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This morning’s apparent U-turn in US-Iran relations – when the US demanded the UN rescind Iran’s invite to the Syrian peace conference having somewhat instigated their invitation in the first place – is a little confusing for some. However, as OilPrice’s Joao Peixe points out, reports are emerging that Iran and Russia are in talks about a potential $1.5 billion oil-for-goods swap that is sure to upset the powers that be in Washington.
Reports are emerging that Iran and Russia are in talks about a potential $1.5 billion oil-for-goods swap that could boost Iranian oil exports, prompting harsh responses from Washington, which says such a deal could trigger new US sanctions.
So far, talks are progressing to the point that Russia could purchase up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods, according to Reuters.
“We are concerned about these reports and Secretary (of State John) Kerry directly expressed this concern with (Russian) Foreign Minister (Sergei) Lavrov… If the reports are true, such a deal would raise serious concerns as it would be inconsistent with the terms of the P5+1 agreement with Iran and could potentially trigger US sanctions,” Caitlin Hayden, spokeswoman for the White House National Security Council, told Reuters.
Russian purchases of 500,000 bpd of Iranian crude would lift Iran’s oil exports by 50% and infuse the struggling economy with some $1.5 billion a month, some sources say.
Since sanctions were slapped on Iran in July 2012, exports have fallen by half and Iran is losing up to $5 billion per moth is revenues.
In the meantime, a nuclear agreement reached in November with Iran and world powers is in the process of being finalized, and the news of the potential Russian-Iranian oil swap deal plays to the hands of Iran hawks in Washington who are keen to seen the November agreement collapse.
The November agreement is a six-month deal to lift some trade sanctions if Tehran curtailed its nuclear program. Technical talks on the agreement began last week.
Under the terms of the tentative November nuclear agreement, Iran will be allowed to export only 1 million barrels of oil per day.
In mid-December, Iranian oil officials indicated that they hoped to resume previous production and export levels and would hold talks with international companies to that end.
This announcement sparked an immediate reaction from US Congress, which has threatened oil companies with “severe financial penalties” if they resume business with Iran “prematurely” following the six-month agreement reached in Geneva.
There are plenty of figures in Congress—Republican and Democratic alike—who are opposed to the deal. The key “Iran hawk” in US Congress, South Carolina Republican Lindsey Graham, has described the deal as “so far away from what the end game should look like”, which should be to “stop enrichment”.
The opposition in this case believes any talk between Tehran and Western oil companies is premature because they are convinced that we won’t see a comprehensive resolution after the six-month period, and that sanctions will be laid on stronger than ever before.
Yet again, it would seem, Iran is another proxy pissing match between the US and Russia… and remember, nothing lasts forever...
Bailed-out euro-area countries are facing “painful” challenges with worse-than-anticipated consequences of economic adjustment, including high unemployment and slow growth, central banks and finance ministries said.
Officials and ministers from Greece, Ireland, Portugal and Cyprus, in responses to European Union lawmaker questions published yesterday, described how their countries’ emergency aid had been followed by social hardship and continuing economic difficulties.
The bailout program had a “worse-than-expected impact on both output and employment,” Portugal’s finance ministry said. The program in Cyprus was “rigorous and painful,” according to the island’s central bank. Adjustment in Greece, after four years of cuts and efforts to make the economy more competitive, has come at “an extremely high socioeconomic cost,” Greek Finance Minister Yannis Stournaras said.
The testimonies come three-and-a-half years after Greece became the first euro-area country to be bailed out, using EU and International Monetary Fund loans. Since then the German-led path of aid in return for reforms and debt cuts has seen 396 billion euros ($538 billion) committed to the region’s four most fragile economies, with an additional 100 billion euros pledged for Spain’s banking sector. The bloc has endured the longest recession in its history and unemployment has reached record levels.
Government bonds in the euro-area’s most indebted nations have rallied this year, pushing Portugal and Ireland’s 10-year yields to the lowest since 2010 and 2006 respectively, as recovery sign’s in the region have boosted demand for higher-yielding debt.
