Ukraine President Takes On Other Crisis: a Broken Economy

    The WSJ reports,"Ukraine's new president, Petro Poroshenko, has inherited a deadly separatist insurgency in the country's east, but the billionaire tycoon faces another, equally challenging problem: a deeply broken economy.

Ukraine's gross domestic product is expected to contract 5% to 7% in 2014. Experts warn those projections could worsen, should the pro-Russia rebellion grow and further cripple output in the Donetsk and Luhansk regions, the heart of heavy industry and metals extraction in Ukraine. Together those regions account for nearly 16% of Ukraine's gross domestic product.

"We must end the fighting this week," Mr. Poroshenko said in a statement released on the presidential website after the talks. "Every day people are dying, and every day Ukraine is paying such a high price, and it's unacceptable." He said a first step would be for Ukraine to secure the border with Russia.

Mr. Poroshenko accused the separatists of dealing a blow to the fragile economy of those regions at his inauguration on Saturday. "They, in addition to their looting and their abuse of peaceful civilians, have driven an already crisis-stricken regional economy to the brink of complete catastrophe," the new president said.

In addition to the conflict in the east, Ukraine's economy faces other points of instability. Kiev remains locked in a thorny dispute with Moscow over the price of its future gas imports from Russia, with talks in Brussels scheduled to continue Monday.

European officials helping broker the negotiations have urged both sides to come to an agreement. Any disruption to gas supplies resulting from failed talks—something Ukraine witnessed in 2009—could further cripple the economy.

Russia also accounts for about 25% of Ukraine's exports. A large portion of them are industrial products such as railway cars and defense components that Ukrainian factories sell to Russian state entities. Moscow has shown a willingness to bar Ukrainian products on technical grounds amid tensions between the two countries in the past, including a ban it placed last year on candy from Mr. Poroshenko's Roshen confectionary firm. Russia could also raise import tariffs for Ukrainian goods.

Olena Bilan, chief economist at Kiev's Dragon Capital, said the conflict in the east, the possible disruption to gas supplies and the potential for deteriorated trade all threaten the economy.

"They are three major risks, all of them somehow related to Russia," Ms. Bilan said.

Mr. Poroshenko met Russian President Vladimir Putin for the first time since being elected Ukraine's leader during a D-Day memorial ceremony in France on Friday. Mr. Putin said he liked the new Ukrainian leader's attitude and planned to work with him, but the Russian president also signaled possible trouble on the trade front.

Kiev's pledge to follow through on signing a trade pact with the European Union as early as this month has rankled Moscow, which wanted Ukraine to join its own economic union with former Soviet republics. On Friday, Mr. Putin said Russia would "take steps to protect its market" should Ukraine join a customs union with the EU, but he didn't elaborate.

To turn around its economy, Ukraine is relying on a $17-billion bailout from the International Monetary Fund and an additional $15 billion in aid from the World Bank, the EU and bilateral donors. The IMF has predicted that Ukraine's real GDP will decline a 5% this year and rebound 2% in 2015, should the country comply with its plan.

The measures have all but locked in the new government's economic policy.

Already, Ukraine has put through some of the toughest overhauls demanded by the IMF. It ended the National Bank of Ukraine's long-standing intervention in the foreign exchange market to prop up the hryvnia currency, which depleted reserves to crisis-level amounts. It also nixed long-standing energy subsidies that made gas and heat cheap but burdened Ukraine's budget.

As a result, the hryvnia has depreciated about 30% against the U.S. dollar since the start of the year. Inflation, meanwhile, has jumped more than 10%. Average gas prices for Ukrainian households began increasing by more than 50% starting in May. Heating prices are expected to climb by about 40% on average starting in July. The poorest households, however, are due to receive subsidies to compensate for the increase, part of a broad overhaul of Ukraine's energy sector.

"It looks like people are ready to accept this decline in living standards," said Vitaliy Vavryshchuk, head of research at Kiev-based investment house SP Advisors. But he said Ukrainians eventually will expect economic improvement. "Patience is not unlimited," he said.

Ukraine is instituting austerity measures and extra revenue-boosting actions to reduce its budget deficit.

The conflict in the southeast, which has crippled many businesses there, could put the national budget under more pressure. Ukraine said it collected only 88% of targeted tax and customs revenues for May from Donetsk and only 75% of targeted income from neighboring Luhansk. The numbers could deteriorate as production falls amid continued violence.

