster than expected.

Financial Heist of the Century: Confiscating Libya's Sovereign Wealth Funds (SFW)

Global Research

 

Il Manifesto (translated from Italian) - 2011-04-22

UN Votes to Target Sovereign Wealth Funds

The objective of the war against Libya is not just its oil reserves (now estimated at 60 billion barrels), which are the greatest in Africa and whose extraction costs are among the lowest in the world, nor the natural gas reserves of which are estimated at about 1,500 billion cubic meters. In the crosshairs of "willing" of the operation “Unified Protector” there are sovereign wealth funds, capital that the Libyan state has invested abroad. 

The Libyan Investment Authority (LIA) manages sovereign wealth funds estimated at about $70 billion U.S., rising to more than $150 billion if you include foreign investments of the Central Bank and other bodies. But it might be more. Even if they are lower than those of Saudi Arabia or Kuwait, Libyan sovereign wealth funds have been characterized by their rapid growth. When LIA was established in 2006, it had $40 billion at its disposal. In just five years, LIA has invested over one hundred companies in North Africa, Asia, Europe, the U.S. and South America: holding, banking, real estate, industries, oil companies and others. 

In Italy, the main Libyan investments are those in UniCredit Bank (of which LIA and the Libyan Central Bank hold 7.5 percent), Finmeccanica (2 percent) and ENI (1 percent), these and other investments (including 7.5 percent of the Juventus Football Club) have a significance not as much economically (they amount to some $5.4 billion) as politically. 

Libya, after Washington removed it from the blacklist of “rogue states,” has sought to carve out a space at the international level focusing on "diplomacy of sovereign wealth funds." Once the U.S. and the EU lifted the embargo in 2004 and the big oil companies returned to the country, Tripoli was able to maintain a trade surplus of about $30 billion per year which was used largely to make foreign investments. The management of sovereign funds has however created a new mechanism of power and corruption in the hands of ministers and senior officials, which probably in part escaped the control of the Gadhafi himself: This is confirmed by the fact that, in 2009, he proposed that the 30 billion in oil revenues go "directly to the Libyan people." This aggravated the fractures within the Libyan government. 

U.S. and European ruling circles focused on these funds, so that before carrying out a military attack on Libya to get their hands on its energy wealth, they took over the Libyan sovereign wealth funds. Facilitating this operation is the representative of the Libyan Investment Authority, Mohamed Layas himself: as revealed in a cable published by WikiLeaks. On January 20 Layas informed the U.S. ambassador in Tripoli that LIA had deposited $32 billion in U.S. banks. Five weeks later, on February 28, the U.S. Treasury “froze” these accounts. According to official statements, this is "the largest sum ever blocked in the United States," which Washington held "in trust for the future of Libya." It will in fact serve as an injection of capital into the U.S. economy, which is more and more in debt. A few days later, the EU "froze" around 45 billion Euros of Libyan funds. 

The assault on the Libyan sovereign wealth funds will have a particularly strong impact in Africa. There, the Libyan Arab African Investment Company had invested in over 25 countries, 22 of them in sub-Saharan Africa, and was planning to increase the investments over the next five years, especially in mining, manufacturing, tourism and telecommunications. The Libyan investments have been crucial in the implementation of the first telecommunications satellite Rascom (Regional African Satellite Communications Organization), which entered into orbit in August 2010, allowing African countries to begin to become independent from the U.S. and European satellite networks, with an annual savings of hundreds of millions of dollars. 

Even more important were the Libyan investment in the implementation of three financial institutions launched by the African Union: the African Investment Bank, based in Tripoli, the African Monetary Fund, based in Yaoundé (Cameroon), the African Central Bank, with Based in Abuja (Nigeria). The development of these bodies would enable African countries to escape the control of the World Bank and International Monetary Fund, tools of neo-colonial domination, and would mark the end of the CFA franc, the currency that 14 former French colonies are forced to use. Freezing Libyan funds deals a strong blow to the entire project. The weapons used by "the willing" are not only those in the military action called “Unified Protector.” 

Il Manifesto, April 22, 2011 

Translated from Italian by John Catalinotto

Bid for State of Palestine Gets Support From I.M.F.

NYTimes

JERUSALEM — The Palestinian Authority, which is working toward global recognition of its statehood in September, got an endorsement on Wednesday from the International Monetary Fund, which said that the authority was fully capable of running the economy of an independent state.

