Archives for June 2015

Reuters / Remote / Staff

The world key indices across the world have nosedived on fear Greece will again miss its Tuesday deadline when it has to repay its €1.6 billion debt to the IMF. This could cause a default and push the country out of the Eurozone.

Greek debt crisis LIVE UPDATES

DAX of Germany has suffered the most, falling 4.17 percent this morning. In Asia, where trading finished by the time of publication Shanghai Composite showed the worst result, closing at 3.34 percent lower.

READ MORE: Greece closes banks, imposes capital controls

The Euro is also losing momentum against the US dollar, having gone down 0.74 percent on Monday as of 10:42 am MSK. By 06:59 GMT the euro was trading at $1.1089, still down 0.7 percent on the day but well clear of a four-week low at $1.0953 touched in Asian trading.

Morning Note: 1. Stoxx50 futures plunge. 2. EURUSD dives. 3. Spanish + Italian yields surge pic.twitter.com/re6tpzXGAJ

— Jonathan Ferro (@FerroTV) June 29, 2015

In Greece, the banks will remain closed for a week and cash withdrawals will be limited at €60 a day, as the government said it would hold a referendum this Sunday to let the people decide what to do with Athens’ multibillion-euro debt.

IMF chief Christine Lagarde told the BBC on Saturday that the planned referendum on the terms of any new bailout plan will be invalid, as on Tuesday the current program expires.

The Greeks would be voting on proposals that no longer exist, she said.

The ECB refused to expand its emergency liquidity assistance (ELA). As of June 23, the ELA program had lent Greek banks about €89 billion.

The EU Tax Commissioner Pierre Moscovici hasn’t lost hope of reaching an eleventh hour deal.

To those who wonder what’s next, 1. #Greece should stay in euro;2.The door is still open for negotiations on latest @EU_Commission proposals

— Pierre Moscovici (@pierremoscovici) June 28, 2015

London-based market strategist Michael Ingram at BGC Partners told Bloomberg that a Greek default is almost inevitable.

“Without a complete capitulation from the troika, Greece will default on the IMF tomorrow and emergency liquidity assistance should be withdrawn on Wednesday. I can’t see anyone stepping in before Wednesday ahead of an ELA withdrawal,” he said.

Greece is due to repay €1.6 billion to the IMF by June 30. If it is unable to do so, the country could technically default.

Article source: http://rt.com/business/270325-greece-debt-market-slump/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

READ MORE: ECB says it will neither cut off nor increase emergency lending to Greek banks

“The more calmly we deal with difficulties, the sooner we can overcome them and the milder their consequences will be,” Tsipras told the Greeks.

The European Central Bank decided on Sunday not to increase Emergency Liquidity Assistance to the Greek banks, adding that the decision may be reviewed at a later date.

“The Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday,” the ECB said in a statement.

Meanwhile, a number of EU countries are urging their citizens to bring cash to Greece rather than to rely on ATM withdrawals.

The German foreign ministry is suggesting that tourists traveling to Greece “take sufficient amounts of cash” when visiting the country. The British Foreign office urged their citizens to do the same, warning travelers “of the possibility that banking services – including credit card processing and servicing of ATMs – throughout Greece could potentially become limited at short notice.”

It said “make sure you have enough euros in cash to cover emergencies, unforeseen circumstances and any unexpected delays.”

Sweden, Poland, Denmark and Netherlands have also warned their nationals not to rely on bank cards.

In light of a lack of a foreseeable resolution to the Greek crisis, two of the Eurozone’s strongest economies, France and Germany announced that they will hold an internal crisis meeting on Monday.

President Francois Hollande will have discussions with “restricted cabinet” ministers on Monday for an emergency session.

German Chancellor Angela Merkel is scheduled to meet with German parliamentary parties to discuss German policy in relation to the Greek crisis.

Meanwhile, Greek Finance Minister Yanis Varoufakis has told the newspaper Bild, that Merkel holds the “keys in her hand” to secure a deal with its international lenders.

