Apr 8, 2011

In Portugal Crisis, Worries on Europe’s ‘Debt Trap’

By STEVEN ERLANGER
Published: April 8, 2011
PARIS — For the third time in a year the European Union is going through the same ritual, bailing out another insolvent country.Portugal now follows Greece and Ireland to the European welfare office to ask for new loans on the condition of ever more drastic spending cuts.

Related

So far the markets have taken Europe’s third successive sovereign financial crisis in stride. But many economists are a good deal more alarmed, most notably because the bailout formula European leaders keep applying to their most indebted member nations shows no signs of working.
Greece, Ireland and now almost certainly Portugal have access to hundreds of billions of dollars in emergency European aid to help them avoid defaulting on their debt. But the aid is really just more loans, and the interest rates the countries are paying, if a little lower than what the private market would charge, are still crushingly high. Their pile of debt gets bigger with every passing day.
Moreover, the price of these loans has been a commitment to slash government spending far more drastically than domestic leaders would have the desire or the political power to accomplish on their own. And for countries that depend a good deal on government spending to generate growth, rapid decreases in spending have meant sustained economic stagnation or outright recession, making every dollar of debt that much harder to pay back.
Economists call this “the debt trap.” Escape from the trap generally requires devaluation of the currency, which cannot happen among countries that use the euro as their common currency, or strong economic growth, which none of the three have, or some kind of bankruptcy process, which all three forswear. Add to that the likelihood that all three countries will continue to have unstable governments until they figure a way out, andEurope’s financial crisis has no end in sight.
“What has been missing, in the debate about how countries can restore their finances to some kind of sustainability, is the limit of how much they can cut in a period of austerity,” said Simon Tilford, chief economist for the Center for European Reform in London. “There is a limit of how much any government can cut back spending and survive politically unless there is a light at the end of the tunnel, a route back to economic growth.”
The problems of the weaker countries are not just sovereign debt, but also lack of competitiveness, both in Europe and the larger world. Without the nations’ restoring competitiveness and selling more goods abroad, which can come only through a longer-term process of reducing wages and taxes to spur private sector investment, economists are not optimistic about prospects for new growth soon.
The crisis in Portugal also raises new questions about whether the European Union will come to grips with the other side of its crisis: the banks. Banks in well-off countries like Germany, France and the Netherlands, as well as Britain, hold a lot of Greek, Portuguese and Irish debt. And if these countries cannot pay their debts, they would have to reschedule them, reduce them or default, causing a major banking crisis in the rest of Europe.
That reckoning would require governments to ask their taxpayers to recapitalize the banks, which is exactly what political leaders are afraid to do.
“We have a banking crisis interwoven with a sovereign debt crisis,” Mr. Tilford said. “Europe needs to address both, and it needs to acknowledge that the banking sectors of creditor countries — especially Germany — are not now in a position to handle restructuring and default, and that governments will have to pump money into the banks to recapitalize them.”
In essence, Mr. Tilford said, it is the taxpayers of Greece, Ireland and Portugal who are bailing out German, French and British taxpayers and depositors — not the other way around. The indebted countries are not really getting bailouts, he said, “but loans at high interest rates.” For there to be a real bailout, he said, there would have to be a default.
António Nogueira Leite, a former Portuguese secretary of the treasury and an adviser to the center-right opposition, said that the bailout packages “don’t really take into account the arithmetic of the debt.” The experiences of Greece and Ireland show, he said, “that once austerity sets in, the country doesn’t generate the means to be able to pay for the already incurred debt.”
The Economist this week, in an article about Greece’s problems, said, “The international plan to rescue Greece is instead starting to paralyze it.”
Of course the indebted countries have responsibility for their own dire straits. Greece lied about its statistics, Ireland decided to guarantee the enormous debts of its reckless banking sector and Portugal borrowed cheap money but did not restructure its economy. Still, Mr. Nogueira Leite said, “If you can’t devalue, and you say no restructuring of the debt, and say that the taxpayers of Germany must receive a risk premium in interest to loan to the peripheral countries, then it’s impossible to avoid the debt trap.”

