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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 »

OECD sees global economy in low gear

The Organization for Economic Cooperation and Development has predicted the global economy and worldwide trade will expand only moderately in the near future. In its latest outlook, it voiced concerns about the eurozone. The OECD's Economic Outlook, released on Tuesday, said there would be only a moderate expansion of global output in the next two years as large risks and vulnerabilities persisted. The organization forecast global growth to come in at 3.25 percent this year, followed by a 3.75 percent rise next year and just under 4 percent in 2016. Economies in OECD member countries would continue to be supported by accommodative monetary policies and slow improvements on labor markets. The report noted the speed of recovery from the global financial crisis remained unimpressive, but singled out the US and Britain where shrewd policy action had led to above-average growth incentives. Excessive austerity? By contrast, the OECD survey was highly , saying the single-currency area was grinding to a standstill and posed a major risk to world growth in the years ahead as unemployment remained stubbornly high and inflation persistently far from target. The OECD urged eurozone nations to invest more in education and infrastructure, also advising them to ease the pace of deficit reduction so as not to stifle growth. "Renewed fiscal austerity could downshift the pace of recovery rather than help it," Chief Economist Catherine Mann said in an editorial. The OECD expected Japan's economy to pick up, following a decision to postpone another sales tax hike and expand quantitative easing until further notice. It also mentioned that India and China remained the fastest growing major economies while other emerging nations struggled to advance. The organization added Russia was in go-slow mode, seeing its economy dragged down by Western sanctions and low oil prices.

The Organization for Economic Cooperation and Development has predicted the global economy and worldwide trade will expand only moderately in the near future. In its latest outlook, it voiced concerns about the eurozone. The OECD’s Economic Outlook, released on Tuesday, said there would be only a moderate expansion of global output in the next two years as large risks and ... Read More »

ThyssenKrupp logs profit after years of losses

German heavy engineering giant ThyssenKrupp has left behind painful years of loss-making. The company managed to log a sound profit in its 2013/2014 business year, but structural woes continue to haunt it. ThyssenKrupp reported Thursday it booked a bottom-line profit of 195 million euros ($245 million) for its business year from October 2013 to the end of September 2014, compared with a loss of 1.436 billion euros in the previous fiscal year. Including profit from minority stakes, the firm's net income amounted to 210 million euros. "For the first time in three years, our industrial and technology group has generated net earnings," the Essen-based company said in a statement. Chief Executive Heinrich Hiesinger said the group would not let up in its current restructuring efforts to make it more competitive. "That applies to our efficiency program as well as our operating performance," he explained. Symbolic gesture to shareholders Underlying, pre-tax earnings came in at 1.333 billion euros, with the firm also reporting a 7 percent increase in new orders. With the company back in the black, it announced it would resume dividend payments to shareholders, proposing a 0.11 euros-per-share award for investors. "We are aware that this proposal is no more than a signal to our shareholders," Hiesinger said. ThyssenKrupp employs 160,000 people worldwide - 100,000 of them abroad. One of the firm's major problems is the unprofitability of its steel mill in Brazil which has been able to reduce losses of late. Hiesinger insisted, though, the company was still serious about plans to sell it.

German heavy engineering giant ThyssenKrupp has left behind painful years of loss-making. The company managed to log a sound profit in its 2013/2014 business year, but structural woes continue to haunt it. ThyssenKrupp reported Thursday it booked a bottom-line profit of 195 million euros ($245 million) for its business year from October 2013 to the end of September 2014, compared ... Read More »

UK warns of bleak world economic prospects

British Prime Minister David Cameron has said the global economy was at risk of slipping back into crisis. But ahead of a national election in May, he didn't fail to mention his country's superior growth. Britain's head of government, David Cameron told Monday's edition of the Guardian newspaper the prospects for the world economy were anything but rosy. "Six years on from the financial crash that brought the world to its knees, red warning lights are once again flashing on the dashboard of the global economy," the prime minister said in an opinion piece after returning from the G-20 summit in Australia. Cameron cited recession fears across the eurozone as the UK's main trading partner and the slowing of emerging economies, but also mentioned additional risk factors such as the Ebola epidemic and conflicts in the Middle East and Ukraine. Keeping expenditures at bay Facing a national election in May, he hastened to contrast the situation in many struggling nations with Britain's strong GDP expansion, with the EU Commission forecasting 3.1 percent growth for the UK throughout 2014, the highest among all large advanced economies. Cameron promised his government would stick to its endeavors to cut the country's budget deficit and bring down public debt. "Britain will face a choice: the long-term plan that has seen it prosper, or the easy answers that would surely have seen it fail," he said in a broadside to Labour party activists who'd been lobbying for more spending to fuel the economy.

