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IEA: Crises cloud world energy outlook

Global security is headed for an uncertain future if world leaders fail to transform energy supplies, industry expert group IEA warns in new report. The International Energy Agency called on world leaders to take decisive action to stem future energy demand in its latest World Energy Outlook report released on Wednesday. The Paris-based energy consultancy said that total energy demand is set to rise by 37 percent by 2040, and that annual investment of $900 billion (723 billion euros) in oil and gas development is needed by the 2030s to meet the projection. The authors estimate that oil supply will increase from 90 million to 104 barrels per day over the next 25 years, but warn that a waning oil boom in the US could threaten energy security, as consumers will increasingly have to look to the conflict-ridden Middle East as the world's number one supplier. "A well-supplied oil market in the short-term should not disguise the challenges that lie ahead, as the world is set to rely more heavily on a relatively small number of producing countries," said IEA Chief Economist Fatih Birol. The authors predict that China will overtake the United States as the world's largest oil-consuming country by 2030, as Asia is on track to make up 60 percent of total global energy use. Rise of renewables It's not all bad news, according the report, which predicts that renewable energies will leave coal in the dust as the leading source of electricity, accounting for nearly half of the global increase in power generation. "The development path for a growing world population and economy is less energy-intensive than it used to be."

Global security is headed for an uncertain future if world leaders fail to transform energy supplies, industry expert group IEA warns in new report. The International Energy Agency called on world leaders to take decisive action to stem future energy demand in its latest World Energy Outlook report released on Wednesday. The Paris-based energy consultancy said that total energy demand ... Read More »

LuxLeaks: Juncker answers critics

The European Commission's new president, Jean-Claude Juncker, defended his record as prime minister of Luxembourg, amid mounting calls for his resignation over a brewing tax evasion scandal. Jean-Claude Juncker, the new European Commission President, denied any wrongdoing as Prime Minister of Luxembourg on Wednesday, as he tried to weather a storm of criticism that he helped turn the tiny Grand Duchy into a haven for corporate tax evaders. "I am politically responsible for what happened in each and every corner and quarter (of Luxembourg)," Juncker, who served as Prime Minister from 1995 to 2013, told reporters in a surprise appearance at a daily briefing of the European Commission in Brussels. However, the 59-year-old sought to deflect critics, saying the mounting tax scandal exposed the inherent shortcomings and vulnerabilities of the 28-member bloc, where every country has different tax regimes. "I am not the architect of what you could call the Luxembourgish problem," Juncker said. "This state of affairs is due to the fact that we have to deal with the outcome of different standards. If there is no tax harmonization throughout Europe ... then this can be the result." Ghosts of Prime Minister's past Juncker's past has come back to haunt him less than two weeks into his EU presidency, following last Thursday's revelations that Luxembourg gave hundreds of international companies huge tax breaks, including IKEA, Pepsi and Deutsche Bank. The leaked document, dubbed "LuxLeaks," showed that the Grand Duchy's financial laws were set up to encourage global firms to funnel billions of euros through the country, allowing them to shave huge chunks off their tax liabilities. The leaks have caused an outcry throughout the EU, with some demanding Juncker's resignation as EU executive. Critics warn that keeping Luxembourg's former Prime Minister, who also oversaw the country's coffers as Finance Minister from 1989 to 2009, is like setting the fox to guard the henhouse. Juncker rejected such criticism, saying that "there is nothing in my past indicating that my ambition was to organize tax evasion in Europe." He reiterated his commitment to cleaning up fiscal fraud, saying he had asked EU Economy Commissioner Pierro Moscovici on Wednesday to draw up new EU laws that would increase transparency by facilitating automatic exchange of corporate information between member states. "I have said that the Commission would fight tax evasion and fiscal fraud," he said, adding "I want everyone to know that those are not just words but really reflect the Commission's aim." He admitted that it had been a "mistake" not to speak out earlier over the "LuxLeaks" affair after he had ducked reporters for days. 'Height of hypocrisy' The scandal comes ahead of a G20 summit in Brisbane this weekend, where the members are expected to sign off on new measures to rein in corporate tax evasion. In an interview with The Guardian newspaper, which helped leak Luxembourg's tax avoidance scheme last week, British Margaret Hodge Labour MP called it 'outrageous and the height of hypocrisy' that Juncker would represent the EU in Australia. Luxembourg is not the only country, whose dubious tax schemes have caught the eye of EU watchdogs. The European Commission is also currently investigating allegations that Ireland and the Netherlands infringed state aid rules by tailoring their tax schemes to favor some corporations over others. Closing costly tax loopholes has been on the top of Brussels agenda since last year's so-called "Offshore Leaks" affair, when the International Consortium of Investigative Journalists leaked 130,000 offshore accounts, documenting pervasive, global tax evasion schemes, which are estimated to have cost governments trillions of euros in lost revenue. The EU's former top tax official, Algirdas Semeta, called the Leaks "most significant trigger" behind Brussels' push to crack down on tax dodging. Last week, the European Parliament voted to ramp up its requirements for automatic exchange of tax between member nations, demanding governments to collect and share data on additional types of income, such as employment, property and capital gains, by 2017.