“The government leaders in the EU have to act,” Varoufakis said. “And among them, she, the representative of the most important country, holds the keys in her hands,” he said, referring to Merkel. “I hope she uses them.”

Facing extreme criticism from EU for the decision to hold a referendum on the proposed deal, Varoufakis explained Athens’ decision to hold the vote.

“We couldn’t accept that proposal but also couldn’t simply reject it in view of the importance of the matter for the future of Greece,” he said. “So we decided to turn to the citizens: to explain our negative position but to let them decide.”

Article source: http://rt.com/business/270304-greece-capital-controls-banks/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Reuters / Marko Djurica

The European Central Bank said it would keep the Emergency Liquidity Assistance, which has been providing funds to the Greek banks, at the same level. Some media had earlier predicted it would be cut off.

“The Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday,” the bank said in a statement, adding that the decision may be reviewed at a later date.

Earlier, the BBC reported that the emergency lending program would be cut, citing well-placed sources. Greek banks have been using money provided under the ELA program to sustain cash withdrawals from bank accounts.

As I said earlier, the ECB is not providing any additional Emergency Liquidity Assistance to Greek banks. Huge pressure for capital controls

— Robert Peston (@Peston) June 28, 2015

The Greek government may impose capital control – that is put a cap on how much money can be withdrawn over a period of time – to prevent a major bank run expected next week, the BBC Radio reported, saying that Greek Finance Minister Yanis Varoufakis confirmed this to them.

Capital controls within a monetary union are a contradiction in terms. The Greek government opposes the very concept.

— Yanis Varoufakis (@yanisvaroufakis) June 28, 2015

The minister, however, later denied, stating this, according to Reuters.

READ MORE: ‘We don’t need EU permission’: Greek parliament ratifies bailout referendum

Earlier on Saturday, the Eurogroup decided the Greek bailout program wouldn’t be extended beyond Tuesday. The country is expected to default on a €1.5-billion payment due to the International Monetary Fund on the same day.

The possibility of ELA termination was suggested by former ECB board member Lorenzo Bini Smaghi, who said the bank can no longer provide emergency liquidity to Greek banks.

“Given the uncertainty over Greece remaining in the euro, the ECB will no longer be able to supply liquidity to the Greek banks, who in turn will be unable to supply euros to their clients,” he wrote on Sunday.

French Prime Minister Manuel Valls said the ECB should continue the emergency lending despite the looming default.

“The European Central Bank is independent, but I don’t doubt it will assume its responsibilities,” Valls said in an interview broadcast on Europe 1 radio. “I don’t think it can cut off support, to put it another way.”

Greece is planning to hold a national referendum on a deal proposed by foreign creditors to settle the country’s debt problem. The alternative to coming to a compromise agreement would be Greece exiting the eurozone.

Article source: http://rt.com/business/270235-greece-emergency-lending-cut/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Greek Finance Minister Yanis Varoufakis. (Reuters / Francois Lenoir)

Greek Finance Minister Yanis Varoufakis says the issue of agreeing a new strategy to avoid a default by June 30 is a moral obligation – not a question of chance, as Greece’s commitment to the eurozone is “absolute.”

Greek debt crisis LIVE UPDATES

Varoufakis was speaking on RTE’s Morning Ireland program in the middle of the trepidation over the future of debt-stricken Greece, and its €240 billion in loans, and just four days to pay off €1.6 billion to the IMF.

The summit in Brussels is in its second day, and the Eurogroup has just four days to conjure up a solution, or risk a ‘Grexit’. Some officials say it would be “unavoidable” should Greece fail to repay the IMF.

READ MORE: Greece’s creditors ready to unlock €15.3bn till November – media

While the Europeans say the onus is on Greece to prove it is “prepared to reform,” the embattled Varoufakis says it’s time for the rest of the EU “to come to the party.” The implication is that the negotiations are not being carried out amongst the member-states, but between them and international creditors.

In the meantime, Greece’s creditors say they’re prepared to unlock about €15.3 billion over the next five months in four installments, according to those familiar with the documents.