"If there's a peaceful resolution to this conflict, the support of the IMF is sufficient," said Alexander Valchyshen, chief economist at Investment Capital Ukraine. "However, the question is how the Ukrainian authorities can bring this under control."

WSJ: Sex, Drugs and GDP: the Challenge of Measuring the Shadow Economy

        The WSJ reports,"New methods of measuring economies sometimes raise eyebrows. Even more so when they involve prostitutes and mounds of cocaine.

The U.K., Ireland and Italy are among the nations now moving to include illicit doings when tallying their gross domestic product, the broadest measure of goods and services across an economy.

The U.K. could add as much as $9 billion to the value of its GDP by including prostitution and about $7.4 billion by adding illegal drugs, by one estimate, enough to boost the size of its economy by 0.7%. Not to be outdone, Italy will include smuggling as well as drugs and prostitution. Both changes will begin later this year.

Other nations in Europe are also poised to fall in line with a European Union call to standardize and broaden GDPs. The EU is following a "best practices" directive laid out in 2008 by the United Nations.

Some economists question the merits—and methods—of measuring the shadows. Criminals go to great lengths to hide transactions usually conducted in hard-to-trace cash. Because the activity is beyond the easy reach of tax authorities, it isn't something that can bring in revenue to help a nation pay off its debts. All of which complicates measurement.

Claus Vistesen, chief euro-zone economist for Pantheon Macroeconomics, says there is "a trade-off between taking in as much information as you can, and accuracy." Weighing the underground economy, he says, could end up making GDP measures "less accurate."

The argument in favor is simple enough. If drug sales aren't counted in a place where people spend half their income on drugs, one could conclude, wrongly, that the population saved half its money.

The U.N. is blunt in extolling the need to expand GDP definitions. "Accounts as a whole are liable to be seriously distorted" if governments don't tabulate all transactions, it said as part of its 2008 directive.

The overall changes from adding illicit activity may prove small, as that is just one component of the statistical revisions sweeping Europe. The U.K., for example, has altered how it will measure nonprofit groups, a shift that will boost its GDP more than the drugs and prostitution, and capital formation and inventories, which will shrink its GDP.

Some European countries have extra incentives to inflate the size of their economies. In addition to bragging rights, a higher GDP helps keep a nation's debt and deficits within the EU's prescribed targets.

If a nation's deficit must remain below 3% of GDP, a profligate government would want the largest possible estimate of GDP. For others, a higher GDP may end up costing governments more. The 28-nation bloc uses measures of GDP to determine how much each country contributes to the EU's collective budget.

Across Europe, Finland and Sweden, hardly nations characterized by vast criminal economies, would see the biggest boosts. The main changes result not from drugs but from technical adjustments such as how to capitalize expenditures on research and development and how to account for pension programs and most types of insurance policies".

WSJ: Venezuela Pays Price for Smuggling(Socialismo Siglo XXI)

        The WSJ reports,"CÚCUTA, Colombia—Venezuelan President Nicolás Maduro's sliding popularity amid persistent street protests can be partly blamed on the humming smuggling market on this border, which shows how Colombia's unbridled free-market capitalism is eclipsing Venezuela's socialism and hurting ordinary Venezuelans.
  Many Colombian consumers  benefit from a massive smuggling trade involving subsidized and price-controlled goods from oil-rich Venezuela—including near-free gasoline, car parts, corn flour and deodorant, all bought cheap in Venezuela and marked up before being sold here.

With its heavy intervention in the economy, Venezuela now imports three-quarters of what it consumes but loses a third of its goods to illegal cross-border trade, its government estimates. Some economists say Caracas exaggerates the smuggling problem to mask its own inability to keep supermarkets stocked.

The scarcity has eroded Mr. Maduro's popularity to a low of 37%, as recent polls show food shortages surpass rampant crime as citizens' top concern. And in Colombia, there is so much anxiety among businessmen about the incoming, cheap products that the National Poultry Federation on Sunday started a public-awareness campaign to discourage the purchase of contraband chicken.

"We're not so much living here as much as surviving," said Isabel Castillo, president of the Chamber of Commerce in San Antonio, a struggling town by Venezuela's side of the Táchira River that divides the countries.

Stifled by inefficient state-owned factories and price controls, domestic production in Venezuela has plummeted. Moreover, the massive weakening of Venezuela's currency makes its goods cheaper in Colombia. These factors lead to frequent shortages that make life especially trying for Venezuelans along the border, where smugglers leave little behind on store shelves.