British Prime Minister David Cameron has said the global economy was at risk of slipping back into crisis. But ahead of a national election in May, he didn’t fail to mention his country’s superior growth. Britain’s head of government, David Cameron told Monday’s edition of the Guardian newspaper the prospects for the world economy were anything but rosy. “Six years ... Read More »

Hong Kong, Shanghai open landmark stock link

A trading link between Hong Kong and Shanghai giving foreign investors wider access to mainland China's restricted equity market has opened. Meanwhile, Japan surprisingly slid into recession, pushing the Nikkei south. Officials in Hong Kong and Shanghai ceremonially banged gongs on Monday morning at the start of trading under the new Shanghai-Hong Kong Stock Connect platform, allowing investors to buy and sell shares through each other's exchanges. "Today we are going to witness history," said C.K. Chow, the chairman of stock exchange operator Hong Kong Exchanges and Clearing, at the opening ceremony. "It is a breakthrough in the opening up of China's financial markets and an important milestone in the development of Hong Kong as a unique gateway between the mainland and international investors." In Shanghai, Xiao Gang of the China Securities Regulatory Committee said that "China's capital markets now face historic opportunities." No major impact on Monday's numbers The two indexes briefly opened up around 1 percent each, but swiftly shed those gains. Traders had already factored in the new link-up ahead of Monday's opening, analysts said. "The market had already responded to the stock link," Andy Wong, senior investment analyst at Harris Fraser (International) Ltd in Hong Kong told Reuters. "Short-term investors are taking profits from the market." Initially scheduled to open late last month, but delayed, the project received the definitive green light one week ago. The new link allows international investors access to stocks traded in mainland China, and also grants wealthy Chinese investors the chance to purchase shares off the mainland. Trade in both directions remains subject to restrictions, however, at a daily total of 23.5 billion yuan (3 billion euros, $3.8 billion). Up to 13 billion yuan is the limit for international investors buying mainland stocks; the remainder can be spent in Hong Kong. Hong Kong has officially been a part of China since Beijing took control of the former British colony in 1997, but under the terms of the handover agreement the Asian financial hub retains broad legal and financial autonomy. Japan dips into recession In Tokyo, the Nikkei index backslid on Monday morning, after the unexpected announcement that Japan had slipped into recession. Japanese GDP contracted year-on-year by 1.6 percent in the July-September quarter, compared to the 2.1-percent increase predicted by economists in a Reuters poll. Following on from a 7.3-percent contraction in the previous quarter, the figures put Japan into recession. The silver lining, of sorts, was that the turmoil on the Nikkei helped Japan's yen currency rebound from a fresh seven-year low against the dollar. At one point early in Monday's trade the dollar rallied as high as 117.06 yen, but had fallen back down below 116 yen later in the day.

A trading link between Hong Kong and Shanghai giving foreign investors wider access to mainland China’s restricted equity market has opened. Meanwhile, Japan surprisingly slid into recession, pushing the Nikkei south. Officials in Hong Kong and Shanghai ceremonially banged gongs on Monday morning at the start of trading under the new Shanghai-Hong Kong Stock Connect platform, allowing investors to buy ... Read More »