The ECB left its emergency lifeline for Greek banks unchanged Friday for a second day, as deposit withdrawals stabilized, according to a source familiar with the matter.

Continued talks

Greece and its creditors have been stuck in talks over the country’s massive debt since the end of January, when the leftist Syriza party headed by Prime Minister Alexis Tsipras came to power. The new government promised to end the era of drastic budget cuts that dragged the country deep into recession.

READ MORE: Greece rejects ‘exceptionally generous’ counterproposals by creditors

Varoufakis said Greece has done everything humanly possible to cave in to the “strange demands of creditors.” And while its commitment to the EU is “absolute,” the country would not accept an unrealistic deal. And, by his account, the current proposals are “absolutely, absolutely” unworkable.

The finance minister explained that the debt repayment schedule was uneven, and that his own proposal is, basically, to take money from the ECB and put it into the ESM, so as to “even out a very spiky debt repayment schedule, so as to make it easier for us to make the repayments for the benefit of the creditors.”

Some EU members are ringing alarm bells – chief among them Germany and France, whose leaders say Saturday’s meeting of finance ministers is of the utmost importance to the Greek rescue effort.

“We have to keep working because time is pressing and the Eurogroup on Saturday will have a decisive importance,” German Chancellor Angela Merkel said at a news conference early on Friday, following a failure by the 19 nations of the eurozone to reach a consensus the day before.

French President Francois Hollande echoed the sentiment: “I consider that the meeting on Saturday is crucial because time is up on June 30, when the Greeks must meet their payment obligations, there are national parliaments that have to meet.”

“We have to do everything we can and France will set itself to work so that we can have a universal and durable deal,” the French leader added.

READ MORE: German EU commissioner says ‘Grexit’ unavoidable if no solution found in 5 days

German Finance Minister Wolfgang Schaeuble stressed at a conference in Frankfurt that Greece, along with other eurozone members, should adhere to the zone’s rules, because “No country in the monetary union should be infinitely spending money at the expense of others,” he added.

Article source: http://rt.com/business/269938-varoufakis-greece-eurozone-agreement/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Reuters / China Daily

China is expected to become the world’s biggest overseas investor by 2020. Beijing’s global offshore assets will likely triple from $6.4 trillion, to more than $20 trillion by then, says research reported in the Financial Times (FT).

READ MORE: Great Waldorf of China: Beijing buys legendary NYC hotel for $2bn

China will invest more in the developed West, much of the money come from foreign exchange reserves and portfolio investments, says joint research by Rhodium Group and Germany’s Mercator Institute for China Studies, the FT reports Friday.

However, the share of China’s direct investment is also booming. In 2000-2014, Chinese businesses directly invested €46 billion in the 28 EU countries. The UK was the biggest recipient getting €12.2 billion over the period, with Germany getting €6.9 billion and France €5.9 billion.

Energy, automotive, food and real estate sectors attracted the most Chinese money into Europe.

With China being one of top three exporters of direct investment in the world, its outbound foreign direct investment stock (OFDI) is expected to reach $2 trillion, more than doubling the current $744 billion.

Currently China is the world’s biggest trader of goods, while its share of global financial cross-border trading remains minor; at 3.4 percent in 2011.

“Characteristics such as the size, growth and complimentarity of the Chinese economy create unique opportunities for Europe,” said the report.

Beijing’s “authoritarian political system” and closed nature of local markets to foreign direct investment may, however, become a gridlock according to the research. China is considered “one of the least open countries among the G20 economies,” the authors say.

The West is not the only place for Chinese foreign direct investment.

READ MORE: Russia officially joins $50bn China-led infrastructure bank

In April it established the Asian Infrastructure Investment Bank (AIIB) along with another 52 countries. With its headquarters in Beijing, the bank will bankroll infrastructure projects in the Asia-Pacific Region. The initial subscribed capital of AIIB is $50 billion and is expected to be increased to $100 billion.

