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‘Greece approves austerity budget plan’

The Greek cabinet approved a 2012-2015 austerity budget plan as well as laws for its implementation, a key condition for further EU-IMF help to tame a massive public debt, government sources said.


The government had committed to another round of stiff budget cuts and tax hikes in return for fresh EU-IMF cash and a new debt rescue deal.

The austerity measures will add up to more than 28 billion euros by 2015 and include a major privatisation programme to raise 50 billion euros — a provision bitterly opposed by the unions who plan a 48-hour general strike in protest.

The government won the confidence motion by 155 votes to 143 but Prime Minister George Papandreou now faces a fraught challenge to overcome dissent within his Socialist party over the debt-cutting onslaught.

Papandreou attends an EU summit Thursday and Friday in Brussels where the Greek debt crisis is very high on the agenda.

His eurozone peers will be very anxious to know if he can get the latest steps through parliament after the close confidence vote.

Eurozone ministers have insisted on the latest measures before they would release the next tranche of debt funding worth 12 billion euros ($17 billion), part of a 110-billion-euro rescue package agreed with the European Union and International Monetary Fund last year.

The money will be used to cover debt repayments coming due next month and give Greece and its partners time to work on the next step — a new rescue plan to keep Greece solvent for long enough so that it can grow its way back to fiscal balance.

The Greek finance minister will meet officials from the EU, IMF and European Central Bank in Athens Thursday to review the implementation of the new measures, the ministry said.

Parliament’s vote on the legislation promises to be dramatic, with the financial markets watching the outcome closely given fears that a Greek default could hit other weaker eurozone members or even sink the euro entirely.

In Washington, US Federal Reserve chief Ben Bernanke warned that the Greek debt crisis could threaten the stability of the global financial system, not just the eurozone.

“If there were a failure to resolve that situation, it would pose threats to the European financial systems, the global financial system and to European political unity,” he told a press conference.

Bernanke stressed that the Fed is not part of the negotiations to resolve the crisis, but has been “kept well-informed,” citing a conference call over the weekend with the G7 (Group of Seven) rich countries on the issue.

During the Greek parliamentary debate leading up to the confidence vote in the early hours, Papandreou called for support “to avoid bankruptcy and keep Greece in the euro core.”

The most immediate concerns are over Ireland and Portugal, bailed out by the EU and IMF like Greece, while Spain, or even Italy and Belgium, are considered potentially at risk of being dragged down should Athens go bust.

“We have a unique opportunity (to change the country)…. If we falter, if we lose heart and squander it… history will judge us very harshly,” Papandreou said early Wednesday.

The union in the electricity operator PPC, which opposes the sale of a 17-percent stake in the company under the privatisation plan, on Monday temporarily cut power at the infrastructure ministry.

It also began hour-long electricity cuts around the country, intending to escalate them when the reforms are being debated.

“In the end, the decision on this matter will be decisive for the future of aid payments to Greece, not (the) vote of confidence,” analysts at Germany’s Commerzbank commented.

“(Socialist) members who were afraid of an early election… will not necessarily vote in favour of the government’s fiscal policy,” they wrote.

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IMF calls Australia to seize mining boom

The International Monetary Fund said Friday that Australia needs to take advantage of the ongoing mining boom to enact tax reforms and build a rainy-day fiscal cushion.


Calling Australia’s economic performance in recent years “enviable”, the IMF said in its annual report that there were few serious weaknesses in the economy.

Australia “was one of the few advanced economies to avoid a recession in recent years, reflecting its strong position at the onset of the crisis and a supportive macro policy response,” the IMF said.

“The good performance can also be attributed to a healthy banking system, a flexible exchange rate, and robust demand for commodities from Asia, especially China.”

But, it underlined, while the economic outlook is “favorable”, the economy does face real risks: a stall in the global economy or faltering Asian growth could hit income from commodity exports.

Moreover, it added, partly due to the disastrous cyclones and flooding in Queensland and Western Australia, the government had a wider-than-expected budget shortfall in 2010-2011 of 3.5 percent of GDP.

“Directors stressed that over the medium term, the government should grasp the opportunity provided by the mining boom to strengthen fiscal buffers further, recommending that a budget surplus of at least one percent of GDP be targeted for the period beyond 2013/14.”

“A reduction in government debt and buildup of public funds would give fiscal policy the flexibility needed to respond to larger shocks and deal with the long-term pressures from aging and rising health care costs.”

It also urged reform to taxes such the state stamp duties on house sales — which it says discourage worker mobility — and reduction of the effective marginal income tax rates, while the economy is strong and government income buoyant.

It said that Australia could supplant the lost income from such reforms with more dependence on consumption and land taxes, and broadening the proposed minerals resource rent tax to cover more than coal and iron.

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Spain set to swing right, stalked by debt threat

Spain’s Conservative leader Mariano Rajoy is set for a crushing win in Sunday’s general election, but will come under instant pressure to convince investors that he can strengthen its public finances.


Rajoy and his conservative Popular Party are expected to beat Socialist Alfredo Perez Rubalcaba by a wide margin when voters punish the Socialists for their economic woes, with unemployment at more than 21.5 percent.

His promises of further tough spending cuts have not stopped him opening a wide lead in the polls, but financial markets have raised the stakes by pushing up rates on government bonds to euro-era records ahead of the vote.

