Friday, January 13, 2012

S&P downgrades nine euro countries

The Standard & Poor's ratings agency has carried out a mass downgrade of more than half of the euro zone countries.

S&P stripped France and Austria of their top AAA ratings on Friday in a move that may complicate efforts to solve a two-year old European debt crisis.

Those were just two of the nine member-states of the euro area that had ratings cut.

Besides France and Austria, Malta, Slovakie and Slovenia suffered a one-notch downgrade while Portugal, Italy, Spain and Cyprus were cut by two notches.

"What Standard & Poor's is saying is that the kind of measures European countries are proposing up until now simply may not be enough," Jackie Rowland, Al Jazeera's correspondent in Pairs, said.

The downgrades come as crucial talks on cutting Greece's massive debt pile appeared close to collapse on Friday.

A pact being negotiated to tighten budgetary discipline is not a breakthrough for the eurozone's problems and may lead to self-defeating fiscal austerity, Standard & Poor's.

The pact, which EU leaders agreed to negotiate at a December 9 summit, "has not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems," S&P said as it announced the downgrades.

S&P reaffirmed the ratings of Belgium, Estonia, Finland, Germany, Ireland, Luxembourg and the Netherlands.

The agency said that of the 16 countries reviewed, all save Germany and Slovakia have negative outlooks, meaning more downgrades are possible in the next couple of years.

It also said that while Italy's downgrade reflects increasing vulnerabilities to external financing risks and their negative implications on economic growth, Germany's AAA rating reflects a track record of prudent fiscal policies and spending discipline, with the ability to absorb large economic and financial shocks.

Global impact

Markets in Europe and the US plummeted earlier on Friday after a European Union official disclosed Standard & Poor's decision.

Previously, France was, along with Germany, Luxembourg and the Netherlands, among the six eurozone nations with a AAA rating.

Friday's developments sent the euro currency spinning down to a 17-month low against the dollar.

The widespread downgrade could have far-reaching implications, potentially complicating the ability of Europe's bailout fund, the European Financial Stability Facility (EFSF), to provide support to struggling countries.

Responding to the downgrade, the head of the Eurogroup said in a statement that the eurozone is determined to protect the triple-A credit rating of its bailout fund.

"The shareholders of the EFSF affirm their determination to explore the options for maintaining the EFSF's AAA rating," Jean-Claude Juncker, Luxembourg's prime minister, said.

France is a major contributor to the EFSF.

Europe's crisis sprang from worries that countries had taken on more debt during boom years than they could pay back once their economies slowed

US to restore full ties with Myanmar

Hillary Rodham Clinton, the US secretary of state, has announced that Washington will exchange ambassadors with Myanmar in response to its freeing of political prisoners and other reforms.

Clinton announced the move on Friday after state media announced that Thein Sein, Myanmar's president, had issued a pardon and freed 651 detainees, included some of the country's most famous political inmates.

In a statement, US President Barack Obama described the pardons as "a substantial step forward for democratic reform".

The decision follows a landmark visit by Clinton to Myanmar in December, seen by the US as a way of deepening engagement and encouraging more openness there.

Speaking to Al Jazeera from Washington, Win Min, a Myanmar activist and former student protest leader, described the exchange of envoys as "very significant".

"It is important because the US and other Western governments may now roll back some of their sanctions [on Myanmar]," said Min, who added that restored ties would also balance China's growing influence in the country.

'Political courage'

As the Obama administration looks to step up US involvement across the Asia-Pacific region, it has shifted from Washington's long-standing policy of isolating Myanmar's military government because of its poor human rights record.

"As I said last December, the United States will meet action with action. Based on the steps taken so far, we will now begin," Clinton said.

The highest level US diplomat based in Myanmar has been a charge d'affaires.

Washington downgraded its representation in 1990, when opposition leader Aung San Suu Kyi's party swept elections but was barred from power by the military.

Also on Friday, Nicolas Sarkozy's office said the French president had decided to give France's highest award, the Legion of Honor, to Suu Kyi.

Sarkozy hailed Suu Kyi's "political courage" and expressed support for the Myanmar's recent reforms.

Alain Juppe, French foreign minister, will be charged with giving Suu Kyi the award during his trip to Myanmar on Sunday and Monday.

Clinton said the US would identify further steps it could take to support reforms, but gave no specifics. 

Among the other recent moves by the government that she commended was its reaching a ceasefire with the Karen National Union, stopping a long-running ethnic conflict.

'Historic' steps

The US currently maintains tough political and economic sanctions against Myanmar, which heavily restrict trade, investment and foreign aid.

The Myanmar government is still dominated by the army, but it has freed Suu Kyi and begun a dialogue with her while easing restrictions on media and trade unions.