The BRICS and SCO summits to be held on July 8-10 in Russian city of Ufa should see the launch of another cross-border bank. The $100 billion BRICS New Development Bank (NDB) and a currency reserve pool worth another $100 billion will probably be launched at the summit, said Russian President Vladimir Putin in May.

The currency pool is expected to shield the BRICS bloc from exchange rate volatility, while the bank will finance infrastructure projects within the group.

READ MORE: BRICS starts examining SWIFT alternative

The AIIB and NDB will not rival, but complement each other, according to Putin talking at the St. Petersburg Economic Forum last week.

Article source: http://rt.com/business/269863-china-investment-finance-world/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

READ MORE: BRICS summit in Russia to launch New Development Bank currency pool – Putin

Ufa is expecting 10,000 visitors during the two summits in early July,said Khamitov at the St. Petersburg Economic Forum.

The region was ready for the summits about a month ago. A lack of modern hotels was our weak point, Khamitov said, adding that private investors managed to construct seven leading brand hotels, like Sheraton, Hilton and Holiday Inn during the last two years.

“The heads of states and provinces will arrive bringing with them about 10-20 representatives of small and medium enterprises each. We will introduce them to each other, formalize this platform, work out the plan and open new ground,”Khamitov said.

The BRICS and SCO summits will take place on July 8-10 in Ufa. Russia expects the BRICS summit to trigger off the $100 billion BRICS New Development Bank and a currency reserve pool worth another $100 billion, said President Vladimir Putin in May.

READ MORE: BRICS leadership passes to Russia, $100bn development bank ‘main priority’

The member countries are also likely to discuss the IMF reform that should expand the decision-making abilities of developing countries, and the possibility of creating an independent BRICS rating agency. Russia assumed the BRICS rotating leadership in April 2015.

Khamitov says the BRICS and SCO summits will be a favorable environment for making new business deals and strengthening economic ties across the region. The republic of Bashkortostan represents certain interests among foreign entrepreneurs and attracts investment, Khamitov added.

“At present foreign investors participate in several big projects. These are investors from Austria, Germany and China,” he said. “Chinese investors are involved in the construction of an iron and steel plant and of a heavy oilfield equipment manufacturing plant. This is very good. I’m hoping the amount of foreign investment will increase. Today this amount is relatively small – no more than 5-7%, but we are hoping to reach the level of 10-15%.”

READ MORE: GDP of BRICS could surpass G7 in 2-3 years – senior Duma MP

Chinese investors are particularly interested in the republic’s agricultural sector and are currently involved in joint projects to construct a sugar factory and a plant producing rapeseed oil, he said.

The member countries of BRICS and SCO are interested in the region’s industrial production as well. “For instance, India buys helicopter and aircraft engines from a plant in Ufa, and the Indian government plans to build and affiliated branch in its country,” Khamitov said.

Foreign trade with Bashkortostan is estimated at $15 billion, of which only one billion, or 7.5 percent, is with the SCO countries. The republic’s government wants to double this figure within 3 to 4 years, and it could be achieved through improving relations with BRICS and SCO economies, Khamitov concluded.

Article source: http://rt.com/business/269677-hamitov-ufa-brics-summit/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Ukraine’s Finance Minister Natalie Jaresko. (RIA Novosti / Mikhail Polinchak)

Ukrainian Finance Minister Natalie Jaresko doesn’t rule out the country failing to make a $120 million coupon payment on July 24 and default. A Goldman Sachs analyst made the forecast on Wednesday.

Ukraine could theoretically default next month, as in May the country’s parliament adopted a law allowing a moratorium on foreign debt repayments. The law aims to protect Kiev from an “attack by unscrupulous creditors.”

This echoed a forecast made by a Goldman Sachs analyst Andrew Matheny on Wednesday.

“Ukraine will not make the July 24 coupon payment and, as a result, will enter into default at that point…We do not expect the ad hoc committee to accept Ukraine’s latest restructuring proposal,” he said, Bloomberg reports.