That is partly why the protest movement that kicked off in February against Mr. Maduro's administration took root here before spreading nationwide. Scattered demonstrations and rallies still take place, including one on Sunday in which members of the Popular Will party spoke out against the government's arrest of their leader, Leopoldo Lopez, who is accused of instigating violent demonstrations.

Venezuela's government says it is working with its neighbor to try to crack down on trafficking with an increased military presence on the border. That led smugglers, who see their work as legitimate, to block traffic last week on the bridge connecting the two countries here.

"The problem is that on the Venezuelan side what these smugglers do is illegal but just one kilometer down the road in Colombia, no one thinks they're doing anything wrong," said Carlos Chacon, a San Antonio city councilman, referring to Colombian customers.

To make ends meet, many residents turn to running bags of groceries from Venezuela to Cúcuta—an errand that can yield more than a typical workman's salary. Here they have become known as "bachaqueros," a reference to South American leaf-cutter ants that can deplete a terrain of resources when working together.

In this year's first three months, Venezuela's border patrol in Táchira state confiscated more than 14,000 tons of food and meat—enough to feed about 400,000 people for a month—compared with 20,000 tons of food seized in all of 2013, Venezuela military commander Vladimir Padrino said on state television.

Fueling the illicit trade is Venezuela's bolívar currency, which has shed more than 60% of its value against the dollar over the past year on the black market, enabling buyers with stable U.S. dollars and Colombian pesos.

As a major clash point between the two countries' economic models, many Venezuelans look to Cúcuta to find out how much their bolívares are worth. For years, the exchange rate determined by currency houses in Cúcuta has been posted on underground websites to be used as a reference for dollars on the black market in Venezuela, where strict currency controls make dollars difficult to obtain".

WSJ: China's Central Bank Prevails in Policy Battles Over Economic Future

    The WSJ reports,"China's central bank is turning into a policy heavyweight in a battle among the country's top economic authorities over how to fuel growth without piling on excessive debt.

The government has sought to portray a united front on its "mini-stimulus" measures, or small adjustments to monetary policy to bolster growth.

Behind the scenes, however, China's biggest economic agencies—the People's Bank of China, the Ministry of Finance, the state planning commission and other financial regulators—have fought over whether more should be done to bolster growth, such as cutting interest rates for the first time in two years, according to officials familiar with the government's deliberations.

China's gross domestic product growth has fallen below its target of 7.5% for the year, deepening concerns about the strength of the world's No. 2 economy.

In the latest battle, the country's top banking regulator on Friday said it would ease rules to make it easier for banks to lend only to small companies. That followed a decision a week earlier by the State Council, the government's top decision-making body, to target more bank funding for small businesses and farms.

The central bank fended off calls to cut interest rates, at least for now, the people familiar with the situation said, by arguing that a rush of new credit could add to already ballooning debt and funnel money to the real-estate sector, which is struggling with a housing glut that is dragging down growth and threatening to trigger loan defaults.

"Theoretically, conditions are ripe for a rate cut as inflation is not a concern right now," a central bank official said. "But it wouldn't be as effective as we would want it to be" because it could worsen other problems in the economy".

Japan: Sharing corporate tax cut target with Abe: Amari

Economic and Fiscal Policy Minister Akira Amari said Saturday that both he and Prime Minister Shinzo Abe hope to bring down Japan's effective corporate tax rate below 30 pct in some five years.

During his visit to London last month, Amari expressed his willingness to carry out such a tax cut.Speaking to reporters in the western Japan city of Osaka on Saturday, he said that he and Abe agree on the cut target.

Source: Jiji Press

Egypt's Sisi vows no reconciliation with anyone inciting violence

 Egypt's former army chief Abdel- Fattah al-Sisi, who was sworn in as new president on Sunday, said there is no reconciliation with anyone who "committed crimes or inciting violence" against Egyptians.

Addressing a ceremony on Sunday evening at Cairo's Qubba presidential palace, Sisi said he is looking forward to " reconciliation with all citizens but except those committed crimes against the nation or using violence as a methodology," clarifying that "those who shed blood of the Egyptian people have no place in this course."

The military-oriented new president, who led the ouster of former Islamist leader Mohamed Morsi last July, won almost 97 percent of the votes in last week's presidential election. Morsi's Islamist backers led by the currently-blacklisted Muslim Brotherhood claim the move was as a "military coup."