Rajoy has avoided scaring voters with details of his austerity plans but analysts say the rise in debt costs will force him to flesh them out quickly, to reassure its lenders that Spain will not need to be bailed out.

“We must make cuts everywhere” except in pensions, said Rajoy, 56, in an interview published Thursday in El Pais newspaper. “Spain needs to send a message that it takes the issue of the public deficit seriously.”

The cost for Spain to borrow money crept up to dangerous levels in the days before the election. Similar pressures have already prompted changes of government in Italy and Greece.

On Thursday Spain’s Treasury had to pay a rate of 6.975 percent on its 10-year bonds — near the levels that prompted Greece, Ireland and Portugal to seek help from the EU and International Monetary Fund.

Its key debt risk premium hit a euro-era record of 4.99 percentage points.

The latest polls suggested the PP could win an absolute majority in parliament, strengthening Rajoy’s hand for reforms if he officially takes over as prime minister on December 20.

“If the government emerging from the election achieves an absolute majority, we consider it highly probable that as early as next week it will announce a package of key reforms aimed at regaining credibility over the economy,” analysts from Bankinter bank said in a note.

They expected reforms to labour laws, taxes and the financial sector.

Measures brought in by the current Socialist government have already cut public sector salaries by five percent, frozen pensions and raised the retirement age, prompting street protests.

In the latest of these, thousands of doctors, teachers and students marched in Madrid and Barcelona in several demonstrations against cuts to education and healthcare budgets by PP-led regional governments.

After seven years of Socialist rule, Spain’s unemployment rate is the highest in the industrialised world at more than 21.5 percent, with nearly five million people jobless, and many voters disillusioned.

“The situation in Spain is bad, awful,” said Alberto Jaray, 38, who sells sweets on a Madrid street.

“And these elections are a farce. The two main parties are both liars. They are only interested in the banks, the big companies.”

Analysts said the new government’s imperative in the weeks after Sunday’s election will be to send a strong message that it has a grip on the public finances to prevent jitters over Greece and Italy spreading to Spain.

“If the markets think the new government is not going to act with the necessary determination, they will raise the risk premium further,” said Daniel Pingarron, analyst at trading house IG Markets.

“They will force the new government to take the austerity measures more seriously.”

Other voters seemed resigned to more austerity.

“The Popular Party is going to win and what’s more it will have to take very drastic economic measures,” said Federico Cres, 43, an airline worker in Madrid.

“The current government took them late. It should have taken them much sooner.”

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World stocks retreat on Greek default fear

Stocks plunged and the euro fell on Monday as signs of German impatience with Greek debt woes and fears over French banks compounded worries that the world is set for another recession, analysts said.


Wall Street fell less sharply than the steep drops in Europe. Tokyo struck its lowest close in 29 months after the G7 group of rich nations admitted that current economic problems were so complex that a unified response was impossible.

French banking shares dived more than 10 per cent on concerns that Moody’s credit rating agency might downgrade their ratings because of the amount of Greek debt bonds they hold.

“The political theatre playing out in Europe continues to drive investors towards the exits with policymakers adopting an increasingly tough line with respect to Greece as bailout fatigue in northern Europe starts to manifest itself alongside austerity fatigue in southern Europe,” Michael Hewson of CMC Markets in London said.

At close in Europe, Paris’ CAC 40 index of leading shares fell 4.03 per cent to 2,854.81 points. In Frankfurt, the DAX slid 2.27 per cent to 5,072.33 points and in London the FTSE-100 index dropped 1.63 per cent to 5,129.62 points.

Elsewhere in Europe Milan dropped 3.89 per cent, Madrid 3.41 per cent, Lisbon 4.2 per cent and Brussels 3.06 per cent.

The euro slid to 103.90 yen — the lowest level since 2001. It later pulled back to 105.32 yen, which compared with 105.91 yen on Friday.

On Wall Street in early afternoon trade, the Dow Jones Industrial Average sank 0.66 per cent to 10,990.01 points, the broader S&P 500 fell 0.61 per cent to 1153.50 points, while the tech-heavy Nasdaq Composite was flat at up 0.08 per cent to 2442.86 points.

Lee Hardman, currency economist at The Bank of Tokyo-Mitsubishi UFJ said the intensifying sell-off in both the euro and risk assets in general reflected “heightened investor fear that Greece is on the verge of defaulting which could plunge the weak global economy back into another Lehman-esque recession.”

“Hopes for coordinated action from the G7 finance ministers over the weekend to restore confidence to financial system predictably fell short of expectations.”

Europe’s single currency dropped as low as $US1.3495 – the lowest point since February – before recovering to $US1.3648 almost unchanged from $US1.3649 on Friday.

“Given how sharply it has dropped, the euro could easily experience a short squeeze over the next few days and respond positively to any news events that don’t suggest an imminent crisis. However, we doubt that a sustained rebound is in the cards over the next few weeks,” analysts Greg Anderson and Valentin Marinov at CitiFX said.

The flight to safety drove down the yields on 10-year bonds issued by Germany and the United States to historic low levels. Borrowing prices fell for France as well.

At ING Debt Strategy, analyst Alessandro Giansanti also noted the shock to sentiment of the announcement on Friday that the chief economist at the European Central Bank, Juergen Stark would step down early.

