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Ebola breaks backs of West Africa economies

The World Bank warns that Ebola is wreaking economic havoc on the West African countries worst hit by the pandemic. In a new report, the bank is calling for swift international action to mitigate the damage. While it's impossible to put a price on the nearly 6,000 lives already lost to Ebola, the World Bank on Tuesday published an estimate of the measurable economic impact of the outbreak. In a new report, it warned that the outbreak could cost the three worst-hit countries - Guinea, Liberia and Sierra Leone - more than $2 billion (1.61 billion euros) in lost income over the 2014-15 period. The new report paints a decisively bleaker picture of the economic calamity facing the region if the virus is not contained soon, than the cautiously optimistic analysis the bank released only two months ago. " [If] the epidemic spreads into neighboring countries, some of which have much larger economies, the cumulative two-year impact could reach US$32.6 billion by the end of 2015—almost 2.5 times the combined 2013 GDP of the core three countries," Negative growth The World Bank lowered its 2014 growth forecast across the board: Growth in Guinea was adjusted to 0.5 percent, compared with 2.4 percent in October and 4.5 percent pre-crisis; Liberia's GDP was expected to fall to 2.2 percent compared with 2.5 percent in October and 5.9 percent pre-Ebola; and Sierra Leone was now projected at 4 percent, half of October estimates and down from 11.3 percent before the outbreak. The World Bank also said it expected negative or slower economic growth next year, downgrading forecasts for Guinea to minus 0.2 percent, compared with October's 2 percent estimate and pre-crisis forecast of 4.3. In Sierra Leone, projected growth was negative at minus 2 percent, down from 7.7 percent in October and 8.9 pre-pandemic. "In Liberia, where there are signs of progress in containing the epidemic and some increasing economic activity, the updated 2015 growth estimate is 3.0 percent, an increase from 1.0 percent in October, but still less than half the pre-crisis estimate of 6.8 percent," the report said. International action Exacerbating the crisis are pullbacks by foreign investors, as well as a breakdown of tourism, adding to detrimental cutbacks to government spending. The bank warned that the outbreak had triggered a devastating chain reaction: Forgone output, higher fiscal deficits, rising prices, lower real household incomes and greater poverty. The report called on the international community to double down on efforts to help pull back Guinea, Liberia and Sierra Leone from the brink of economic collapse. "The swift and coordinated actions of the international community may help limit the impact of this Ebola crisis to an interruption in that trajectory of sustained economic growth rather than a lengthy detour." The report comes as World Bank President Kim Yong Kim embarked on a two-day trip to the affected region to discuss ways to combat Ebola. "While there are signs of progress, as long as the epidemic continues, the human and economic impact will only grow more devastating," he said.

The World Bank warns that Ebola is wreaking economic havoc on the West African countries worst hit by the pandemic. In a new report, the bank is calling for swift international action to mitigate the damage. While it’s impossible to put a price on the nearly 6,000 lives already lost to Ebola, the World Bank on Tuesday published an estimate ... Read More »

Deutsche Bahn sues airlines over price-fixing

German rail operator Deutsche Bahn (DB) is filing a billion-euro lawsuit against more than a dozen airlines over allegations of running a 'global cargo cartel.' Germany's Lufthansa is reportedly the main target. DB's cargo unit said on Sunday that it was claiming damages of nearly 2 billion euros from at least 13 airlines, including Lufthansa, Air France-KLM, and British Airways. The state-run railway operator is accusing the carriers of conspiring to push up airfreight fees. A spokesman for Deutsche Bahn told German business weekly Wirtschaftswoche that the company was seeking 1.76 billion euros ($2.19 billion) in compensation for the damages sustained by its cargo subsidiary Schenker from 1999-2006. The price-fixing scheme could amount to one of the "biggest cartels in business history," he said, He said DB would file the suit to the regional court in the western German city of Cologne, home of the Lufthansa headquarters. The company already announced in August that it was filing a similar suit in New York. DB won't let Lufthansa off the hook The price-fixing scandal first blew up seven years ago, and in 2010 Europe's competition watchdog fined 11 airlines, including Air France-KLM and British Airways, nearly 800 million euros for coordinating their action on fuel and security fees. However, the ruling also allowed victims of the cartel to file separate claims, which is why Deutsche Bahn is now revisiting the lawsuit. It is seeking the lion's share of the compensation from Lufthansa, which was let off the hook four years ago, because it reported the practice to the authorities. Deutsche Bahn operates in more than 130 countries and transports nearly 400 million tons of cargo annually by land, rail, sea and air.