The European Commission’s new president, Jean-Claude Juncker, defended his record as prime minister of Luxembourg, amid mounting calls for his resignation over a brewing tax evasion scandal. Jean-Claude Juncker, the new European Commission President, denied any wrongdoing as Prime Minister of Luxembourg on Wednesday, as he tried to weather a storm of criticism that he helped turn the tiny Grand ... Read More »

Germany’s ‘wise men’ panel cuts growth

A group of senior German government economic advisers has substantially lowered its growth forecast for this year and next. It lays part of the blame for a cooling in the economy on current government policies. The German government's panel of economic advisers - formerly known as "the five wise men" but now including one woman - released its autumn growth report Wednesday, revising its previous estimate of 1.9 percent down to 1.2 percent in 2014. Next year, Germany's gross domestic product (GDP) was predicted to grow by 1 percent, the report, titled "More trust in market forces," said. The downward revision was mainly caused by rising "geopolitical tensions" and "unfavorable conditions" in the euro currency area, the experts said. But they also said that current policies pursued by the grand coalition government of chancellor Angela Merkel had a "negative impact" on growth. As the government was relying "more on re-distribution and less on efficiency," they especially criticized a recent reduction in the pension age for people with 45 years on the job, and the planned introduction of a national minimum wage. In addition, they described current state finances as "structurally unsustainable" for the long run. The panel urged a re-thinking of policies as long as the German economy was still "in good shape." Merkel shrugs off criticism During the presentation of the report to the German chancellor on Wednesday, Angela Merkel promised to "seriously study" the panel's recommendations. But she flatly rejected the criticism of an 8.50-euro ($10.6) per hour minimum wage planned to be launched in 2015. "It's not easy to understand how a policy that has not yet come into force is dampening growth already now," she said. Merkel also said a series of international crises were to blame for sluggish growth, and that the government was planning measures to counter their negative impacts. Robust jobs market In additional advice, the senior economists proposed lowering business taxes for startup companies and a reduction in income tax for the German middle class. Moreover, they urged the government to provide more funding for maintaining public infrastructure for which a redistribution of funds in the budget should be used rather than raising more debt. In spite of their criticism of new labor market regulation, the panel expects more jobs to be created in Germany. This year, they said employment would rise to 42.6 million people, and to 42.8 million in 2015 - equivalent to a jobless rate of 6.7 percent. The robust jobs market would bolster domestic spending as a main pillar of growth in Germany, the report said.

A group of senior German government economic advisers has substantially lowered its growth forecast for this year and next. It lays part of the blame for a cooling in the economy on current government policies. The German government’s panel of economic advisers – formerly known as “the five wise men” but now including one woman – released its autumn growth ... Read More »