Giansanti, noting this was rumoured to be because of “personal disappointment with the ECB purchasing of Italian and Spanish bonds,” said it had sparked heavy selling of bonds issued by eurozone countries in trouble.

Bank watchers suggested his exit showed the ECB was deeply split over its approach to handling the sovereign debt crisis.

Greece announced on Sunday 2 billion euros ($A2.62 billion) in budget cuts demanded by the EU and the IMF to unlock more funds under its 110-billion euro rescue package to avoid a default.

EU Economy Commissioner Olli Rehn welcomed the move, but European finance ministers are split over how to deal with obstacles holding up a second 160-billion-euro bailout for Greece, agreed in principle in July.

With Athens having difficulty meeting its commitments to receive further rescue funding, on Saturday, Der Spiegel magazine reported that the German government was preparing two contingency plans in the event of a Greek default.

“What would never have been contemplated a few months ago is now being openly discussed, as talk gathers pace of Germany looking towards a plan B to recapitalise and protect its banks in the event of a Greek default,” analyst Hewson said.

The Tokyo stock market tumbled 2.31 per cent on Monday to close at its lowest level for almost two-and-a-half years, with exporters again feeling the most pain as the euro sank against the yen.

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Battles as Greece cuts deep

Lawmakers voted 155 to 138 for the hotly-disputed package to slash 28.


4 billion euros ($40 billion) from the balance of government spending by 2015, a plan aimed at unlocking emergency finance from the EU and the IMF.

An estimated 500 to 600 hardcore youths hurled missiles, according to police, who responded with volleys of tear gas that blanketed Syntagma Square in front of the parliament and reached high floors in surrounding buildings.

Security forces drove protesters further away from the parliament, but a blaze broke out at the finance ministry on the far side of the square amid early evening running battles.

“We’re going to carry on the protest until the government falls, and it will fall,” said student Thanas, 22, told AFP.

“It’s chaos here, we’ll stay whatever happens though, we’re going to fight to take back the square,” added 22-year-old law student Debbi.


European Union leaders including German Chancellor Angela Merkel hailed the parliamentary endorsement for the austerity measures, despite the fact a second vote on the detail behind the measures has still to be held on Thursday.

The euro firmed and Greek stocks again rose as EU president Herman Van Rompuy applauded a “vote of national responsibility.”

The yes vote was “the only way to buy time and start the great changes this country needs,” Papandreou said, pledging to do “everything to avoid the collapse of this country,” and prevent default on its 350-billion-euro debt.

The plan is a condition for 12 billion euros of emergency loans needed by mid-July from stressed eurozone partners and the International Monetary Fund, that could now be unlocked by eurozone finance ministers as early as their next meeting on Sunday.

Eurozone chief Jean-Claude Juncker urged another yes vote on Thursday “in these grave and crucial times for Greece” as MPs started their debate on the “implementation” of radical reforms.

Five lawmakers voted ‘present’ — a political statement indicating they could back the second vote if the majority gets squeezed.

“We have taken a big step,” Finance Minister Evangelos Venizelos told the Athens News Agency. “Tomorrow we will take the second so that I can go on Sunday to see my Eurogroup partners with real proof of the country’s credibility.”


Papandreou’s only rebel was blind MP Panayotis Kouroublis, who was immediately expelled from the party.

Governing party lawmaker Alexandros Athanassiadis, who had said he would vote against the package but then didn’t, was attacked early evening by jeering demonstrators who threw water bottles at him, police said.

The aim in privatising a dozen utilities and other public assets is to raise 50 billion euros by 2015, but the sale of the state’s majority holding in the national electricity company is a particularly divisive element in the detail.

The Health Ministry said around 100 demonstrators and 31 officers had received hospital treatment for breathing troubles and wounds to the head, though no one had been seriously wounded. Police said they had made 11 arrests.

Amid rioters’ accusations of police provocation, Greek Finance Minister Evangelos Venizelos told parliament he would look into the situation but slammed the violence against the post office and banks as “appalling.”

Protesters erected makeshift barriers on the square, hurling firecrackers, rocks and metal barriers at security forces, before more tear gas sent them scuttling down metro steps, those without masks struggling to breathe or see.

“Everyone in the streets at the moment is really angry, and some are scared, you don’t know what’s going to happen” joiner John Papadopis, 35, told AFP on the square.

On the second day of a 48-hour general strike, many protesters had said they expected the cocktail of taxes, spending cuts and sell-offs deemed essential for wider eurozone stability to pass — but that they would be back.

“Too many of these protesters are just out for fun,” bartender Helene told AFP. “They don’t have jobs so they come here at night for a party.”

The general strike brought about power cuts and ground transport in the capital to a halt.

Once the July cashflow needs are met, a second bailout expected to be worth a similar amount to last year’s 110-billion-euro rescue can be thrashed out.

The main sticking point involves how much banks and other private creditors will contribute by way of a ‘rollover’ of existing debts.

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Bangladesh floods displace 120,000

Floods in southwest Bangladesh have inundated vast swathes of farmland, affecting nearly a million people, many of whom are stranded on embankments with no food or shelter, officials said today.


