Denmark rejects closer EU links in blow to integration

Meanwhile, Prime Minister Lars Lokke Rasmussen, the leader of a minority government that backed the "Yes" campaign despite relying on the DF for their support on other policies, was sanguine. 

PHOTO: REUTERS

DEC 4, 20157:29 AM

[COPENHAGEN] The European Union, strained by a refugee crisis, security fears and popular disenchantment after years of economic doldrums, suffered another blow on Thursday when Danes voted to reject just a small step to further integrate with the bloc.

Together with Britain and Ireland, Danes have long enjoyed several exemptions from EU laws dating from the 1990s when the modern foundation of the 28-member bloc was laid. Despite that, most mainstream politicians advised the Scandinavian country to adopt some more EU laws to help fight cross-border crime.

But a bungled "Yes" campaign that got mired in complicated details was trumped by a simple message from the populist Danish People's Party (DF) which said Danes should neither give up hard-fought-for exemptions nor give away sovereignty over security to "Eurocrats" in Brussels.

With all the votes counted, the "No" camp won 53.1 per cent against 46.9 per cent to the "Yes" camp with a turnout of 72 per cent, which was higher than expected. "The Danes know that when things are left to Brussels, they're left a long way away in a non-transparent system where we lose a lot of our democracy," DF leader Kristian Dahl Thulesen said after most of the votes had been counted.

Such sentiment reflects a growing scepticism within the 28-member bloc as Brussels struggles to deal with problems ranging from Greece teetering on bankruptcy, a massive refugee crisis and the spread of attacks linked to Islamic militants.

The "No" victory will cheer Britain's UK Independence Party, which wants a total withdrawal, or a "Brexit", from the EU as well as other far-right factions such as the French National Front leader Marine Le Pen. "The Danish 'No' to Europe is a massive boost for the Brexit campaign in Britain as well as Marine Le Pen and other political forces who want to see Europe revert to closed nation-states based on economic protectionism and nation-first rejection of cooperating with other EU member states and, sadly at times, open xenophobia," said Denis MacShane, Britain's former Europe minister.

But British Prime Minister David Cameron, who is trying to renegotiate Britain's relations with the EU, before holding a referendum by 2017 on whether to remain a member, may point to it as a sign other countries are unhappy with the EU as it stands.

A source familiar with Britain's talks to renegotiate ties to the EU said the result did not bode well for Britain's continued EU membership, adding fear of losing control of immigration was crucial: "The same factor, the same fear." The Danish vote comes amid heightened security fears across Europe after 130 people were killed in Paris in attacks claimed by Islamic State militants, and as Europe struggles with a huge influx of refugees from Syria and other countries.

Danes were told by the government that certain EU laws were needed to keep the country within the cross-border police agency, Europol. But instead of seeking approval for the 22 EU acts slated for adoption, Danes were instead asked to entrust to parliament the power to decide on such opt-ins.

That, analysts said, made it easy for the "No" camp to play on Danish distrust of politicians. "It has been easy to create insecurity about what would happen with a 'Yes' vote because what was on the menu was giving parliament a wider frame to involve Denmark in the EU," Aarhus University Professor Rune Stubager told Reuters.

Meanwhile, Prime Minister Lars Lokke Rasmussen, the leader of a minority government that backed the "Yes" campaign despite relying on the DF for their support on other policies, was sanguine. "I don't consider this as a step back. The Danes have refused to take a step forward," he told journalists. "The reasons why Danes refused to chose what we proposed is probably that there's this feeling of uncertainty given the fact that Europe is right now faced with other major problems which we haven't really solved."

REUTER
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ECB disappoints markets with bare-minimum easing package

The European Central Bank eased policy further on Thursday to fight stubbornly low inflation but kept much of its powder dry, disappointing high market expectations for greater stimulus. 

PHOTO: AFP

DEC 4, 20157:14 AM

[FRANKFURT] The European Central Bank eased policy further on Thursday to fight stubbornly low inflation but kept much of its powder dry, disappointing high market expectations for greater stimulus.

The ECB cut its deposit rate deeper into negative territory and extended its asset buys by six months - widely anticipated moves that some investors considered the bare minimum after the bank had for weeks stoked expectations of stimulus moves.

