Wednesday, July 30, 2008

IMF predicts no end in sight to credit crisis

Radio Australia
July 29, 2008

The International Monetary Fund says there’s no end in sight to the credit crisis gripping world financial markets.

As Australia’s NAB and ANZ have already discovered, the IMF believes banks are in for more pain as mortgage defaults soar and economies slow. The IMF has a particularly gloomy assessment of the US economy, and it came on the same day as the Bush administration revealed America’s budget deficit will climb to a record high of more than half-a-TRILLION dollars.

Trade failure clouds climate talks and beyond

GENEVA, July 30 (Reuters) - The collapse of world trade talks deals such a blow to international negotiations that the prospect of agreeing effective solutions to global warming or the spread of nuclear weapons seems more remote than ever.

"If we cannot even manage trade, how should we then find ourselves in a position to manage new challenges like climate change?" said European agriculture chief Mariann Fischer Boel after talks at the World Trade Organisation (WTO) in Geneva fell apart on Tuesday. "It is a failure with wider consequences than we have ever seen before."

Countries aim to agree a successor by the end of next year to the Kyoto Protocol on climate change, a 1997 treaty which commits developed countries to limit greenhouse gas emissions and which expires in 2012.

Like trade pacts, climate agreements have to be reached by consensus -- something that has proven impossible among the 153 WTO members.

The Geneva failure augurs badly for United Nations climate negotiations in Copenhagen in late 2009, and for faltering global efforts to halt nuclear proliferation, highlighted by the dispute over Iran's atomic programme, analysts said.

"It will greatly undermine trust in multilateral goodwill," said Mark Halle of the International Institute for Sustainable Development. "Nobody thinks we can get a climate deal without overcoming the deep mistrust in the developing world."

The fact that the WTO's "Doha development round", touted as a way to help poorer countries get more from world trade, foundered on a dispute between the United States and and big emerging economies has hit hopes for a post-Kyoto deal.

"It will be extremely difficult (for developing countries) to rebuild their confidence in the multilateral system about the desire of the rich to do anything," Halle said.

BALANCE OF POWER

The rise of the big developing economies, Brazil, China and India, since the Doha round began in 2001, will also change the dynamic in climate talks, said Bruce Stokes, a fellow at the German Marshall Fund of the United States.

"Certainly India in particular will be a key player in Copenhagen," he said.

"China's last minute objections to a Doha deal underscore their leverage, that will of course be even greater," he added.

Under Kyoto, only developed countries have greenhouse gas limits, but at Copenhagen, developing nations with the fastest growing output of carbon dioxide blamed for global warming are under pressure to brake their own emissions.

India in particular is resisting any negotiated binding curb, and its firm line in Geneva -- where a dispute with the United States on protecting its farmers felled the trade talks -- suggests it may show little flexibility on climate change.

Persuading developing countries to accept emissions curbs is seen as vital to bringing Washington, which turned its back on Kyoto under President George W. Bush, back into a rules-based global climate pact.

Coincidentally, India is one of the emerging world's nuclear powers, which built an atomic arsenal in defiance of U.S.-led efforts to halt the spread of weapons of mass destruction.

For some policymakers, failure in Geneva was a symptom of a major change in the global order, which is likely to be just as evident in climate talks.

"The collapse of the WTO talks is another sign of the decline of Western power," said a European Union official involved in policy planning. "It's no longer enough for the United States and the Europeans to agree on the objective in order to achieve the desired outcome."

The reluctance of emerging countries to accept curbs on greenhouse gases is another sign of the changing world order, which the EU official put down in part to opposition to the 2003 U.S. invasion of Iraq and a perception that Washington remains bogged down and unable to prevail in either Iraq or Afghanistan.

He pointed to this month's veto by Russia and China of a U.N. resolution to impose sanctions on Zimbabwe, and to persistent difficulty in persuading them to back tougher measures against Iran and Sudan, as signs of this power shift.

For the EU's trade negotiator, haggard and bitterly disappointed after nine days of ultimately fruitless talks, the failure in Geneva was a blow for those who hope the world can find consensus to solve global problems that affect everyone.

"We have missed a chance to seal the first global pact of a reshaped world order," said Peter Mandelson. "We would all have been winners from a Doha deal. Without one we all lose." (Additional reporting by Paul Taylor in Brussels) (Editing by Paul Taylor and Catherine Evans)

CIA accuses Pakistan of 'backing militants'

WASHINGTON (AFP) — A senior CIA official this month confronted Pakistani officials over ties between the country's intelligence service and militants in the tribal areas, The New York Times reported Wednesday.

Citing defense and intelligence sources, the Times said that the trip by agency deputy director Stephen Kappes demonstrated a harder line being taken against Pakistani ties to those responsible for the surge of violence in Afghanistan, including militant Maulavi Jalauddin Haqqani.

Earlier this year, the US military pressed for Pakistani troops to hit the Haqqani network in the tribal areas.

"It was a very pointed message saying, 'Look, we know there's a connection, not just with Haqqani but also with the other bad guys and ISI, and we think you could do more and we want you to do more about it," a senior US officials told the Times, referring to Pakistan's Inter Services Intelligence agency.

The daily said the meeting could be a sign that the relationship between the Central Intelligence Agency and Pakistan's ISI "may be deteriorating".

A US official said there was no evidence of official Pakistani support of Al-Qaeda, but there was "genuine and longstanding concerns about Pakistan's ties to the Haqqani network, which of course has ties to Al-Qaeda."

The report comes after premier Yousuf Raza Gilani met with US President George W. Bush in Washington and urged him not to act "unilaterally" against militants in Pakistan's lawless tribal zones.

Gilani insisted Monday that Pakistan was committed to fighting extremists.

Pakistan's fledgling government caused concern in Washington by launching talks with militants soon after beating allies of US-backed President Pervez Musharraf in elections in February.

Militants kidnapped 30 troops and police in northwestern Pakistan's Swat Valley on Tuesday, a day after killing three intelligence officials, threatening a shaky truce in the region.