Heavy monsoon rains in recent days have caused at least five rivers to burst their banks, flooding more than 1,000 square kilometres (400 square miles) of farmland in the remote Satkhira district.

“Nearly a million people have been affected by floods in Satkhira. Among them, 120,000 people have been displaced,” district administrator M. Abdus Samad said.

The government has stepped up relief efforts in the area, Samad said, adding that those who have lost their homes are staying in a network of 284 temporary relief centres and are receiving emergency rations.

More than 1,500 tonnes of rice and a large quantity of high-energy biscuits have been distributed by government workers to the displaced families, he said.

The World Food Programme (WFP) is also providing emergency food assistance to 57,000 people affected by floods in Satkhira, the agency said in a statement.

“A vast number of ultra-poor people are stranded on embankments, with no access to food and shelter,” said Michael Dunford, the acting WFP Country Director.

Bangladesh is criss-crossed by more than 200 rivers and is regularly hit by floods during the monsoon season, spanning from June through September.

The country receives some 80 percent of its annual rainfall during the monsoon, when heavy rain water gushes from two Himalayan rivers — the Ganges and the Brahmaputra — causing many local rivers to breach their banks.

Last month, 21 people were killed and 400,000 were marooned in flash floods and landslides in southeastern Bangladesh.

In 2007, during the most recent episode of severe flooding, nearly 1,100 were killed and more than 2.5 million were displaced.

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Greek ministers approve new austerity

The Greek Cabinet has approved a new round of painful austerity measures and a 50 billion euros ($A68.


71 billion) privatisation drive that are essential for the debt-ridden country to continue receiving funds from its international bailout.

Greece is lagging behind with reforms promised in return for last year’s 110 billion euros ($A151.16 billion) package of rescue loans from its European partners and the International Monetary Fund.

Fellow eurozone governments have warned that if the country does not enforce new austerity, it will be cut off from aid.

Without the next 12 billion euros ($A16.49 billion) installment from its rescue loans due in July, Greece, which remains stuck in recession and locked out of international bond markets, will default on its massive debts.

Finance Minister George Papaconstantinou said the plans were submitted to Parliament shortly after their approval.

“The medium term framework includes interventions to achieve a deficit of 7.5 per cent of GDP (gross domestic product) in 2011, and broader interventions to reduce the deficit below three per cent of GDP by 2014, and around one per cent for 2015,” he said.

“It also advances the broader privatisation program.”

No specific date has been set for a vote, but Cabinet officials said they expected it to be held before June 28.

The governing Socialists hold a six-seat majority in the 300-member legislature, but many party backbenchers have strongly criticised the new austerity plan – which follows a series of pension and salary cuts last year, accompanied by increases in taxes and retirement ages.

However, none of the disgruntled Socialist lawmakers have openly threatened to vote against the measures.

Once the package is approved, the government will table supplementary legislation on its precise implementation.

Officials say both pieces of legislation must be ratified before Greece can receive the next installment of the EU and IMF loans.

The new plans include a remedial 6.4 billion euros ($A8.79 billion) package of cuts and tax hikes for this year, a renewed 22 billion euros ($A30.23 billion) austerity drive for 2012/15 and the privatisation program.

Officials said all Greeks earning more than 8,000-10,000 euro annually will be charged an extra tax worth up to three per cent of their income every year for the next four years, while the sales tax on restaurants and bars will increase to 23 per cent from the current 13 per cent.

Civil servants and pensioners will suffer more income cuts, while health, education, defence and social spending will be further curtailed.

“We have sought and we have found the fairest possible solution” in the new austerity cuts, Prime Minister George Papandreou said, according to another Cabinet official who was reading from a text of the premier’s remarks.

Eurozone finance ministers meeting in Brussels on June 20 and EU leaders gathering on June 23-24 are to discuss Greece’s situation.

“We expect the Greek parliament to approve the measures put forward by the Greek authorities in the last review of the troika, so that the euro area finance ministers can take this into account when they decide on the next disbursement,” Amadeu Altafaj-Tardio, a spokesman for the EU’s Monetary Affairs Commissioner Olli Rehn, said in Brussels shortly before the Cabinet approval.

The pressure on Papandreou and his government is greater than ever, with the country’s international creditors calling for cross-party support for the bailout program and openly criticising the slow pace of reforms.

“After a strong start in the summer 2010, reform implementation came to a standstill in recent quarters,” the European Union, the European Central Bank and the International Monetary Fund wrote in a summary of their recent assessment of Greece’s efforts.

The Associated Press obtained a copy on Thursday.

The three institutions, known as the troika, also cited “political risks” to the implementation of the budget cuts and privatisation program in their findings, which were circulated among eurozone finance ministers Wednesday.

Those “doubts on the ability and the willingness of the Greek government and society to persevere in fiscal consolidation, and in restoring competitiveness” are the main reason Greece likely won’t be able to access financial markets again next year, leading to serious financing gaps, the troika concluded.

In the first quarter, Greece’s GDP shrank 5.5 per cent from a year earlier, the national statistical agency said Thursday.

The troika now expects Greece’s economy to shrink by 3.8 per cent in 2011, worse even than the 3.5 per cent recession the EU predicted only in May.

Without the additional measures this year, Greece’s budget deficit would remain above 10 per cent of economic output, the troika said, way off the 7.5 per cent target set out in the program.