The fund issued its latest report on the economies of the West Bank and Gaza, to be presented next week to a donors’ conference in Brussels. It said for the first time that it viewed the authority as “now able to conduct the sound economic policies expected of a future well-functioning Palestinian state, given its solid track record in reforms and institution-building in the public finance and financial areas.”

The World Bank, which will be reporting at the same conference, will make a similar point, one that it made last fall.

“If the Palestinian Authority maintains its performance in institution-building and delivery of public services, it is well positioned for the establishment of a state at any point in the near future,” the World Bank says in its report, to be released Thursday.

Salam Fayyad, the Palestinian prime minister, said Tuesday that his government was “in the home stretch” of state building, what he called “our rendezvous with freedom.” He was taking part in a ceremony in the West Bank city of Ramallah to mark the opening of a new venture capital fund that has raised more than $28 million for the West Bank.


Both the World Bank and the International Monetary Fund estimated the Palestinian areas’ real G.D.P. growth at around 9 percent in 2010. They attributed the growth to structural reforms and rigorous budget preparations by the Palestinian Authority, as well as the easing of Israeli restrictions in the West Bank and Gaza, and donor aid.


But both worried about overdependence on foreign aid and said that the current growth rate could not continue without further easing of Israeli restrictions in the West Bank and Gaza.

The authors of the World Bank report noted, “Aid is what keeps many Palestinians above the poverty line, particularly in Gaza, where unemployment is still 37.4 percent and a staggering 71 percent of the population benefited from some form of social assistance in 2009.”

They added that sustainable growth was dependent on a vibrant private sector, which they said was “unlikely to emerge while Israeli restrictions on access to natural resources and markets remain in place, and as long as investors are deterred by the increased cost of business associated with the closure regime.”


Gaza, run by Hamas, has been under Israeli economic boycott for several years and suffered an Israeli military invasion two years ago aimed at stopping rocket fire. Since last fall, Israel has promised to allow more exports and large projects that produce jobs, but progress has been slow.

The Palestinian Authority, which runs the West Bank, announced in September 2009 that in two years it would be institutionally ready for statehood, and it is sticking to that timetable.

Israel occupies the West Bank and argues that unless the Palestinians negotiate over borders and security, no state can rise. In addition, it says, with Gaza run by Hamas, the divisions between the parts of a future Palestine make statehood a dubious proposition in the short term.

But the Palestinians have been building support internationally. Next week they hope that at a meeting of the so-called Quartet — the United Nations, the European Union, the United States and Russia — an endorsement of negotiations based on the 1967 lines will emerge.

The Israelis are opposed to that and seem to have some American support. Prime Minister Benjamin Netanyahu is traveling to Berlin on Thursday, hoping to persuade Chancellor Angela Merkel that a statement on the 1967 lines would be counterproductive because it would permit the Palestinians to avoid real negotiation.

The Palestinians say that if September comes and nothing has changed they will apply to the United Nations for membership.

German President Resigns Over "Telling it Like it Is"

New York Times

By JUDY DEMPSEY

Published: May 31, 2010

BERLIN — President Horst Köhler of Germany resigned Monday amid a barrage of criticism for remarks he made during a visit to Afghanistan.

It was the first time in four decades that a German president has quit the post, the nation’s highest even though it is largely ceremonial.

Mr. Köhler set off the criticism when he said in an interview with Deutschland Radio, the public broadcasting station, that German soldiers serving in Afghanistan or with other peacekeeping missions were deployed to protect German economic interests.

His resignation was another blow for Chancellor Angela Merkel, a close friend and an important conservative ally. She had lobbied hard for him to become president, first in 2004 and again in May 2009, and his departure came just a week after another leading conservative politician, Roland Koch, resigned as premier of the state of Hesse, saying he had had enough of politics.

Mrs. Merkel said Monday that she regretted Mr. Köhler’s decision to resign, adding that she had tried to persuade him to change his mind when he phoned her about his decision.

“I was very surprised,” Mrs. Merkel said. “We had had a very good cooperation. I respect his decision.”

In the radio interview, which was conducted on May 22, Mr. Köhler, a former director of the International Monetary Fund, emphasized the importance of the nation’s economy.

“A country of our size,” he said, “with its focus on exports and thus reliance on foreign trade, must be aware that military deployments are necessary in an emergency to protect our interests, for example, when it comes to trade routes, for example, when it comes to preventing regional instabilities that could negatively influence our trade, jobs and incomes.”

