06/02/2012 World Business Report


06/02/2012

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encouragement and support during her time as Queen.

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Now with the Financial News, here it is World Business Report.

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The headlines: The battle to avoid default - Greece's prime minister

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will continue talks to Secure a much-needed bail-out.

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The cold spell across Europe is set to fuel a fight over gas supplies.

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China is prohibiting the airlines from paying the European Union's

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carbon emission tax. A weekend of frustrating talks over

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details of Greece's next bail-out. Mr Papademos will resume

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negotiations with other party leaders today to try and get their

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backing for a harsh austerity cuts that are being demanded in return

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for another loan. He also needs to secure an agreement with Brussels.

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Without it, Greece will go bankrupt in a month. Our business reporter

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has the latest. Five frantic hours of talks in

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Athens failed to create an agreement on budget cuts. There was

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progress on bank recapitalisation, but agrees's prime minister is

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struggling to convince coalition partners to go along with more wage

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cuts. Greece knows that if it fails to take the troika's medicine, the

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bail-out will stop. The outcome of talks with private bondholders are

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somewhat academic. Even if Greece can play these debts down with

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private sector involvement, there is still a need for public sector

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involvement, that is the ECB taking a big hit. The head economist here

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says that ministers will feel pretty constrained - one is that?

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The government of the European Union needs to justify to the

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taxpayers that they will use more money to bail out Greece again. To

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do that, they need to show the taxpayers that the Greek party is

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doing their homework. The problem is that the government in Greece is

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very weak. It is not elected. The economy of Greece is in a deep

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recession. Therefore, the Greek government is unlikely to meet the

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target of fiscal adjustment. agonising wait for a complete deal

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continues. EU and IMF leaders want guarantees that the measures will

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be implemented, though how Greece can back up its promises isn't

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clear. We will speak to our reporter in

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Athens again. The agonising wait continues and there is still a

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severe lack of clarity as to what is going on?

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That right, all we had yesterday after five hours of talks between

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the coalition partners was a statement from the Prime Minister

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that said an agreement had been reached that 1.5% of GDP should be

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cut from public spending this year. There was some agreement about the

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recapitalisation of banks and pension funds, but there was no

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agreement on the contentious issues that the EU and IMF are putting

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forward, that minimum wage should be reduced and that holiday bonuses

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should be cut. These issues, which would go down very badly among

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ordinary Greeks are things that the coalition partners are unwilling to

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throw their weight behind because they have elections here in April

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and are unwilling to shoot themselves in the fort before these.

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The IMF is saying that Greece needs to forgo short-term economic game

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to secure their future for the long run.... Cutting the minimum wage so

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severely is not as easily said as done?

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That is what they say. Even though the Greek minimum-wage is about 50%

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more than the Portuguese wage, a similar sized country, the cost of

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living here it is higher than that of Portugal. Greece cannot cut even

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more from the wage. One party as spoke yesterday said that, actually,

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people are earning less here because the tax exemption threshold

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has fallen since last year. Greeks already feel very squeezed by

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austerity. There is a fear that if these sort of measures were to be

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pushed through, that could inflame social unrest on the streets of

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Athens even more than we have seen in the last few months. No party

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wants to be seen to be supporting that just weeks before elections,

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if they happen, in April. One news wire says that the

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international creditors have imposed an 11am deadline today for

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agreement on this issue. We will keep you up-to-date when we get

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developments. As you have been hearing, Severe

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weather across Europe is taking its toll and energy companies are

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bracing themselves for a fight oversupplied. Temperatures of-met

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35 degrees in Russia -- minus 35 degrees, where most of the gas

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comes from, have seen drops in delivery... The country is

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preparing contingency plans just in case. We are speaking to a Russian

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contingency expert. Initially, when there was a drop of supply to

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Europe, Russia pointed the finger at the Ukraine, a little bit of a

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fight there. What is your perspective on that? This is

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nothing new. As we have seen in 2006 and 2009 when similar fight

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happened between the Ukraine and Russia, it was quite difficult to

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establish who was at fault. Is it Russia not supplying enough, or the

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Ukraine not transporting it? In this case it is again difficult to

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establish whether the Ukraine is siphoning off, as Russia is

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claiming, or is Russia diverting the gas supplies to its domestic

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market? We are hearing, of course, very harsh temperatures in Russia

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and the Ukraine. There have been about 100 deaths there over the

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weekend. With this escalate and impact supplies to Europe? Again, I

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think it depends on what is happening. If it is really Russia

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diverting gas supplies to its domestic market because of the

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harsh winter conditions, then this may impact on European gas supplies.

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The good news is that the European Union has seen these problems

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before and they are well prepared, as we have seen. They are saying

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that they have enough gas in their storage and hope that this spell of

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cold will always sooner rather than later. This seems to reoccur you

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are ear, the relationship between their trading partners must be

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getting fractured -- a year after year. They will say that they are

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meeting their contractual obligations, they will push for

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alternative export routs. It the Ukraine is right, it is really a

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great impact on the European Union, EU officials will start thinking

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more about diversifying their energy import routes, putting more

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stress on other methods. Thank you for your perspective.

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China has banned Airlines from playing a carbon tax. -- paying. It

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has said it will prohibit its airlines from paying this tax on

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carbon emissions. They join the Americans, the Russians and the

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Indians are -- who are aiming to avoid these charges. Beijing says

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it will employ unspecified measures to protect their companies....

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There is no indication that there will be any immediate impact on

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