The Finance Ministry said the measures would bring the national debt down to 139.5 per cent of GDP by 2015, as opposed to a suffocating projected 198.9 per cent if no measures were taken.

In addition to the recession, the crisis has led to significant job losses, with unemployment in March reaching 16.2 per cent, the highest since monthly data began to be released in 2004.

The protracted pain, with little prospect of respite visible on the horizon, has prompted a series of strikes and protests.

Workers at Greek state-run companies walked off the job Thursday to protest the government’s privatisation plan, which they fear will lead to further job and salary cuts.

Under the slogan “we won’t sell,” they marched through central Athens.

Public transport workers walked off the job in the early morning and late evening, while port workers, post offices and banks called a 24-hour strike. Television station technicians were also on strike, as were journalists at the state-run broadcaster, disrupting live news programing. A general strike has been called for June 15.

Angry Greeks have taken over the central Syntagma Square, setting up a tent city in a sit-in. Tens of thousands of people thronged the square, which lies in front of Parliament, last Sunday.

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Q&A: The causes of the Somalia famine

While it is true that droughts are an act of nature, there is nothing “natural” about the resulting famine in Somalia, an expert told SBS.


Dr Tanya Lyons is a Senior Lecturer at the School of International Studies at Flinders University in Adeialde, SA. She is also the editor of the Australasian Review of African Studies. SBS asked her to explain the causes of the Somalia famine.

“The biggest cause of the Somalia famine is the failure of the state to protect its citizens. Twenty years ago we saw a famine unfold and we saw a failure of the international community to intervene effectively to protect these vulnerable people who didn’t have a government to look after them.

Their competing plans, factions and war lords were all competing with each other, competing for scarce resources and they are unable to effectively provide any services or support for the people in that country. A lot of people fled Somalia then. A lot of people became refugees in other countries.

So, do the roots of this famine go a long way back in history?

It could be argued that it all stems from the colonial days with Britain and Italy forming protectorates in those areas. Back in 1960, they got their independence but with the country continually being affected by droughts, these continually turned into famines because they didn’t have systems and processes in place to protect the security of their people.

In the last 20 years, after the disastrous US-led intervention, and after they withdrew from the country in the early 1990s, having completely failed in their tasks of setting a secure state and enabling the vulnerable people in being given food, it has been a constant cycle of intervention where humanitarian aid and food relief have been brought in only at the will of local war lords or clans that still have this kind of authority at the end of the rifle to let the food come to the people.

So it is only at the will of war lords that the people can get hold of food relief if they need it. The whole country is dependent on this foreign humanitarian aid and it’s just that cycle of dependence.

What role did Al Shabab play in creating this crisis?

Of course thrown into the mix is the Al Shabab terrorist organisation, which has connections with al Qaeda, and the US played a role in trying to get rid of them and have some power over the country. Now there is an interim western-backed government in place but unfortunately they don’t hold authority over the country, nor any legitimacy.

Al Shabab has been competing to get power to install Islamic law across the country. The US has been using that political situation in trying to install a pro-democracy government, so they don’t want humanitarian aid to go to support terrorist groups. So they haven’t been providing that humanitarian aid in the lead up to the drought and to prevent the famine.

A lot of shipments of food aid will get into the system and will go in the hands of terrorist organisations and they will use it in the same way that Zimbabwe’s President Robert Mugabe used food aid a couple of years ago to gain the support of the people in rural areas. They will use aid make it look like they are the one helping the people in need to get the votes and the support of the local communities.

There are also foreign economic interests in Somalia — for example four major US oil companies are operating there.

I would say Somalia is the most complex country in the world. The reason it’s so important is the Gulf of Aden and the US has been trying at least to put a pro-democracy government and make it work because they need to get in and pass through the Gulf of Aden unaffected by the pirates.

It is no surprise to me that there is oil interest in that region and it’s the same in Sudan as well and I am sure that that would be another reason why Americans are so interested in getting a government that can talk to and work with and get rid of the power of Al Shabab who are more likely to do business with competing countries like China or other countries that are also interested in the oil on the ground or in the ocean off Somalia. This is a typical scenario in the African continent since independence in the 1960s.

Was this crisis brought about also by corruption?

I think it’s more the weakness and failure of a state rather than straightforward corruption.

There’s certainly corruption in the sense that well meaning humanitarian aid that is given to the country would be redeployed to support troops or insurgent troops in that region. To that extent it’s difficult for the international community to feel confident that they can make a difference to these vulnerable people suffering.

Plus, there is always the issue that the local communities may distrust or not trust aid workers thinking they may be spied working for foreign government and they may be targeted. Because there is that lack or trust in the international community.

And it’s only recently that Al Shabab made an agreement with the World Food Program to allow food to come in to help people in the communities that they have control over to access some of this food aid, realising that it may win them favours rather than getting aid workers to leave.

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Japan starts shutdown of nuke reactor

The operator of Japan’s ageing Hamaoka nuclear plant, located near a tectonic faultline southwest of Tokyo, on Friday began shutting down one of its two running reactors, a plant official said.


Chubu Electric Power started installing control rods into the number four reactor of the power plant early Friday, the first procedure in the operation, said Kazuhide Enoo, an official at the plant.

