Arab League Plan for Syria May Go to UN Security Council
The Arab League may ask the U.N. Security Council to adopt an Arab peace plan aimed at ending Syria's violent crackdown on anti-government protesters.
Qatar's Prime Minister said Saturday that Syria is delaying its response to the Arab peace proposal.
He said Arab foreign ministers will meet in Cairo on Wednesday to discuss taking the peace plan to the U.N. Security Council if Syria does not accept the proposal and begin carrying it out. His remarks appeared to rule out any military action by the Arab League against Syria.
The prime minister spoke in the Qatari capital, Doha, after an emergency meeting of the Arab League.
The Arab peace plan calls for President Bashar al-Assad to withdraw his forces from restive cities, free prisoners and start a reform-minded dialogue with the opposition.
Violence continued on Saturday. The Britain-based Syrian Observatory for Human Rights said security forces killed at least 20 civilians, many of them in the restive province of Homs.
Activists said security forces killed at least 17 people on Friday.
Separately, an Iraqi delegation in Damascus held talks Saturday with Mr. Assad on ending the escalating violence. The head of the delegation, Iraq's national security adviser is quoted as reporting the talks were “positive.”
The Iraqi official is heading next to Cairo to report his findings to Arab League members on the nine-month-long uprising.
The U.N. estimates that 5,000 people have been killed since the uprising began in February. Syria's U.N. ambassador has rejected that figure as “incredible.”
Tunisians Rally on Anniversary of Uprising
Thousands of Tunisians rallied Saturday to celebrate the first anniversary of the popular uprising that sent the former president into exile, ending decades of dictatorship, and sparked revolutions across the Arab world.
The crowd gathered peacefully in the town of Sidi Bouzid, one year after a young fruitseller, Mohamed Bouazizi, set himself afire in an act of protest that triggered the uprising. He later died.
Streets were filled with Tunisian flags, pictures of those who died in the revolution and a large photo of Bouazizi.
Newly elected President Moncef Marzouki attended the rally. He paid tribute to Tunisians for rising up and defying longtime President Zine el Abidine Ben Ali, who fled the country in January and now is in exile in Saudi Arabia.
The climac tic outcome of the Tunisian revolution sparked popular movements across much of the Middle East and North Africa. What soon became known as the Arab Spring prompted citizens to defy autocratic rulers and call for reforms in Egypt, Syria, Bahrain, Yemen, Jordan and Libya.
State of Emergency in Kazakhstan After Deadly Protests
Kazakh President Nursultan Nazarbayev has declared a state of emergency in the western city of Zhanaozen, where Kazakhstan's independence celebrations turned deadly.
Mr. Nazarbayev ordered the presidential decree on Saturday, a day after at least 10 people were killed in clashes between police and oil workers in the Caspian town. The state of emergency will last until January 5.
Oil workers in Zhanaozen, including some fired from their jobs, have been demanding better wages.
Officials said the clashes erupted after some of the protesters tore down traditional yurts, or tents, that had been put up in the city's central square. But demonstrators told social media networks that they had been surrounded by police, who opened fire.
The sound of what could be gunfire could be heard on video from the scene obtained by the Associated Press, but officials in the capital of Astana denied police fired their weapons.
Friday marked the 20th anniversary of Kazakhstan's independence, when it separated from what was then the Soviet Union.
Oil and resource-rich Kazakhstan has been Central Asia's largest and most successful economy. But the mainly Muslim nation of 17 million has seen an increase this year in small-scale bombings and shootouts, many blamed on Islamist extremists.
Italy's Monti faces confidence vote over austerity
The government of Italian Prime Minister Mario Monti faces a confidence vote in parliament as it seeks to pass crucial austerity measures.
His government needs approval for a 33bn euro ($43bn; £27bn) package of cuts and reforms intended to restore confidence in Italy's economy.
The vote, to be held in the Chamber of Deputies in the afternoon, should be passed easily, analysts say.
Mr Monti, appointed in November, heads a government of unelected technocrats.
They are trying to tackle a collapse in market confidence that put Italy at the heart of the eurozone debt crisis.
Crucial to the government's plans is a package of tax increases, spending cuts and pension reforms aimed at balancing Italy's budget by 2013.
However, analysts say rising borrowing costs and the prospect of a deepening recession still threaten to undermine the government's efforts.
On Thursday, Mr Monti said his government would move on to growth-boosting measures after the austerity bill is passed, Ansa news agency reported.
