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Iran President-Elect Wants to Ease Strains With U.S., but Sees No Direct Talks

June 17, 2013 by Leave a Comment

In his first news conference after winning Friday’s presidential election promising more freedoms and better relations with the outside world, Mr. Rowhani called the issue of nonexistent relations between Iran and the United States “an old wound, which must be healed.”

Iran, he said, wants to reduce tensions between the two countries, which have no diplomatic relations and are at odds over the nature of Iran’s nuclear enrichment program. Echoing similar statements from the departing administration of President Mahmoud Ahmadinejad, Mr. Rowhani said there would be no direct talks until the United States stopped “interfering in Iran’s domestic politics,” respected what he called Iran’s nuclear rights and lifted economic sanctions.

“All should know that the next government will not budge from defending our inalienable rights,” Mr. Rowhani told reporters. He emphasized that, like those of his predecessors, his government would not be prepared to suspend uranium enrichment, something he had done as a nuclear negotiator in 2004 as a trust-building measure in discussions with European countries.

“We have passed that period,” he said of that time. “We are now in a different situation.”

Instead, Mr. Rowhani, who will take office on Aug. 3, offered more openness concerning Iran’s nuclear program, saying that was his way of working to end the sanctions that have severely damaged the Iranian economy.

Mr. Rowhani’s victory has been received with cautious optimism at the White House, which issued a statement on Saturday congratulating Iranians on “making their voices heard” and reaffirming an American willingness to “engage the Iranian government directly” to resolve the nuclear dispute.

President Obama appeared to go further in an interview with Charlie Rose on Sunday before the president left for a summit meeting in Northern Ireland.

“Clearly you have a hunger within Iran to engage with the international community in a more positive way,” Mr. Obama said in the interview, broadcast Monday night on PBS. “I do think that there’s a possibility that they decide, the Iranians decide to take us up on our offer to engage in a more serious, substantive way.”

Iran has always contended that its uranium enrichment is for peaceful purposes, rejecting Western suspicions that the country is seeking the ability to build weapons. “First, we are ready to increase transparency and clarify our measures within the international framework,” Mr. Rowhani said.

“Of course our activities are already transparent, but still we increase it,” Mr. Rowhani said. “Second, we will increase the trust between Iran and the world.”

Inspectors from the International Atomic Energy Agency have repeatedly sought access to the military site of Parchin, near Tehran. But Iran has denied such a visit by saying that military sites are not part of its obligations under the Nuclear Nonproliferation Treaty, which Iranian diplomats often refer to as the “international framework.”

But indirectly underlining the effects of the sanctions, Mr. Rowhani said he was already working with the departing government to prevent food shortages. “People are in instant need of basic staples,” he said. The government would increase domestic production to stabilize prices and rising unemployment, he said without elaborating.

Mr. Rowhani, who is nicknamed the “diplomat sheik” in Iran for his white turban and pragmatic streak, said his victory and the high turnout in Friday’s election had altered the view that other countries had of Iran.

“On a global level, our image has changed,” he said. “The atmosphere in the global opinion has changed, and this provides new opportunities for us.” Interaction with the rest of the world — except for Israel, which Iran does not recognize — is important, he emphasized.

He paid special attention to neighboring countries, especially the Persian Gulf kingdoms that reduced relations with Iran under Mr. Ahmadinejad’s presidency. “The priority of my government’s foreign policy will be to have excellent relations with all neighboring countries,” he said. He singled out Iran’s biggest regional rival, the Sunni kingdom of Saudi Arabia, which supports rebels in Syria while Iran supports the government of Syria’s president, Bashar al-Assad.

“We are not only neighbors but also brothers,” he said. “Every year hundreds of thousands of Iranian pilgrims visit Mecca. We have many common points with Saudi Arabia.”

On Syria, he made the same points offered by Iranian diplomats over the last two years, that the Syrian people should decide their own fate in the presidential election in 2014. “It’s up to them to decide,” Mr. Rowhani said, without commenting on the military support to Mr. Assad provided by Hezbollah, the Lebanese Shiite organization that is financed by Iran. “We hope that peace will return to this country with the help of all countries,” he said. “Until the next election in Syria in 2014, the current government must be officially recognized by the world countries.”

He noted the street parties that erupted Saturday after his official victory, saying the “time of sadness for Iranians” was finished. But he did not offer any clear examples of the measures he would take to lift the security atmosphere that has pervaded the country during Mr. Ahmadinejad’s presidency.