The ruble tumbles with the oil price

The Russian currency has lost a great deal of value, and the central bank in Moscow can no longer afford to prop it up. Russia's dependency on commodity energy exports has become more apparent than ever. For Russians, it's a nightmare come true: The oil price has plunged, falling around 30 percent in just a few months. It may come as a blessing for Western motorists and fuel oil buyers, but it's a tangible threat to the wellbeing of the more than 145 million inhabitants of the world's third-largest oil producer. That's because crude oil is by far the biggest source of income for the Russian state. Despite the media spotlight on gas, it's much more important as a lubricant for investment and consumption. And gas, too, become cheaper due to a stipulation in most of Gazprom's export contracts linking its price to that of oil. The central bank tries to help Russians know from the news and increasingly worried discussions in the media that their most important export commodity has lost a large share of its value. But the drooping exchange rates at the many currency exchanges offices in major cities also show something is out of joint. The ruble has lost 30 to 40 percent of its value against the dollar and the euro this year. There was a panic selloff of the Russian currency in late October and early November. The Russian central bank, which had previously spent billions to prop up the ruble, on Monday (10.11.2014) allowed the ruble to trade freely, something it had planned to do only at the end of the year. The latest speculative wobbles on the Russian foreign exchange market had "absolutely nothing to do with fundamental economic causes and factors," Russian President Vladimir Putin assured his colleagues at the Asia-Pacific summit in Beijing on Monday. Experts see it quite differently. They point in particular to the rapid slowdown in economic growth, which began in 2013 and brought Russia to the brink of recession this year. Added to this are a massive flight of capital, a decline in foreign investment and of course the falling oil price, which led to a cut in foreign exchange earnings. Oil price down, economy down Apart from the oil price, all these problems are homemade. "The fundamental reasons have to do with the fact that no reforms have been carried out in the country in the last 10 years. Today we are seeing the result of this policy," Mikhail Kasyanov, Russian Prime Minister in 2000-2004 and now opposition politician, told DW. He said there were two political reasons for the decline in the ruble added this year: "the aggression of Russia against Ukraine" and the Western sanctions that followed. In contrast, the annexation of Crimea and "other results of Putin's policies" have played a secondary role in the devaluation of the ruble, said Maxim Mironov, who teaches finance at the IE Business School in Madrid. The sole decisive factor, he said, was the price of oil. "The growth in the 2000s was the result of the correlation between the Russian economy and oil prices, and the devaluation of the last few months is the result of this same correlation," Mironov wrote in the Moscow business daily "Vedomosti." To make his point, Mironov used a barrel of oil as a measure of wages and prices in Russia. The average monthly salary of a Russian amounts to about 10 barrels, he said. When oil cost $10, people earned $100; as the price rose to $100, pay packets swelled to the equivalent of $1000. Since July this year, average Russians had become poorer by 30 percent, in line with the drop in oil prices. Purchasing power down And while examples like this can't be taken literally, they illustrate the current purchasing power of the people in a country that, as Mironov put it, "exports oil and other commodities and imports everything else." Former economy minister Andrei Nechayev, who served in the reformist Russian government in the early 1990s, described Russia's vast dependence on imports in an interview with DW. "Depending on the market segment, the share of imported goods lies between 20 and 100 percent." This means that if the ruble depreciates against the euro by more than 25 percent, all goods imported from the eurozone automatically become a third more expensive. For Russian consumers, who are already hit by high inflation, the ruble's current fall comes as a serious blow. Not so for the government. Russian Finance Minister Anton Siluanov recently calculated that a drop in oil prices by one dollar leads to a loss of revenue of 70 billion rubles, but a one-ruble rise in the dollar exchange rate brings an additional 180-200 billion rubles into the state coffers. It may well be that despite the drop in oil prices Russia will end this year with a considerable budget surplus, at least on paper. That these additional revenues will consist of devalued, inflation-plagued rubles is the other side of the coin. The Russian government and the major Russian oil and gas companies will find they lack access to hard currency. And Western exporters who previously had high hopes on the Russian market will soon feel the pinch. That's because they don't want rubles for their products, but dollars or euros.

