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December 21, 2014 / 29 Kislev, 5775
 
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Posts Tagged ‘euro’

Does Russia Have its Eye on Strategic Cyprus?

Sunday, January 27th, 2013

Cyprus’s banks are on the brink of collapse. As a result of a crisis that began in Greece, and as one of the 17 European countries that use the euro as their currency, Cyprus, is a victim of the euro’s domino effect, and is being dragged down by the eurocrisis, along with the entire southern rim of the eurozone.

Since last spring, Cyprus, a small country with barely one million inhabitants, has been negotiating with the other members of the eurozone about a financial bailout. When Greece was given 85 percent relief on its debts, the Cypriot banks suffered heavy losses on top of the huge losses already incurred as a result of a domestic real estate bubble. To stay afloat, Cyprus’s banks currently need some €17 bn ($23 bn) — an immense sum for a country with a 2011 GDP of only €19 bn ($25 bn) and a contracting economy.

Cyprus’s fortune, however, is its location. It is the easternmost island in the Mediterranean and of considerable strategic importance. Cyprus is like a huge aircraft carrier situated in front of Turkey, Syria, Lebanon, Israel and Egypt. In addition, huge offshore fields of gas and perhaps oil have recently been discovered in Cypriot territorial waters.

Cyprus is also the place where the Arab Spring meets the Eurocrisis. The Syrian port of Tartus hosts Russia’s only naval base in the Mediterranean. The impending fall of the Assad regime in Syria is forcing Russian President Vladimir Putin to look for an alternative to Tartus — leaving him with only one option: Cyprus.

Politically and economically, Russia and Cyprus are already closely tied. Cyprus’s President, Demetris Christofias, is the leader of the Cypriot Communist Party. He met his wife during his studies at the Russian Academy of Sciences in Moscow in the 1960s. When Russia became “capitalist,” the ties between the two countries became even closer. Thousands of wealthy Russians have put their “black money” in Cypriot banks. Although Cyprus joined the eurozone in 2008, its banks have almost no clients from other EU countries. With the exception of Greece, with which the Greek-speaking Cypriots share close cultural and historic ties, Cypriot banks cater almost exclusively to Russian oligarchs; as a consequence, tiny Cyprus is Russia’s largest foreign investor.

In November 2011, Cyprus was bailed out by a €2.5 bn loan from Russia. The eurocrisis has since deepened and more money is now urgently needed. Last June, Cyprus turned to the European Union, the eurozone’s European Central Bank (ECB) and the IMF, asking for emergency aid of at least €10 bn. In return, however, the E.U., ECB and IMF – the so-called Troika – have asked Cyprus to reform its economy. Negotiations over these “structural reforms,” such as privatization of state-owned enterprises and reduction of wages, have dragged on for almost eight months.

No agreement could be reached between the ruling Cypriot Communists, who refused to implement the reforms demanded by the Troika, and Germany, the euro’s major paymaster. Next fall, general elections will be held in Germany. With an electorate that is tired of bailing out banks and governments in Greece, Ireland, Portugal and Spain in order to save the euro – a currency which many Germans feel was forced upon them – making Chancellor Angela Merkel reluctant to come to Cyprus’s aid.

Last November, a leaked intelligence report of the Bundesnachrichtendienst (BND), the German equivalent of the CIA, made matters even more difficult for Merkel. The report asserted that a bailout of Cyprus would boil down to using German taxpayers’ money to save the funds of rich Russians, who deposited up to €26 bn in “black money” in Cypriot banks, which are now on the brink of bankruptcy. The BND accuses Cyprus of creating a fertile ground for Russian money laundering, a charge further exacerbated by the ease with which Russian oligarchs can obtain Cypriot nationality and thus gain automatic access to all the E.U. member states. The BND said 80 oligarchs have managed to gain access this way to the entire E.U.

As the financial blog Testosterone Pit explained: “Taxpayers in other countries, including those in the U.S. – via the U.S. contribution to the IMF – will be asked to [bail out] tiny Cyprus.” However, given that Chancellor Merkel has already decided that the euro must be saved at all costs, she has no other option but to bail out Cyprus, including the investments of Russian oligarchs.