Sisi said he will work for a comprehensive development, combating terrorism and improving security.

However, some worried that Sisi's rule will be reproduction of former regime of Hosni Mubarak that was characterized by repression and police brutality.

The 59-year-old Field Marshal said in the speech that he will work hard to create "a healthy relation between security apparatuses and the people based on preserving dignity and respecting freedom." Yet he warned that "freedom without commitment leads to disorder."

About 1,200 attendees, including outgoing President Adly Mansour, cabinet members as well as local and foreign dignitaries, showed up at the palace ceremony.

On Sunday morning, Sisi was sworn in at the Supreme Constitutional Court in Cairo as Egypt's new president amid massive security presence. The military strongman comes to office nearly one year after the ouster of his predecessor.

Hours after taking the oath of office, Sisi headed to the northeast Ittihadiya presidential palace in Heliopolis, where he addressed a prior ceremony and then signed with Mansour a power transfer document, the first of its kind in the country's modern political history.

More than 50 delegations topped by Palestinian President Mahmoud Abbas, Saudi Crown Prince Salman Bin Abdelaziz, as well as the rulers of Kuwait and Bahrain and other Arab and foreign dignitaries, attended the ceremony.

"For the first time, Egypt is witnessing a democratic and peaceful power transfer from a president to another," Sisi said. " We will make up for what we have lost and we will establish a country with a better future," he added.

He also expressed thanks to all the guests and gave a special praise to Saudi Arabia, one of the most generous supporters to Egypt.

Most of the Gulf countries were throwing their weights behind Sisi after Morsi's ouster, pumping about 20 billion U.S. dollars in aid to Egypt.

King Abdullah of Saudi Arabia described Sisi's victory as " historical." He called for a donor conference to help Egypt revive its flagging economy.

Qatar, whose ruler and prime minister sent congratulatory messages to Sisi on Sunday, is the only Gulf nation that supports Morsi's Brotherhood group, the oldest and most influential Islamist movement in Egypt.

Bucking the trend, Western countries were represented by low- level officials or envoys.

Meanwhile, large numbers of Sisi's supporters surrounded the two presidential palaces, as well as several public squares nationwide, including the iconic Tahrir Square, to celebrate the new president's inauguration who defeated his only rival, leftist politician Hamdeen Sabahy, in the three-day election.

Source: Xinhua

Japan upgrades GDP growth to annual 6.7 % for Q1

The Japanese economy expanded at an annualized rate of 6.7 percent during the first three months of 2014 in inflation-adjusted terms, the government said on Monday.

The January-March growth in real gross domestic product corresponded to a 1.6 percent rise from the previous quarter, the Cabinet Office said in a report.

The government said in the initial report on May 15 that the country's economy expanded an annualized 5.9 percent in the first quarter of this year, supported by robust consumer spending.

Corporate capital spending soared 7.6 percent from the previous quarter, upwardly revised from the 4.9 percent rise reported in the preliminary data.

Private consumption growth was upwardly revised to a 2.2 percent rise from 2.1 percent growth.

Exports rose 6.0 percent, while imports increased 6.3 percent, the same as in the initial report.

Source: Xinhua

China-ASEAN trade up 1.2 pct in Jan.-May

rade between China and the Association of Southeast Asian Nations (ASEAN) grew 1.2 percent year on year to 1.12 trillion yuan (181.75 billion U.S. dollars) in the first five months of this year, Chinese customs data showed on Sunday.

The growth came amid a 2.2-percent decline in China's general trade during the same period in yuan-denominated calculations, according to the data released by the General Administration of Customs.

During the January-May period, Chinese exports to ASEAN expanded 4.1 percent to 621.01 billion yuan, compared with a 2.7 percent drop in the nation's general exports, the data showed.

Meanwhile, imports from the ASEAN went down 2.2 percent to 498.57 billion yuan, with the drop deeper than a 1.6 percent decline in the nation's general imports, the data showed.

Analysts said that economic cooperation between China and the ASEAN has remained stable, even though political and economic instability in some ASEAN countries has brought down bilateral trade growth from a high gear since the first quarter of the year.

But trade has proved resilient despite the ambivalent world economic recovery and growing protectionism. Trade rose 10.9 percent to 444 billion U.S. dollars in 2013, exceeding the 7.6 percent increase in China's total foreign trade.