The bank will also start buying municipal debt but keep its overall asset purchases unchanged, potentially lowering its government bond buys as the new instrument crowds out other assets.

The euro jumped as much as 3.1 per cent against the dollar after the policy announcement and bond yields surged. Disappointed investors had anticipated a 25-per cent increase in monthly asset buys, with some even pricing in a bolder deposit rate cut than the move to -0.3 per cent from -0.2 per cent.

The euro traded 2.4 per cent higher on the day at US$1.0865 at 1510 GMT, on course for its biggest one-day gain since March.

Defending the moves, ECB President Mario Draghi said the market just needed to take time to understand them, adding they could always be adapted. "I think these measures need time to be fully appreciated and we'll see," he told a news conference. "Our asset purchase programme is flexible, it can always be adjusted." The huge foreign exchange market move actually tightens monetary conditions, effectively countering the ECB's easing by lowering imported inflation through a higher exchange rate.

DRAGHI DAMAGED?

"The biggest danger is that market reaction may put the ECB in an awkward position," Nicholas Wall, portfolio manager at Invesco Fixed Income said. "A large sell-off in bonds and a stronger euro will tighten financial conditions in Europe and make inflation even harder to generate; they may be talking about easing again sooner than they wished," Wall said.

Still, the euro remains 4 per cent weaker against the dollar since the last rate meeting, indicating that the easing stance has had some impact, even if much of it has been reversed.

The disappointment also damages Draghi's track record of promising and delivering big, first established with a pledge to"do whatever it takes" to defend the euro and bolstered with a bigger-than-expected QE earlier this year. "The non-unanimity of the decision is important, and the market's disappointment is important for the future," Toby Nangle at asset manager Columbia Threadneedle said. "It limits President Draghi's ability to guide markets who will naturally become more suspicious of his power to deliver the Governing Council." Bets on looser ECB policy, even as the US is expected to lift rates this month, has been a key factor driving the euro's weakness against the dollar. Federal Reserve Chair Janet Yellen said investors appeared to expect more from the ECB on Thursday. "The market expected some actions that were not forthcoming," she told a congressional hearing in Washington.

Resistance to many of the measures under consideration by the ECB was evident after the 25-member Governing Council's two German members came out in opposition of any measures.

Bundesbank chief Jens Weidmann and Executive Board member Sabine Lautenschlaeger have both argued that monetary policy is already exceptionally loose, that growth is rebounding and the biggest reason inflation is hovering near zero is the fall in oil prices, a big boost for household spending.

Indeed, the ECB actually raised its 2017 GDP forecast and said the recovery, even if tepid and prone to geopolitical risk, was actually becoming more broad-based.

FISCAL LOOSENING?

Arguing for monetary policy caution, some European governments are working on looser 2016 budgets, raising the prospect of loosening fiscal and monetary policy at the same time, for some a potentially dangerous combination. "The ECB is acting against a backdrop of easier fiscal policy; across the euro zone, governments are quietly abandoning fiscal austerity," David Tan, global head of rates at JP Morgan Asset Management said.

He said France gave up the pretence of fiscal rectitude with successive delays to cutting its deficit while Italy's 2016 fiscal stance next year is also projected to be 0.7 per cent points of GDP looser than seen six months ago. "Even Germany expects to miss its balanced budget target next year as it needs to spend to accommodate a refugee influx of around 900,000 in 2015 and 800,000 in 2016," Tan said.

The ECB is also facing seemingly inevitable rate hikes from the U.S. Federal Reserve with divergence between the world's biggest central banks keeping markets volatile Although the ECB also said it decided to reinvest principal payments purchased under QE, the impact of the measures is not seen as significant in the short term as few assets are set to mature until March 2017. "If we take QE purchases so far, less than 9 per cent were maturing in the 2-year sector of the curve," Citigroup said. "If we take this as a reasonable amount of bonds, this would be reinvestment worth less than 60 billion euros."

REUTERS

    
 

Strong US dollar makes Fed cautious, says Yellen

The stronger dollar and the divergence in monetary policies by major central banks has made the Federal Reserve "cautious" on raising interest rates, Fed Chair Janet Yellen said Thursday. 