“We plan to stop electricity generation in the morning, and then the reactor is scheduled to be non-critical around noon today,” Enoo said.

“So far procedures went smoothly as no problems were found,” he said, adding that the reactor was expected to be in “cold shutdown” status “within a day at the earliest.”

Prime Minister Naoto Kan last week called for the closure of the plant, eight weeks after a massive quake and tsunami damaged the Fukushima Daiichi nuclear plant northeast of Tokyo, sparking the world’s worst atomic crisis since Chernobyl in 1986.

Seismologists have long warned that a major quake is overdue in the Tokai region southwest of Tokyo where the Hamaoka plant is located. It is only 200 kilometres (125 miles) from the capital and megacity of Tokyo.

The Hamaoka plant has five reactor units, but only two are currently running — numbers four and five. Reactors one and two, built in the 1970s, were stopped in 2009, and three is undergoing maintenance.

The firm also plans to begin shutting down the number five reactor on Saturday.

Standard and Poors on Thursday lowered its ratings on Chubu Electric to ‘A+’ from ‘AA-‘, leaving the outlook on the firm’s long-term corporate credit rating negative.

“Chubu Electric’s decision to suspend operations at the Hamaoka nuclear power plant will cause profitability and cash flow protection to deteriorate for at least two years,” the ratings agency said.

“We expect downward pressure on the ratings will continue, particularly in measures of its financial profile,” it said.

The Hamaoka plant accounts for almost 12 percent of the output of Chubu Electric, which services part of Japan’s industrial heartland, including many Toyota auto factories.

Kan has explained the plant should stay shut while a higher sea wall is built and other measures are taken to guard it against a major quake and tsunami. Local media said the suspension would last about two years.

Japan, the world’s number three economy, endures 20 percent of all major earthquakes and generates about 30 percent of its power from nuclear plants.

The record March tremor and wave which battered Japan’s northeast coast caused 11 of Japan’s 55 nuclear reactors to automatically shut down, while triggering a major crisis at the Fukushima plant.

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Turkey death toll nears 500

Homeless survivors of Turkey’s devastating earthquake shivered in sub-zero temperatures as the government admitted that it was struggling to cope with the demand for shelter.


As the death toll neared 500 and complaints mounted over the speed of the relief effort, authorities were in a race against time to provide some form of shelter with snowfall expected.

After the rescue of a 16-day-old baby and her grandmother sparked scenes of joy on Tuesday, emergency teams managed to beat the odds again on Wednesday by pulling a 27-year-old woman out of the rubble of her home in the eastern town of Ercis, which took the full brunt when disaster struck on Sunday.

Gozde Bahar, a teacher, was immediately rushed to hospital after being trapped under the rubble for 66 hours.

But her rescue was a rare slice of good news as the number of body bags mounted.

The latest official death toll was 461 but the International Federation of Red Cross and Red Crescent Societies said that “hundreds, possibly thousands” of people are still trapped under the rubble.

And as hopes of finding more survivors receded rapidly, the complaints from those left homeless grew louder.

There was uproar among the crowds when they learned that the local governor’s office had stopped distributing tents, instead transferring responsibility to village headmen.

“Yesterday I waited here until midnight and I received nothing. I came back this morning at 3:00 am and have been waiting since then and now the distribution is cancelled,” said 29-year-old Erdal Bayram, a construction worker.

“I need a tent for myself and for my father. We made a makeshift tent to sleep under but it rained last night and the wind was blowing.”

Hasan Edemem, a 31-year-old teacher, worried that the village headmen would not give priority to those most in need of shelter.

“Now they are transferring the responsibility to village headmen but I am pretty sure they will allocate the tents to their fellows,” Edemem said.

On Tuesday, locals had to wait in queues stretching for hundreds of metres outside the governor’s office before being handed supplies by the military police.

“They treat us here like animals,” said one young local waiting in line.

“We stopped the distribution because there was too much confusion here. It will start as soon as we can restore security and order,” said an official in the governor’s office.

While the government in Ankara initially refused outside offers of help it reversed that decision late Tuesday.

“We were not expecting such a huge demand for tents,” the daily Milliyet quoted Besir Atalay, the deputy prime minister, as saying.

“When people ask for tents for 100,000 households, you cannot meet that demand,” Atalay said.

Israel’s foreign ministry said that it had been asked to help despite the recent deterioration of ties between the two countries.

Some remote villages in the worst affected Van province have received only rudimentary help so far.

In the village of Guvecli, locals said they had had to recover the bodies of their loved ones by themselves.

“We had to do it by our own means, by shovels and digging tools,” Guvecli resident Ahmet Yayin told AFP.

While the Red Crescent had handed out some tents, they were far from enough to go round.

“We are a family of 12 but we could only get one tent,” said Abdulaziz Yatkin, another villager. The tents are designed for a maximum of five.

Residents clustered around fires to keep warm on Wednesday. Snow was forecast for later in the day.

In Gedikbulak village, only 70 tents were distributed for a population of 2,000, the NTV news channel reported. Only a few houses remained standing there.

Turkey has a tragic history of earthquakes, including in Van province.

In 1999, two strong quakes in northwest Turkey’s heavily populated and industrialised regions left some 20,000 dead. A powerful earthquake in the town of Caldiran in Van province killed 3,840 people in 1976.