The Russian currency has lost a great deal of value, and the central bank in Moscow can no longer afford to prop it up. Russia’s dependency on commodity energy exports has become more apparent than ever. For Russians, it’s a nightmare come true: The oil price has plunged, falling around 30 percent in just a few months. It may come ... Read More »

Hong Kong-Shanghai trading link approved

A trading link between Hong Kong and Shanghai's stock exchanges has eventually been given the green light by regulators after a delay last month. The project is key to Chinese market liberalization. Following weeks of postponement over taxation details, the trade link between the stock exchanges of Hong Kong and Shanghai will launch on November 17, officials from sides confirmed Monday. The Hong Kong Monetary Authority described the Stock Connect project as being pivotal for China's efforts to liberalize its financial market, saying it was "a milestone" towards achieving just that. The platform will allow international investors to trade selected stocks on Shanghai's tightly restricted exchange and let mainland investors buy shares in Hong Kong. The scheme is believed to result in cross-border trades of up to $3.8 billion (3 billion euros) per day. Limited progress, but progress The venture is expected to see trade volumes rising on both sides, but it's still subject to strict limits so as to preserve capital controls in China, where authorities keep a tight grip on the yuan currency. "Despite the limited degree of opening-up, it still means a great deal to the domestic capital markets and the whole financial system," BOC International analyst Shen Jun said in a statement. Before the launch of Stock Connect next Monday, Chinese authorities will announce detailed policies to clarify capital gains tax issues and other technical parameters for trading.

A trading link between Hong Kong and Shanghai’s stock exchanges has eventually been given the green light by regulators after a delay last month. The project is key to Chinese market liberalization. Following weeks of postponement over taxation details, the trade link between the stock exchanges of Hong Kong and Shanghai will launch on November 17, officials from sides confirmed ... Read More »

Airlines’ overall CO2 emissions alarming

Many airlines around the world have become more efficient recently, decreasing their harmful emissions. But a fresh study reveals the carriers' overall CO2 emissions are still on the rise as traffic volumes increase. The largest airlines in the world managed to decrease their CO2 emissions by about 1 percent within a year calculated per passenger and kilometer, the Bonn-based environmental pressure group Atmosfair said in its 2014 Airline Index on Monday. But it added the big picture was less encouraging, with total CO2 output by the air traffic industry having risen by some 3 percent simply because of rapidly growing flight volumes. Atmosfair's index compared the greenhouse gas emissions of 193 airlines worldwide, evaluating their CO2 efficiency. With 31.2 million flights in total, the barometer thus covered over 90 percent of global air traffic. Unreachable targets? "The steady rise of carbon emissions shows that nations of the world must double their efforts at the upcoming climate conference in Lima," Atmosfair Managing Director Dietrich Brockhagen said in a statement, warning that the aviation industry remained within the global CO2 growth rate of 3 percent annually and with it far from limiting global warming to a maximum increase of 2 percent a year. The progress made by individual airlines was mainly achieved by fleet modernization and retrofitting aircraft with aerodynamic winglets. Among the large scheduled international carriers, China's Okay Airways led the ranking with a modern fleet and high occupancy ahead of Canadian Air Transat and Brazil's TAM Linhas Aereas. Tuifly performed best among the German carriers, followed by Air Berlin and Condor.

Many airlines around the world have become more efficient recently, decreasing their harmful emissions. But a fresh study reveals the carriers’ overall CO2 emissions are still on the rise as traffic volumes increase. The largest airlines in the world managed to decrease their CO2 emissions by about 1 percent within a year calculated per passenger and kilometer, the Bonn-based environmental ... Read More »

Britain allowed to halve EU budget bill

London has reached a compromise with EU finance ministers over higher British payments to the EU budget. British Finance Minister George Osborne says Britain will only have to pay half of the 2.1-billion-euro bill. A surprising outcome to a surprise bill: EU officials have agreed to halve the amount Britain owes Brussels, following a weeks-long row over a budget surcharge due by next month. Britain hailed the compromise as a victory, following a weeks-long row with Brussels over a 2.1-billion-euro budget surcharge. British Finance Minister George Osborne (center of the picture) struck a triumphant tone after Friday’s negotiations. “Instead of footing the bill we have halved the bill, we have delayed the bill, we will pay no interest on the bill, if there are mistakes in the bill we will get our money back," Osborne told reporters in the Belgian capital, adding, “this is far beyond what anyone expected us to achieve.” More breathing space Osborne said London will pay 850 pounds in two installments in the second half of next year. Under new calculations released last month, the EU had asked Britain to provide the additional funding because of higher-than-expected growth. London was given until December 1 to foot the bill. British Prime Minister David Cameron denounced the move as “appalling.” Friday’s deal gives Cameron some much-needed breathing space - and a chance to save face at home. Instead of three weeks, he now has 10 months to find the funds for the payments. But more importantly, it’s sure to silence euroskeptics - if only for a while - who sought to paint Cameron into a corner ahead of the May 2015 general elections. With this win in the bag, the conservative leader can make the case to voters that he can stand up to Brussels, at a time of growing anti-EU sentiment among Brits.