Clinton said having an ambassador would help the US to deepen its ties with Myanmar's people and government and support "the historic and promising steps that are unfolding".

She cautioned that posting the ambassador would be a lengthy process and would depend on continued progress toward reform.

Myanmar's own diplomatic representation in Washington also currently is a step below the level of ambassador.

Clinton urged Myanmar to release its remaining political prisoners and make their release unconditional, address concerns of ethnic minority groups and hold free and fair by-elections that Suu Kyi's party will contest on April 1.

She said she would call Suu Kyi and Thein Sein this weekend "to underscore our commitment to walk together with them on the path of reform".

Nigeria protests on hold as oil strike looms

A nationwide strike and mass protests has shut down Nigeria for a fifth day, but union leaders have called for a weekend pause in demonstrations as talks sought to avert a halt in oil production.

It was announced on Friday that the first round of negotiations between labour leaders and top government officials, including President Goodluck Jonathan, had failed to reach a deal on Thursday night over soaring fuel prices.

The main oil workers' union has threatened to shut crude production beginning on Sunday if the government does not reverse a move that ended fuel subsidies on January 1, more than doubling pump prices in Africa's top crude exporter.

Labour officials have said the government had offered to reduce petrol prices to 120 naira per litre [$0.74], down from the current 140 [$0.93] or more, but unions have not yet accepted the proposal.

Al Jazeera's Haru Mutasa, reporting from the Nigerian city of Kano, said the removal of the fuel subsidies was a heavy blow.

"You can't abruptly remove something people are used to, especially when many believe the [subsidies] are the only benefit they get from living in an oil-rich country," Mutasa said.

Unions have said that until a deal is reached, the proposed strike by oil production workers on Sunday is still on. More talks are set for Saturday.

According to union sources, protests are suspended so people can rest in case a deal is not agreed at the weekend and they need to protest more next week,

Union officials said the pause in talks until then was to allow for labour officials from across the country to gather in Abuja and discuss the way forward. 

With domestic flights grounded, they would be forced to come by road.

Sunday shutdown

World oil prices moved higher in Asian trade on Friday over concerns that Nigerian supplies could be hit by the planned oil strike.

Although strikes have paralysed Africa's most populous country, and brought tens of thousands of people on to the streets, oil workers have so far not moved to halt output of crude, the country's economic lifeline.

Babatunde Ogun, president of the 20,000-strong PENGASSAN oil workers' union warned that "from Sunday, we are shutting down".

The blue-collar union NUPENG had already joined the strike.

"A shutdown of oil production in Nigeria means a potential loss of at least three per cent of global oil production," said Kayode Tinouye, an analyst with Lagos-based Afrinvest.

OPEC member Nigeria produces more than two million barrels per day and is a key supplier of crude to the US and European Union.

Inadequate infrastructure

Protests pushed ahead on Friday, including thousands in the economic capital Lagos, where Muslims held prayers at the main protest ground.

Since demonstrations against the subsidy cuts started, hundreds of thousands of people have staged protests in cities across Africa's largest crude oil producing country, with at least  three people reported killed in the demonstrations.

Abdulwahed Omar, Nigeria Labour Congress president, on Friday told a rally in Abuja that Monday will see "the mother of all crowds" if the government does not backtrack.

Government officials and economists say removing subsidies was essential and will allow much of the $8bn per year in savings to be invested into projects to improve the country's inadequate infrastructure.

"The government argues that the money they will save [by removing the subsidies] will go to the country, some people believe that and some don't," said Mutasa.

"Many are concerned the money will simply line the pockets of some corrupt officials."

Syrians rally in support of army defectors

At least 13 people have been killed in Syria, including three children, activists told Al Jazeera, as nationwide protests against the government continued across the country.

The Local Co-ordination Committee activist network reported on Friday that six of those killed died in the central city of Homs.

Rallies were held in support of the Free Syrian Army (FSA), a group of military defectors who switched sides to try to topple President Bashar al-Assad.

Speaking to Al Jazeera from the al-Khaldiyeh neighbourhood in Homs, Abu Rami al-Homsi said that 49 protest points were identified in the city and its suburbs on Friday.

"There were large protests in Karm al-Zeitoun and Karm al-Shami and a large sit-in in al-Khaldiyeh. These were all dispersed brutally by security forces," he said.

On holding protests in support of army defectors, Homsi said: "We wanted to thank the Free Syrian Army, the only protectors of Syrian protestors after God.

"We also wanted to encourage those soldiers still hesitant to defect from the Syrian Army and side with us."

Meanwhile, in the town of al-Zabadani, 30km northwest of Damascus, activists said that troops stormed the area backed by tanks, but were met with resistance.