Related

Portugal is not in a great position to bargain, he said, but “we must fight to get as low an interest rate as possible, so we don’t end up like Greece and Ireland.”
Portugal’s decision to seek a bailout from the European Union was hardly unexpected, and funds had already been set aside to cover its needs. But the decision is also a marker about the political costs of austerity.
Portugal went to the European Union after the opposition refused to support the minority government’s fourth austerity package, and the government of José Sócrates, the Socialist prime minister, finally fell. Portuguese bankers also made it clear that they would no longer keep buying up Portuguese government debt, which was approaching junk status, even if they could offload it to the European Central Bank.
“The government had a cash problem, but was just kicking the can down the road,” said Ricardo Costa, deputy editor of the weekly newspaper Expresso.
He said that when the European Union failed to agree on more flexible measures to aid countries like Portugal — blocked in February by Germany and Finland — Mr. Sócrates “was alone against the markets.” Elections in June are likely to bring the center-right Social Democrats to power in a coalition.
They accept the need for cuts, but how they react to the bailout deal Mr. Sócrates will have to negotiate before then is complicated, Mr. Costa said.
Portuguese efforts to get a small “bridging loan” to get the country through the elections failed because the European Union has no such practice and no country would give a bilateral loan. So on Friday, in Hungary, European finance ministers said they would begin negotiations, together with the International Monetary Fund, for a roughly 80-billion-euro rescue package for Portugal with all political parties.
“If the opposition signs the package before elections, voters will say, ‘You’re the same, raising taxes, closing schools,”‘ Mr. Costa said.
“But our main problem is that we’re not growing enough; actually we’re not growing at all,” he said. “And if we don’t grow, we won’t get out of this problem in a decade.”
There are also fears about Spain, one of the largest economies in the euro zone, which has problems with bank debt, unemployment and bad mortgages that are still on the books after the construction bubble burst. If Spain needs a bailout, the euro will be in deep trouble because the rescue fund, the European Financial Stability Facility, is not big enough. On Friday, European officials insisted that the Portuguese bailout would reduce the risk to Spain.
The Spanish government has worked hard to pacify the markets by cutting spending, but its economy must also grow to convince markets that it can handle its debt. The austerity program already in place has made the Socialist prime minister, José Luis Rodríguez Zapatero, and his party so unpopular that he announced this week that he would not run again.
Được đăng bởi vào lúc No comments:

Allies of Zimbabwe’s President Push for Quick Vote

Stephane De Sakutin/Agence France-Presse — Getty Images
Some supporters of President Robert Mugabe, above, fear that his health may be ebbing, so they want Zimbabwe to hold an election soon.
By CELIA W. DUGGER
Published: April 8, 2011
HARARE, Zimbabwe — As Zimbabwe hurtles into another violent political season, President Robert Mugabe’s party is fiercely pushing for a quick election this year because of fears that the president’s health and vigor are rapidly ebbing, senior party officials said.
Enlarge This Image
Associated Press
In 1985, Mr. Mugabe campaigned in Harare before parliamentary elections. His party, ZANU-PF, increased its majority.
With no credible successor to unite the quarrelsome factions that threaten to splinter the party, its officials say they need Mr. Mugabe, who at 87 has been in power for 31 years, to campaign for yet another five-year term while he still has the strength for a rematch against his established rival, Prime Minister Morgan Tsvangirai, 59.
“There’s urgency, real urgency,” said a party insider, speaking anonymously because of the delicacy of the topic. “The old man is not the same as he was.”
Zimbabwe’s neighbors, who helped broker a power-sharing government led by Mr. Mugabe and Mr. Tsvangirai after a discredited election in 2008, have strongly warned against trying to hold another one too soon. But a separate Mugabe confidant said the party’s power brokers worried that the president would no longer be a plausible candidate by next year.
“Imagine him being supported all the way to the podium to address a rally and him telling the people he is the future of this country,” the Mugabe confidant said. “Even the staunch supporters would not believe that.”
The intensity of the party’s determination to hold an election this year was evident as a newspaper controlled by Mr. Mugabe’s party carried out an extraordinary attack on South Africa’s president, Jacob Zuma, the official mediator in Zimbabwe’s political crisis, after he publicly called for a halt to political violence in the country.
South Africa had long been criticized for coddling Mr. Mugabe through a decade of rigged, bloodstained elections, but last week Mr. Zuma persuaded regional leaders to endorse assertive, time-consuming efforts to ensure that the next time Zimbabweans voted, they would be able to do so freely and fairly.
“There is no way we can agree to an election in Zimbabwe when the institutions needed to ensure a credible, free and fair election are not in place,” Mr. Zuma told Mr. Mugabe and Mr. Tsvangirai at the meeting, according to Mr. Zuma’s adviser, Lindiwe Zulu.
A day later, Mr. Mugabe defiantly told his party’s central committee that Zimbabwe’s neighbors should not meddle in its political affairs and urged his followers to prepare for an election. An editorial in The Sunday Mail, a state-controlled newspaper, accused Mr. Zuma of duplicity and dishonesty and called him a puppet of the West.
South African officials reacted sharply to the vitriolic, personal attack on the president of the region’s most powerful nation, and Mr. Mugabe’s spokesman this week sought to soften Zimbabwe’s tone, saying the editorial was not government policy.
“President Jacob Zuma’s erratic behavior is the stuff of legend,” one of Mr. Mugabe’s loyalists wrote in the editorial’s opening line.
Mr. Mugabe’s domineering rule has led to the country’s disastrous economic decline, pervasive corruption and an intensely repressive society, but as the centerpiece of the state, there is uncertainty about whether his death would lead to a military coup, a vicious internal battle within his party, ZANU-PF, or some still unforeseen outcome.
“Mugabe’s health is a matter of national instability,” Mr. Tsvangirai said. Having been pressured by regional leaders into the power-sharing deal with Mr. Mugabe, his political enemy, two years ago, Mr. Tsvangirai said of his still dominant partner, “He left the succession way too late, and now there is a scramble between the two main factions of ZANU-PF.”
A Western ambassador here likened this period in one of Africa’s longest-surviving autocracies to the last days of Brezhnev and Franco. It is a time of fevered rumors and back-room plotting.
And it has brought a crackdown on pro-democracy civic groups and members of Mr. Tsvangirai’s party, the Movement for Democratic Change. The authorities have banned its rallies, rounded up activists and party workers and put truckloads of riot police officers on the streets to head off protests.
