Eurozone crisis: Spanish fears send euro near to two-year low against dollar

Currency hit as concerns grow about solvency of Spanish banks and central bank governor reveals decision to step down early

The euro sank to a near two-year low against the dollar on Tuesday amid worries about the solvency of Spanish banks, and as the governor of the country’s central bank quit. The single currency fell below $1.25 after rating agency Egan-Jones cut the country’s credit rating. Against the pound it was worth 79.95p.

Miguel Ángel Fernández Ordóñez, governor of the Bank of Spain, will step down on 10 June, a month earlier than expected, the central bank said.

The decision came amid fierce criticism from the ruling People’s party over the central bank’s role in failing to deal quickly enough with the toxic real estate problems of Spanish banks. The government has invited external auditors to value bank assets, in effect bypassing the central bank. The government is expected to ask central bank board member Luis María Linde to take over.

Spain’s borrowing costs are near euro-era records amid worries about when the country will recover from its second recession in three years and start cutting its 24% unemployment rate. Retail sales fell 9.8% in April compared with March, figures showed on Tuesday. It was the biggest monthly drop since the statistical series began in 2003, underlining the impact of government austerity measures. Sales in April were 11.3% lower year on year.

Spain’s leading Ibex 35 share index fell 2.3% to 6,251.70. Troubled lender Bankia sank 16.3% after several brokers cut their ratings on the stricken bank, which had tumbled 13% on Monday after its €23.5bn (£18.8bn) rescue announced on Friday.

As markets fretted about Spain, policymakers in Brussels struggled to reach a consensus on how to tackle the crisis. The European commission is to deliver economic and fiscal policy prescriptions for the eurozone countries on Wednesday amid intense speculation that Spain will need to be given a longer and looser timeframe for budget deficit reduction.

With Ireland voting in a referendum on the eurozone’s German-pushed fiscal pact on Thursday, Spain’s growing banking predicament, and Greece’s standoff with Brussels deepening with elections less than three weeks away, Wednesday’s verdict from the commission is anxiously awaited by governments and the markets.

The air of last-minute uncertainty was heightened when commission officials admitted they had no idea when the results of the scrutiny of national budget figures and the resulting policy recommendations would be revealed.

Pictured: Bank of Spain governor Miguel Angel Fernández Ordóñez. Photograph: Susana Vera/Reuters

Poland Emerges as a Central European Powerhouse

Germans used to think of Poland as a country full of car thieves and post-communist drabness. On the eve of hosting the European Football Championship, however, the country has become the most astonishing success story in Eastern Europe. Relations between Berlin and Warsaw have never been better.

There are cities that are as uninteresting as the stone they are made of, rigid and heavy, done up as stylishly as if they had been completely untarnished by the vagaries of history. And then there are the other kinds, the raw, rough, unfinished and exciting cities of the world.

Warsaw is one of those cities, a place that seems to crackle and groan in all of its unfinished glory. No one would dream of calling the Polish capital a beautiful place. But how much it breathes history, how many critical, comforting and tragic things it says about the course of time to those who not only contemplate but also scrutinize its building blocks is evident in many of its structures. It is especially evident in the new football stadium in the Saska Kepa quarter on the east bank of the Vistula River, the place that will transfix billions of people on June 8, the day of the opening match of the European football championships.

Warsaw, 68 years earlier, less than a stone’s throw away. Resistance fighters with the Polish Home Army are crawling through cellars, sewer tunnels and secret underground passages, rallying against the savage German occupiers. They strike out, armed with the courage of despair, and they manage to capture important parts of the city. They are counting on Stalin’s help, after hearing on Radio Moscow that the Soviets have promised to support them militarily. But instead the Soviet dictator orders his troops to sit tight and do nothing, in the exact spot where this year’s football championship is to take place. Stalin has no interest in self-confident Poles who liberate their capitals under their own steam. The Nazis massacre 180,000 Poles, and large parts of the city are reduced to rubble. The Russians eventually do liberate the Poles, their “sister people,” but not until January 1945 — on their own terms.

In 1955, the new Communist leaders serving at Moscow’s pleasure build the “Tenth Anniversary Stadium.” Sloppily constructed and soon too run-down for sporting events, for years the structure stands as a symbol of the decay of communism. In 1983, Pope John Paul II, a superstar for the Poles, celebrates a mass in the stadium. The choice of Karol Wojtyla to be the successor of St. Peter proves to be yet another important nail in the coffin for the communist system.

A Pioneer and Role Model

The site undergoes yet another transformation. Counterfeit CDs and bootleg liquor are sold within the stadium, and one of the biggest open-air markets in Eastern Europe becomes established in the stands. Starting in the mid-1990s, almost anything can be bought there: Kalashnikovs from Russia, black-market cigarettes from Ukraine and cheap clothes from China — and women from all over the world. In 2008, after the European football championship has been awarded to Poland and Ukraine, demolition of the stadium begins.