Mr Monti, a former EU commissioner, has broad support in parliament.
Although the two main parties - the centre-right PDL and the centre-left Democratic Party - have misgivings over parts of the bill, they cannot sabotage it for fear of unleashing economic catastrophe, analysts say.
Mr Monti's predecessor, Silvio Berlusconi, said his PDL party would back the government out of a sense of responsibility, not because it agrees with the sacrifices being asked of Italians.
The BBC's Alan Johnston in Rome says there are many on the left who feel that the proposed austerity measures are unfair and that the poorest in society are being asked to bear too much.
He says Mr Monti has softened the edges of the austerity package but more opposition can be expected as the sacrifices bite deeper.
US Republicans Hold Final Debate before Iowa Caucus
U.S. Republican presidential hopefuls debated Thursday in the politically influential midwestern state of Iowa, where the national nominating process begins in less than three weeks.
Republican contenders used much of the two-hour debate to criticize Newt Gingrich, who has emerged as the front-runner heading into the final stretch of the primary campaign.
The former speaker of the House of Representatives defended his recent involvement with disgraced mortgage giant Freddie Mac. Gingrich has admitted to receiving $1.6 million from the government-backed company, but insists he did no political lobbying for them.
Former Massachusetts Governor Mitt Romney, an early favorite in the race, focused much of his attention on President Barack Obama. Romney accused Mr. Obama of having a foreign policy of appeasement, and criticized him for a weak response in trying to retrieve a drone that recently crashed in Iran.
Meanwhile, Texas Congressman Ron Paul, who has done well in recent Iowa opinion polls, used the debate to defend his controversial views on foreign policy. Paul, who has been deeply critical of U.S. military efforts, referred to the recently ended war in Iraq as “useless.”
Also participating in the debate were Texas Governor Rick Perry, Minnesota Congresswoman Michele Bachmann, former Pennsylvania Senator Rick Santorum and former Utah Governor Jon Huntsman, once Mr. Obama's ambassador to China.
It was the final debate before the nominating process begins with the Iowa caucuses on January 3.
This week, a Wall Street Journal/NBC News survey of likely Republican voters put Gingrich 17 points ahead of Romney.
Separately, a poll released Wednesday showed that negative views of Mr. Obama have hit an all-time high. But the ABC News/Washington Post poll also found that Mr. Obama is viewed more positively than Gingrich.
Gingrich's unfavorable rating was 48 percent, but his favorable rating was 13 points lower than Mr. Obama's at 35 percent.
ICC: Gadhafi’s Death May Be War Crime
The International Criminal Court's chief prosecutor says there are “serious suspicions” that the death of Libyan leader Moammar Gadhafi was a war crime.
Luis Moreno-Ocampo made the comments Thursday at a press briefing at the United Nations. Moreno-Ocampo said the ICC is asking Libya's interim government how it plans to investigate alleged war crimes, including those of revolutionary forces.
“I think the way in which Mr. Gadhafi was killed creates suspicions of war crimes and I think that a very important issue.”
Gadhafi was captured and killed in October in unclear circumstances. Videos and witness accounts indicate he was alive after the capture, but he was later seen bloody and beaten shortly before he died.
Libya's National Transitional Council leaders have been under intense pressure from Western allies to investigate the circumstances of Gadhafi's death.
Moreno-Ocampo says the ICC is also working with the NTC on the case of Mr. Gadhafi's son Seif al-Islam Gadhafi, as well as Libya's former intelligence chief, Abdullah al-Senoussi, who were both captured and face charges for their role in the uprisings.
Seif Gadhafi is the custody of Libyan authorities, and the NTC says it will try him at home.
The ICC wants to ensure the interim government is capable of giving Seif Gadhafi a fair trial. ICC judges have asked the NTC to inform them of their plans before January 10. The judges will decide where Seif Gadhafi will be tried if the Libyan government tries to challenge the ICC's jurisdiction.
The death of Gadhafi and the Seif Gadhafi's trial are part of a broader ICC probe into alleged war crimes committed by pro-Gadhafi forces, revolutionary fighters and NATO.
Lawmakers Agree on $1 Trillion Deal to Avert Shutdown
U.S. lawmakers say they have reached deal to fund the federal government through the end of the fiscal year, just a day before parts of the government would have been forced to stop operating.
