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Germany’s Merkel Says Euro Crisis ‘Resembles a Marathon’

December 2, 2011 by Leave a Comment

Mrs. Merkel was speaking to the German Parliament as Europe’s leaders prepare for yet another round of talks on the issue, which has roiled markets across the continent and forced the collapse of governments in Greece, Italy and elsewhere. Mrs. Merkel spoke in sober and serious tones, and her words drew sustained if not overly enthusiastic applause from lawmakers.

“Resolving the sovereign debt crisis is a process, and this process will take years,” Mrs. Merkel said.

Marathon runners believe that their efforts become particularly difficult after the “35 kilometer mark,” she said, adding, “but they also say that you can get to the finish if you are conscious of the magnitude of the task from the very start.”

“The future of the euro is inseparable from European unity. The journey before us is long and will be anything but easy,” she said. “But I am convinced that we are on the right path. It is the right path to take to reach our common goal: a strong Germany in a strong European Union that will benefit the people in Germany, in Europe.”

Later on Friday, President Nicolas Sarkozy of France met in Paris with British Prime Minister David Cameron — whose country is not part of the single currency but belongs to the European Union and whose economy is heavily dependent on continental trade.

“We need the euro zone to resolve their crisis. We need the countries of the euro to stand behind their currency,” George Osborne, Britain’s chancellor of the Exchequer, said shortly before Mr. Cameron traveled to Paris. “We do need the countries of the euro to work more closely together to sort out their problems.”

“Britain doesn’t want to be a part of that integration — we’ve got our own national interests — but it is in our economic interest that they do sort themselves out. The biggest boost that could happen to the British economy this autumn would be a resolution of the euro crisis,” Mr. Osborne said.

Mr. Cameron’s discussions in Paris came in advance of talks between Mr. Sarkozy and Mrs. Merkel on Monday to be followed by a summit of European leaders in a week’s time.

Mrs. Merkel’s speech came after Mr. Sarkozy said on Thursday night that Europe could be “swept away” by the euro crisis if it does not change. He said that Europe would “have to make crucial choices in the next few weeks,” and that France and Germany together were supporting a new treaty to tighten fiscal discipline and promote economic convergence in the euro zone.

The European Union needs “an overhaul,” Mr. Sarkozy said, to remain relevant and competitive, but he was vague about the details of what needs to be done.

“If Europe does not change quickly enough, global history will be written without Europe,” he said. “Europe needs more solidarity, and that means more discipline.”

On Friday, Mrs. Merkel again appealed for a strengthening of fiscal cooperation across the euro zone in what she called a “union of stability” able to enforce controls on individual European economies.

“Where we today have agreements, we need in the future to have legally binding regulations,” she said.

Mrs. Merkel said it was time to fix the “mistakes of construction” in the euro zone. “We must strengthen the foundations of the economic and monetary union in a sustainable way.”

“We are not only talking about a stability union, but we are beginning to create it,” she said, advocating changes in European treaties so as to create a fiscal union — a measure likely to be opposed by Britain.

Evoking the spirit of German leaders past, from Konrad Adenauer to Helmut Kohl, Mrs. Merkel said Germany wanted to “avoid divisions” by creating a two-speed Europe split between those inside the euro zone and those outside it.

She again ruled out so-called euro bonds backed by all 17 members of the existing currency union, which embraces many different levels of economic strength ranging from struggling Greece to the export-driven German economy which is seen as the powerhouse of Europe. She called the idea of euro bonds “unthinkable.”

Germany, she said, did not wish to dominate Europe. “That is far-fetched,” she said.

“Germany and European unity are two sides of the same coin,” she said. “That is something we will never forget.”

Frank-Walter Steinmeier, parliamentary leader of the opposition Social Democrats, accused Mrs. Merkel of “talking past the heart of the matter” and said her “tactical approach was not making things stable.”

But Rainer Brüderle, the head of the parliamentary group of Mrs. Merkel’s junior coalition partner, the Free Democrats, offered an important token of support, saying Mrs. Merkel was “fighting for the future of Europe and we stand behind her.”

Nicholas Kulish reported from Berlin, and Alan Cowell from London. Steven Erlanger contributed reporting from Paris, and Victor Homola from Berlin.

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Merkel, Sarkozy and Monti Meet to Try to Stem Crisis

November 24, 2011 by Leave a Comment

STRASBOURG, France (AP) — French President Nicolas Sarkozy says that France and Germany will propose changing EU treaties to improve governance of the eurozone.

Sarkozy spoke after meeting with German Chancellor Angela Merkel and Italian Prime Minister Mario Monti on Thursday, their first meeting since Monti took over amid market panic over Italy’s huge debts.

Sarkozy said that the three are committed to saving the shared euro currency.