READ MORE: IMF ‘failed’ in Greece, Ukraine – fund’s executive director to RT

Ukraine has asked its creditors to write off 40 percent of its debt and adopt new bonds tied to its future economic performance. Matheny says this option could allow bondholders to make a profit in the case of positive dynamics of economic indicators of Ukraine.

The Creditors’ Committee of Ukraine, which includes T. Rowe Price, TCW Group, BTG Pactual and Franklin Templeton, said it insists on changing the terms of the agreement with the Ukrainian government and the IMF to restructure the $15 billion, including $3 billion owed to Russia. The group owns about $9 billion of Ukrainian debt.

READ MORE: Ukraine should delay debt payment until 2019 without writing it off – creditors committee

Ukraine’s Prime Minister Arseny Yatsenyuk also admitted Thursday his country is unable to pay the $40 billion debt it has accumulated over the last three years. The total amount required to service Kiev’s debts is equal to its military expenses, which make up five percent of GDP, he added.

Kiev is struggling to restructure its more than $50 billion debt, including $3 billion bonds sold to Russia. Some estimates put the debt at $70 billion.

The IMF says the bonds held by Russia should be treated as official rather than private debt, reported Bloomberg Tuesday, citing sources.If the $3 billion bonds are treated as Kiev’s official debt, they would be excluded from restructuring.

READ MORE: Russia to turn to courts if Ukraine fails to pay $3bn debt in time – Siluanov

In 2013, Russian President Vladimir Putin and then Ukrainian president Viktor Yanukovich agreed Moscow would buy $15 billion in Ukrainian bonds.Russia decided against buying the extra $12 billion after the Maidan events, that resulted in Yanukovich leaving his post and fleeing Ukraine.

Members of the committee, Jaresko and the IMF will meet in Washington to discuss whether and when Kiev would get the next part of a $17 billion loan.The IMF said earlier in June that it intends to give financial aid to Kiev even if it halts servicing debt held by private bondholders.

Article source: http://rt.com/business/269623-ukraine-yatsenyuk-sovereign-debt/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Greek Finance Minister Yanis Varoufakis. (Reuters / Francois Lenoir)

Switzerland is providing only limited information about rich tax evaders who have stashed about €80 billion from cash-strapped Greece, Finance Minister Yanis Varoufakis said in an interview with Swiss state broadcaster SRF.

“Sometimes we know that someone has taken money away from Greece. But we do not know in what city or which bank it is located in Switzerland. We know too little to be able to locate the black money,” Varoufakis toldthe Rundschau program on SRF on Wednesday.

It is impossible to obtain the information from Swiss authorities, he added.

READ MORE: EU Switzerland ink historic agreement to end Swiss banking secrecy

Athens is working on a plan to give tax evaders the opportunity to voluntarily disclose themselves, and make them invest in Greek economy. The evaders would pay a 22 percent penalty in such a case.

“It’s never easy finding a middle ground,” said Varoufakis, adding that if the penalty is too low, justice won’t be done. If it is higher, the plan wouldn’t work.

Varoufakis hasn’t detailed the exact sum hidden away in Swiss banks, saying it’s like “an archeological dig, before you dig you do not know what you will find.” Experts estimate the sum at about €80 billion.

Swiss authorities deny the accusation, saying proposals have been made to Athens and they are willing to make “better use of existing laws” to help the country facing default.

Greece and its creditors have been unable to reach a deal in talks over its €240 billion debt since the end of January when Syriza came to power in Greece. Fears of Greece defaulting are causing a bank run as Greeks rapidly withdraw cash.

READ MORE: Greek debt crisis LIVE UPDATES

Swiss banking secrecy started in 1934, when the Federal Act on Banks and Savings Banks was introduced. Article 47 of the Act made it a criminal offence for banks to disclose their clients’ identities.

The country has been trying to make its banking more open.

In May, Switzerland signed an agreement with the European Union for the automatic exchange of information on the accounts of its citizens. From 2018 the EU will regularly receive the names, addresses, tax identification numbers and dates of birth of their people with accounts in Switzerland, as well as the balance of their accounts.This new agreement is a serious blow to those who hide undeclared income to evade taxes at home in Swiss banks.