German rail operator Deutsche Bahn (DB) is filing a billion-euro lawsuit against more than a dozen airlines over allegations of running a ‘global cargo cartel.’ Germany’s Lufthansa is reportedly the main target. DB’s cargo unit said on Sunday that it was claiming damages of nearly 2 billion euros from at least 13 airlines, including Lufthansa, Air France-KLM, and British Airways. ... Read More »

German energy giant E.ON to focus on renewables

Germany's largest power supplier E.ON is quitting conventional energy to focus entirely on renewables. The overhaul comes amid mounting debt and as Germany gears up to phase out nuclear energy by 2022. The energy giant announced plans to spin off its nuclear, oil, coal and gas operations - a move that will include selling its businesses in Spain and Portugal to Australian investment firm Macquarie for 2.5 billion euros ($ 3.11 billion). E.ON said its trimmed-down operation would allow it to focus on green energy, distribution networks and customer solutions. "We are convinced that it's necessary to respond to dramatically altered global energy markets," the company's CEO Johannes Teyssen said in a statement late Sunday. "E.ON's existing broad business model can no longer properly address these new challenges," he added. "Two separate, distinctly focused companies offer the best prospects for the future." Germany goes green The overhaul comes as Germany plans to wean itself off nuclear power and shift to renewable energy sources by 2022. The country's Economy Minister Sigmar Gabriel welcomed the announcement, hailing E.ON as the "first company to draw the consequences of a dramatic change in the field of energy supplies," according to German daily Rheinische Post. "This definitely creates new opportunities," Gabriel said. Germany's benchmark DAX share index jumped at the news, reflecting hopes that the new strategy could pump new life into the company, which is currently staring at a jarring 31-billion-euro mountain of debt. The price slump on the wholesale electricity market has added to the misery, with E.ON bracing itself for fourth-quarter impairment charges of 4.5 billion euros on its operations in southern Europe. 'Bad Bank' Critics worry that the company is now trying to offload its bad assets and that the new offshoot won't be able to generate enough revenue in the green energy environment to finance the phase-out and demolition of its nuclear plants. "I fear that E.ON is creating a 'bad bank' for its seven nuclear plants, which will have to be bailed out by the German taxpayer," said Bärbel Höhn of the Greens and chairwoman of the parliamentary committee on environment, nature conservation and nuclear safety. However, E.ON's Teyssen rejected the criticism, saying that "it's not clear which will be more successful in five years - E.ON or the new company." He added that the new business would enter the market debt-free and with the 14.5-billion-provision that the company has currently reserved for the 2022 exit. E.ON shareholders would continue to own a majority stake in both companies and are expected to sign off on the deal, which is scheduled to take effect in 2016.

Germany’s largest power supplier E.ON is quitting conventional energy to focus entirely on renewables. The overhaul comes amid mounting debt and as Germany gears up to phase out nuclear energy by 2022. The energy giant announced plans to spin off its nuclear, oil, coal and gas operations – a move that will include selling its businesses in Spain and Portugal ... Read More »

Merkel bets on BlackBerry to beat cyberspies

Berlin has signed an anti-spying deal with BlackBerry, allowing the Canadian phone maker to take over Germany's Secusmart. The encryption software maker outfits government phones, including that of Chancellor Merkel. The German Economics Ministry said Friday it had approved of the takeover of German software firm Secusmart by Canadian mobile phone maker BlackBerry. In a statement the ministry said it had "thoroughly scrutinized" the transaction to see if it violated "essential security concerns." The German government uses about 2,500 BlackBerry devices outfitted with Secusmart encryption software. The handsets incorporate a Secusmart microSD that acts as a separate hard drive for confidential information which can't be accessed by hackers. No-spy deal According to German media reports, BlackBerry had accepted far-reaching control powers for the German government in exchange for the Secusmart takeover to go ahead. BlackBerry reportedly agreed to give Germany's cyber security agency BSI full insight into the source code of BlackBerry's operating system and immediately report security problems to BSI. In addition, the deal included a binding obligation for BlackBerry not to pass on confidential information to foreign intelligence agencies, the German media said. The German Economics Ministry didn't confirm details of the deal, saying only that a contract had been signed to protect essential "security interests." In 2013, Germany was scandalized by revelations from the Snowden files that Chancellor Angela Merkel's cell phone had allegedly been tapped by United States' intelligence agency NSA. The takeover of Secusmart by BlackBerry raised concerns among German lawmakers as Canadian officials are known to be working closely together with US-based spy agencies.