France had been reluctant to make any changes to eurozone governance via treaty changes, something Germany had supported.

But Sarkozy said Thursday that France and Germany would present “propositions for the modification of treaties” in the coming days.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

STRASBOURG, France (AP) — The role of the European Central Bank in stemming Europe’s crippling debt crisis will likely figure prominently in discussions later Thursday between the leaders of Germany, France and Italy.

It’s the first time Italy’s new prime minister, Mario Monti, is meeting German Chancellor Angela Merkel and French President Nicolas Sarkozy since he took charge last week in the wake of growing market concerns over the size of his country’s debts.

The meeting in Strasbourg, France comes amid signs that even Germany and France — the eurozone’s two biggest economies — are not immune from the debt crisis that’s already seen three relatively small countries bailed out.

A failed German bond auction on Wednesday and another warning that France may see its cherished triple A credit rating downgraded, form the uncomfortable backdrop to the discussions between the three leaders.

Though German and French borrowing rates are well below the 7 percent level that eventually forced Greece, Ireland and Portugal into seeking financial bailouts, they have been rising markedly in recent days. Germany’s ten-year yield has ratcheted up around 0.25 percentage point over the past 24 hours since the auction to stand at 2.12 percent, while France’s has been rising steadily in recent weeks to 3.6 percent on Thursday.

Italy’s though have hovered around the 7 percent level for a couple of weeks now, and that’s a real cause for concern for the eurozone as the current bailout facilities are not big enough to bailout the eurozone’s third-largest economy. Italy’s debts stand at around euro1.9 trillion ($2.5 billion), or around 120 percent of the country’s national income.

The meeting is aimed at “showing support for Mario Monti and his policy of reforms,” French government spokeswoman Valerie Pecresse said Wednesday.

However, a big element of the discussions are expected to center on the European Central Bank’s role, which many think is the only institution capable of calming frayed market nerves. Potentially, the ECB has unlimited financial firepower through its ability to print money.

While Germany finds the idea of monetizing debts unappealing, Sarkozy’s government has been pushing for the ECB to play a more active role.

France has repeatedly been frustrated in its push for the ECB to play a greater role in resolving the crisis by Merkel’s fierce opposition. France’s finance minister, Francois Baroin, has raised the possibility of allowing the ECB to act as lender of last resort to financially troubled countries locked out of lending markets by the punishingly high interest rates increasingly demanded by bond market investors.

Merkel also clashed with the head of the European Union on Wednesday over another proposed solution to the European crisis — common bonds issued by all 17 nations that use the euro currency.

A European bond could promote stability in the markets. But Merkel said it would not solve “structural flaws” with the euro, and, in a testy exchange, an EU official said Merkel was trying to cut off the debate before it could even start.


Article source: http://www.nytimes.com/aponline/2011/11/24/business/AP-EU-Europe-Financial-Crisis.html?partner=rss&emc=rss

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U.S. Leverage Limited in Greek Debt Talks at G-20

November 4, 2011 by Leave a Comment

But while the president hustled from meeting to meeting with world leaders, he was in many ways thrust into the rare position of bystander, as the unfolding drama over whether the Greek government would fall (it did not) and whether Greece would back the comprehensive accord to protect the euro reached last week (it will, at least for now) dominated conversations in the hallways and conference rooms here in this iconic seaside town.

The grand Espace Riviera is more accustomed to red-carpet arrivals by movie stars and hangers-on for the Cannes Film Festival; on Thursday it was transformed instead into ground zero for blue-suited bureaucrats grappling with a financial crisis and the global contagion that it threatened.

Instead of Angelina Jolie posing before the paparazzi, it was Chancellor Angela Merkel of Germany holding a frozen smile as she greeted Mr. Obama in front of the cameras. There was little preening before the hundreds of reporters gathered from all over the world; President Nicolas Sarkozy of France quickly swept Mr. Obama into a meeting to discuss how to try to stop the unfolding Greek drama from turning into a tragedy, for global markets at least.

Mr. Obama arrived early Thursday morning and, during an initial meeting with Mr. Sarkozy, he called the European financial crisis the most important task for world leaders gathered at the Group of 20 economic summit meeting.

For Mr. Obama, the stakes are high. He has called the European financial crisis the largest headwind facing the American economic recovery, and he knows that his own re-election prospects are tied to how well the American economy does. But at the same time, his leverage is limited.

In public, Mr. Obama largely stuck to his administration’s official message that Europe’s leaders must “flesh out details” about the plan they agreed to last week in Brussels to deal with the debt crisis in the 17 European Union countries that use the euro. But American officials, including Treasury Secretary Timothy F. Geithner, were huddled in private with their European counterparts trying to hash out an agreement that, at the very least, would stop the disintegration under way in Greece from spreading to Italy and Spain, a contagion that could further stymie America’s own anemic economic recovery.