PHOTO: BLOOMBERG

DEC 4, 20157:08 AM

[WASHINGTON] The stronger dollar and the divergence in monetary policies by major central banks has made the Federal Reserve "cautious" on raising interest rates, Fed Chair Janet Yellen said Thursday.

Hours after the European Central Bank announced a rate cut and further policy easing, Yellen acknowledged that the Fed's opposite track has sent the dollar higher, hitting US exports.

"When we have divergent monetary policies globally, it often means that there will be exchange rate movements that accompany that. We have seen that over the last year and a half," Yellen told a congressional hearing.

"The combination of the weak growth abroad, plus the movement in the dollar, has been a factor that has been depressing net exports. And that's been a subtraction from growth." Noting that the trend is likely to continue, Yellen added, "that makes us much more cautious in terms of raising rates." But she also argued that US economic strength is rooted in domestic consumption and investment, which continues to grow.

"For very good fundamental reasons, there's greater strength there. So when we put it all together, we're still seeing an overall picture of above-trend growth," she said.

Despite the European Central Bank's interest rate cut earlier Thursday, the dollar actually strengthened by a sharp 2.5 per cent against the euro, because, as Yellen noted, markets had expected stronger action by the ECB to stimulate eurozone growth.

The Fed meanwhile is widely expected to begin raising rates after nine years in its December 15-16 policy meeting.

AFP

    
 

Yellen says shootings, terror attacks could damage US economy

A surge in mass shootings and terror attacks have the potential to damage the economy, Federal Reserve Chair Janet Yellen said Thursday as the United States reeled from the latest incident in California.

PHOTO: AFP

DEC 4, 20157:05 AM

[WASHINGTON] A surge in mass shootings and terror attacks have the potential to damage the economy, Federal Reserve Chair Janet Yellen said Thursday as the United States reeled from the latest incident in California.

Asked about the risk to US growth from domestic and international terrorism in a congressional hearing, Yellen said the Fed keeps its eyes on the economic impact.

"Those risks are ones that we watch very carefully," she said.

"It does have the potential to have a significant economic effect." Speaking a day after 14 people were killed in a yet-to-be-explained mass shooting in San Bernardino, California, and three weeks after Islamic State attackers killed 130 in Paris, Yellen said that she had not seen a "significant effect" yet on economic activity.

However, she added, "certainly in the aftermath of the financial crisis, we've seen rather cautious behavior on the part of households and firms." "I would add geopolitical risk as a further factor that is causing that kind of cautiousness," she added.

Despite worries about risks to global growth, Yellen voiced confidence in the US economy continuing to grow at the current moderate rate.

Markets expect that the Fed will decide to raise interest rates for the first time in more than nine years in its December 15-16 policy meeting.

AF
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IMF urges ECB to use all tools to support eurozone

The International Monetary Fund welcomed moves announced by the European Central Bank on Thursday to support the eurozone, and urged it to use its entire toolbox to spur growth. 

PHOTO: REUTERS

DEC 4, 20157:04 AM

[WASHINGTON] The International Monetary Fund welcomed moves announced by the European Central Bank on Thursday to support the eurozone, and urged it to use its entire toolbox to spur growth.

"The ECB should continue to strongly signal its willingness to act and use all the instruments available until its price stability mandate is met," IMF spokesman Gerry Rice said at a regularly scheduled news conference.

The ECB extended its quantitative easing asset-purchases program by at least six months and broadened the types of bonds it would buy. It also lowered its key deposit rate by 1/10th point to minus 0.3 per cent.

The IMF applauded the ECB decisions which, according to Rice, "will help address increased downside risks to the recovery" in the 19-nation currency bloc.

The ECB asset-purchase programme "has supported confidence, financial conditions, and inflation expectations," he said.

ECB President Mario Draghi, speaking at a news conference following the monetary policy meeting, said the ECB was ready to step up measures if the "external conditions put at risk achievement of our objective." Eurozone inflation was unchanged at 0.1 per cent in November, well below the ECB rate target of below, but close, to 2.0 per cent.

AFP

    
 

With Schengen under threat, Greece accepts EU help

Stranded migrants protest next to the Greek-Macedonian border near the village of Idomeni, Greece, on Dec 3, 2015. 

PHOTO: REUTERS

DEC 4, 20156:56 AM

[BRUSSELS] Greece asked for European help on Thursday to secure its borders and care for crowds of migrants, defusing threats from EU allies to bar it from the passport-free Schengen zone if it failed to get a grip.