Lawmakers announced the $1 trillion deal late Thursday to fund government operations for the rest of the 2012 fiscal year. But negotiators are still working on a deal to extend a payroll tax cut that President Barack Obama said will keep 160 million working Americans from seeing a tax increase on January 1.
At issue is how to make up for the shortfall created by that tax cut. Democrats have argued for an increase to a tax on people who earn $1 million or more, but Republicans refused to allow any tax increases. Sources Thursday said the new deal will not include the so-called “millionaire's tax.”
The top Democrat in the Senate, Harry Reid, said negotiators were working on a two-month extension as a back up plan, in case lawmakers were unable to agree on a year-long plan.
Both the Senate and the House of Representatives must still vote on the budget bill Friday, before the current stopgap funding for the federal government runs out at midnight.
U.S. President Barack Obama Thursday had pressed lawmakers to extend the payroll tax cut, saying the federal government should not shut down because Congress cannot agree on a tax issue.
In August, wrangling over budget cuts and taxes led the U.S. government to come within hours of being unable to pay its debts and the country's credit rating was downgraded for the first time in history.
The government also came within hours of shutting down because of stalled budget negotiations in April.
Lagarde: No country's economy immune from rising risks
IMF head Christine Lagarde has said the world economic outlook is "gloomy" and no country is immune from rising risks.
She said all nations, starting with Europe, needed to head off a crisis with risks of a global depression.
"There is no economy in the world immune from the crisis that we not only see unfolding but escalating," she said.
"It is going to be hopefully resolved by all countries, all regions actually taking action."
Meanwhile, ratings agency Standard and Poor's downgraded 10 Spanish banks by applying new ratings criteria.
And France's official statistics agency, INSEE, said that it expects the Europe's second-largest economy to fall into recession in the final three months of this year and the first quarter of 2012.
France, Spain and Italy have been facing rising borrowing costs. Many investors fear one will be the next eurozone member to need a bailout.
'Require efforts'
Speaking at the US State Department in Washington, she said global economic leaders now needed to take a rounded approach towards addressing monetary weaknesses, such as those underscored by the current eurozone debt crisis.
"It is going to require efforts, it is going to require adjustment, and clearly it is going to have to start from the core of the crisis at the moment, which is obviously the European countries and in particular the countries of the eurozone."
Ms Lagarde mentioned economic bright spots in Asia and Latin America, which she said had taken, with IMF help, steps during crises in the 1980s and 1990s to address weaknesses in their banking systems and their financial frameworks.
"All those challenges that they faced in the days of the Asian crisis, of the Latin American crisis, have now served them well," Ms Lagarde said.
On Thursday, a closely-watched survey suggested the downturn in the 17 economies that share the euro had eased slightly in December.
The composite survey of thousands of firms by Markit showed a continued contraction - but at a slower rate than in November.
ECB chief Draghi: Governments must save themselves
European Central Bank president Mario Draghi says there’s “no external savior” for heavily indebted governments in the 17-nation eurozone and gave no indication the bank is ready to step in and support their finances. Investors had hoped the ECB would increase its support for financially weak countries like Italy with bigger purchases of their government bonds once European leaders had agreed to tighten controls of national budgets.
So far, the ECB has made some purchases but kept them limited, stressing that governments must not rely on such help. Draghi said governments had reached a “breakthrough for clear fiscal rules” at last week’s summit, where 26 of 27 EU leaders agreed to seek a treaty toughening the enforcement of rules against excessive national debt and deficits.
But he offered no support for the notion that the ECB might now increase its bond purchases. Instead, governments need to take the tough steps to balance budgets and reform economies to promote growth. “I will never be tired of saying that the first response ought to emanate from the country,” Draghi said Thursday at a speech in Berlin. “There is no external savior for a country that doesn’t want to save itself.”
As a “firewall” to calm markets in the meantime, Draghi said, the EU has its newly strengthened bailout fund. Draghi stressed that the purchases were “neither eternal nor infinite.” The purchases of the government bonds of Italy or Spain drive up their prices and push down their yields, or interest rates, which move in the opposite direction. The lower yields mean better terms when Italy or Spain sells bonds directly to investors at auctions.