In a short resignation statement delivered alongside his wife, Eva Luise, he said he regretted his remarks and the way he said they were misunderstood. He said he could not remain in office in the face of such intense criticism and loss of confidence.

“I regret that my comments in an important and difficult question for our nation were able to lead to misunderstandings,” Mr. Köhler said.

He complained that some critics had suggested he supported military “missions that are not covered by the Constitution.”

“This criticism lacks any basis,” he said. “It also is lacking in the necessary respect for the presidential office.”

He added, “It was an honor to serve Germany as federal president,” then walked off without taking questions.

Mr. Köhler’s resignation is certain to lead to a fresh debate over the role of German troops in Afghanistan and in other international missions.

Denis MacShane, a British Labour legislator and German expert, said that Mr. Köhler was only speaking the truth but that German commentators did not want to recognize what he had said.

“Köhler made the point that German military capability was relevant to German interests, including German economic interests,” Mr. MacShane said.

“As the world’s second-biggest exporter after China it is self-evidently in Germany’s interest to keep the world as open as possible for the free flow of trade and commerce. It is self-evidently in Germany’s interests to help defeat the growing scourge of piracy.”

Mr. MacShane added that Mr. Köhler’s remarks were “grotesquely and cynically misinterpreted by the German press.” He added, “He expressed the self-evident truth that German military power was now an expression of German national interests.”

Mrs. Merkel, who has come under repeated criticism from her own Christian Democratic Union party as lacking leadership ever since her new coalition of conservative and Free Democrats took office last October, had long tried to avoid dealing with Germany’s new role.

With Mr. Köhler’s resignation, analysts said Mrs. Merkel showed she was out of touch with what some of her closest allies thought.

“Merkel has not got a firm grip on her party,” said Nils Diederich, political scientist at the Free University in Berlin.

He added: “It’s as if she is out of her depth when it comes to deal with crisis over the euro, Greece, the future of Europe and Afghanistan.”

Opposition parties, after roundly criticizing Mr. Köhler last week, had only praise for him on Monday.

The Left Party, the only party that has consistently called for the withdrawal of Germany’s 4,500 troops from Afghanistan, said they respected Mr. Köhler’s decision to resign.

Gesine Lötzsch, leader of the Left Party, praised Mr. Köhler, saying he was speaking out about why German troops are involved in peacekeeping missions. His resignation showed why a major reassessment of Germany’s foreign policy was needed, she said.

“If that takes place as a result of the resignation of the federal president, then it will perhaps be a good signal,” Ms. Lötzsch said.

Sigmar Gabriel, leader of the Social Democrats, praised Mr. Köhler’s commitment to environmental issues and Africa, the president’s two main interests.

Guido Westerwelle, foreign minister and leader of the Free Democrats, said he regretted Mr. Köhler’s resignation.

A new president will have to be chosen by a joint session of the two houses of Parliament, the Bundestag, the lower house, and the Bundesrat, the upper house, by June 30.

In the meantime, the president of the Bundesrat, Jens Böhrnsen, the Social Democratic mayor of Bremen, will take over.

Anti-Reform Front Group Wears a Populist Mask

Center for Media and Democracy

A corporate front group with the populist-sounding name "Stop Too Big To Fail" (STBTF) is running a $1.6 million TV advertising campaign designed to appeal to liberal/progressives and get them to advocate against financial reform legislation currently under consideration in Congress. The ads target Senate Democrats in three states and ask viewers to tell their senators to "vote against this 'phony financial reform' " and "support real reform, stop 'too big to fail.' " STBTF has also put out a blitz of opinion columns on left-leaning Web sites. TPMMuckraker, which researched STBTF, says it has every indication of being an "astroturf operation funded by corporate interests to give the appearance of grassroots opposition to reform." The group's president is Robert K. Johnson, a serial astroturf group operator who also heads the corporate front Consumers for Competitive Choice (C4CC). C4CC was formerly known as "Consumers for Cable Choice," a front group funded by big telecom companies like Verizon and SBC, which fought to deregulate the cable industry. STBTF also has links to the DCI Group, a well-known Washington, D.C. Republican lobbying and astroturfing business. STBTF sought the support a prominent former chief economist for the International Monetary Fund (IMF), Simon Johnson (no relation to Robert K. Johnson), who now advocates breaking up big banks. At first Simon Johnson agreed, and STBTF posted a picture of him on their Web site, but when Johnson realized the group was really pushing an anti-reform message, he demanded they stop using his name and likeness, and STBTF was forced to pull all references to S. Johnson from its Web site.