Portugal expects to restart bond auctions in the first half of 2014, its debt agency said yesterday, after selling one-year bills at the lowest yield since November 2009. Greece’s Stournaras said last week that the government may sell five-year notes in the second half of the year, for the first time since being shut out of the bond markets in 2010. It would follow Ireland, which sold bonds last week for the first time since completing its bailout program.
Greek 10-year yields have dropped 68 basis points this year to 7.74 percent, after touching 7.53 percent on Jan. 13, the lowest since May 2010. The yield on similar-maturity Portuguese securities reached the lowest since August 2010 at 5.07 percent yesterday.
EU lawmakers questioned whether the so-called troika, comprising the European Commission,European Central Bank and IMF, which sets conditions for the countries receiving bailouts and monitors their progress, should have been more accountable and could have prevented the most painful effects of austerity. The European Parliament’s economic and monetary affairs committee is today discussing the responses received about the troika’s work.
European lawmakers will continue to work to make the troika more accountable, EU Parliament President Martin Schulz said on Twitter yesterday. Schulz is a member of Germany’s Social Democrats, the junior partner in the country’s coalition government.
While finance ministries and central bankers said that the hardships associated with the bailout conditions could not be ignored, they said they backed the process.
“The program, although rigorous and painful, is the only way that will enable the country’s exit from the crisis,” Cyprus’s central bank said in its letter to the 28-nation European Parliament.
Portugal’s finance ministry said that it “remained convinced” a bailout program had been inevitable and that “on the whole it remains a suitable and rational response to the crisis of credibility threatening our country.”
Ireland’s bailout-program exit last month and its return to financial markets “confirms that our strategy of providing assistance to euro-area countries that requested it in return for strict conditionality is working,” Jeroen Dijsselbloem, the Dutch finance minister who chairs meetings of his 17 euro-area counterparts, said in his letter to EU lawmakers.
He said that while growth is returning to the euro area and the economic outlook is improving “a number of important challenges remain, most importantly unacceptably high levels of unemployment.”
Ireland’s bailout program can be considered a success, Michael Noonan, Ireland’s finance minister, said in his response to the parliament. Even so, unemployment is still high, economic growth has returned more slowly than predicted and the country’s overall level of debt remains elevated, with a peak of slightly over 120 percent of gross domestic product expected this year.
Europe’s second largest economy and crucial to the core founding partnership of the euro project, France, has seen its unemployment rate rise unceasingly for 9 quarters in a row now. At 11.03%, French unemployment has not been higher since Q3 1997. Of course, President Hollande, despite falling PMIs and rising unemployment is hopeful that things are turning around as he notes, France is “now in a phase of stabilization that remains very fragile.” Some optimism can be taken from the relative stability in youth unemployment for a change but the over-50s unemployment reached an all-time high of 8.2%.
Europe Stuns With “Surprising” Record High Unemployment Print, Inflation At 4 Year Low; Euro Tumbles | Zero Hedge
Broken down by country:
And yes, that sudden housing mecca for all rental condo flippers, Spain, was just found to also have a record high unemployment rate of 26.6%. So much for that.
But the worst print for Europe is not in any of the above charts or tables, but is and has always been its youth unemployment, as an entire generation is unable to find a productive life. In this case, the EA17 Under 25 unemployment just rose to a new record high 24.1%, from 24.0% in August, driven by Spain at 56.5%, Cyprus 43.9% (was 28.0% a year ago – thanks template), Portugal at 36.9%, and Greece somewhere in the 58% ballpark.
Finally, rounding out the abysmal picture was the Euro area’s just reported October CPI, which tumbled to 0.7%Y/Y, down from 1.1% in September and below the 1.1% expected. This was the weakest annual inflation print in the continent since 2009, and is a bright red flag for Draghi that everything he has done so far has failed to stimulate inflation, but at least his precious EUR is at 2 year highs against the dollar. Alas, not for much longer as the time to reprice the European currency has arrived.