American officials exhorted their European counterparts to use Europe’s own resources to try to solve the crisis, instead of seeking bailout help from China. Obama administration officials point to the steps that the United States took to try to address its own financial crisis over the past three years.

“Look, we went through this ourselves,” an Obama administration official said on Thursday, speaking on grounds of anonymity because he was not authorized to speak publicly. “They have the capacity to handle this within Europe.”

Jay Carney, the White House press secretary, said that the 2008 Wall Street crisis could provide insight on steps Europe should take. He maintained that the United States remains influential in advising its allies on how to deal with the problem, even if the United States is in no position to provide financial support.

“The United States, obviously, has a great deal of influence, because of who we are and the role we play in the global economy, and globally in general,” Mr. Carney said in a news briefing on Wednesday. “I would not discount the significance of the experience that we have in terms of its usefulness to the Europeans.”

The Obama administration is not eager to see an increase in the resources sent by the International Monetary Fund to Europe; that might further mute American influence as the additional resources would likely not come from the United States, but rather from Asia — and most likely China.

“The I.M.F. has a substantial amount of resources to deal with a range of challenges in Europe and around the world,” said Benjamin Rhodes, the deputy national security adviser for strategic communications.

Michael Froman, the deputy national security adviser for international economic affairs, said the turmoil in Greece and uncertainty over how exactly Europe plans to carry out its accord to cut Greece’s debt and shore up its finances “underscores the need to move rapidly toward the full elaboration and implementation of the plan.”

Specifically, Mr. Froman said that the United States wants to make sure that Europe has “a firewall that is sufficiently robust and effective ensuring the crisis does not spread from one country to another.”

Mr. Froman said the United States was also trying to make sure that attention was also paid to stimulating economic growth, both in Greece and throughout the euro zone. Part of the anger among Greek citizens has stemmed from a belief that the euro agreement focuses more on Greek austerity and repaying the banks than on growth, a balance that many people fear could lead to higher unemployment rates as the Greek government cuts public sector jobs to pay its creditors and stabilize its finances.

“I think right now the highest priority in Greece is stabilizing the situation,” Mr. Froman said. “But the program that Greece has is also about reforming its system and engaging in structural reforms, so that it could become more competitive and therefore grow as part of the euro area.”

Article source: http://www.nytimes.com/2011/11/04/world/europe/obama-urges-european-solution-to-debt-crisis.html?partner=rss&emc=rss

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Europe Agrees to Basics of Plan to Resolve Euro Crisis

October 27, 2011 by Leave a Comment

The agreement on Greek debt was crucial to assembling a comprehensive package to protect the euro, which has been keeping jittery markets on edge.

The accord was reached just before 4 a.m. after difficult bargaining. The severe reduction would bring Greek debt down by 2020 to 120 percent of that nation’s gross domestic product, a figure still enormous but more sustainable for an economy driven into recession by austerity measures.

The leaders agreed on Wednesday on a plan to force the Continent’s banks to raise new capital to insulate them from potential sovereign debt defaults. But there was little detail on how the Europeans would enlarge their bailout fund to achieve their goal of $1.4 trillion to better protect Italy and Spain.

After all the buildup to this summit meeting, failure here would have been a disaster. While the plan to require banks to raise new capital was generally approved without difficulty — banks will be forced to raise about $150 billion to protect themselves against losses on loans to shaky countries like Greece and Portugal — the negotiations over the Greek debt were difficult.

“The results will be a source of huge relief to the world at large, which was waiting for a decision,” President Nicolas Sarkozy of France said.

Chancellor Angela Merkel of Germany said: “I believe we were able to live up to expectations, that we did the right thing for the euro zone, and this brings us one step farther along the road to a good and sensible solution.”

In the face of considerable pressure from Europe’s leaders, the banks had been resisting requests that they voluntarily accept a loss of about 50 percent on their Greek loans, far more than the 21 percent agreed to previously. But after months of denying that Greece would have to restructure its large debt, which was trading at 40 percent of face value, European leaders forced the much larger reduction, known as a “haircut,” on the banks, while the International Monetary Fund promised more aid to Greece.

Germany had taken a tougher stance than France with the banks. Mrs. Merkel was willing to think about imposing an involuntary write-down on the private sector, but Mr. Sarkozy remained worried about the consequences on the markets and the banking system.

In a statement, Charles Dallara, managing director of the Institute of International Finance, which represents the major banks, said he welcomed the deal. He called it “a comprehensive package of measures to stabilize Europe, to strengthen the European banking system and to support Greece’s reform effort.”

In a meeting described as crucial for the fate of the euro zone, the leaders had been trying to restore market confidence in the euro and in the creditworthiness of the 17 countries that use it.