Hours before EU interior ministers are to meet on Friday to consider what to do about Greece's inability to stem the flow of refugees and others streaming toward Europe's rich north, the Athens government finally heeded calls from Brussels and agreed to accept European aid and foreign border guards.

Though EU officials insisted publicly there was "no threat to expel" Greece from Schengen - a fairly symbolic punishment as it has no land border with the rest of the bloc - diplomats said Athens was under huge pressure to show by Friday's meeting that it was cooperating on EU migration measures.

Its acceptance of three offers - EU staff to help on its northern frontier, foreign border guards on its Aegean islands and tents and supplies to house stranded migrants - was quickly welcomed by the EU executive and Migration Commissioner Dmitris Avramopoulos, a Greek himself, called for EU states to help.

Riots and the death of a young Moroccan electrocuted on a rail line as he tried to cross Greece's northern frontier into Macedonia put more human faces on a crisis that has poisoned relations among European governments and left their cherished Schengen system of open borders on life support.

The man was among some 3,000 people, mostly from Pakistan, Iran and Morocco, stuck near the northern Greek town of Idomeni since Macedonia began limiting entry to Syrians, Iraqis and Afghans likely to be given asylum further north in the EU.

Half a world away, in Pakistan, the government's refusal to let 30 of its own citizens get off a plane chartered from Greece to return them to Islamabad underscored the difficulties in enforcing a new EU determination to deport those of this year's million arrivals who fail to qualify for asylum Inside Europe, a Swedish plan that could close the Baltic bridge linking it to Nordic neighbour Denmark in case of migrant emergencies rammed home how far disarray in coping with Syrian and other refugees - in numbers dwarfed by the EU population of 507 million - is taxing European unity.

South of the bridge, Danes voted No on Thursday in a referendum to a government request for more power to cooperate with EU partners on policing - the latest sign that fears of Euro-chaos are fuelling populist nationalisms.

On Sunday, Union co-founder France is likely to hand big electoral gains to the anti-EU National Front, three weeks after 130 people were killed in Paris by Islamic State militants, some of whom may have arrived from Syria via Greece.

GREECE STRUGGLES

Handicapped by the economic crisis that nearly saw it drop out of the euro currency zone, Greece has struggled to cope this year with nearly 600,000 people making the short but perilous crossing from Turkey to Greek islands scattered along its coast.

Allies have grown increasingly impatient with Greek failures to even register and identify most of those arriving, let alone accommodate them and handle asylum requests as EU rules dictate and that frustration has mounted sharply amid accusations that Prime Minister Alexis Tsipras's radical leftist-led coalition has refused to accept EU help, notably foreign border guards.

While denying it had rejected aid and cooperation, the government said on Thursday that it would work with officers from the EU's Frontex border agency to register those migrants trapped in the north since Macedonia tightened frontier checks.

Sensitive to suggestions Greece was losing sovereignty on its territory, a government spokeswoman stressed Frontex would only work on registration of people not documented further south and not take part in "joint border controls".

The European Commission, which under President Jean-Claude Juncker has been pressing Tsipras to accept more EU help, said Athens had formally activated two other assistance programmes.

The EU Civil Protection Mechanism, originally conceived to cope with natural disasters such as earthquakes, will provide EU supplies of tents, generators and other equipment to help Greece accommodate people over the winter. And on the Greek islands, Frontex will organise a Rapid Border Intervention Team (RaBIT), forcing other EU states to reinforce Greek border guards.

It is only the second time the RaBIT system has been activated after Greece used it in the winter of 2010-11 to check a surge in people crossing its land border with Turkey. That has since been sealed but medical charity Medecins Sans Frontieres, which is involved in saving people at sea in the Aegean, called on the EU on Thursday to open new, safer routes to Europe.

EU leaders hope winter seas, and their new deal with Turkey to try to dissuade and prevent Syrian and Iraqi refugees and other migrants from setting off, can bring down the numbers and give them breathing space to organise a collective response.

Two weeks before they sit down for a Brussels summit that could be stormy, there is no sign of divisions easing, notably between German Chancellor Angela Merkel, who has led efforts to take in more Syrians, and leaders in the formerly Communist East who oppose EU schemes to make them take in some asylum seekers.