Berlin has signed an anti-spying deal with BlackBerry, allowing the Canadian phone maker to take over Germany’s Secusmart. The encryption software maker outfits government phones, including that of Chancellor Merkel. The German Economics Ministry said Friday it had approved of the takeover of German software firm Secusmart by Canadian mobile phone maker BlackBerry. In a statement the ministry said it ... Read More »

European Union grants budget laggards more time to meet deficit rules

The European Commission has said it will refrain from punishing eurozone nations not able to bring their budget plans in line with deficit rules. Some will get three extra months to make adjustments. France, Italy and Belgium have been be granted until March of next year to bring their 2015 budgets in line with EU rules, the European Commission said Friday. Brussels had been assessing the eurozone nation's draft budgets under a new system meant to spot financial trouble early on. Only Greece and Cyprus were not scrutinized as the two nations were still undergoing international bailout programs. Following the assessments, the EU executive could have decided on immediate punitive and disciplinary action against eurozone nations not getting their act together. Heterogeneous picture "But I made the choice not to sanction," Commission President Jean-Claude Juncker said in a statement. "It would have been easy to punish the countries which do not respect the rules of the Stability and Growth Pact - we only needed to apply the foreseen procedures. But I chose to let them talk, and to listen." France and Italy had faced particular pressure in recent months as analysts expected their budgets to run afoul of EU rules. Other countries also found at risk of overspending included Malta, Austria and Portugal. By contrast, the budgets of Germany, Ireland, Luxembourg, the Netherlands and Slovakia were all given the green light.

The European Commission has said it will refrain from punishing eurozone nations not able to bring their budget plans in line with deficit rules. Some will get three extra months to make adjustments. France, Italy and Belgium have been be granted until March of next year to bring their 2015 budgets in line with EU rules, the European Commission said ... Read More »

German retail sales rebound

German retailers have been able to increase their sales volumes lately, leaving behind a marked drop earlier in the year. The latest figures suggested pre-Christmas shopping could add to making retailers even happier. A closely watched measure of household confidence, German retail sales rose by 1.9 percent in October month-on-month, the Federal Statisitcal Office (Destatis) reported Friday. On a 12-month basis, business increased by 1.7 percent. The rebound was stronger than most analysts had expected, following a 2.8 percent decline in sales in September. Statisticians said the pickup in October was primarily due to stronger sales of food items, beverages and tobacco plus books and jewelry, while clothing and shoes didn't sell well because of a protracted spell of warm weather in the country. Rosy outlook In the first 10 months of 2014, retail sales rose by 1.3 percent, Destatis said. Retailers are now looking ahead to what they believe will be a very lucrative pre-Christmas business. The HDE business association had said it expected a record 85.5 billion euros ($106.3 billion) in seasonal income, a 1.2 percent improvement over 2013 levels. The organization also said people seemed willing to spend more money on big-ticket items as the domestic labor market remained robust and many people had more in their pockets because of recent pay hikes in many industries.

German retailers have been able to increase their sales volumes lately, leaving behind a marked drop earlier in the year. The latest figures suggested pre-Christmas shopping could add to making retailers even happier. A closely watched measure of household confidence, German retail sales rose by 1.9 percent in October month-on-month, the Federal Statisitcal Office (Destatis) reported Friday. On a 12-month ... Read More »

Foreigners no burden on German welfare system

A fresh study by a leading German economic think tank has shown that foreigners living in Germany are no financial burden on the nation's welfare system, sharply contradicting popular belief. A survey released by the Mannheim-based Center for European Economic Research (ZEW) Thursday says foreigners living in Germany contribute a net profit to the country's welfare system. The study - compiled on behalf of the Bertelsmann Foundation - adds that Germany's 6.6 million foreigners, defined as people not holding a German passport, account for a social welfare fund surplus of 22 billion euros ($27.4 billion) yearly, with every individual in that group contributing an average 3,000 euros more in taxes and premiums than they get in terms of state support. The findings are in stark contrast to popular belief, with roughly two two-thirds of native Germans insisting that migration poses a huge burden on the welfare state. Foreigners a budget factor The ZEW survey adds that back in 2004, each foreigner already contributed an average 2,000 euros to the social systems network, while ensuing improvements are attributed to favorable developments on the domestic labor market. The study's author, Holger Bonin, says it's no secret, though, that highly qualified people contribute more than people with low or no skills. Bertelsmann Foundation chief Jörg Dräger argues foreigners' contribution to the welfare system could increase through a better education and qualification policy. But he said German is not yet attractive enough to lure enough foreign skilled workers from countries outside the European Union. "A good education policy is the best integration policy," he said. "The global stream of talent is still passing us by."