China is the largest trading partner of ASEAN and ASEAN has emerged as China's third largest partner, a major investment destination and an important tourist destination.

Source: Xinhua

Lion whisper plays football with predators

All 10 militants attacking Pakistan's Karachi airport killed

All 10 militants involved in attacking Pakistan's Karachi airport on Sunday night have been killed, spokesperson Inter Services Public Relations Asim Saeed Bajwa said.

Bajwa tweeted that the area has been cleared and all vital assets of the airport including planes are intact.

Source: Xinhua

Chinese military delegation attends ASEAN regional forum meeting

- A Chinese military delegation attended a two-day conference on security policies of the Association of Southeast Asian Nations (ASEAN) Regional Forum, which ended in Myanmar's capital city of Yangon on Sunday.

The delegation, led by Wang Guanzhong, deputy chief of general staff of the Chinese People's Liberation Army, also hosted a China-ASEAN breakfast meeting and held talks with the heads of delegations from some other countries on the sidelines of the conference.

Representatives sent by the forum's 19 member nations and regional organizations attended the meeting to exchange views on such issues as the regional and international security situation, and the contribution made by armed forces in responding to traditional and non-traditional security challenges.

Source: Xinhua

China to enhance cooperation with Central, Eastern Europe

China will beef up cooperation with countries in Central and Eastern Europe (CEE), according to a ministerial meeting that concluded on Sunday in east China.

China will boost exchanges with the 16 CEE countries in a variety of fields, including human resources, infrastructure and investment, Gao Hucheng, China's Minister of Commerce, said at the meeting that focused on economic and trade promotion in the city of Ningbo, east China's Zhejiang Province.

In a step toward more mutual understanding and higher levels of economic cooperation, Gao said that the country will have more exchanges with the CEE countries in terms of human resources.

"We will also see more tie-up in the construction of infrastructure for railways, ports, highways and electricity," Gao said.

Gao added that both sides will provide more convenience in terms of visas and work permits to increase mutual investments and allow more business exchanges.

Representatives from the CEE countries expressed optimism about China's economic prospect and their willingness to enhance cooperation with China to look for more development opportunities.

The conference, with the theme "Deepen pragmatic cooperation; Achieve mutual development", discusses topics covering trade promotion, mutual investment and cooperation in infrastructure construction.

Source: Xinhua

Asia Markets rise after Chinese trade and Japanese Gdp growth beat estimates

Markets at a Glance

Major Stock Indexes

10:31 PM EDT 6/8/2014

	LAST	CHANGE	% CHG
Source: The WSJ
Japan: Nikkei 225	15165.01	87.77	0.58%
Hang Seng	23111.66	160.66	0.70%
Shanghai Composite	2032.16	2.20	0.11%
S&P BSE Sensex	25396.46	376.95	1.51%
Australia: S&P/ASX	5464.00	27.10	0.50%
UK: FTSE 100	6858.21	44.72	0.66%
DJIA	16924.28	88.17	0.52%
Asia Dow	3240.28	9.69	0.30%
Global Dow	2601.30	2.47	0.10%

Greece: SS songs and antisemitism: the week Golden Dawn turned openly Nazi

By  Helena Smith,The Observer

      It has been a bad week for democracy in Athens. All around this great Greek city, the politics of hate now lurk. On Friday I got a taste of it in the tiny Italian-style cafe I frequent off Syntagma Square.

It arrived in the form of two middle-aged men, both supporters of the neo-fascist Golden Dawn – and, by their own account, the holders of university degrees, well-travelled and well-informed. Over espressos, they began to engage in an animated discussion about all that is wrong with Greece.

The first, a self-described businessman decked out in designer suit, brogues and silk tie, blamed the country's economic collapse on malfeasance, corruption and uncontrolled immigration. "The only way to teach our filthy politicians is to bring in Golden Dawn," he trilled, his eyes locked in a fierce glare. "These gentlemen are patriots, proud Greek nationalists, and they know how to deal with the scum, the foreigners who never pay taxes, who steal our jobs, who have taken over our streets."

Dismissing charges that Golden Dawn is a criminal gang masquerading as a political group, the second – a self-described government employee – said the far right was the best response yet to the great Jewish conspiracy of an interconnected banking system that has come with globalisation. "Let's not forget all the faggots and the Jews, the wankers who control the banks, the foreigners who are behind them, who came in and fucked Greece," he insisted. "The criminals who have governed us, who have robbed us of our future, of our dreams, need a big thwack."