Mr. Rowhani said he would never forget the promises he made during his campaign. “But we need to set our priorities first,” he said. “We need time.”

Toward the end of the news conference, a spectator yelled for the release of Mir Hussein Moussavi, the opposition leader who is under house arrest. Mr. Rowhani made no comment.

Peter Baker contributed reporting from Washington, and Rick Gladstone from New York.

Article source: http://www.nytimes.com/2013/06/18/world/middleeast/irans-president-elect-says-he-wants-better-us-ties.html?partner=rss&emc=rss

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Europe Steers Into a Zone of Uncertainty

September 9, 2011 by Leave a Comment

Economists and financial analysts point to a series of land mines that lie ahead.

Growth is slowing, even in Germany, where exports are down and imports are stagnant. A team of experts stalked out of Greece last week to force Athens to live up to its debt-cutting promises as its bills continue to mount. The Italian government is applying fiscal Band-Aids to its deficit instead of surgery, while there is new budgetary pressure on Rome and Madrid, considered too big to bail out.

On Thursday, the Organization for Economic Cooperation and Development provided only the latest gloomy assessment of the prospects for a new recession and a European banking crisis. “The sovereign debt crisis in the euro area could intensify again,” the group said, urging the recapitalization of some European banks and better financial management in the 17-nation euro zone.

And the German finance minister, Wolfgang Schäuble, scolded Athens, warning that European aid would be provided only “if Greece actually does what it agreed to do.”

“The situation is extremely grave,” said Julian Callow, chief European economist for Barclays Capital. “Despite a sharp slowdown in economic activity, especially on the export side, you still have to push governments with large deficits to cut them to levels that are sustainable. That’s the key challenge, and the economic environment is much less favorable now for fiscal consolidation in the euro zone. And the Greek situation is like a ticking bomb.”

But Europe works in incremental steps, driven by crisis and the domestic politics of its nations. Any sweeping solution to the problems of the euro — like an “economic government,” or a pan-European Treasury or Finance Ministry, or collective “euro bonds” — is many months, if not years, away.

Still, most experts agree that Europe’s crisis will persist until it adopts a far tighter fiscal and monetary union, expels weaker economies or divides into two, with different currencies.

“You either go forward to more European economic governance or backward,” said Edwin M. Truman of the Peterson Institute for International Economics. “And if you go backward, you go backward pretty far, to the fragmentation of Europe.”

Mr. Callow said that the mood among European central bankers and German officials, too, was “centralize or die.”

For now, Europe is working on ratifying the changes made to its economic system at a meeting on July 21. To go into effect, even those limited changes must be approved by all euro-zone countries and their parliaments, which may take until mid-October, further unnerving markets.

The hope among experts and economists is that the changes, if carried out with skill, may allow Europe to further isolate Greece and its unsustainable debts from other countries, reducing the risk of contagion and buying time for other countries to fix their budgets and work on how to better centralize control of fiscal policy. Though abstract on the surface, the changes will provide more flexibility to bail out or further restructure Greek debt, to aid Italy and Spain with their bond sales and even to recapitalize some European banks, weakened by their exposure to sovereign debt in the form of Greek, Portuguese, Spanish and Italian bonds.

Changes in the European Financial Stability Facility, which will be expanded to $610 billion of collective financing from the 17 euro-zone states, should also allow it to act as a kind of bank. That would help relieve the European Central Bank from its current role as the buyer of last resort for Italian and Spanish bonds, a decision it reluctantly made to keep down the borrowing costs of those governments and prevent Greece’s problems from infecting the rest of Europe.

The facility itself is already a form of stealth euro bond, in that its obligations are shared by all euro-zone members.

Article source: http://www.nytimes.com/2011/09/09/world/europe/09europe.html?partner=rss&emc=rss

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News Analysis: In Crisis, Reminders of Disputes in Euro’s Founding

August 18, 2011 by Leave a Comment

EUROPE has never found it easy to define itself, and now it is having more trouble than ever doing so.

When the rules for the euro currency were first drafted 15 years ago, the leaders of France and Germany had to compromise even to agree on the name for the proposal: Berlin wanted a “stability pact,” emphasizing Germanic fiscal discipline, while Paris insisted on adding “growth” to the title to make it more palatable to French voters.