The revolutions in North Africa, and particularly South Africa’s support for a no-fly zone in Libya, have unnerved the sprawling spy operation controlled by Mr. Mugabe’s party. Dozens of students, trade unionists and activists who had gathered to watch news reports on the uprisings in Tunisia and Egypt were arrested in February and charged with treason, accused of plotting to oust Mr. Mugabe.
“We are hearing from the intelligence services that M.D.C. meetings are intended to incite people to engage in an Egyptian-, Tunisian-style uprising,” said a spokesman for Mr. Mugabe’s party, Rugare Gumbo.
Beyond that, recurrent speculation that Mr. Mugabe suffers from prostate cancer has quickened since he made trips to Singapore in February and March, ostensibly for routine follow-up care after cataract surgery he had there over the Christmas holidays. But why would such an elderly man have made three grueling, transoceanic flights unless he was really sick, analysts here asked.
Cabinet ministers say Mr. Mugabe is mentally sharp, but tires easily and has difficulty walking up stairs. Mr. Mugabe himself declared at his 87th birthday celebration in February, according to an Associated Press account, “My body may get spent, but I wish my mind will always be with you.”
At a conference here in November, Mr. Mugabe was natty in a charcoal gray suit, blue silk tie and matching handkerchief peeking from his breast pocket. A waiter in white gloves poured his juice and hovered nearby. The president’s sonorous voice still echoed in the hall as he read a speech he held up close to his eyes.
But as he left the stage, Mr. Mugabe — his days as a vibrant liberation leader long past — gripped the banister as he slowly made his way down the steps. Outside, an ambulance trailed his limousine.
His press secretary, George Charamba, said at the time that Mr. Mugabe had dashed up 22 flights of stairs when elevators at the party headquarters malfunctioned, leaving security agents panting in his wake. Even some political opponents wonder if he has years left. His mother lived to nearly 100.
“There’s nothing that tells me he’s about to drop dead,” said Theresa Makone, a leader of Mr. Tsvangirai’s party and the co-minister of Home Affairs in the power-sharing government.
But the uncertainty about his health has profoundly unsettled politics here.
After each of Mr. Mugabe’s Singapore trips, Mr. Charamba insisted in interviews that his boss had just been seeking routine eye care. But the spokesman revised that explanation in a recent interview, saying the president had actually made the trips to accompany his wife, Grace, who had badly injured her back while exercising at a gym.
“She’s up and about so we can talk about it” now, he said.
In a rare interview with Reuters last year, Mr. Mugabe himself brushed off rumors he was dying of cancer.
“I don’t know how many times I die, but nobody has ever talked about my resurrection,” he said.
“Jesus died once, and resurrected only once, and poor Mugabe several times,” the president added, laughing gleefully at his own joke.
Under the current Constitution, if Mr. Mugabe died in office, ZANU-PF would choose the next president to finish out his term, legal experts said. Zimbabweans are supposed to vote on a new constitution before the next election, but drafting one has spurred an intense struggle between the parties. The member of Parliament leading the constitution-making effort for Mr. Tsvangirai’s party was recently jailed for almost a month.
Mr. Mugabe wants an election as soon as possible, not because of his own ill health, but because the power-sharing government is not working, his spokesman said.
Mr. Mugabe has unhappily shared the stage with Mr. Tsvangirai in what they call an inclusive government for the past two years. The deal has brought a tenuous political stability and improving economy, but has left Mr. Tsvangirai with little authority.
It was formed after the 2008 election. In May and June of that year, Mr. Mugabe’s lieutenants orchestrated a campaign of beatings, torture and murder against Mr. Tsvangirai’s workers and supporters. Mr. Tsvangirai, who won more votes than Mr. Mugabe in the first round, quit the race days before the runoff.
A senior ZANU-PF leader offered a blunt assessment of his party’s current political quandary, acknowledging Mr. Tsvangirai as a formidable opponent.
“Morgan has been in the making for 10 years,” he said, using Mr. Tsvangirai’s first name. “He has contested three elections. So there’s fear he has momentum. Who among our so-called leaders can face Morgan if the old man is gone?”
Được đăng bởi vào lúc No comments:

Syrian Protests Are Said to Be Largest and Bloodiest to Date

By LIAM STACK and KATHERINE ZOEPF
Published: April 8, 2011
CAIRO — Dozens of communities across Syria erupted in protest on Friday in what activists said were by far the largest and bloodiest demonstrations against the iron rule of President Bashar al-Assad.
Enlarge This Image
APTN, via Associated Press
In this image made from television, protesters are seen near a barricade Friday in Dara'a, a flashpoint for demonstrations.
Multimedia
Interactive Feature
Arab World Uprisings: A Country-by-Country Look

Related

The New York Times
Security forces opened fire on demonstrators in Dara'a.
While the number of protesters, said by some opposition activists to be in the hundreds of thousands, could not be independently confirmed, the size of the protests and their level of coordination suggest that Syria’s fragmented opposition movement is reaching new levels of coherence and organization.
The deadliest clashes were in the southern city of Dara’a, where security forces opened fire on demonstrators, witnesses said. A Syrian human rights activist said 21 deaths had been confirmed, but that figure was likely to rise.
The government, meanwhile, said its security forces had been fired on by armed groups in Dara’a. The Interior Ministry said 19 police officers and members of security forces were killed, in addition to several civilians, the government news agency, Sana, reported. It was the first time the government had made a substantial claim of deaths.
The numbers reported by either side were difficult to verify. Foreign news media have not been permitted to travel outside Damascus, the capital, and state security forces have cordoned off the towns and suburbs where the largest protests took place.
There were also protests on Friday in Damascus, in a suburb where at least 15 protesters were killed by security forces last Friday, and in Kurdish towns in the east.
In Washington, President Obama condemned what he called “the abhorrent violence committed against peaceful protesters by the Syrian government today and over the past few weeks.” He also condemned “any use of violence by protesters.”
Ausama Monajed, a London-based political activist who is in frequent touch with protesters in Dara’a and other cities, said that the protest movement had gained enormous momentum and confidence over the past week. Though Syria lacks a natural mass gathering point like Tahrir Square in Egypt, he said, he estimated that across Syria, total numbers of protesters might add up to hundreds of thousands.
He called the attack on protesters in Dara’a “a massacre.” He feared that the government might be trying to make an example of Dara’a, where the protests began three weeks ago after a group of teenagers was arrested for writing antigovernment graffiti, as it did with Hama in 1982.
“What happened is that after Friday Prayers, the marchers started to chant, ‘Freedom! Freedom!’ and security forces opened fire,” Mr. Monajed said in a phone interview. “When the protesters tried to collect the dead and wounded, the security forces opened fire again.”
There were reports that security forces had closed the hospitals, possibly to forestall further protests at funerals on Saturday, Mr. Monajed said. According to Islamic custom, the dead are buried as soon as possible, and the funerals of protesters in recent weeks have turned into political demonstrations.
Ammar Abdulhamid, a Syrian dissident who lives in Maryland and has helped organize the protests, said that according to his contacts in Dara’a, 100 may have been killed there and as many as 500 wounded.
Though Syria’s protest movement is far more decentralized than it has been in Egypt and Bahrain, Mr. Abdulhamid said, its strength is growing.
“Each community has its own uprising,” he said. “Every week the regime is being forced closer to its endgame.”
The killings in Dara’a on Friday, he said, may have been an attempt by the government “to send a lesson to other cities,” the way Mr. Assad’s father, Hafez al-Assad, massacred at least 10,000 Muslim Brotherhood members in Hama in 1982 to strike fear in Islamists across the country.
Amr al-Azm, a Syrian historian, cautioned that it was not yet clear how broad support for the protest movement was. He said the greatest numbers of protesters were poor, semirural and young, and that the country’s powerful Sunni upper-middle class had not yet decided where it stood.
“The urban upper-middle classes feel uncomfortable with these people,” he said. “The thing about Syria is that in order for these protests to reach the critical mass you need to achieve real change, you have to tap into the merchant classes of Damascus and Aleppo.”
He said that group was unhappy with the government but also concerned about stability.
There were also protests on Friday in the eastern Kurdish areas, two days after Mr. Assad sought to quell unrest there by offering Syrian nationality to the estimated 200,000 Kurds, formerly classified by the government as stateless.
Kurdish leaders and human rights activists rejected the offer.
Hakeem Bashar, a Kurdish leader, said that thousands of people had demonstrated in Qamishli, one of the largest towns in the Kurdish northeast.
“We want all of the demands that other Syrians in other parts of the country are making,” Dr. Bashar said. “These are national demands, but we are demanding them too because this is our country. We are Kurds, but we are also Syrians.”
Security forces have maintained a heavy presence in Damascus. Six buses carrying uniformed and plainclothes officers arrived at the Al Rifai mosque, a center of protests last week, during Friday Prayer, said Wissam Tarif, a human rights activist, pulling open its doors and beating worshipers as they exited.
Security forces scuffled with protesters and hauled others into the waiting buses as they chanted “Freedom! Freedom!”
Villagers outside of Damascus marched toward Douma, a village where security forces fired on demonstrators last week, killing at least 15 people.
Liam Stack reported from Cairo, and Katherine Zoepf from New York. J. David Goodman contributed reporting from New York, and an employee of The New York Times from Damascus, Syria.
A version of this article appeared in print on April 9, 2011, on page A9 of the New York edition.
Được đăng bởi vào lúc No comments:
Nhãn:

Late Clash on Abortion Shows Conservatives Sway

By JENNIFER STEINHAUER
Published: April 8, 2011
WASHINGTON — The emergence of abortion as the last and most contentious of the issues holding up a budget deal highlighted the enduring influence of social conservatives within the Republican Party even at a time when the Tea Party movement’s focus on fiscal austerity is getting most of the attention.