Last Wednesday Greece got that jolt when Nikos Michaloliakos, Golden Dawn's imprisoned leader – who stands accused of murder and assault – made his first public appearance in almost nine months. The politics of hate took over Athens as the 58-year-old was hauled before parliament, ahead of a vote to lift his immunity from prosecution, on further charges of illegal weapons possession.

Emboldened by its recent success in European and local elections – in which the party emerged as the country's third biggest political force, thanks to a softening of image that has attracted ever-growing numbers of the middle class – the extremists drove home the message that they were not only on the rebound but here to stay. And as they ran roughshod through the house of democracy, hurling abuse at other MPs in an unprecedented display of violence and vulgarity, there was no mistaking what Golden Dawn is: a party of neo-Nazi creed determined to overturn the democratic order. For, far from being contrite, the handcuffed Michaloliakos was in unusually aggressive mood, giving Nazi salutes, telling the house speaker to "shut up", and instructing guards to take their hands off him.

Outside, black-shirted Golden Dawn supporters, lined up in military formation in Syntagma Square, gave a hearty rendition of the Nazi Horst Wessel song – albeit with Greek lyrics. All this was a far cry from the party's recent efforts to distance itself from the thuggery and racist rhetoric from which it was born.

"That day democracy felt a bit weak," said Pavlos Tzimas, a political commentator who has watched the party's rise from its fringe group beginnings in the early 1980s. He has watched it grow from marginal group to mainstream party over the past three decades. "After all the revelations [about criminal activity], after all the prosecutions against its MPs, it still has the nerve to act in such a way, in scenes of hate that, frankly, I cannot recall ever being seen inside the parliament," he sighed. "Golden Dawn is not a passing phase, it will not disappear with the end of the crisis, it feels untouchable, it fears nothing, and what we saw this week is its real face. It is not like other extremist parties in Europe. It is a true neo-Nazi force whose aim is to use democracy to destroy democracy."

Last Wednesday Greece got that jolt when Nikos Michaloliakos, Golden Dawn's imprisoned leader – who stands accused of murder and assault – made his first public appearance in almost nine months. The politics of hate took over Athens as the 58-year-old was hauled before parliament, ahead of a vote to lift his immunity from prosecution, on further charges of illegal weapons possession.

Emboldened by its recent success in European and local elections – in which the party emerged as the country's third biggest political force, thanks to a softening of image that has attracted ever-growing numbers of the middle class – the extremists drove home the message that they were not only on the rebound but here to stay. And as they ran roughshod through the house of democracy, hurling abuse at other MPs in an unprecedented display of violence and vulgarity, there was no mistaking what Golden Dawn is: a party of neo-Nazi creed determined to overturn the democratic order. For, far from being contrite, the handcuffed Michaloliakos was in unusually aggressive mood, giving Nazi salutes, telling the house speaker to "shut up", and instructing guards to take their hands off him.

Outside, black-shirted Golden Dawn supporters, lined up in military formation in Syntagma Square, gave a hearty rendition of the Nazi Horst Wessel song – albeit with Greek lyrics. All this was a far cry from the party's recent efforts to distance itself from the thuggery and racist rhetoric from which it was born.

What worries Tzimas most is not just the coarsening of public debate but the "banalisation of violence" that is now stalking Greece. "We seem to be getting used to it, and that frightens me," he said.

In an explosive political climate, where popular rage is at boiling point nearly five years into the country's worst crisis in living memory, the politics of hate so embodied by Golden Dawn is becoming increasingly pervasive. "Who cares if six million Jews were exterminated?" asked the businessman back at the cafe, in a shocking endorsement of that reality. "I don't care if they were turned into soap. What I care about is the salary I have lost, the never-ending taxes I am forced to pay, the criminals who rule this country, the anger I carry inside."

In a global survey released by the Anti-Defamation League last month, Greece at 69% was found to be the most antisemitic country in Europe.

"This is the deeper explanation for the growth of Golden Dawn," says Dimitris Psarras, author of The Black Bible of Golden Dawn, which chronicles the party's meteoric rise. "Greece has deep cultural differences with the rest of Europe. After the second world war, it did not undergo real democratisation because we had civil war [1946-49]. And after that the deep state was never really purged [of extreme rightwing elements]. Even when it was a small group, Golden Dawn had ties to the Greek state."