The Hungarian government of Prime Minister Viktor Orban said it would follow neighbouring Slovakia in filing a complaint at the European Court of Justice against the plan.

The potential for immigration to wreck major achievements of the European Union has fuelled calls for tougher action. This week, Merkel has warned that even Afghans who do not meet strict criteria for asylum will be deported - though that is not easy.

And in an interview published on Thursday, Donald Tusk, the former Polish premier who chairs EU summits, said irregular migrants should be detained for as long as needed to check their identities, up to the 18 months allowed by law.

Warning of security threats and saying most migrants were not fleeing war, Tusk said: "It's too easy to get into Europe ... This wave of migration is too big not to be stopped."

REUTERS

    
 

Paris climate talks turn hostile over money

      

A woman walks past the COP21 logo in the Climate Generations area during the World Climate Change Conference 2015 (COP21) at Le Bourget, near Paris, France, on Dec 1, 2015. 

PHOTO: REUTERS

DEC 4, 20156:54 AM

[LE BOURGET] Angry developing nations warned Thursday that increasingly tense UN talks aimed at averting catastrophic climate change would fail unless a bitter feud over hundreds of billions of dollars was resolved.

Negotiators from 195 nations are haggling in Paris over a planned universal accord to slash greenhouse-gas emissions that trap the Sun's heat, warming Earth's surface and oceans and disrupting its delicate climate system.

Taking effect from 2020, the pact would target emissions from fossil fuels such as coal, oil and gas - the backbone of the world's energy supply today - as well as from the cutting down of rainforests.

The question of finance to help developing countries make the shift to cleaner energy sources is "make or break", said South African negotiator Nozipho Mxakato-Diseko, who spoke on behalf of the G77 group of 134 developing and emerging countries, plus China.

"It has to be clearly understood that finance is critical," she told a news conference.

At stake is hundreds of billions of dollars that would need to start flowing from rich to developing nations from 2020. However the developed nations have yet to fully commit to the financing deal.

With frustrations at the conference mounting, UN Secretary-General Ban Ki-moon called on the world's leading economies to honour the financing pledge they made at the last major climate summit six years ago.

"I have been urging the developed world leaders that this must be delivered," Ban told reporters at UN headquarters in New York. "This is one very important promise." Of the US$100 billion to be mobilised by 2020, US$62 billion has been raised so far, he added.

More than 150 world leaders including President Barack Obama launched the talks Monday, seeking to build momentum for the tough negotiations ahead with lofty rhetoric about the urgency of the task.

But after three days of grinding discussions over a hugely complex 54-page draft pact, bureaucrats unveiled a document just four pages shorter and with vast stretches of text yet to be agreed.

By the end of a day of frustratingly slow negotiations, tempers frayed.

"I am deeply concerned. I'm out of words. I have been doing this for many years, and this is just not right," Bolivia's Juan Hoffmaister, representing the G77 and China, told fellow negotiators at an evening session.

At the heart of the dispute is a demand by developing nations that the rich shoulder the most responsibility for fighting global warming because they have emitted most of the greenhouse gases since the start of the Industrial Revolution.

But some rich nations point out that developing nations, particularly China and India, are now big polluters.

Norwegian negotiator Aslak Brun said they were grappling with "very hard lines on all sides".

"Pointing fingers at this point in time saying: 'you are to blame and we are the good guys', it doesn't help us. Collectively, we just have to really speed up," he said.

Ministers from around the globe will descend on Paris Monday to try to transform the draft prepared by diplomats into a universal accord to avert planetary overheating. The conference is scheduled to end on December 11.

French Environment Minister Segolene Royal said she was still confident warring sides would come together by December 11.

"It is normal for it to take a day or two for negotiations to get into gear," she told AFP.

"It is unthinkable to imagine failure." At the core of the talks is the goal of limiting average warming to a maximum of two degrees Celsius (3.6 degrees Fahrenheit) over pre-Industrial Revolution levels.

Scientists warn time for action is running out, issuing ever-louder warnings that steadily growing carbon emissions will doom future generations to rising seas and worsening floods, storms and drought - a recipe for hunger, disease and homelessness for many millions.