End result of all of the above:
And going much lower.
Anti-austerity protesters in Rome threw eggs and firecrackers at the Finance Ministry during a march Saturday to oppose cuts to welfare programs and a shortage in low-income housing. Police said 11 people were detained.
More than 4,000 riot police were dispatched to maintain order as some 25,000 protesters marched through the capital on Saturday. There were moments of tension when demonstrators passed near the headquarters of an extreme-right group, but police intervened when a few bottles were thrown.
Later, demonstrators threw eggs, firecrackers and smoke bombs outside the Finance Ministry. Police reacted by dispersing the protesters, detaining 11 of the demonstrators. There were no reports of injuries.
Ahead of the march police detained some anarchists believed to pose a security threat.
The protests were accompanied Friday by a 24-hour nationwide strike that caused disruptions for travellers. Train service was guaranteed in most cities for morning and evening commutes, but airports in Rome, Naples, Milan and Bologna had to cancel some flights. Some school and health workers also went on strike.
The USB and COBAS unions organized Friday’s strike to protest austerity measures reducing transportation budgets. USB union co-ordinator Pierpaolo Leonardi accused the Italian government of imposing EU directives without concern for the impact on workers.
A smaller protest of about 600 workers was held in Milan.
- PHOTOS: Anti-austerity protest rips through Rome (photos.denverpost.com)
- Anti-austerity protesters throw eggs, firecrackers outside Finance Ministry in Rome (globalnews.ca)
- Italian anti-austerity protesters clash with police (scooprocket.com)
- Tens of thousands clash with Italian police in anti-austerity protests (theglobeandmail.com)
- Italian protesters take on police during mass march against austerity budget (PHOTOS) (giftoftruth.wordpress.com)
Thousands of Portugese took the streets of Portugal’s two most populated cities to demonstrate against planned cuts of pensions and salaries.
Saturday’s demonstrations are a response to the government’s decision to extend austerity measures in the 2014 budget.
In Lisbon, hundreds of buses slowly crossed the April 25th bridge in a protest organised by Portugal’s main labor group, the General Confederation of Portuguese Workers. In the northern city of Porto, thousands gathered in the main square shouting anti-austerity slogans.
Portugal, currently engaged in an international aid programme, is focusing next year’s fiscal efforts on spending cuts, reducing state pensions and cutting public workers’ wages.
Unemployed teacher Sofia took part in the protest to ask for government resignation.
“I’m here to fight for more work and better wages and against this government’s austerity measures, so I want them to leave together with the Troika,” Sofia said referring to the trio of European Commission, International Monetary Fund and European Central Bank in charge of handling bailouts of distressed euro zone countries.
“I am a retired civil servant and I’m suffering from the cuts. I worked and studied to earn more than 2,500 euros without any government help and now they are cutting my pension,” pensioner Maria Barreto said.
The country’s 78-billion-euro bailout formally ends in mid-2014 when Portugal should return to financing itself normally in bond markets, which it stopped doing in 2011 when its debt crisis first hit.
Seeking a better future Ricardo Pereira travelled from Torres Novas to Lisbon: “I’m here to fight for a better future for me and for the next generation and against this government’s austerity measures.”
The budget aims to slash the budget deficit to 4 percent of GDP next year from 5.9 percent in 2013. It may still face challenges from the Constitutional Court that has previously rejected some government austerity measures.
- IMF approves $ 5.3 billion bailout package for Pakistan (nation.com.pk)
- IMF Posts Negative Report About Italy (247wallst.com)
- IMF Cheats on Greece Debt and Bailout (econmatters.com)
- Bolivia President’s Evo Morales Treated Like A Common Thug in Europe (atlantablackstar.com)
- Bolivia’s Morales Dissed and Pissed as France, Portugal, and Austria Violate Diplomatic Immunity (dissidentvoice.org)
- Latin America outraged over Morales’ European pat down (csmonitor.com)
- Portugual’s workers set for general strike (socialistworker.co.uk)