The party's fielding of two retired generals on its European election ticket was testimony to those ties. With three Golden Dawn MEPs now about to take seats in Brussels, the burning question for many is how to confront the extremists. Following the poll, even France's Front National leader, Marine Le Pen, ruled out relations with them.

The independent MP and prominent novelist Petros Tatsopoulos, himself the focus of much of the fascists' fury in parliament last week, thinks there is no other way but to ban Golden Dawn. "It was a huge, historic mistake on the part of our parliament not to de-legitimise Golden Dawn," said Tatsopoulos, until recently an MP with the radical left. "It should have been banned, not for its Nazi ideology but because it is a paramilitary force … who, if it could, would press ahead with a coup d'état," he told the Observer.

Source: theguardian

Japan Steps Up as Regional Counterweight

       The WSJ reports,"Japan has long struggled to define its position in the world. Its two decade-long economic slump destroyed pretensions of becoming Asia's dominant power, while the rise of China dethroned Japan as the world's second-largest economy and raised the specter of a non-liberal hegemon of Asia. Now Prime Minister Shinzo Abe has embraced the role of regional counterweight to Beijing. 

 A primary plank of his policy is to rekindle Japanese relations with India. Mr. Abe was the main official guest at India's Republic Day in January. Tokyo and New Delhi agreed at that time to conduct bilateral naval exercises, and India has invited Japan to participate in the Malabar maritime exercises alongside the U.S. and Australia.

This revitalized cooperation has been embraced by new Indian Prime Minister Narendra Modi, who seeks to build the countries' growing economic ties. Yet the true impetus is strategic, providing both Japan and India with a powerful partner on China's flank. Each has an interest in freedom of navigation and worries about Chinese designs on parts of its territory.

A second prong is to support Southeast Asian nations embroiled in disputes with China. Tokyo has given 10 patrol vessels to the Philippines to help prevent further Chinese seizure of Philippine territory or interference with administrative control over disputed shoals, and Vietnam will also receive Japanese-made ships as soon as they are built. Mr. Abe visited all 10 countries in the Association of Southeast Asian Nations last year and is pushing greater cooperation among Australia, the U.S. and Japan.

The Japanese leader is also redefining his country's broader security policies. He has unveiled plans to end the longstanding ban on "collective self-defense" so that Japanese military forces can aid friends under attack—and, most importantly, work more closely with the United States. Mr. Abe has stated that the alliance with Washington can be effective only if Japan is able to help defend U.S. ships and military personnel from attack by states like North Korea.

Public opposition to expanded military activities abroad may be Mr. Abe's greatest obstacle to making Japan a "normal nation," meaning one that removes onerous restrictions on using its military, even for peacekeeping purposes.

Mr. Abe has adopted the rhetorical tack of claiming that everything Japan does is to support international law. The implication, of course, is that China is undermining international law and norms of behavior—in contrast, for example, to Indonesia and the Philippines peacefully resolving their maritime border dispute, as Mr. Abe noted at the Shangri-La Dialogue. This variant on "naming and shaming" is designed to start isolating China throughout the region. Beijing often helps Mr. Abe make his case, as when Chinese fighter jets flew dangerously close to Japanese surveillance planes over the Senkaku Islands last week.

But if Japan's economy can grow with its geopolitical ambitions, Asia may have an alternative to Chinese hegemony—provided also that the U.S. stays engaged in the region to prevent Beijing from filling in any vacuum in great-power influence. The risks of antagonizing China are becoming more readily apparent, but Japan's most dynamic leader in a decade has decided that his country will no longer be a bystander to history".

China Exports Strengthen With 7% Climb

       The WSJ report, "China posted solid export gains in May, pointing to improving global demand for the nation's goods and providing a bright spot in the outlook for the world's second largest economy.

But surprisingly weak imports in the same month raised concerns over domestic demand, suggesting that the economy isn't out of the woods after its sluggish growth early this year.

Exports climbed 7% year over year in May, according to official data released on Sunday. These were in line with market expectations of a 7.2% rise and marked a healthy improvement over the 0.9% advance in April and the 2.3% decline year on year in the January-April period.

The improvement in exports probably reflected the end of distortions in comparisons with year-ago data.

Early last year, many exporters used over-invoicing of their exports to bring currency onshore, skirting foreign exchange controls, to take advantage of a then-rising Chinese currency. That practice was reduced—if not eliminated—after authorities warned in May last year they would impose tough penalties on firms found to be falsifying reported data.