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Athens smoulders after austerity protests

“It’s culture that has gone up in smoke,” filmmaker Nikos Kavoukidis lamented as he shot footage of the crowd gathered at the ruins of the Attikon cinema.


“What do we have left? Television and football?”

Officials say 45 buildings were wholly or partly destroyed by fire as violence erupted during demonstrations while parliament voted Sunday for tough new austerity measures aimed at averting national bankruptcy.

The minister in charge of police later said security forces and fire crews had waged a “superhuman” effort to contain violence.

“(The police) made superhuman efforts, as did the fire department, despite the fact that they were attacked and impeded from reaching fire outbreaks,” Citizens’ Protection Minister Christos Papoutsis told reporters.

Overall, 170 businesses around the city centre sustained damage, including banks, bookstores, jewellery shops, home appliance stores and supermarkets, the Athens chamber of commerce said.

The government, neck-deep in debt, said it would find a way to help out.

“Ways will be examined to support citizens whose property was destroyed,” said government spokesman Pantelis Kapsis.

The Attikon was housed in a neo-classical building dating back to the late 19th century. The cinema was famed for its sumptuous decor, plush red seats and the sweeping curves of its main auditorium.

Until Sunday, the film on show was “Tinker, Tailor, Soldier, Spy” starring Gary Oldman.

Around 150 people held a candlelit vigil outside the gutted building on Monday evening in a silent protest campaign organised on Facebook.

“I am ashamed, it’s hooliganism,” lamented one of Sunday’s demonstrators, a 55-year-old security guard who gave her name only as Melpo, standing outside the ruined building earlier in the day.

The Attikon building was home to several other businesses, including a store whose owner fretted for the future of his four employees in a country where unemployment is more than 20 percent.

About 80,000 people took to the streets on Sunday to protest austerity measures, according to police estimates, while media reports said the number was almost double that.

Rioters attacked “emblematic buildings, about 10 neo-classical edifices,” dating from the beginning of the 20th century, the deputy mayor in charge of maintenance Andreas Varelas said.

Another group tried to storm the Athens city hall but were arrested.

A few metres (yards) from the Attikon, a memorial site celebrating Greek resistance to the Nazis during World War II suffered broken windows and had been daubed in red graffiti stating: “Uprising.”

Condemnation for the violence came quickly.

“Violence and destruction have no place in a democracy,” Prime Minister Lucas Papademos said late Sunday, while calling on Athenians for calm.

European Union economic affairs commissioner Olli Rehn on Monday slammed the violence as unacceptable.

“These individuals do not represent the vast majority of Greek citizens who are genuinely concerned for the future of their country,” Rehn said in a statement.

Greece’s new budget cuts were demanded by the European Union and International Monetary Fund as the price of a second 130-billion-euro ($172 billion) debt rescue to avert imminent bankruptcy and keep Greece in the eurozone.

The new cuts include reductions in the country’s minimum wage and further layoffs in the public sector.

Athenians on their way to work were shocked at the extent of the damage.

“It’s a reminder of December 2008,” deputy mayor Varelas said, in reference to nearly a month of urban violence in Athens sparked after a youth was killed by a policeman.

The health ministry said 54 civilians had been hurt, while police said 68 members of the force had suffered injuries.

Some 67 people were arrested and police say there was an organised plan by some to cause casualties.

“Through their actions, they showed that they sought human casualties,” Greek police chief Nikos Papagiannopoulos told a news conference.

Athens police chief Ioannis Lioungas added that 15 people had to be rescued from a burning bank, reviving memories of three people — one of them a pregnant woman — who died inside another firebombed bank branch in 2010.

Municipal workers were on Monday clearing up the debris of marble ripped up from the pavements and hurled by rioters. Rubbish bins smoked and everywhere near the centre, from the tourist area of Monastiraki to the chic streets of the Kolonaki quarter, the ground was littered with shattered glass.

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Violence flares in Kosovo, talks delayed

EU-brokered talks between Belgrade and Pristina were delayed Tuesday after the latest surge of violence on the disputed Serbia-Kosovo border left four NATO troops and six Serb protesters wounded.


“Due to the tension the dialogue has been delayed until tomorrow (Wednesday),” an EU diplomat said in Brussels.

Kai Gudenoge, deputy spokesman of the NATO-led KFOR force, told AFP that “four KFOR soldiers are wounded by a pipe bomb (an improvised explosive device). One of them badly and three slightly.”

He added that the seriously injured soldier was medivaced for treatment.

A manager of nearby Kosovska Mitrovica’s hospital told local media that six Serb protesters who clashed with KFOR at the disputed Jarinje border post were seriously injured by gunfire.

The situation around Jarinje was calm but tense after the incident and sporadic gunfire could still be heard, an AFP correspondent reported.

KFOR spokesman Ralph Adametz said late Tuesday that the situation “is currently tense but under control”.

“Acts such as these, whether by individuals or groups, are a serious threat to the safety,” Adametz told reporters.

In Brussels, the European Union called for the removal of barricades and condemned the violence.

“The EU supports the removal of the barricades. These barricades restrict freedom of movement and should be removed,” said Maja Kocijancic, spokeswoman for EU foreign policy chief Catherine Ashton.