Israeli Company Wins Tender to Build Milk Parlors for Belarus

Thursday, September 20th, 2012

An Israeli company has won a 12 million-euro tender with the Belarusian government to build 135 advanced cow milking parlors across the country.

The Israeli dairy herd management firm AfiMilk will help Belarus bring its dairy system up to European standards following Russia’s decision to stop purchasing Belarusian dairy products due to violations of its packaging laws.  The decision was a major blow to the Belarusian dairy industry, which previously exported 95% of its dairy to Russia.

The systems will include all the necessary hardware, as well as computer software to mange the cattle.

AfiMilk is jointly owned by SAE from Kibbutz Afikim in the northern Jordan Valley, and Israeli private equity investment group Fortissimo Capital.  AfiMilk technologies are in use in 50 countries across the world.

The company won a gargantuan tender in China a month ago to build milking parlors for 50,000 cows at a price of $500 million.

Shekel Up Against Dollar Post-Rosh Hashanah

Wednesday, September 19th, 2012

The shekel strengthened against the dollar and euro in trading after the Rosh Hashana holiday.  Tel Aviv’s foreign currency exchange market was closed Monday and Tuesday for the Jewish New Year.

In trading on Wednesday morning, the shekel-dollar rate dropped by 0.38% to 3.895 shekels to the dollar.

The Euro also strengthened against the dollar to $1.308 to the euro following a four-month low by the dollar against the euro last week.

Moody’s 2012 Report and Israel

Sunday, September 9th, 2012

While Israel is concerned about growing budget deficit and unemployment, Moody’s September 3, 2012 annual credit report on Israel, states:

*Israel’s A1 government bond rating and stable outlook are underpinned by the country’s high economic, institutional and government financial strength. [However], the rating is constrained by significant social and political challenges, which lead to moderate susceptibility to event risk….

*Israel’s high economic strength is supported by its relatively high GDP per capita (US$31,200 in 2011) and its economic resilience, which has been illustrated in recent years during frequent economic and political shocks. However, this resilience is being challenged once again by the ongoing euro zone debt crisis and the concurrent slowdown in the global economy.

*Moody’s points out that the Israeli economy’s pace of recovery following the global recession in 2009 has slowed as the contribution of net exports became a drag on the economy last year for the first time since 2007, a trend continued into the first quarter of this year. Capital inflows have diminished and the current account surplus has disappeared in 2012, the latter partly a result of the need to replace Egyptian gas imports following that country’s revolution. As a consequence, the real GDP growth rate dropped to 3% in H1 2012 from an average of 4.8% during 2010-11. Nonetheless, the country’s specialized export sector is well-positioned to rebound quickly should the global environment normalize….

*Moody’s assesses Israel’s government financial strength as being high thanks to the improving debt trajectory, the favorable debt composition and the comfortable debt service schedule…. Additional spending has been allocated to address the acute problems in the housing sector, related primarily to affordability. Other social spending hikes in response to last year’s widespread popular demonstrations and secular increases, mainly associated with demographic trends, will require strict prioritization to conform to the fiscal rule that sets a ceiling on the growth of government spending.

*Moody’s judges Israel’s susceptibility to event risk as moderate based on the political risks facing the country, both domestic and external. The Arab Spring revolutions have ironically created problems for Israel, for whom the 1979 peace treaty with Egypt has been critical to its security framework. The violent uprising in Syria and concerns about Iran’s nuclear program, have led the government to maintain a high level of defense spending, representing about 15% of total government expenditure. However, the negative impact of the cutoff of Egyptian gas supplies on the Israeli balance of payments will be more than offset as Israel’s own gas production increases substantially between 2013 and 2016.