A fresh study by a leading German economic think tank has shown that foreigners living in Germany are no financial burden on the nation’s welfare system, sharply contradicting popular belief. A survey released by the Mannheim-based Center for European Economic Research (ZEW) Thursday says foreigners living in Germany contribute a net profit to the country’s welfare system. The study – ... Read More »

Tribesmen blow up Yemen’s main oil pipeline

Armed tribes have attacked Yemen's main oil pipeline, halting the flow to a crucial export terminal. The country almost exclusively depends on its oil and gas shipments abroad to secure foreign currency. Saboteurs blew up Yemen's main oil export pipeline on Wednesday, interrupting flows of crude oil to a major export hub, the country's defense ministry said. It was the latest assault on the country's main source of income, as Yemen relies on oil and gas exports for 90 percent of its foreign currency earnings. The motive for the latest attack was not immediately clear, but previous acts of sabotage by tribesmen have targeted oil and other infrastructure in a bid to extract concessions from the central government. The defense ministry said on its website, www.26sept.net, that the attack occurred in the area of Habab in Marib province. Some 70,000 barrels are pumped through the Marib pipeline a day to Ras Isa, a crucial petroleum export terminal on the Red Sea. According to government figures, attacks on infrastructure have cost the impoverished nation $4.5 billion (3.6 billion euros) between March 2011 and March 2013 alone.

Armed tribes have attacked Yemen’s main oil pipeline, halting the flow to a crucial export terminal. The country almost exclusively depends on its oil and gas shipments abroad to secure foreign currency. Saboteurs blew up Yemen’s main oil export pipeline on Wednesday, interrupting flows of crude oil to a major export hub, the country’s defense ministry said. It was the ... Read More »

With prices, demand low, OPEC mulls oil options

The drop in the oil price means the upcoming OPEC summit could be the most interesting in years. Although the oil-producing countries don't have a common line, conspiracy theorists suggest they're using oil as a weapon. As the lubricant of the global economy, the price for oil can stimulation the world economy - or stifle it. The current low price of oil has hit many oil-producing countries hard, including Russia. Russian Finance Minister Anton Siluanov said on Monday that Russia will lose almost $100 billion per year as a result of the price drop of around 30 percent over the past few months. By contrast, he estimated that Western sanctions against Russia have cost it only $40 billion. Venezuela and Iran are also struggling. Analysts at Deutsche Bank estimated that the oil price would have to be around $160 a barrel for Venezuela to balance its national budget. Iran would need around $125 a barrel. At present, though, the price has dropped below the $80 mark. Wrangling over production quotas Together, the 12 OPEC oil producers only account for a third of global oil production. But the organization is able to cut production in order to stabilize the price or to drive it up. According to Deutsche Bank, the cartel has successfully deployed this strategy 11 times since 1984. Russia, which is not an OPEC member, called for production to be cut back ahead of Thursday's OPEC policy meeting. In an interview with the Russian Tass news agency, President Vladimir Putin adopted a threatening tone while warning of a domino effect in the globalized economy, "The modern world is interconnected. It is far from guaranteed that the sanctions, the drop in the price of oil and the fall of the ruble will have catastrophic consequences for us alone." The day before the OPEC conference the Russian oil company Rosneft even announced that it would cut production by 25,000 barrels a day, in the hope of sending a signal to OPEC. There was, however, no reaction from the market. Saudi Arabia sets the prices Whenever there is talk of reducing production, all eyes usually turn to Saudi Arabia. The desert kingdom is what is known as a "swing producer," according to Leon Leschus, an expert in natural resources at the Hamburg Institute of International Economics. Saudi Arabia is by far the biggest oil producer in OPEC. "In the past, when there have been deficits in oil production, Saudi Arabia has leapt into the breach and substantially increased its production," Leschus told DW. "Of course, it's easier to increase production, because then you also have bigger revenues, rather than having to decide to cut it back." Either way, Saudi Arabia has so much power over the market that any action it takes has a significant effect on the price. The United States also has the ability to influence the price of oil, according to the US investor George Soros. At a podium discussion in Berlin earlier this year, Soros suggested that the US should pour oil from its strategic reserves onto the market to bring down the price of oil as a way of upping the pressure on Moscow. The West has already placed sanctions on Russia and a number of Russians regarding Russian policy toward Ukraine. "The Russian economy is weak because the oligarchs who control the country don't trust it, and send their money abroad," Soros said. "If you stop the flow of money, you bring the Russian economy to its knees." The Russian central bank is predicting that capital outflow in 2014 will reach $128 billion - more than double last year. Conspiracy theories No wonder, then, that conspiracy theories abound in the run-up to the OPEC meeting. A particularly virulent one is that Saudi Arabia and the US have established a geopolitical cooperation with the aim of putting economic pressure on both Russia and Iran. Frank Umback, director of research at the European Center for Energy and Resource Security at King's College London, pointed out that there is a precedent for this. "In 1986 the oil price fell by more than 50 percent. And that was the start of the economic collapse of the Soviet Union," he said. However, Umbach said he doesn't believe that the current price drop is the result of the United States and Saudi Arabia cooperating. In fact, he said the rivalry between two oil producers is intensifying. "Most observers assume that Saudi Arabia wants to see how far the oil price has to fall before it has a serious effect on shale oil production in the US," he said. Shale oil is obtained through the costly technical process known as fracking, which Leschus said only becomes profitable when the price lies above $80 or $90 per barrel. Over the past few years the American shale oil boom has shaken up the market, turning the US into one of the biggest oil producers in the world. Oil glut as economic stimulus There is currently a surplus of oil on the market as demand is lower than supply and forecast to rise only slightly next year. Prior to the OPEC meeting the Reuters news agency reported that the majority of member states had reason to be glad international negotiators were unable to reach a deal with Iran regarding the country's nuclear program. Such a deal could have entailed easing sanctions against Iran and allowing the country to put its oil on the open market. However, the low price of oil also acts as a stimulus for the global economy. The World Bank estimated that when the oil price falls by 10 percent the global economy grows by 0.2 percent. By this measure, the current price drop would bring about growth of 0.6 percent. If the price were to stabilize at $80 per barrel, the 28 states of the European Union would be paying around 100 billion euros less for oil imports. On the other hand, over the past 15 years rising oil prices have allowed the energy exporters to make sizeable profits, and these have, at least in part, been behind a development boom from which Germany in particular has benefited: In recent years, around 7.5 percent of German capital goods exports were to the oil-producing states. In this respect, Putin is right: The modern world is indeed interconnected.