Blogs

The Caucus

The latest on President Obama, the new Congress and other news from Washington and around the nation. Join the discussion.
The intensity of the push to retain restrictions on funds for abortion providers — including family planning services by Planned Parenthood and other groups — in any budget deal appeared to come from veteran Republicans. Major supporters included RepresentativeChristopher H. Smith of New Jersey, Representative Joe Pitts of Pennsylvania and Representative Mike Pence of Indiana, all of whom have proposed anti-abortion legislation numerous times and view the issue as a nonnegotiable matter of principle.
They have had a welcome ear in Speaker John A. Boehner of Ohio, who has won awards from opponents of abortion rights and during the debate over health care of provisions was a visible supporter of preventing federal money from going to abortion providers. (It is already illegal to use federal money for abortions.)
The main restrictions on financing for abortion providers were included in the first spending bill passed by the House, in February. They have the backing, with varying degrees of intensity, not just of Republicans identified primarily as social conservatives but also of many fiscal conservatives.
“The life issue is important to a lot of us,” said Representative Steve Chabot of Ohio, who has been very involved in anti-abortion measures in the past. “For some, people, for example, abortion is more important. For some people, spending is more important. For me, it would be hard to say one over the other.”
Republicans sought to take away federal money for family planning for poor women and give that money instead to states, to forbid the District of Columbia from using its own tax dollars to help the poor obtain abortions, and to end family planning subsidies to some international organizations.
In one sense, the flashpoint nature of the battle presented both parties with an opportunity to energize their bases.
Senator Harry Reid of Nevada, the Democratic majority leader, stressed repeatedly on Friday that his party would defend abortion rights, and he characterized the fight as one over women’s health. Equally, House Republicans portrayed themselves as determined to stand by their principles and use their leverage to impose restrictions that would otherwise have little to no chance of passing the Senate or winning President Obama’s signature.
But the fight held political peril for Republicans in particular when it comes to appealing to women and the broad center of American politics.
In polls taken this year and last by The New York Times/CBS News, when Americans were asked to name the most important problem facing the country, fewer than 1 percent cited abortion. In December, when respondents were asked how available abortions should be to those who seek them, 36 percent said generally available, 40 percent said available with limits, and 20 percent said abortions should not be permitted.
The risks are not lost on Republicans like Senator Susan Collins of Maine, who favors abortion rights. “Senator Collins does not believe this rider belongs on this bill,” said a spokesman, Kevin Kelley, in an e-mail. “She believes it is the height of irresponsibility for Congress to jeopardize pay for our dedicated troops, who are serving in harm’s way in three wars, because of a policy debate that can occur later this year.”
Other Republicans, including Senator Tom Coburn of Oklahoma, also suggested that the party should not sacrifice what is otherwise a good budget deal if they cannot win on the abortion issue.
Few Republicans wanted to be seen as shutting down the government over the issue, which may be why House freshmen insisted that the issue was irrelevant to the budget battle, even as aides to lawmakers negotiated them down to the wire.
“This is not about policy riders,” said Representative Raúl R. Labrador of Idaho, echoing almost word for word seven other House Republicans and Mr. Boehner as well. “It’s about spending.”
America has seen this play before.
Over the nearly four decades since the Supreme Court affirmed women’s abortion rights, Congress has worked to chip away at them, often through measures like those on the table in the final stages of the budget battle. Those efforts have largely been led by Republicans, but by no means exclusively; it was Democrats who favored restrictions on abortion who came close to unraveling the 2009 health care overhaul.
While the 87 freshmen Republicans in the House ran on a platform of containing federal spending, and while some prominent Republicans, like Gov. Mitch Daniels of Indiana, have suggested de-emphasizing social issues until the nation’s fiscal problems can be addressed, the desire among social conservatives to curb abortion rights has never gone away, especially among older members.
While few of these measures sought by Republicans would cut spending — in the case of funds now used by Planned Parenthood, it would simply move them — Republicans repeatedly said providing money to family planning organizations was a waste of taxpayer funds.
“This has been an ongoing struggle for decades,” said Norman J. Ornstein, a resident scholar at the American Enterprise Institute, a conservative research group. “But in this particular context, there is a different twist. It is one thing to be deeply opposed to a policy and look at every vehicle you can for changing it. It’s another when you frame the entire narrative around the debt crisis we face.”
Using the amendment process to pull away at abortion rights has a history that dates back almost as far as Roe v. Wade, which was decided in 1973. In 1976, the House passed the Hyde Amendment, which excludes abortion from health care services provided throughMedicaid.
The amendment has been tacked on to annual appropriations bills ever since. Under the Balanced Budget Act of 1997, health maintenance organizations gained the right to refuse to cover counseling or referrals for abortion on moral or religious grounds. The law restricting the use of District of Columbia funds for abortions, known as the Dornan Amendment, was first introduced in 1988.
Mr. Reid repeatedly denounced the effort on Friday, at news conferences, in news releases and on the Senate floor. He was often joined by Senator Patty Murray, Democrat of Washington. “People in this country ought to be furious,” she said. “Women are not going to be thrown under the bus for this agreement.”
A version of this article appeared in print on April 9, 2011, on page A1 of the New York edition.
Được đăng bởi vào lúc No comments:
Subscribe to: Posts (Atom)