On the other hand, here’s Moody’s August 30, 2012 assessment of the economic performance of the G-20 countries:

*We expect the G-20 advanced economies to grow by around 1.4% in 2012 and 2.0% in 2013, comparable to the 1.3% growth in 2011 and significantly lower than the 3.0% growth in 2010. We expect the prolonged financial market volatility stemming from the sovereign debt crisis in the euro area to continue to depress consumer and business confidence, and the high level of uncertainty to continue to weigh on investment and hiring decisions. Along with ongoing deleveraging efforts in the public and private sectors, persistently high unemployment levels, and real-estate market weakness in a number of countries, these developments will continue to constrain growth in advanced economies.…

*The risk of a deeper than currently expected euro area recession remains significant. The risk of further financial market turbulence in the euro area also remains elevated, given the need for fiscal consolidation measures in an environment of weak economic growth, which raises implementation risks. Furthermore, political and financial uncertainty in Greece and potential funding stress in Spain and Italy have increased the risk of severe economic and financial dislocations in the euro area….

Visit Yoram Ettinger’s website, www.theettingerreport.com.

The U.S. Politics of the Eurocrisis

Tuesday, June 19th, 2012

The eurocrisis has been festering for well over two years. What initially looked like a small problem, involving relatively small peripheral countries such as Greece, Portugal and Ireland, is now dragging the entire European economy into a recession. During his first three and a half years in the White House, Europe was not high on Barack Obama’s priorities. Belatedly, however, Obama seems to have realized that his own reelection next November might be in jeopardy if the eurocrisis leads to worldwide financial instability and global economic depression. Europe is the world’s largest trading bloc. Thousands of American jobs depend on trade with Europe. Obama’s chances of reelection are bound to diminish as soon as Americans start to lose jobs as a result of a eurocrisis spun out of control.

Nicolas Sarkozy, the former President of France, hoped that he would be reelected by the time that the eurocrisis would begin to affect France. He was wrong. France was hit sooner and deeper than Sarkozy expected, and he lost the elections. Similarly, Obama hopes that the eurocrisis will not begin to affect America before November. Play for time is the only thing he can do. And playing for time means the same for Obama as it meant for Sarkozy: He needs to persuade Germany to buy time by bailing out the bankrupt economies in Southern Europe.

During the past weeks, Obama has spent many hours on the phone with European leaders – and in particular with German Chancellor Angela Merkel — to find a way to contain the eurocrisis. At this week’s G-20 summit in Los Cabos, Mexico, more pressure was exerted on Frau Merkel.

Germany, Europe’s economic powerhouse, is the only country in Europe capable of bailing out insolvent countries such as Greece and providing enough financial backing to prop up Spain’s collapsing banks.

The problem is, however, that even if Britain and the United States join in, the European economies along the Mediterranean such as Greece and Spain keep contracting, making it ever more difficult for them to overcome their debt problems. Consequently, they will keep on needing one bailout after another, without the prospect of improvement in the foreseeable future. In 2010, Greece received a first bailout of €110bn. Germany provided the bulk of the money. Earlier this year, Athens received a second bailout of an even more staggering €130bn. Again, Germany provided the bulk of the money. This summer, Greece will need a third bailout. Meanwhile, last week, the eurozone countries decided to give Spain €100bn to bail out its banks. As usual, Germany will have to pay most of the money. But analysts say that another €200bn might be needed to save the Spanish banking sector.

As long as the Germans believe that it is in their interest to save the euro, the common European currency which ties Germany to countries such as Greece and Spain, they are prepared to keep paying the euro’s rising price tag. But the German people are becoming exasperated and angry.

A growing number of Germans are losing faith in the eurozone. Others feel betrayed. Even ten years ago, when the euro was introduced as the common currency of several European countries, a majority of Germans were reluctant to give up the D-mark for the euro. They were reassured, however, by their politicians’ promise that there would be no bailouts. Bailouts between European countries are, in fact, prohibited by the European treaties. Nevertheless, Europe’s politicians have found legal loopholes to impose them anyhow. Reluctantly, national parliaments have consented to the bailouts out of fear that the bankruptcy of one eurozone country would drag the entire monetary union down.

A poll last week suggested that 69% of the Germans want Greece to leave the euro and return to the drachma, and 29% of the Germans want Germany to leave the euro and return to the D-mark. Either event – a Greek exit or a German exit – is expected to have enormous repercussions and dramatic consequences, not just for Europe but for the entire global economy. The cost would be enormous, but some Germans reckon that ultimately the price tag for Germany might be less than the price of continuing with the present policies of seemingly endless bailouts.