Article source: http://rt.com/business/269641-varoufakis-switzerland-tax-evasion/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Reuters / Morteza Nikoubazl

Over the last two months executives from Royal Dutch Shell and Italian oil major Eni have met Iranian officials in Tehran. This is the first time Western oil firms confirmed talks prior to the expected lifting of Iranian sanctions on June, 30.

READ MORE: Deal between Tehran, 6 world powers could be reached before deadline – Iran envoy

This month Shell officials visited Tehran to discuss a possible partnership and its $2.16 billion debt to the National Iranian Oil Co., after Western sanctions over Iran’s nuclear program are lifted, the company said in a statement e-mailed to Bloomberg Wednesday. Shell can’t pay the debt due to the sanctions.

This follows the visit of Eni CEO Claudio Descalzi to Tehran in May, which was confirmed on Wednesday.

These meetings highlight how the large oil companies are looking to return to Iran, which has the world’s third biggest oil and gas reserves.

“We review our growth portfolio on a regular basis and do not exclude any countries that are open to foreign investment. Should future sanctions relief make that possible; we would be interested in exploring with the government of Iran what role Shell can play in developing its energy potential,” Shell told the FT Wednesday.

The CEOs of Shell, Eni, Russia’s Lukoil and France’s Total, met Iranian Oil Minister Bijan Zanganeh in Vienna this month, chairman of the Facts Global Energy consultancy Fereidun Fesharaki told the FT.

Iran hopes to increase its oil production by one million barrels per day from the current three million barrels, and has appealed to OPEC for permission to re-enter the oil market as soon as the sanctions are lifted, Zanganeh said in June.

READ MORE: Talks on Iran nuclear program at ‘standstill,’ deadline might be extended – source

Western negotiators have set a self-imposed deadline until June 30 to seal a final deal at binding Iran’s nuclear program in exchange for lifting sanctions on Tehran.

The US have been tightening the screws on Iran since 2002, trying to tackle Tehran’s nuclear ambitions. In 2006, the UN Security Council introduced sanctions on Iran after the country refused to cancel its uranium enrichment program.

Article source: http://rt.com/business/269602-iran-oil-nuclear-deal/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Prime Minister Dmitry Medvedev. (RIA Novosti / Dmitry Astakhov)

Russian Prime Minister Dmitry Medvedev has signed a decree to extend Russia’s embargo on food imports until August 5, 2016. The details of the extended ‘blacklist’ remained unchanged, he said.

“The list is no different [from last year – Ed.] except for some positions. It includes the same livestock products, including meat of cattle, pigs, edible offal, fish and shellfish, milk and dairy products, vegetables, sausages and so on,” Medvedev said.

Countermeasures to Western sanctions were dictated not by political, but economic motives, he added.

READ MORE: President Putin signs order to extend counter-sanctions for another year

Medvedev urged ministers not to comment on the decision to extend the Russian food embargo before final publication of the relevant documents. “It confuses the market and introduces uncertainty,” he added.

Russian food watchdog Rosselkhoznadzor spokesman Aleksey Alekseenko said Tuesday that Russia was considering a ban on European chocolate and flowers. Russian Agriculture Minister Aleksandr Tkachev said the ministry had plans to limit imports of flowers and canned fish from countries on the sanctions list, but no decision to include chocolate on the list had been made.

Efforts by Russia and the EU are key to putting an end to the so-called ‘sanction war’, Medvedev said. However, so far there are no significant efforts from the West, he added.

On Wednesday, Russian President Vladimir Putin signed an order to extend Russian sanctions for another year. The government was instructed to work out and publish corresponding documents as soon as possible.

The EU prolonged Russia sanctions for six months on Monday, which followed last week’s decision to extend sanctions against Crimea for another year.

Article source: http://rt.com/business/269644-russia-food-embargo-extension/?utm_source=rss&utm_medium=rss&utm_campaign=RSS