In what the leaders saw as an important first step, banks would be required under the recapitalization plan to raise $147 billion by the end of June — enough to increase their holdings of safe assets to 9 percent of their total capital. That percentage is regarded as crucial to assure investors of the banks’ financial health, given their large portfolios of sovereign debt.

German lawmakers voted overwhelmingly on Wednesday to authorize Mrs. Merkel to negotiate an expansion in an emergency bailout fund to $1.4 trillion, more than double its current size of about $610 billion. The vote followed Mrs. Merkel’s plea that the lawmakers overcome their aversion to risk and put Germany, Europe’s strongest economy, firmly behind efforts to combat the crisis, which has unnerved financial markets far beyond the Continent.

“The world is looking at Germany, whether we are strong enough to accept responsibility for the biggest crisis since World War II,” Mrs. Merkel said in an address to Parliament in Berlin. “It would be irresponsible not to assume the risk.”

The $1.4 trillion figure was generally accepted as the likely target for negotiators here, but many questions remained about how the enlarged fund would be financed.

Jack Ewing contributed reporting from Frankfurt, Rachel Donadio from Athens and Elisabetta Povoledo from Rome.

Article source: http://www.nytimes.com/2011/10/27/world/europe/german-vote-backs-bailout-fund-as-rifts-remain-in-talks.html?partner=rss&emc=rss

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European Leaders’ Promises Lift Asian Markets

October 11, 2011 by Leave a Comment

PARIS — Stocks fell modestly in Europe on Tuesday, after a rally in Asia, as the European Central Bank’s departing chief warned of an increasing risk of financial contagion from the euro zone debt crisis.

The broad European market was off less than 1 percent, and trading in index futures suggested Wall Street would start the day marginally weaker.

Jean-Claude Trichet, who is stepping aside from the top E.C.B. post to make way for Mario Draghi, told the European Parliament in Brussels on Tuesday that the financial crisis “has reached a systemic dimension,” Bloomberg News reported.

“Sovereign stress has moved from smaller economies to some of the larger countries,” Mr. Trichet said. “The crisis is systemic and must be tackled decisively.”

Mr. Trichet was speaking in his capacity as head of the European Systemic Risk Board, a body created last year to ensure supervision of the E.U. financial system. He steps down as E.C.B. chief on Nov. 1.

Investors were awaiting the outcome of a vote in Bratislava, where Slovakian lawmakers were scheduled to hold a debate later Tuesday on whether to back the European Financial Stability Facility. The Slovak government is divided on the bailout mechanism, and a failure of the vote could, at the very least, further complicate plans to shore up the euro zone.

On Monday, the European Council president, Herman Van Rompuy, said a European Union summit meeting on the debt crisis would be delayed by a week to Oct. 23 to give the bloc time “to finalize our comprehensive strategy on the euro area sovereign debt crisis covering a number of interrelated issues.”

Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France have promised a plan to recapitalize European banks before a Group of 20 summit meeting on Nov. 3.

“The sense of urgency among European officials that became apparent two weeks ago appears to be gathering steam,” analysts at DBS wrote in a note to clients. “One can’t be unhappy about that.”

In early trading, the Euro Stoxx 50 index, a barometer of euro zone blue chips, fell 0.5 percent, while the FTSE 100 index in London gave up 0.2 percent. Energy companies posted the largest declines as oil prices fell.

Standard Poor’s 500 index futures were down slightly, suggesting the U.S. market would be slightly weaker at the opening bell. The S. P. 500 powered 3.4 percent higher on Monday.

“The pressure on euro zone officials has ratcheted higher, and risks of failure are now too significant to jeopardize with half measures,” analysts at Crédit Agricole CIB said. “Weekend promises of banking sector capitalization by Germany and France have helped but will not be enough should such promises prove empty.”

Asian shares were higher across the board. The Tokyo benchmark Nikkei 225 stock average rose 2 percent. The Sydney market index S. P./ASX 200 rose 0.6 percent.

Chinese stocks initially rose a day after the country’s sovereign wealth fund bought shares in China’s four main banks in a show of support
, but the Shanghai composite index gave up all but 0.2 percent of the gain by the end of trading.

The Hang Seng index in Hong Kong also pared an early surge of more than 4 percent but ended the day up 2.4 percent.

The dollar was higher against other major currencies. The euro slipped to $1.3637 from $1.3642 late Monday in New York, while the British pound fell to $1.5646 from $1.5668. The dollar ticked up to 76.69 yen from 76.68 yen, and to 0.9043 Swiss francs from 0.9037 francs.

U.S. crude oil futures for November delivery fell 1.9 percent to $85.06 a barrel. Comex gold futures rose 2.1 percent to $1,670.80 an ounce.