Eurocrisis: Russia Offers Its Services

Tuesday, June 5th, 2012

Europe’s politicians will not admit it openly but they are afraid that the dire economic situation in countries such as Greece and Spain might lead to revolution. In two weeks’ time, the Greeks will go to the voting booths again. The far-left Syriza party is leading in the polls. During the past months, violence has hit the streets of Athens and Thessaloniki. Desperate people are committing suicide in public, reminding Europe’s leaders that the so-called Arab Spring, which toppled many Arab regimes, was triggered in December 2010 by the self-immolation of a street vendor in Tunisia.

Later this month, Greece needs a new round of €5.2 billion in bailout funds from the other European Union countries. In return, the Greeks must pass €14.5 billion worth of austerity measures. With a newly elected Greek parliament unwilling to introduce them, however, and with Greek politicians threatening to annul prior loan agreements, other countries are unwilling to come forward with new funds. Meanwhile, Greek citizens are moving their money out of the country, exacerbating the situation of Greece’s banks. The prospect of a bankruptcy of Greece, and of the country leaving the eurozone, seems ever more likely. Grexit – as the European media call the scenario of Greece leaving the euro – is a possibility. But how will the Greek people react? If the level of anger and frustration keeps rising in Greece, the country might descend into chaos.

The situation is equally unstable in Cyprus. The economic situation of this strategically located country is inextricably intertwined with that of Greece. A collapse of Greece will drag Cyprus along with it. Economists expect that to keep Cyprus afloat, it will need between €25 and 50 billion from the other EU countries. If the EU does not provide the money, others might. Last December, Russia already gave Cyprus a bilateral loan of €3 billion. Russia is definitely capable of bailing Cyprus out. The Russians, however, are likely to want something in return. If Russia steps in, the strategic situation in the entire Eastern Mediterranean could change. Given the large gas supplies in the waters around Cyprus, Turkey, too, is interested in gaining a stronger foothold in Cyprus. Can Israel tolerate this?

Greece and Cyprus are not the only countries in Southern Europe that are heading for political instability. In Portugal, Spain, and Italy there have also been street protests in response to austerity measures. The EU is particularly worried about Spain. Last week, the Spanish Socialist former Prime Minister Gonzalez said that his country is in a “state of total emergency.” Spain is heading full speed for a debacle.

Last month, panic-stricken Spanish citizens withdrew more than €70 billion from Spanish banks and moved it to foreign safe havens. While Greece is confronting Grexit, Spain is already in the grip of what the European media call Spanic. The Spanish banking sector is about to collapse. Bankia, Spain’s third largest bank, urgently needs the Spanish government to bail it out with €21 billion. Bankia, a state-owned institution which was formed last year out of the ruins of seven regional banks which could no longer shoulder the huge losses of the Spanish real estate crash, is virtually bankrupt. To save the Spanish banks, however, the debt-ridden government in Madrid needs at least €90 billion.

Meanwhile, with youth unemployment higher than 50%, Spain’s younger generation has no prospects whatever. They have nothing to lose and, hence, can be easily persuaded to rebel against a political system that seems incapable of offering them hope for a better future. This is a politically dangerous situation, which the United States should be taking into account. The whole of Southern Europe might soon be in turmoil.

If Spain goes down the drain, Italy is bound to follow. And if Italy, the third largest economy in the EU, goes, France is likely to go as well. The Europeans are preparing for disaster. In May, economic activity in the eurozone countries, including France and Germany, contracted at the fastest rate since June 2009.

Last week, the heads of government of the eurozone countries met in Brussels for their 19th emergency gathering since the eurocrisis began two years ago. Spain, Italy, and France have stated that they want the European Central Bank to intervene by issuing eurobonds, pooling the sovereign debts of all 17 eurozone countries.

Who Will Suffer As A Result of Euro Policies? The Jews.

