World Economic News
'An Atomic Group of 7' Emerge from Washington Meetings
The Group of Seven (G-7) (U.S., U.K., France, Canada, Germany, Italy, and Japan) Finance Ministers meeting, held April 13 in Washington, D.C., around the annual meeting of the International Monetary Fund, has called for nuclear energy for the first time.
The mention of nuclear power in the G-7 communiqué was a small paragraph that has major implications. It says, "In order to ensure energy security and to address climate change, we consider energy efficiency and the promotion of energy diversification to be important issues for both developed and developing economies. Diversification can include advanced energy technologies such as renewable, nuclear, and clean coal."
According to the French daily Liberation, the G-7 countries had not previously been able to come to an agreement on mentioning nuclear because of Germany's opposition, but the rise in oil prices and the growth of energy nationalism in countries such as Russia, Venezuela, and Iran, have led these countries to change their position.
Price Crash Forecast for Irish Housing Bubble
RTE, the national television network of Ireland, broadcast a documentary on April 16 warning of a nationwide housing price crash. The documentary, called "Future Shock: Property Crash," made by journalist Richard Curran, warns about the danger of a 30% collapse of property prices in Ireland, which has been suffering a big housing price bubble.
Curran, who is the Deputy Editor of the Sunday Business Post, points to the falling U.S. dollar, the downsizing of the construction industry in Ireland, and questions whether banks and other institutions have behaved responsibly towards "exposed groups such as first time buyers." Curran also looks at the effects of other property crashes, including the British 1990s debacle, on Irish emigrants.
U.S. Ambassador Tells Italy: Give Us Your Telecom, Now!
Ronald Spogli, Ambassador to Italy and founder of the private equity fund Freeman Spogli & Co., attacked Italy's "long tradition of public intervention in the economy," after the announcement April 17 that AT&T was dropping out of the race to buy Telecom Italia. AT&T reacted to rumors that the Italian government might prevent a foreign takeover of Telecom Italia, by re-nationalizing the network and selling concessions for services only. According to Goldman Sachs, as reported in Financial Times Deutschland, the second foreign bidder for Telecom Italia, Carlos Slim's America Movil, is also expected to drop out of the race.
Economic 'Hit-Men' Strangle Iran Financially
Less visible than the military deployments against Iran in the Persian Gulf, a more "discreet" battle is taking place between the U.S. and Tehranthe struggle to "strangle the Islamic Republic financially," says Natalie Nougareyde in Le Monde (April 17). Since the Autumn of 1996, American Treasury officials have developed a strategy for this, inspired by the boycott they imposed on North Korea, called "Naming and Shaming," that is, designating those economic interests which are too cooperative with Iran, and shaming them internationally, according to Le Monde.
And, after the U.S. approached some 40 large financial institutions and companies throughout the world, "the results are there.... According to diplomats and diplomatic experts, not a single European bank is still financing large projects in Iran," writes Nougareyde. Basically, Treasury economic hit-men pay visits to all foreign investors on Wall Street to talk to them about "sanctions, fines, or the eventual decisions of American pension funds to which those companies would be exposed if they would pursue their business affairs with the Islamic Republic."
This has been apparently extremely efficient, writes Nougareyde. The German Commerzbank and the Swiss UBS and Credit Suisse were rapidly convinced by the Bush Administration. In France, the BNP Paribas has strongly reduced its investments in Iran, and the global engagement of French banks in that country have dropped by half in one year. While not officially endorsing the American strategy, the French Foreign Affairs Ministry and the Finance Ministry have nonetheless sent out messages to French companies underlining the dangers of further engagements in Iran. Energy companies have also been put under great pressure. Total, the "French" oil "major" has been forced to cancel its planned investments this year in the South Pars liquefied gas site in Iran, because of threatened sanctions involving the Iran/Libya Sanctions Act of 1996. AFX news reported on April 17, that AREVA, the French public nuclear company, "excludes de facto any cooperation with Iran." AREVA only works with clients and governments that fully comply with the international regulations on nuclear energy."
Ecuador's President Threatens To Expel World Bank
Ecuadorian President Rafael Correa announced on April 15 that the World Bank and its representative will be expelled from Ecuador, unless the bank can provide an adequate explanation for its attempted "blackmail" of the country in August 2005, reports the government website, www.presidencia.gov.ec, and major Ecuadorian dailies. Correa knows whereof he speaks: He was Finance Minister that August, when World Bank officials suddenly informed him that the Bank would not disburse a $100 million loan which had already been approved for Ecuador, unless the government reversed its decision to use some of the country's surplus oil funds for national development and poverty reduction, instead of solely paying off foreign bondholders. At the time, Correa told the Financial Times that the loan cancellation was an "offense to Ecuador.... We are a sovereign country. Nobody can punish us because we are changing our own laws."
Correa's charge adds fuel to the international campaign to force the notorious neo-conservative heading the World Bank, Paul Wolfowitz, to resign, because he has been using the World Bank to crush countries that stand up for their sovereignty.
Uranium Demand To Surge, Says Japan Atomic Industry Forum
Because of the growing numbers of new reactors coming on line or in planning worldwide, a surge in the demand for uranium is expected to increase by one-third, according to reports from the Japan Atomic Industry Forum. The International Herald Tribune reported April 16 that the JAIF report came at a nuclear industry conference held last week in Aomori, Japan.
Mukhtar Dzhakishev, president of Kazakstan's state-owned uranium explorer Kazatomprom, said his country plans to triple its production to 25,750 tons a year by 2016. Kazakstan, the world's third largest producer of uranium, expects to produce 7,250 tons this year.
Jay Thayer, vice president of the U.S.-based Nuclear Energy Institute, told the conference that the U.S. expects to build 33 new nuclear power stations, in addition to the 103 existing ones. The U.S. already needs 52 million pounds of uranium annually, of which 80% is imported.
The U.S. produces 2,050 tons of uranium annually, Thayer said, but hopes to increase production to 5,000 tons by 2014.
IMF to Italy: Pay Debt; Let People Die!
In a rare Promethean impulse, covered by Italian Raiuno television, Italian Prime Minister Romano Prodi announced that an expected tax revenue surplus will not be used to pay debt, but will instead be redistributed among families and firms. Two-thirds of the surplus, estimated at a several billion dollars equivalent, will go to poorer families, mostly in the form of rent subsidies; one-third will go to corporations.
In response, Michael Deppler, head of the European Desk of the International Monetary Fund in Washington, said that Italy should reduce its budget deficit as a priority. "Therefore, all the surplus revenues must go to reduce the deficit or be allocated for reducing the debt," the IMF official said, according to Corriere della Sera of April 14.