London has reached a compromise with EU finance ministers over higher British payments to the EU budget. British Finance Minister George Osborne says Britain will only have to pay half of the 2.1-billion-euro bill. A surprising outcome to a surprise bill: EU officials have agreed to halve the amount Britain owes Brussels, following a weeks-long row over a budget surcharge ... Read More »

OECD warns of euro weakness

The OECD's new Economic Outlook report calls for action to fight stagnation in the eurozone. It warns the common currency area has become a drag on the world economy, and says reform and quantitative easing are needed. The OECD has described weakness in the eurozone as a major concern for the global economy and called for the European Central Bank to "increase asset purchases" to head off the danger of deflation. "Overall, the euro area is grinding to a standstill and poses a major risk to world growth as unemployment remains high and inflation persistently far from target," the Paris-based group's Chief Economist, Catherine Mann, said Thursday as it released its latest Economic Outlook report. The report says the world's outlook is "stuck in low gear." It portrays a global economy performing far below its potential, and calls for governments to work together to initiate pro-growth policies and economic reforms. A mixed picture "Whereas individual reforms are important for individual economies, getting the global economy into high gear requires system-wide reforms," Mann said. "The increase in GDP that a country may enjoy through broad-based labor, trade, product, and tax reforms is large." Amid rising financial risks and increasing market volatility, discrepancies in economic performance between countries were another worry, with the eurozone lagging behind both the US and Japan in both investment and consumption overall. Even within the eurozone, Germany's strong performance contrasts vividly with the economic malaise of France and Italy. "Within the euro area, those economies who have rebuilt their engines with sweeping reforms are starting to move up the field," Mann said. One size does not fit all Because of these divergences, the OECD is calling for "more variation" in the ways countries must support demand. And it said Europe's central bank must step in to kick-start the eurozone economy and head off the threat of deflation. "Monetary policy stimulus - beyond measures already announced - is needed in combination with banking union and structural reforms," it warned. "This should include a commitment to sizeable asset purchases - quantitative easing - until inflation is back on track." While the report predicted sluggish growth for the eurozone, climbing to from 0.8 percent in 2014 to 1.7 percent in 2017, it described the US's recovery as "robust," expecting growth there to increase from 2.2 percent this year to 3.0 percent in three years' time. Falling BRICS In contrast, China is attempting a controlled slowdown to achieve more sustainable growth rates and is predicted to slow from 7.3 percent to 6.9 percent. India's 6.6 percent will nearly match it in 2017, up from 5.4 percent today. Brazil and Russia appear mired in low-growth scenarios and may need to raise rates further, it said. The Economic Outlook is an analysis and forecast of OECD member states' economies published twice a year. The current report, which focuses on the economies of the G-20 group of 20 leading economies, will be released in full on November 25. The OECD was founded in 1961 to stimulate world trade, market economics and democracy.

The OECD’s new Economic Outlook report calls for action to fight stagnation in the eurozone. It warns the common currency area has become a drag on the world economy, and says reform and quantitative easing are needed. The OECD has described weakness in the eurozone as a major concern for the global economy and called for the European Central Bank ... Read More »