Sei Chong reported from Hong Kong. Stephen Castle contributed reporting from Brussels.

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Sarkozy Proposes New Tax Measures to Lower Debt

August 25, 2011 by Leave a Comment

PARIS — With sluggish growth and the European debt crisis threatening to deepen France’s budget deficit, the government of President Nicolas Sarkozy on Wednesday announced a wide-ranging series of tax measures intended to generate an extra 11 billion euros, about $15.9 billion, in revenues for 2012, an election year.

This year’s budget is also expected to be bolstered by an additional $1.4 billion, Prime Minister François Fillon said at an evening news conference.

Mindful of the downgrade of American debt this month and the troubles in other European economies, Mr. Sarkozy has said he is committed to hitting lower debt targets for the next three years in order to keep the confidence of the markets and maintain France’s triple-A credit rating. But with French growth forecasts slipping — Mr. Fillon announced newly reduced projections of 1.75 percent for 2011 and 2012 — the government has been obliged to scramble to find alternative revenue sources.

“We have set ourselves on a trajectory,” Mr. Fillon said. “That trajectory commits us.”

The measures largely involve the closing of tax loopholes for larger corporations and the wealthy, some of whom will also face a small tax increase. Mr. Fillon also announced a partial reversal of a much-trumpeted 2007 reform exempting workers and employers from taxes on overtime pay. As one of Mr. Sarkozy’s campaign promises — part of the inspiration for the campaign slogan “Work more to earn more” — the measure was designed to undermine the Socialist-passed 35-hour week.

The measures, which also include taxes on alcohol, tobacco and sugary drinks, were finalized at a last-minute cabinet meeting Wednesday. They will be debated by Parliament next month.

Hard times bring resentment, and even Mr. Sarkozy has felt the need to further tax the richest in France. The higher tax on the wealthy — a 3 percent increase on total annual income and capital gains of more than $720,000, to remain on the books until the deficit dips to just 3 percent of gross domestic product — is expected to bring in about $288 million annually. While that is not a major dent in the $15.9 billion Mr. Sarkozy is seeking to generate for the 2012 budget, it is likely to be welcomed by the public.

After a similar call by the American billionaire Warren E. Buffett, 16 of France’s wealthiest people signed a petition urging the government to tax them more to in a period of austerity. Signatories to the petition, published this week in Le Nouvel Observateur, include the L’Oréal heiress Liliane Bettencourt (who was questioned by the police last year about suspected tax evasion), the company’s chief executive, Jean-Paul Agon, and the chief executive of Total, the energy company, Christophe de Margerie.

The group called for a “special contribution” in these difficult times but not a tax rate so high as to encourage the rich to quit France for overseas tax havens.

“We are conscious of having benefited from a French system and a European environment that we are attached to and which we hope to help maintain,” said the petition.

The current French budget was written with optimistic growth forecasts of 2 percent for 2011 and 2.25 percent for 2012. But G.D.P. grew only 0.9 percent in the first quarter this year, and not at all in the second, meaning that tax receipts will be lower and debt will be a higher proportion of the smaller G.D.P.

With a fiscal deficit of 7.1 percent of G.D.P. in 2010, the government has pledged to reduce it to 5.7 percent this year and to 4.6 percent in 2012, before reaching 3 percent in 2013. With the measures announced Wednesday, Mr. Fillon said France might exceed its goal for next year, reaching a deficit level of 4.5 percent.

In recent weeks, Mr. Sarkozy has also pressed France and his European counterparts for a “golden rule,” a constitutional amendment that would require future governments to seek to reach a balanced budget within five years. That stance, along with Wednesday’s tax measures, signal a shift in Mr. Sarkozy’s fiscal policy, political analysts say.

Several of Mr. Sarkozy’s emblematic policy stances have fallen victim to the economic downturn. In June, Mr. Sarkozy gave up on the “fiscal shield” he had championed, a rule ensuring that French taxpayers paid no more than 50 percent of their earnings to the state. Fiscal prudence and a firm and steady hand may prove a winning approach for 2012, Mr. Sarkozy has concluded, and he has already sought to cast his Socialist opponents as irresponsible spendthrifts.

They have countered by noting that Mr. Sarkozy’s calls for sober spending and national belt-tightening are hardly longstanding positions. Arnaud Montebourg, a Socialist lawmaker and a candidate in the presidential primaries, has called the French deficit “the bastard child of the right, a mixture of ideological choices and payoffs for its electoral clients.” Such complaints are widespread among the opposition and much of the electorate, where Mr. Sarkozy’s approval ratings have lately hit historic lows.

