privatization

I.M.F. and Europe Set Strict Terms for Cyprus

The other 9 billion euros, or $11.6 billion, of the bailout is to come from the other 16 euro zone countries whose approval is still required.

“This is a challenging program that will require great efforts from the Cypriot population,” Christine Lagarde, the managing director of the I.M.F., said in a statement issued by the fund, which is based in Washington.

The commitment comes after the completion of a memorandum of understanding the fund has drafted with Cyprus and the other two international organizations involved in the bailout, the European Central Bank and the European Commission.

Though it has not yet been made public, officials say the agreement includes budget cuts, the privatization of state-owned assets and other conditions Cyprus must meet.

It was another dose of strong medicine for Cyprus, which agreed last month to restructure an outsize banking sector by forcing huge losses on bondholders and big depositors in the country’s two biggest lenders.

Officials from the Cypriot government, which still needs its Parliament’s approval of the terms of the deal, sought to put a positive spin on the deal.

“This is an important development which brings a long period of uncertainty to an end,” Christos Stylianides, a government spokesman, said in a statement made available on Wednesday.

The bailout agreement “should have taken place a lot sooner, under more favorable political and financial circumstances,” said Mr. Stylianides, who was apparently referring to infighting in Cyprus about responsibility for the debacle.

Before the deal, the Cypriot economy was expected to shrink 3.5 percent this year, with unemployment hitting nearly 14 percent. Now, under the strict bailout measures, some experts predicted the economy could contract 5 percent or more, sending unemployment even higher.

The memorandum will not be made public before euro zone governments review it, Olivier Bailly, a spokesman for the European Commission, said at a news conference on Wednesday. Euro finance ministers will hold an informal meeting next week in Dublin, where they might give their backing, Mr. Bailly said.

Full legal approval, though, is expected only after the Parliaments in some euro area countries like Finland and Germany vote on the deal. If those approvals are completed by the end of month, Mr. Bailly said, Cyprus could receive its first aid payment in May.

The Cypriot authorities on Tuesday described elements of the agreement that they said were favorable.

Mr. Stylianides, the Cypriot spokesman, said the deal safeguarded important parts of the economy by keeping potentially valuable offshore deposits of natural gas under Cypriot jurisdiction, and by winning two more years, until 2018, to hit deficit targets and carry out privatizations.

Mr. Stylianides also said the government saved the jobs of contract teachers and of 500 civil servants, and had overcome demands by the international lenders to tax dividends.

But the memorandum could be hotly contested by the Cypriot Parliament, where many lawmakers have criticized the measures that already have been taken, like capital controls — tight restrictions on transfers and withdrawals of money — that threaten to make a bleak economic outlook even worse.

In a change partly aimed at easing those tensions, the government on Tuesday appointed a new finance minister, Harris Georgiades, to succeed Michalis Sarris, who resigned. Mr. Sarris has been criticized at home and abroad for his handling of the crisis.

Mr. Georgiades, who had been the deputy finance minister, said on Wednesday that capital controls would be lifted “gradually” and that the country would meet all of its bailout targets.

Over the course of the negotiations, the spotlight fell on whether the monetary fund was being too forceful in pressing for the country to quickly reduce its debt and impose losses on bank shareholders and big depositors. The approach strained relations with the European Commission, which had concerns about the confidence-sapping effects that such aggressive measures might have on other countries.

In an apparent show of unity on Wednesday, Ms. Lagarde jointly issued a statement with Olli Rehn, the European commissioner for economic and monetary affairs, pledging to “stand by Cyprus and the Cypriot people in helping to restore financial stability, fiscal sustainability and growth to the country and its people.”

The monetary fund’s share of the package for Cyprus was smaller than in some previous arrangements for countries like Greece. But Mr. Bailly, the commission spokesman, said it did not signal a change in policy.

The sums given by the fund depend on the “specific situation” in each country, he said, adding that the billion-euro, three-year loan for Cyprus was unanimously agreed upon by the I.M.F., the European Commission and the European Central Bank.

Ms. Lagarde said Cyprus needed to make substantial spending cuts “to put debt on a firmly downward path,” including in areas like social welfare programs. But she said the plan sought to be evenhanded.

“The fiscal and financial policies of the program seek to distribute the burden of the adjustment fairly among the various segments of the population and to protect the most vulnerable groups,” she said.