James Hansen, one of the world's foremost climate scientists, warned in an interview with AFP that even capping warming to 2 C was a massive risk.

"Two degrees Celsius warming above pre-Industrial would put us at least at the temperature of the last inter-glacial period. Sea level was six to nine metres (20-30 feet) higher then," he said.

"If we let ice sheets become unstable, the world may become ungovernable because the economic consequence would be so great."

AFP

      

US military to open frontline combat roles to women

The US military will open up all positions - including frontline combat roles - to women, Defense Secretary Ashton Carter announced Thursday in a sweeping move officially ending centuries of men-only tradition. 

PHOTO: AFP

DEC 4, 20156:50 AM

[WASHINGTON] The US military will open up all positions - including frontline combat roles - to women, Defense Secretary Ashton Carter announced Thursday in a sweeping move officially ending centuries of men-only tradition.

The historic step served as a rebuke to a Marine Corps call this year for a partial exemption, after it argued mixed-gender combat units were not as effective as male groups.

"There will be no exceptions," Carter said, adding he was confident the change would enhance "combat effectiveness." He noted that while, on average, physical differences exist between sexes, plenty of women can meet the military's rigorous physical standards for combat roles - just as there are some men who cannot.

"As long as they qualify and meet the standards, women will ... be allowed to drive tanks, fire mortars, and lead infantry soldiers into combat," Carter said.

"They'll be able to serve as Army Rangers and Green Berets, Navy SEALS, Marine Corps infantry, Air Force parajumpers and everything else that was previously open only to men." Given the tough physical standards, Carter stressed that equal opportunity would probably not translate to equal participation of men and women in all roles.

"There must be no quotas or perception thereof," he said.

Currently, the US military comprises some 1.34 million active-duty personnel, about 15.6 per cent of them women.

President Barack Obama welcomed the change, saying it would improve the US military just as racial de-segregation did in the 1950s.

"As commander in chief, I know that this change, like others before it, will again make our military even stronger," he said.

The nature of the US-led wars in Iraq and Afghanistan meant many women found themselves in combat anyway - for instance if their convoy came under fire or struck a roadside bomb.

Congresswoman Tammy Duckworth is a case in point. She had her legs amputated after Iraqi insurgents blasted the US Army helicopter she was co-piloting out the sky in 2004.

"I didn't lose my legs in a bar fight," she said. "Of course women can serve in combat. This decision is long overdue." Three women made history this year when they graduated from the US Army's elite Ranger school, previously only open to men.

The Ranger course physical fitness test includes 49 push-ups, six chin-ups, 59 sit-ups, a five-mile run in 40 minutes and a slew of other challenges.

Obama's administration in 2013 asked for all combat positions to be open to women by 2016, including the infantry, artillery, armor and special forces.

But Obama gave the Pentagon the opportunity to request exceptions, provided these were justified by operational constraints. The Marine Corps asked for such an exemption.

Notably absent from Carter's announcement was his top general, Joe Dunford, who previously headed the Marines.

"In the wake of the secretary's decision, my responsibility is to ensure his decision is properly implemented," Dunford said in a less-than-enthusiastic statement.

So, though it was widely expected, Carter's announcement brings to a head something of a paradigm shift in how the United States views its fighting forces. It was only five years ago that gays were banned from serving openly in the military under its "Don't Ask, Don't Tell" law.

Carter, who is Obama's fourth defense secretary and started his job in February after battling his way up the Pentagon's bureaucratic ranks, has spoken frequently about the need for the vast US military to be inclusive.

"Our force of the future must continue to benefit from the best people America has to offer," Carter said.

"In the 21st century, that requires drawing strength from the broadest possible pool of talent. This includes women ... We have to take full advantage of every individual who can meet our standards." The changes will begin to be implemented "as soon as practicable" after January 2, and no later than April 1, a Pentagon memo said.

Senior Republican lawmakers greeted the decision frostily.

"Carter's decision to open combat positions to women will have a consequential impact on our service members and our military's warfighting capabilities," Senator John McCain and Congressman Mac Thornberry, who both chair armed services committees, said in a statement.

We "intend to carefully and thoroughly review all relevant documentation related to today's decision," they added.

Congress has a 30-day period to review the decision, and could still block it. But Pentagon officials are confident that won't happen.

AFP