In an op-ed article Wednesday in Le Monde, Jérôme Cahuzac, the Socialist president of the finance committee at the National Assembly, cast Mr. Sarkozy’s call for a “golden rule” as purely political. Since Mr. Sarkozy became president in 2007, the government has created more than $28 billion in additional tax exemptions, Mr. Cahuzac wrote, saying, “The authorities of the country ought, urgently, to cease playing with our collective destiny in the hopes of saving their own.”

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French Court Puts Off Decision in Lagarde Case

July 9, 2011 by Leave a Comment

As Ms. Lagarde prepared to hold her first I.M.F. board meeting on Friday to consider another $3 billion in emergency financing for Greece, the French Court of Justice, which oversees the actions of ministers in office, said it would delay until Aug. 4 a decision on whether to look into her handling in 2007 of a court case involving a French tycoon.

It was the second time in a month that the court had postponed a ruling. A court official said one of the judges had recused himself, Reuters reported. The delay means another month of legal uncertainty hangs over Ms. Lagarde.

“It’s a bit surprising,” said Christopher Mesnooh, a partner in international business law at Field Fisher Waterhouse in Paris. “Given the high-profile conditions under which she replaced her predecessor at the I.M.F., one might have thought the court would have wanted to provide legal certainty today, to allow Madam Lagarde to commence her functions with a clear mind.”

Ms. Lagarde ushered in a new era at the I.M.F. on Tuesday as the first woman to hold the post of managing director, one of the top positions in international finance. She met at the fund’s headquarters in Washington with employees still ruffled by the resignation of her predecessor, Dominique Strauss-Kahn, after he was charged with the sexual assault of a hotel maid in New York. Her contract contains a section on conduct and ethics that requires her to “strive to avoid even the appearance of impropriety.”

At issue in the French court case is whether Ms. Lagarde abused her authority as finance minister in one of France’s longest-running legal dramas.

In 2007, she ordered that a dispute between Bernard Tapie, a flamboyant French businessman and friend of President Nicolas Sarkozy, and Crédit Lyonnais, a state-owned bank, be referred to an arbitration panel. The panel ultimately awarded Mr. Tapie a settlement of about $580 million, including interest.

Mr. Tapie, a former chief of the Adidas sports empire and a former Socialist minister who changed political loyalties to support Mr. Sarkozy’s 2007 presidential campaign, accused Crédit Lyonnais in 1993 of cheating him when it oversaw the sale of his stake in Adidas.

Mr. Sarkozy suggested that the Finance Ministry, which was overseeing the case because Crédit Lyonnais was a ward of the French state, move the case to arbitration.

Ms. Lagarde defended her role in the case again this week, telling French television that she had “exactly the same confidence and peace of mind” whether the court decided to pursue investigations or not.

If the court decides later to investigate, Ms. Lagarde will have to gird for a possibly lengthy legal process, although she would not necessarily be required to be present in France.

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Regulating the Internet in a Multifaceted World

June 26, 2011 by Leave a Comment

Last month, President Nicolas Sarkozy of France invited Internet company executives, digital policy makers and others to the French capital for a special meeting in advance of the gathering of leaders of the Group of 8 industrialized nations in Deauville, France. This week, it is the turn of the Organization for Economic Cooperation and Development to summon the digerati to Paris.

Like Mr. Sarkozy, the O.E.C.D., which analyzes the economic policies of the 34 industrialized democracies that make up its membership, aims to highlight the growing importance of the Internet in driving innovation and economic growth. In addition, the backdrop of both meetings is a growing interest in the future governance of the Internet.

The G-8 leaders, for example, called for greater global coordination of efforts to curb copyright piracy, child pornography and other lawlessness that thrives on the digital frontier, a cause that Mr. Sarkozy has championed. The tone of the discussions this week is expected to be more moderate, according to people involved in drafting the agenda.

“We’re trying to get the message across that if you hamper the flow of information, you are shooting yourself in the foot in terms of the economic benefits of the Internet,” said Sam Paltridge, an official in the O.E.C.D.’s directorate for science, technology and industry. “If someone comes along and threatens that openness, that’s a real problem for economic growth.”

A discussion document prepared for the O.E.C.D. meeting highlights the benefits of the existing model of Internet governance, in which governments, private companies and independent organizations all have roles to play but in which no single entity operates without checks and balances. This so-called multistakeholder approach has underpinned the openness and dynamism of the Internet, supporters say.

Yet the multistakeholder approach is not enshrined in any law or treaty, and it is not universally liked. The governments of Russia and some developing countries, which are not members of the O.E.C.D., have expressed dissatisfaction with it. They would like to see the International Telecommunication Union, a U.N. agency, exercise greater oversight.

Prime Minister Vladimir V. Putin of Russia met with Hamadoun Touré, secretary general of the I.T.U., this month in Geneva, where he said that “Russia was determined to contribute to the work of the union and to strengthen the collaboration with the organization,” according to an I.T.U. news release.