An EU diplomat said the two delegations were likely to hold bilateral talks in Brussels through the evening with EU facilitator Robert Cooper in a bid to defuse the tension ahead of Wednesday’s resumption of the dialogue.

Earlier Serbia’s chief negotiator in the talks, Borko Stefanovic, blamed KFOR for any impact the latest violence might have on the talks.

“This is being done with the goal of getting Serbia to give up the dialogue and then accusing it of not wanting peaceful solutions,” Stefanovic said.

The talks, the seventh round this year, aim to resolve practical problems caused by Serbia’s refusal to recognise Kosovo’s independence, unilaterally declared in 2008.

The Serb majority in the north, while the rest of Kosovo is predominantly ethnic Albanian, refuse to recognise the government in Pristina and still consider themselves to be part of Serbia, which makes control of the border a key issue.

Serbian President Boris Tadic urged both sides to show restraint and called for a dialogue to maintain.

“The international forces are here to defend unarmed people and not to clash with them, I call on KFOR to exercise maximum restraint,” Tadic said in a statement.

The unrest started brewing early Tuesday as KFOR moved to dismantle one of the main roadblocks near Jarinje. After some skirmishes, the Serb protesters moved to erect a new barricade nearby, blocked several KFOR trucks and started pelting the soldiers with stones.

The troops hit back firing tear gas into the crowd and rubber bullets.

“They (Serbs) threw stones on German soldiers. One soldier was hit and the troops were forced to fire non lethal rounds in self-defence,” deputy spokesman Gudenoge said.

This in turn provoked the Serbs at the barricades who approached the KFOR positions and threw explosives, severely wounding one soldier.

Adametz later said that a “civilian vehicle attempted to force the gate” at Jarinje and one KFOR soldier “was injured by the vehicle” while the unit tried to stop it.

“During the incident, an attempt was made to seize the soldier’s weapon and, after a verbal warning, a KFOR soldier fired a shot, injuring the civilian attempting to steal the weapon,” he said.

Nicholas Hawton of the EU rule of law mission said “violence against KFOR or EULEX is not acceptable”.

“It is important that everyone shows restraint and acts responsibly,” Hawton said, adding that EULEX was planning to launch an ivestigation into the incident.

Last Friday, Kosovo police and EULEX officials took control of the two crossings.

Fearing this would limit their access to Serbia, Serbs in northern Kosovo responded by erecting a dozen barricades to block traffic to and from the posts.

By stationing Kosovo police and customs officials on the northern crossings, Pristina is trying to assert its authority on the north.

The latest tensions follow violent clashes that took place in late July when Serb protesters confronted Kosovo police who tried to take control of the border posts to enforce a trade ban with Serbia.

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Tensions rising on Kosovo-Serbia border

Dozens of youths set fire to one of two border posts on Kosovo’s northern frontier with Serbia that have been at the centre of rising tensions, media reports and witnesses said Wednesday.


RTS national television showed footage of young masked people, apparently ethnic Serbs, throwing Molotov cocktails at the Jarinje border post and destroying it with the help of a bulldozer.

“The entire Jarinje post has been burned and is covered with smoke,” a witness told AFP by telephone.

According to the witness, about 25 police and border officers, including some from the European Union’s EULEX mission, took refuge on the Serbian side of the border.

EULEX spokesman Nicholas Hawton told AFP no one was injured in the attack.

NATO’s KFOR mission in Kosovo said in a statement that its personnel near the border post had been fired upon, and said it was reinforcing its presence in the area to prevent further incidents.

Kosovo’s prime minister Hashim Thaci blamed Serbia for the attack.

“These violent acts were ordered, coordinated and managed by the highest political structures of the government of Serbia,” he told reporters at a late-night extraordinary press conference.

“It was done by masked people but everything is clear. Behind this is Belgrade.”

Serbian President Boris Tadic called for an end to the violence.

“Extremists and hooligans act against the interests of Serbian citizens and of Serbia and join with the Albanian extremists who want to end, through unilateral acts and violence, the peace process and dialogue between Belgrade and Pristina,” Tadic said in a statement.

EU foreign affairs chief Catherine Ashton also condemned violence in the area.

“I strongly condemn the violence that has taken place in northern Kosovo. These latest developments are unacceptable,” she said in a statement.

“It is the responsibility of both Belgrade and Pristina to immediately defuse the tensions, and restore calm and security for everyone. Violence will never be tolerated and unilateral actions are not the way forward,” she said.

NATO’s top official in Kosovo, German General Erhard Buhler, said there was “a difficult and tense situation” in northern Kosovo, warning that his 5,000-strong force was ready to act to maintain security.

“KFOR is prepared and authorised to defend security by all means,” he said in an interview with local television.

On Monday, the ethnic-Albanian-dominated government in Pristina sent elite police units to seize control of the Brnjak and Jarinje border crossings. One officer was killed and four others hurt in a clash with angry local Serbs. The officers were withdrawn on Wednesday, officials said.

The goal of the operation was to replace local Serb police officers suspected of turning a blind eye to imports from Serbia after a ban was introduced a week ago.

The seizure of the crossings marked a sharp escalation in the trade row between Kosovo and its former rulers in Belgrade, ramping up tensions in an area mainly inhabited by ethnic Serbs.

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