Monday, May 14th, 2012

The European Union, and especially its common currency, the euro, is on the brink of collapse. The Greeks, unable to form a government after the May 6 elections, will have to go to the polls again next month. In Germany, Chancellor Angela Merkel is rapidly losing support. If she cares about her reelection next year, she had better push Greece out of the eurozone rather than keep that country afloat with German taxpayers’ money. If Greece leaves, the whole euro edifice might come down – a better outcome than the present situation, in which extremist parties on the Left and the Right (all of them anti-Semitic) are rapidly gaining electoral support at the expense of mainstream parties which keep clinging to the failed project of the common European currency.

A recent program on German television revealed that former German Chancellor Kohl had exchanged the strong D-mark for the crisis-prone euro because he wanted to atone for Germany’s role in the Second World War. Contemporary Germans, however, are not inclined to pay for the Greeks and other southern Europeans to make up for their grandfathers’ role in the Second World War.

The euro project was flawed from the beginning. It lumped various countries with widely divergent economies, cultures, and languages together in a single monetary union, imposing a “one size fits none” monetary policy on 17 countries which have little in common but the fact that they are all located on the European continent. It is as if the U.S. were to renounce the dollar for the ‘amro,’ a common currency with countries as different as Mexico, Colombia, Brazil, and Argentina.

In this fashion, a prosperous and industrious northern European country such as Germany, the economic powerhouse of Europe, renounced the D-mark for a euro, which also included a nation such as Greece, where corrupt politicians lied and cheated about the country’s dire economic situation.

A documentary on German television last week revealed that the political class in Europe knew that the Greeks were cooking the books, but did not care. The euro was a political project. Former European Commissioner Frits Bolkestein admitted as much in the documentary. Former German Chancellor Helmut Kohl renounced the D-mark for a euro which was to include as many countries as possible. “Kohl was a romantic as far as the EU was concerned,” Bolkestein said. “For Kohl, European unification was the way for Germany to atone for the Second World War. That is why he wanted to have as many countries in the eurozone as possible, whether they qualified or not.”

Bolkestein admitted that he had misgivings about the inclusion of countries such as Greece in the eurozone. In the same documentary, Jean-Claude Trichet, president of the European Central Bank from 2003 to 2011, admitted that the financial crisis in Greece, which is currently dragging the euro down with it, could only have happened because the EU refused to see the obvious. It was an eye-opening documentary that enraged many Germans viewers.

The euro crisis is leading to a general dissatisfaction of the Europeans with the governing political class, whether left, the right, or center. In less than one and a half years, 10 of the 17 government leaders of the eurozone have been brought down or voted out of office. This happened in February 2011 to Ireland’s centrist Prime Minister Brian Cowen; in April 2011 to Finland’s centrist Prime Minister Mari Kiviniemi; in June 2011 to Portugal’s socialist Prime Minister Jose Socrates; in September 2011 to Slovenia’s socialist Prime Minister Borut Pahor; in October 2011 to Slovakia’s center-right Prime Minister Iveta Radicova; in November 2011 to Italy’s center-right Prime Minister Silvio Berlusconi, Greece’s socialist Prime Minister George Papandreou and Spain’s socialist Prime Minister Jose Zapatero; in April 2012 to the Netherlands’ center-right Prime Minister Mark Rutte; in May 2012 to France’s center-right President Nicolas Sarkozy.

All ten of them fell — directly or indirectly — as a result of the eurocrisis. It is generally expected that the same fate will befall Germany’s center-right Chancellor Angela Merkel in next year’s German general elections. Merkel is Helmut Kohl’s successor as leader of the Christian-Democrat Party CDU. In last Sunday’s state elections in North Rhine-Westphalia (NRW), Germany’s most populous state, where almost a quarter of all Germans live, the CDU lost its position as the biggest party in the state to the Socialists. The CDU lost a quarter of its votes, while the Pirate Party, some of whose leaders acknowledge that the party is infiltrated by neo-Nazis, entered the NRW state parliament.

The largest European countries – Germany, France and Italy – which were (or, in Germany’s case, are) led by center-right politicians, are shifting to the left. In countries where the left has lost the leadership, the extreme-left won significantly in the elections.

Printed from: http://www.jewishpress.com/indepth/analysis/who-will-suffer-as-a-result-of-euro-policies-the-jews/2012/05/14/

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