The official Russian government Web site carries a more detailed description of the discussions, saying Mr. Putin told Mr. Touré: “We are thankful to you for the ideas that you have proposed for discussion. One of them is establishing international control over the Internet using the monitoring and supervisory capabilities of the International Telecommunication Union.”

The I.T.U., which coordinates international use of the radio spectrum and allocates satellite orbits, among other things, also plans an international discussion on the future of the Internet during a meeting next year at its headquarters in Geneva. There, I.T.U. members are scheduled to discuss revising existing international telecommunications regulations, which were written in 1988, when the Internet was in its infancy.

O.E.C.D. members are said largely to agree on a desire to exclude the Internet from a revised telecommunications agreement.

“There is a realization that Internet governance wouldn’t work under a traditional treaty model,” Mr. Paltridge of the O.E.C.D. said. “If you do this via a treaty, are you putting a straitjacket on innovation?”

The I.T.U. does not plan to attend the O.E.C.D. meeting, said Sanjay Acharya, an I.T.U. spokesman.

Even among supporters of multistakeholder governance, some recent developments have raised concerns about the existing approach.

Last week, one of the key stakeholders, the Internet Corporation for Assigned Names and Numbers, which oversees the Internet address system, approved plans for a vast expansion in the range of addresses available. In doing so, the organization overrode doubts expressed by the United States, the European Union and other governments, as well as organizations representing trademark holders.

At a meeting of the board of the assigning corporation and its Governmental Advisory Committee, Gerard de Graaf, an E.U. representative on the committee, compared the situation to a conversation between “the deaf and the stupid.”

Even if multistakeholder governance is sometimes messy, advocates of an open Internet say it is preferable to alternatives, like greater government supervision.

Constance Bommelaer, director of public policy at the Internet Society, a group that campaigns against restrictions on the Internet, said her organization had been invited to participate in the drafting of a communiqué to be issued at the O.E.C.D. meeting. At the G-8 meeting, by contrast, the communiqué had been drafted in advance by government representatives.

“This time, we will participate on an equal footing with business and government, which is very encouraging,” she said.

Article source: http://www.nytimes.com/2011/06/27/technology/internet/27iht-internet27.html?partner=rss&emc=rss

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Europeans Agree to a New Bailout for Greece With Conditions

June 25, 2011 by Leave a Comment

“We have agreed that there will be a new program for Greece,” Angela Merkel, the chancellor of Germany, told reporters at the end of a two-day meeting in Brussels. “This is an important decision that says once again we will do everything to stabilize the euro over all.”

The comments came a day after Greece agreed with international creditors to more austerity measures as part of revised plans for 2011-15 aimed at plugging a gap in its future financing.

If the Greek Parliament approves this proposal next week, the European Union and the International Monetary Fund will release a 12 billion euro ($17 billion) tranche of emergency aid, and then put together a second rescue.

The shape and size of the new bailout could become clear at a meeting on July 3 of euro zone finance ministers in Brussels.

All this comes a little more than a year after the government in Athens won a package of loans worth 110 billion euros.

“Greece is supported,” President Nicolas Sarkozy of France said at a news conference. “Europeans trust the Greek authorities and Parliament in their endeavors to implement the bold measures that have been decided.”

After discussions with the Greek prime minister, George Papandreou, European leaders expressed confidence that Greece’s Parliament would approve the austerity package, which has already prompted large protests in Athens.

Changes to the plan, negotiated with European and I.M.F. officials Thursday, are certain to make it even less popular among Greek citizens.

The new austerity program will now include a one-time levy on personal income ranging from 1 to 5 percent, depending on income.

Meanwhile, the tax-free threshold on income will be lowered to 8,000 euros a year from 12,000 euros, with the lowest rate set at 10 percent — but with exemptions for people up to 30 years old, pensioners older than 65 and the disabled. There will also be an annual levy of 300 euros on the self-employed.

On Thursday, at a meeting of center-right parties in Brussels, the Greek opposition leader, Antonis Samaras, refused to bow to pressure to change course and support the new plan during next week’s vote. During the discussion, Mr. Samaras was warned that Europe was engaged in a war for its economic stability, according to one official who spoke on the condition of anonymity.

Reflecting the disappointment of European leaders at Mr. Samaras’s stance, Mrs. Merkel said that “it would be better to have the widest support.”

She also insisted that any new program for Greece should be monitored closely. “One needs to do a reality check on whether the assumptions are proved right,” she said.

Nonetheless, in a statement issued late Thursday, European Union leaders accepted the need for a “new program jointly supported by its euro area partners and the I.M.F.”