In Paris on Tuesday, the two countries again sought to bury their differences, proposing deeper integration for the single currency in the throes of a ferocious debt crisis.

If carried out, those plans could solidify an economic inner core within a two-tier European Union. But with domestic politics pushing in different directions, and much of the detail left deliberately vague, many proponents of a united Europe remain to be convinced.

“Too little, too uncertain, too late — that has been the regular response of E.U. leaders to the euro zone debt crisis,” argued Sharon Bowles, chairwoman of the Economic and Monetary Affairs Committee of the European Parliament. “The Sarkozy-Merkel proposals of Tuesday broadly fall, once again, into this category.”

Simon Tilford, chief economist at the Center for European Reform in London, called it “a positive step that this debate is taking place in Germany and that there is an acceptance that pooling fiscal authority is a necessary precondition of a lasting conclusion of the crisis.”

“But there is a risk,” he added pointedly, “that in order to sell this to domestic opinion, Germany will extract concessions that will render the whole thing unworkable.”

This is just the latest phase of a debate that has ebbed and flowed over decades of European integration. Indeed, when the rule book for introducing the euro — which came to be known as the Stability and Growth Pact — was being drafted, it was completed only after a fractious summit meeting in Dublin Castle in Ireland in 1996.

The patched-together pact, put in place in advance of the introduction of the single currency in 1999, was criticized by many economists from the start. By 2002, with France complaining about the need for more flexibility to promote growth during downturns, Romano Prodi, then the president of the European Commission, described it as “stupid.”

France put together a coalition, ultimately supported by Germany, that prevented the imposition of sanctions on countries that violated the rule limiting annual budget deficits to 3 percent of a nation’s gross domestic product. France and Germany themselves were among those breaching the limits.

The debt crisis has now brought the debate back to its starting point.

Under the emerging set of proposals being pushed by Germany and France, strict new rules would enforce discipline, including fines for sinning countries, which might also lose certain subsidies. The idea of a European finance ministry has been put forward. Debt brakes would be written into constitutions or national law.

Euro zone leaders would have regular summit meetings presided over by a president who, according to talk within the corridors of power, may also lead meetings of the 17 finance ministers.

That is good news for the top contender, Herman Van Rompuy, the former Belgian prime minister who is president of the European Council, which represents the 27 governments in the European Union, and who has maneuvered skillfully for a greater role in coordinating economic policy.

A new bailout mechanism would grow into a sort of European version of the International Monetary Fund, with a bigger staff and powers to buy bonds on the secondary market. And despite the current opposition of Chancellor Angela Merkel of Germany, common euro bonds — which would put the collective strength and collateral of all the euro area countries behind sovereign debt — could eventually become a reality.

As usual with these deals, however, consensus is elusive.

Germany most wanted the debt brakes and strict surveillance of other euro zone governments, with tough punishment for violators. Under pressure from domestic voters horrified at having to bail out a Greek government that lied about its economic data, Mrs. Merkel needs to persuade Germans that the debt crisis won’t rear its ugly head again. The message at home is that the euro zone economy will be recreated in Germany’s image.

France, meanwhile, insisted on new structures to forge integration, led by the 17 prime ministers and presidents, and pressed hard on issues like harmonizing corporate tax rates.

With an election looming, Nicolas Sarkozy, the French president, wants to cast himself in his home country as the savior of the single currency and the driving force behind European integration. Mr. Sarkozy appropriated the notion of strict fiscal discipline to outflank his socialist opposition by making it a centerpiece of the new plans.

The next few months will determine whether this hastily drawn agreement intended to satisfy multiple constituencies will actually upgrade the euro zone’s creaking, often chaotic, structures into something workable in an era of unforgiving markets.

None of this will be easy. It will fall to Mr. Van Rompuy to produce a coherent set of proposals.

Europe still hasn’t resolved the fundamental question it skirted back in 1996 at Dublin Castle: Is the euro more in need of Germanic fiscal stability or the growth and stimulus policies that France traditionally champions?

“It is not going to help the euro zone,” said Mr. Tilford of the Center for European Reform, if “they enforce unworkable positions on the rest of the euro zone.”

He added, “The markets are concerned about debt levels — but also about growth.”

Article source: http://www.nytimes.com/2011/08/18/business/global/debt-crisis-brings-focus-back-to-early-euro-pact.html?partner=rss&emc=rss

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