“The crisis has not ended yet. It is now important not to lose momentum and to swiftly implement all those decisions that have been taken to put the euro area economy back on course,” he said. Investors were clearly disappointed with the EU summit’s deal, with many economists noting it doesn’t address short-term fears about whether governments will be able to borrow at affordable interest rates and pay off maturing debt in the next few months. The euro has tumbled below US$1.30 for the first time in 11 months, stocks have dropped, and the bond yields of Italy — considered the next weakest link in Europe’s debt crisis — have edged up. On Thursday, markets were steady after Draghi’s comments, suggesting they had prepared for the ECB to shy away from more aggressive action.
Draghi defended the EU summit’s deal, saying it had drawn “comments that were more negative than it deserved.” He rejected any idea that the ECB should engage in so-called quantitative easing to support growth, as the US Federal Reserve or Bank of England have done, although Draghi mentioned neither country by name. Quantitative easing involves creating new money through purchases of securities from banks. More money in the economy can spur growth when an economy is slumping, but can cause inflation when and if growth picks up.
Draghi said the economies of countries that have done quantitative easing show no “stellar performances at all” when it comes to “unemployment, growth and especially inflation.” Jens Weidmann, Germany’s top central banker, has vociferously opposed more aggressive action from the ECB, saying a bigger bond-buying program would violate the ECB’s mandate to fight inflation and could compromise its legal independence. While the Bundesbank has only one vote at the ECB, analysts say vocal public opposition from Weidmann would be a serious obstacle for any U-turn by the ECB on bond purchases, since it would undermine its communication on the topic.
His position also has considerable support among economists and politicians in Germany, the eurozone’s largest member. Meanwhile, the volatility in financial markets and the tighter credit conditions are hurting the real economy. Draghi acknowledged that planned austerity measures in the eurozone will lead to a brief contraction in economic growth. He added, however, that the return of investors’ trust and much-delayed economic reforms will mitigate the downturn.
Draghi stressed that the European Financial Stability Facility, the current EU bailout fund, would serve as the “firewall” against the crisis. Governments have agreed on ways to increase the fund’s lending power and are seeking outside investors such as countries in emerging markets to contribute to its lending power, so far without much progress. Economists say the EFSF remains too small to counter the crisis that has seen Greece, Ireland and Portugal seek bailouts from other eurozone governments and the International Monetary Fund.
The ECB has served as lender of last resort for the banking system when financial institutes cannot borrow elsewhere, even as it refuses to play that role for governments. Draghi noted the ECB is fighting to avoid a credit crunch by helping private-sector banks get more access to loans — from as short as overnight to as long as three years. It has also cut the requirement for reserves that must be kept on deposit with the ECB, freeing up capital for banks. He said the use of those facilities should not create a “stigma” for those banks. (AP)
Europe anxiety pushes oil prices lower
Oil prices continued to drop after Wednesday’s 5 per cent plunge, as Europe’s weakest economies failed to get more help from their central bank. Benchmark crude on yesterday fell 58 cents to US$94.37 per barrel in afternoon trading in New York. Similar concerns weighed on oil markets Wednesday, pushing the benchmark price to the lowest level since November 7.
Brent crude, which is used to price foreign oil that’s imported by many US refineries, lost 22 cents at US$104.03 a barrel in London. Investors had hoped that the European Central Bank would take a bigger role in aiding heavily indebted countries like Greece, Italy and Spain. But the ECB has given no indication that it will do so. Without more support those countries won’t be able to pay their bills without even greater spending cuts, analysts said. That will further reduce energy demand and slow imports of manufactured goods from the US, China and elsewhere.
Many traders thought the European financial crisis would be resolved by now. With the situation still in flux, they have decided to close out their positions and lock in whatever profits they’ve made before the end of the fiscal year, PFGBest analyst Phil Flynn said. “The market has come to the reality that the European situation won’t be tidied up before the end of the year,” Flynn said.
Oil prices fell despite a brighter outlook for the US economy and rising stock prices. The government said that applications for unemployment benefits fell last week to the lowest level since May 2008. While manufacturing output fell last month after six straight months of steady gains, a regional report yesterday showed manufacturing activity is rising this month in the Philadelphia area. The Energy Department said natural gas supplies dropped by 102 billion cubic feet last week. That was more than analysts expected. The country is still loaded with a surplus of gas, however, and storage levels are more than 10 per cent above the five-year average.
In other energy trading, heating oil rose 1 cent to US$2.8397 per gallon, and gasoline futures rose by less than a penny to US$2.5079 a gallon. Natural gas was flat at US$3.142 per 1,000 cubic feet. (AP)