More than 95 percent of account holders at Laiki Bank, which will be closed under the plan, and at Bank of Cyprus, which is being restructured, were fully protected, she said.

The main fiscal measures, she said, included raising the country’s corporate income tax rate to 12.5 percent from 10 percent.

Article source: http://www.nytimes.com/2013/04/04/business/global/imf-to-contribute-1-billion-euros-to-cyprus-bailout.html?partner=rss&emc=rss

E.U. Proposes Overhaul of Fisheries Policy

PARIS — European Union officials on Wednesday proposed a major overhaul of the bloc’s fisheries policy, including the creation of a market in fishing rights. But environmentalists criticized the plan for not addressing the most vital issue: the overcapacity of the bloated European fleet.

Maria Damanaki, the European Union’s commissioner for maritime affairs and fisheries, said in Brussels that the changes were needed because scientific models suggested that only 8 out of 136 fish stocks in E.U. waters would be at sustainable levels in 2022 if no action were taken.

“If we don’t make structural changes to the way we do business now,” she said, “we will lose one fish stock after the other. I want to break this vicious circle.”

Ms. Damanaki said the introduction of tradable fishing rights, which would be imposed at the national, rather than E.U. level, would put responsibility for safeguarding fish stocks with the industry and help reduce overcapacity.

The privatization of fish stocks is meant to address the so-called tragedy of the commons, the idea that a publicly held resource will be overexploited because all the users have an incentive to maximize its use in the short term, even if the long-term cost is the total destruction of the resource.

But scientists and conservationists were skeptical that privatizing fish stocks was the solution.

“It’s absolutely not clear how they intend to allocate the rights in the first place,” said Markus Knigge, a fisheries policy adviser to the Pew Environment Group. “What you want is for the most ecologically sustainable fisheries to end up with the rights.”

“The fear is that they won’t even say you have to take environmental and social factors into consideration,” Mr. Knigge added, “but rather just hand over the rights to those who have been overfishing.”

Europeche, an organization of national European fishing organizations, itself has noted that “opinions are divided on the appropriateness of using transferable fishing rights,” with small-scale coastal fisheries fearing that large fishing companies would crowd them out.

The proposal Wednesday was notable for what it did not contain: any measure to directly reduce the overcapacity in the European fleet. A previous report to the European Commission had identified the mismatch between fleet and fish as the most important issue to be addressed.

“Trading around fishing quotas won’t stop overfishing, especially without a clear pathway to bring the fleet size in line with how much fish is left in the sea,” Saskia Richartz, a fisheries policy adviser at Greenpeace, said in a statement.

Critics of Europe’s fisheries policy say that much of the problem comes from the subsidies the industry receives, well over €1 billion a year, according to Fishsubsidy.org, with Spain’s fleet alone getting about half. They say the subsidies — in the form of tax breaks on diesel fuel and aid for building, modernizing and scrapping vessels — results in too many boats to chase too few fish, and leaves the industry dependent on public largess.

Another measure proposed on Wednesday would eliminate rules requiring the discarding of bycatch, or valuable species taken incidentally. The move to end the wasteful practice was welcomed by both the fishing industry and conservationists, who hope it will result in the use of more selective techniques to catch the target fish.

The bycatch issue has recently become the subject of a high-profile television campaign led by Hugh Fearnley-Whittingstall, a British celebrity chef, who has collected nearly 700,000 signatures of support for ending the current practice.

Opponents claim that current E.U. rules lead to as much as 50 percent of the entire catch being dumped backed into the ocean — dead — because fishing operators are not allowed to land species for which they have already met their quotas.

Conservationists welcomed a proposal that all fish stocks are “to be brought to sustainable levels by 2015,” in line with the Union’s international commitments. But skepticism remains there as well because fishing decisions in Europe tend to be made on political, rather than scientific, grounds, and many national governments lack the will to enforce regulations.

The proposal, part of a once-a-decade review of the bloc’s Common Fisheries Policy, may require a year or more of negotiation and consultation before being adopted. But the European Commission strongly backs the measures, officials say, and the final rules are expected to be largely in line with the current plan.

Article source: http://www.nytimes.com/2011/07/14/business/global/eu-proposes-overhaul-of-fisheries-policy.html?partner=rss&emc=rss

I.M.F. and Europe Set Strict Terms for Cyprus

E.U. Proposes Overhaul of Fisheries Policy

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