The drop in the oil price means the upcoming OPEC summit could be the most interesting in years. Although the oil-producing countries don’t have a common line, conspiracy theorists suggest they’re using oil as a weapon. As the lubricant of the global economy, the price for oil can stimulation the world economy – or stifle it. The current low price ... Read More »

Schäuble denies crisis talk in budget debate

Germany's finance minister, Wolfgang Schäuble, has dismissed talk of an impending economic downturn in a parliamentary debate on Germany's budget. Opponents claim his focus on no new debt is hurting the economy. German Finance Minister Wolfgang Schäuble defended the government's rigid budgetary policy on Tuesday, repudiating opponents' claims that a balanced budget was more important to him than growth at a time when Germany's economy was in peril. "We are not in a recession. We are not in an economic crisis," Schäuble said during a budget debate in Germany's lower house of Parliament, the Bundestag. "Our economy is almost working at normal capacity." Germany narrowly avoided a recession in the third quarter, growing by 0.1 percent, official data showed Tuesday, bolstered by higher consumer spending and strong exports thanks to a weaker euro. Berlin is looking to balance its budget next year for the first time since 1969, but its insistence on avoiding new debt has isolated it from weaker eurozone members. No 'loose talk' Earlier this month, the European Commission cut its growth forecast for the eurozone, calling on Germany to invest more to help the 18-member bloc out of its slump caused by economic downturn in France and Italy. European leaders, including Italy's undersecretary for European Affairs, said those forecasts were proof that fiscal policies focused too heavily on budgetary discipline were misguided. The conservative-led government of Chancellor Angela Merkel has consistently warned against falling back into pre-crisis habits of high spending to spur growth. In the Bundestag, Schäuble conceded that the German economy was not growing as quickly as it could, but he also cautioned against "loose talk" that could encourage a crisis. Also on Tuesday, Schäuble sharply criticized in a magazine interview companies that had exploited business-friendly tax laws in Luxembourg to dodge millions of euros in taxes. "When certain groups do not pay their fair share of the public budget, then something's wrong," he told the magazine Focus.

Germany’s finance minister, Wolfgang Schäuble, has dismissed talk of an impending economic downturn in a parliamentary debate on Germany’s budget. Opponents claim his focus on no new debt is hurting the economy. German Finance Minister Wolfgang Schäuble defended the government’s rigid budgetary policy on Tuesday, repudiating opponents’ claims that a balanced budget was more important to him than growth at ... Read More »

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