That could amount to as much as 120 billion euros, though no figures have been identified yet because euro zone countries are negotiating with private investors to determine their level of voluntary contributions.

After the meeting, Mr. Papandreou conceded that his country was on a “difficult path” but one that was “much better than the alternative path of defaulting.”

“I believe that this is something which is understood by the majority in the Greek Parliament,” Mr. Papandreou said, adding that he was sure that the 12 billion euros in emergency aid would be released next month.

At the summit meeting, an obstacle to the new rescue was removed when the leaders agreed that nations that do not use the euro would not be obliged to contribute through a fund that they finance along with countries that use the single currency.

Britain objected to taking part, arguing that it had not participated in last year’s Greek package and had no plans to join the single currency.

“For Britain, we weren’t involved in this bailout and we should not be involved, as a noneuro country, in anything that might happen subsequently,” David Cameron, Britain’s prime minister, said at a news conference. Some practical difficulties remain, including an insistence from Finland that any new loans to Greece should be guaranteed by collateral.

James Kanter contributed reporting.

Article source: http://www.nytimes.com/2011/06/25/world/europe/25iht-union25.html?partner=rss&emc=rss

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DealBook: Lactalis Bids $4.95 Billion for Rest of Parmalat

April 26, 2011 by Leave a Comment

Lactalis of France, one of the world’s biggest cheesemakers, said on Tuesday that it was bidding 3.4 billion euros, or $4.95 billion, for the rest of Parmalat of Italy that it does not already own — a deal that would create the largest dairy company in the world.

The Lactalis bid comes on the same day President Nicolas Sarkozy of France is arriving in Rome to discuss, among other things, the sensitive issue of French companies acquiring a number of their Italian peers.

“We have an ambitious growth plan for Parlamat, creating a benchmark Italian dairy group on a global level, which would keep its headquarters, organization and management in Italy,” said Emmanuel Besnier, head of the Lactalis Group.

Lactalis is offering 2.60 euros for each Parmalat share for the 71 percent of the company it does not already own. That is 12.45 percent above Parmalat’s closing price on Monday and 21.3 percent above its average share price in the last year.

The French company, which became Parmalat’s largest shareholder last month, has moved quickly to make a bid for the full company in the face of political opposition, citing a “change in the regulatory framework” tied to its investment.

Earlier this month, an Italian court decided to allow Parmalat to postpone its annual shareholder meeting until the end of June. The move would give the Italian government time to create new rules that could protect Italian companies from foreign takeovers.

“Milk is not a strategic product,” said Michel Nalet, a spokesman for Lactalis, citing the General Mills deal last month to buy half of the French yogurt maker Yoplait for $1.1 billion. Lactalis had originally bid for Yoplait, but was rebuffed.

Such cross-border deals have ruffled political feathers. When Pepsi was reported to be weighing a bid for the French yogurt maker Danone in 2005, the French prime minister at the time, Dominique de Villepin, said he would “defend the interests of France.” In the end, no bid was made.

In 2006, Lactalis bought another Italian dairy producer, the cheesemaker Galbani, from the private equity firm BC Partners, in a deal thought to be worth more than 1 billion euros.

“Galbani stayed Italian, and it’s now the second most important cheese in the group,” Mr. Nalet said. “We have the same strategy for Parmalat.”

Lactalis went further to reassure Italian authorities, saying that after the takeover it intended to relist Parmalat on the bourse in Milan, maintaining the necessary minimal free float.

In Rome, Prime Minister Silvio Berlusconi told reporters, “I do not consider the takeover bid a hostile takeover bid,” according to Reuters.

Parmalat shares rose 27 euro cents, or 11.7 percent, to 2.58 euros on the exchange in midmorning trading on Tuesday.

Parmalat gained notoriety in December 2003, when it disclosed that a bank account that supposedly held some $5 billion did not exist. The company soon toppled into bankruptcy. In December, Parmalat’s founder and former chief executive, Calisto Tanzi, was sentenced to 18 years in prison for his role in the collapse.

When it collapsed, Parmalat had 36,000 employees and was one of the top 10 companies in Italy — it also had 14 billion euros worth of debt. It emerged from bankruptcy in October 2005, the same month it went public, and now has about 14,000 employees.

The company reported 4.3 billion euros in revenue last year.

This month, four major investment banks were cleared by an Italian judge of charges that they had abetted Parmalat in concealing its debt and overstating its profit. Bank of America, Citigroup, Morgan Stanley, Deutsche Bank and their employees were cleared, though the case may be appealed.

On Tuesday, Lactalis said Crédit Agricole, HSBC, Natixis and Société Générale had agreed to finance the deal.

Article source: http://feeds.nytimes.com/click.phdo?i=2fcd6daea755d183e81e01dc48e97015

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