Analysts said that a slightly weaker yuan currency—which has shed about 3% against the dollar this year—may also have helped exports in May this year.

The 1.6% drop in imports in May was more worrisome as analysts polled by The Wall Street Journal had been looking for a 6% rise.

"Continued subdued import growth seems to reflect slow growth of demand in China's economy," said Louis Kuijs of Royal Bank of Scotland in a note to clients.

China's economic growth slowed to 7.4% year over year in the first quarter of 2014 after a 7.7% year over year rise in the final quarter of last year.

Beijing has responded to the sluggish performance, trying to boost domestic demand with a series of measures such as speeding up spending on railways and offering tax breaks for smaller businesses in what has been dubbed a "mini-stimulus" package.

More recently Beijing told local governments to accelerate their spending on approved projects--where money has already been allocated—or risk losing those funds. It has also told commercial banks to make funds available for mortgage loans to help the important—but ailing--property sector.

Property prices fell month over month in May for the first time in nearly two years, according to an unofficial data provider. Official figures on new housing starts showed a drop of nearly 25% in area terms over the first four months of the year, the latest period for such data.

Analysts said the mini-stimulus measures may be working, as shown in the improved official manufacturing Purchasing managers index, a gauge of factory activity, for May. They added that imports could start to pick up in the coming months.

Overseas shipments from China improved across a broad front in May with exports to the European Union climbing 13.4% and those to the U.S. rising 6.3%, according to the General Administration of Customs. Exports to Taiwan were up 14.7 % while those to the Association of Southeast Asian Nations climbed 9.1% and those to Japan added 2.2%".

Meanwhile, the improved exports and less-than-robust imports led to a substantially wider trade surplus of $35.9 billion for the month, up from a $18.45 billion surplus in April, and topping economists' forecast of a $23.4 billion surplus".

China’s Resource Imports Ebb, But Signs of Health Remain

       The WSJ reports,"China’s imports of major resources fell in May, though they continued to extend modest on-year gains, signaling that macroeconomic uncertainty and metal-financing probes may have taken the edge off trading appetites.

The data reflect a broader trend of strong exports offset by relatively weaker imports in the world’s second largest economy, which is also in key cases the world’s largest buyer of industrial commodities such as iron ore and copper. Analysts widely expected a step back from near-record levels of commodity purchases posted in April.

Imports of crude oil fell 6.4% from April to 6.37 million barrels a day, though they were up 8.9% from a year ago, data from the General Administration of Customs showed Sunday. Iron ore and copper followed the same tack. Imports of the steelmaking ingredient fell 7.2% from April to 77.4 million metric tons but rose 13% on year. Copper shipments ebbed 15.6% from April but gained 6% from the same month in 2013 to reach 380,000 tons in May.

The government has been closely monitoring the role of copper and iron ore imports for their potential to exacerbate China’s vulnerability to financial instability. An estimated third or more of Chinese metal imports are believed to be used as collateral for loans in China’s vast shadow-banking system, instead of feeding actual demand. Chinese authorities are investigating whether companies used the same copper, aluminum and iron ore held as stock in Qingdao– a relatively small port in China’s Shanghai-centered copper trade–as collateral for multiple loans, people familiar with the matter said. News of the probe lowered Chinese copper prices by 4% last week.

“The on-year decline in imports [calculated by headline import value] is possibly due to the tightening of trade finance policies. The impact of the probe in Qingdao is probably bigger than some had thought and more and more banks are paying more attention to it,” ANZ economist Zhou Hao said.

The government is also stepping up its monitoring of iron ore used for financing purposes, though no actual curbs on imports have so far been put in place. Imports are likely to continue to face pressures in the near future, Mr. Zhou said.

Still, China’s commodity imports generally continue to be robust, showing healthy upward clips from a year earlier. This is likely due to a stabilizing economy and a small raft of economic stimulus the government released earlier this year, encouraging investment in infrastructure and urban-renewal projects.

The on-year rise in crude imports may be the due to the opening of a new refinery in Quanzhou in April, analysts say. China’s demand for crude oil might be supported by demand for gasoline, jet fuel, liquefied petroleum gas and the petrochemical feedstock naphtha, all of which have enjoyed healthy demand this year. However, maintenance at some Chinese refineries may have led to the on-month declines, and refineries might be drawing down stockpiles rather than importing more crude oil, analysts say".