Clashes with army

Kamal al-Labwani, a senior opposition figure from the town who fled to neighbouring Jordan two weeks ago, said: "Communications have been cut but we managed to get through to several people.

"Tanks are bombarding the town and have entered the outskirts, but they are being met with resistance. The Free Syrian Army has strong  presence in the area.

"The people of Zabadani have taken up arms to protect themselves and I am afraid we could see lots of casualties. 

"At least 50 tanks are involved in the attack and explosions are already being heard in residential areas."

The latest reports of violence came a day after Burhan Ghalioun, the leader of the opposition Syrian National Council (SNC), held discussions with Colonel Riad al-Asaad, the FSA leader, to assess the group's needs.

"The parties agreed to formulate a detailed plan, to include the re-organisation of FSA units and brigades, and the creation of a format to accommodate within FSA ranks additional officers and soldiers, especially senior military officials, who side with the revolution," a SNC statement said.

Although it is impossible to verify how many army defectors are fighting Assad's regime, Colonel Asaad claims there are thousands of former soldiers in his ranks.

Fears of 'civil war'

Meanwhile, activists in Kilis, in neighbouring Turkey, began staging a two-day hunger strike near the border with Syria on Friday to protest against the Syrian government's refusal to allow them entry to deliver aid and medical supplies for victims of the deadly crackdown on dissidents.

Syrian border guards turned away the convoy of about 150 Syrian expatriates attempting to cross from Turkey into Syria on Thursday.

Moayed Skaif, a member of the "Freedom Convoy", said on Friday that group members are refusing food in a bid to protest against Syria and to force Turkey into pressuring Damascus into allowing the aid into the country.

Nabil el-Araby, the head of the Arab League, told the Egyptian Al-Hayat television channel on Friday that he feared a possible civil war in Syria that could have consequences for neighbouring countries.

"Yes I fear a civil war and the events that we see and hear about now could lead to a civil war," said Araby, whose body deployed monitors on December 26 to check whether Syria was respecting an Arab peace plan.

"Any problems in Syria will have consequences for the neighbouring states," Araby said.

He described reports from the mission head as "worrying", but said there was "no doubt that the pace of killing has fallen with the presence of the observers".

Assessment of violence

Araby's comments came as the credibility of the league's monitoring mission was hit by members starting to walk out, apparently because the operation had failed to halt the government's violent crackdown on protests, a former monitor said.

The monitors resumed work on Thursday, a league official said, for the first time since 11 were injured by pro-Assad demonstrators in the port of Latakia three days previously, an attack that also sidelined plans to expand the team.

There have been renewed calls for an independent assessment of violence in the country following the death of a France-2 television cameraman during a government-sponsored trip to Syria on Wednesday.

The French government, human rights groups and the opposition demanded an independent investigation into the killing of Gilles Jacquier while filming a pro-government rally in Homs.

Jacquier's body arrived back in France on Friday morning and an autopsy was to be carried out later in the day.

He was the first Western journalist to be killed in the 10-month-old uprising. Syria's government and the country's opposition continue to trade blame for the incident.

Guatemala congresswoman gunned down in capital

A Guatemalan congressman has been killed in his car within blocks of the legislative assembly where a new president and parliament will take power on Saturday.

Oscar Valentin Leal Caal, who defected this week to the party of the incoming president, was shot dead along with his brother on Friday when two assassins on a motorcycle pulled alongside his gray SUV and pelted the vehicle with at least 17 bullets, police said.

Leal and his brother were outside the headquarters of his current Democratic Freedom Revival party in downtown Guatemala City when the attackers struck.

President-elect Otto Perez Molinaerez told the Prensa Libre newspaper that Leal had been receiving death threats for discussions about joining Perez' conservative Patriotic Party.

Perez, who will be sworn in on Saturday, has vowed to boost the number of police and send the military to fight the Mexican drug cartels who use the country's porous border region as a smuggling route for cocaine.

Crime fighter

Political violence is common in Guatemala and 43 people were killed in the 2011 elections, including municipal and
congressional candidates, according to the office for human rights.

Perez's party won 58 seats in last September's elections to form the largest block in the 158-member unicameral congress, but lacks the two-thirds majority needed to ensure policies pass swiftly.

He has been talking with lawmakers from rival parties to lure them to his party.

Leal, an attorney, had served as a congressman for the Renewed Democratic Liberty party in the last administration.

He was to represent the northern province of Alta Verapaz, where in December 2010 the government declared a 60-day "state of siege" that suspended constitutional rights as state forces raided homes and businesses in search of powerful organised crime bosses.

Chief investigator Fernando Gomez said the killers had fled the scene of the shooting, which also wounded Leal's bodyguard.