Eurozone exhales as France, Germany skirt recession

The clouds hanging over the eurozone economy lifted in the third quarter as the French economy gathered speed and Germany avoided recession. A significant boost also came from the bloc's southern periphery. Economic output in the 18-nation eurozone grew 0.2 percent in the third quarter, according to figures released by the EU's statistics office on Friday. The uptick by 0.1 percent from the previous quarter was mainly the result of higher growth in Europe's second-largest economy, France, and a robust acceleration in the crisis-hit countries in the eurozone's southern periphery. Between July and September, the French economy boosted output by 0.3 percent, compared with the same quarter last year, growing out of a contraction of 0.1 percent in the second quarter. French Finance Minister Michel Sapin described the data as a confirmation that the government would reach its goal of 0.4 percent higher gross domestic product (GDP) this year. "Economic activity has picked up slightly but remains too weak to ensure the job creation our country needs," Sapin said in a statement. Laggards catch up Stronger economic activity was also reported from crisis-hit eurozone members in southern Europe. Greece, which had been locked in a depression for more than two years, saw its GDP expand by 0.7 percent. The growth rate added to hopes in the debt-laden country to exit a bailout from the EU and IMF next year. The Spanish economy, whose banking sector was also bailed out with EU taxpayers' money, logged growth of 0.5 percent in the quarter, meaning that Italy and Cyprus were the only members of the currency area that remained in recession. On a European Union-wide scale, Romania recorded the strongest economic expansion at 1.9 percent. Germany falls behind Europe's economic powerhouse, Germany, just scraped by a technical recession - defined by two consecutive quarters of falling GDP. After shrinking 0.1 percent in spring, German GDP grew a modest 0.1 percent in the summer quarter. Referring to Germany's record of impressive growth in the past two years, ING DiBa analyst Carsten Brzeski noted that the "glamour of a second German economic miracle seems to have gone." "Since early 2013, the German economy has grown by an average of 0.2 percent quarter-on-quarter, making the country rather a one-eyed king in the land of the blind than economic superman," Brzeski told the news agency AFP. In related news, Eurostat also released new figures on the inflation rate in the currency area, showing prices had increased by just 0.4 percent in October. The figure is far below the European Central Bank (ECB) goal of 2 percent inflation, and an indication that the eurozone economy is far from seeing the robust upswing needed to overcome mass unemployment and weak business activity.

The clouds hanging over the eurozone economy lifted in the third quarter as the French economy gathered speed and Germany avoided recession. A significant boost also came from the bloc’s southern periphery. Economic output in the 18-nation eurozone grew 0.2 percent in the third quarter, according to figures released by the EU’s statistics office on Friday. The uptick by 0.1 ... Read More »

EU irks Russia, ratifies Moldova trade pact

Moldova has moved one step closer to a free trade agreement with the EU after a vote in Brussels that is likely to sour relations with Russia even further. The European Parliament paved the way for closer political and trade ties with Moldova on Thursday, defying Russian retaliation threats. The pact, which was signed on June 27 and includes a Deep and Comprehensive Free Trade Agreement, is seen as a crucial step towards extending EU membership to the eastern European country. Brussels' lead negotiator on the deal, MEP Petras Auštrevičius of Lithuania, congratulated the people of Moldova on what he called a "historic achievement." He dismissed Moscow's objections that the agreement infringes on the free trade zone it has established in the region. "The association process is not a threat to Russia's political and economic interests, and it is truly regrettable that the Russian leadership wishes to regard it as such," said Auštrevičius. The Kremlin has threatened to impose higher tariffs and stricter import inspections in retaliation for Moldova moving closer to the EU, contending that this would hurt its economic interests. The small former Soviet republic got a taste of Moscow's wrath last year, when its wine was banned from Russian shelves - a step Russia insists was over quality issues, but was widely seen as a slap on the wrist for reaching out to Brussels. Ukraine redux? The deal comes amid sustained tension between the EU and Russia, which arose after a similar tug-of-war over neighboring Ukraine. The Cold War overtones of the past months also echoed in Thursday's vote, where conservative parliamentary leader Manfred Weber was one of 535 in favor of the deal. "Today, we voted to give a helping hand to the citizens of Moldova and to show our solidarity in times of external pressure against the country," he said, alluding to Moscow's threats. Parliament members called on Russia to "fully respect Moldova's territorial integrity and European choice." "Today we embark on a new European future for Moldova and its people. There is no doubt that Moldova is a European country and a part of European culture," Auštrevičius said, adding, "we should not be a hostage of the past." The association agreement must now be ratified by the governments of all 28 EU member states before it can go into effect.

Moldova has moved one step closer to a free trade agreement with the EU after a vote in Brussels that is likely to sour relations with Russia even further. The European Parliament paved the way for closer political and trade ties with Moldova on Thursday, defying Russian retaliation threats. The pact, which was signed on June 27 and includes a ... Read More »

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