Major German train drivers’ strike hits DB’s passenger services

A large-scale train drivers' strike, to continue until Monday morning, has begun to affect passenger services in Germany. Rail operator Deutsche Bahn said two-in-three train services faced cancellation. The trade union for German train drivers, GDL, broadened its strike from freight to passenger services as of 2 a.m. local time (0100 UTC) on Thursday. Normal service was scheduled to resume at 4 a.m. on Monday morning. "From the start of services in the early morning, long-distance, regional, and short-distance train traffic will be affected," a spokeswoman for Deutsche Bahn in Berlin told reporters. The national rail operator published an emergency timetable on its website, urging travelers to check times and availability online. Deutsche Bahn said it would try to indicate which trains were certain to run with at least 24 hours notice during the strike, saying it still had the resources to service its busiest routes. The GDL trade union has staged multiple strikes this year, part of a protracted dispute over pay, working hours, and the union's desire to negotiate for all Bahn personnel, not just train drivers. The union on Wednesday rejected a call from DB to return to open new arbitration talks. DB's demand in return was the cancellation of the strike. Government appeal Unusually from a German government that normally makes a point of distancing itself from union disputes, this prompted a cross-party government appeal to the GDL, urging them to return to the table. Chancellor Angela Merkel, Economy Minister Sigmar Gabriel and Transport Minister Alexander Dobrindt - who also represent each of the three parties in Merkel's coalition government - called for the GDL to reconsider. "There is also the possibility of arbitration, if both parties agree," Merkel said. "I can only appeal to the sense of responsibility to reach solutions in this case, which do the least possible damage to us as a country - while completely safeguarding the right to strike." Merkel said that strikes could be a legitimate negotiating tool in labor disputes, but added that they should remain proportional. The chancellor said only a court could decide whether that was the case in this instance, but alluded to a "collective responsibility." Dobrindt, Merkel's transport minister from Bavaria, said DB should sue the union, saying this would be "in the interest of the Bahn's customers, employees, and the maintenance of goods transportation in Germany." In a guest article for the mass-circulation daily Bild, Gabriel argued that the GDL had misused its right to strike - a rare criticism from the Social Democrats, known for close union ties. The GDL is calling for a 5-percent pay increase and decreased working hours, not just for its 20,000 train driver members, but for the roughly 17,000 stewards and conductors as well. DB has said that this is impossible because it could impact on other accords reached with rival unions. The larger union charged with representing other rail and public transport employees, the EVG, has criticized the approach taken by the GDL's boss Claus Weselsky. Prior to the strike's start in the passenger service sector, DB estimated that it could maintain roughly one-third of its ordinary services. A similarly dogged dispute with a comparatively small trade union, the pilots' union Cockpit, has caused major disruptions for German flagship carrier Lufthansa this year too.

A large-scale train drivers’ strike, to continue until Monday morning, has begun to affect passenger services in Germany. Rail operator Deutsche Bahn said two-in-three train services faced cancellation. The trade union for German train drivers, GDL, broadened its strike from freight to passenger services as of 2 a.m. local time (0100 UTC) on Thursday. Normal service was scheduled to resume ... Read More »

German carriers upset about ticket tax ruling

German airlines have said they're disappointed at a Supreme Court ruling that has found a government tax on aviation tickets constitutional. Carriers had argued the levy gravely distorted competition. German carriers called on Chancellor Angela Merkel Wednesday to scrap a controversial tax on airline tickets introduced by her government in 2011 amid efforts to overhaul Germany's finances. The tax has since been imposed on passenger tickets for flights originating in Germany, generating about 1 billion euros (1.25 billion) in revenue each year. In its ruling o Wednesday, the Federal Constitutional Court said the tax was in line with the Basic Law, the German constitution, and did not contravene passengers' or airlines' rights. Unfair levy? But the German Aviation Association (BDL) said it would continue to press for political action to remove the levy, which had cost Lufthansa, Air Berlin, Condor and Tui Fly about 2 billion euros and resulted in reduced passenger numbers. "The air traffic tax law leaves the German airlines with a broken wing," BDL President Klaus-Peter Siegloch said after the court ruling. German airlines claimed passengers, particularly those in border regions, often chose to use airports in neighboring countries where no such tax was levied, making flights cheaper for them. The tax in Germany is calculated according to the distance traveled, with over 40 euros to be paid for flights over 6,000 kilometers (3700 miles).

German airlines have said they’re disappointed at a Supreme Court ruling that has found a government tax on aviation tickets constitutional. Carriers had argued the levy gravely distorted competition. German carriers called on Chancellor Angela Merkel Wednesday to scrap a controversial tax on airline tickets introduced by her government in 2011 amid efforts to overhaul Germany’s finances. The tax has ... Read More »

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