Construction is now complete. The modern venue for the European Championship has risen from the ashes of the old stadium, a dream in the Polish national colors, red and white, designed, ironically enough, by a German, covered with glass and complete with floodlights, video screens and a retractable roof in case of rain. The stadium, with a capacity for 50,000 fans, built out of the ruins, truly and conclusively oriented toward the future, is not just a building but a symbol. With this marvelous stadium, Poland wants to show the world its new face and prove that it has overcome the shadows of the past: the crimes of the Nazis, Communist oppression and the chaotic capitalism of the period after the fall of communism.

The country sees itself as a pioneer and role model for the “others” in the East. It wants to become a power in Europe and for Europe, thereby assuming what it has always believed to be its rightful place in the world. We are a country to be reckoned with, say the Poles in Warsaw, Gdansk, Wroclaw and Krakow.

Poland is one of the world’s few success stories since the fall of the Soviet bloc, a development that is particularly noticeable in comparison with other countries in Eastern Europe. One of those is Ukraine, the second host of the European Championship, plagued by human rights violations and ruled by an authoritarian regime. If Poland is Europe’s model pupil, Ukraine is its bad boy.

Pictured: Poland’s turn at hosting the European Football Championship couldn’t come at a better time for the country. It has experienced a sustained economic boom during the past several years and has left behind its post-Communist torpor. Here, the new national stadium, which will host the opening match of Euro 2012 on June 8. DPA.

Spain’s Bankia seeks 19bn-euro bailout from government

Spain’s fourth-largest bank, Bankia, has asked the government for a bailout worth 19bns euros ($24bn; £15bn).

The bank said that the “recapitalisation measures strengthen the group’s solvency, liquidity and stability”.

Earlier on Friday, trading in Bankia shares was suspended on the Madrid stock exchange while its management put together a restructuring plan.

The bank was part-nationalised because of problems with bad property debt.

Rating agency Standard and Poor’s has also lowered the credit rating of Bankia and four other Spanish banks.

The Spanish government has pledged to inject at least 9bn euros into the lender but added that more would be available if needed.

Shares in Bankia’s parent company Banco Financiero y de Ahorros (BFA) were also suspended.

Bankia had to reassure its savers last week that their money was safe after a Spanish newspaper reported a run on the bank.

Bankia was created in 2010 from the merger of seven struggling regional savings banks. It holds 32bn euros in distressed property assets.

Its shares fell 7.4% on Thursday to close at 1.57 euros, which is 58% down from their listing price in July 2011.

There have been four attempts by Spanish governments to shore up the banking system since the global banking crisis of 2008.

As part of the latest plan, lenders are having to make 30bn euros of extra provisions to cover potential losses on property loans, which comes on top of 54bn euros they were ordered to set aside in February.

Roma continue to face discrimination in Europe, report finds

The Roma minority continues to face hardship and discrimination in Europe, according to a report from European Union and United Nations agencies that underscores ongoing marginalization of the group, including forced evictions and violent attacks.

Four out of 10 Roma surveyed said someone in their household had to go hungry at least once in the past month because money was short. Nine out of 10 Roma, who also are known as Gypsies, live below the poverty line. And roughly half said they had been discriminated against as Roma in the past year, the report found.

All in all, “the results present a grim picture of the situation of the Roma surveyed,” the report said.

Roma were behind other Europeans in education, employment and housing, from Spain to Slovakia. Disadvantages for Roma were apparent across all 11 countries included in the surveys, which polled more than 22,000 households.

“That is precisely what we find most shocking. We would have expected to find significant differences, but from the responses of the Roma people themselves and their neighbors, we see few differences,” Ioannis Dimitrakopoulos of the EU Agency on Fundamental Rights told the BBC.

Earlier this month, Roma were forced out of a Belgrade settlement by masked attackers who shouted: “Serbia for Serbs! Roma out of Serbia!” the European Roma Rights Center reported. The attack echoed a long line of assaults across Europe in recent years reported by the group, including at the hands of police.

An earlier EU report three years ago found that Roma reported the highest levels of perceived discrimination among European minorities. In the new surveys, discrimination against Roma was reported most often in Italy, Poland and the Czech Republic, where more than 60% said they had faced discrimination in the past year. The least common was Romania, where more than 25% said the same.

Though there are laws banning job discrimination against Roma, in most countries fewer than half of Roma were aware of them.

Pictured:  Protesters gather at a construction site for a future Roma settlement on the outskirts of Belgrade, Serbia, in April. Residents of the suburb clashed with riot police during protests against the city’s plan to relocate homeless Roma from a shantytown in the city center into their neighborhood. Credit: Marko Drobnjakovic/Associated Press

Russia lawmakers advance bill on penalties for protesters

The bill, which drew protest from opposition lawmakers, calls for fines of up to $50,000 and community service for organizers of rallies that break rules.

EU summit: Merkel challenged on growth strategy

EU leaders have started summit talks in Brussels with Germany resisting pressure to launch eurobonds as a way to ease the eurozone crisis.

Germany’s Chancellor Angela Merkel said the bonds, pooling eurozone debt, would violate EU treaties and would “not contribute to kick-starting growth”.

France’s President Francois Hollande says he wants discussion of eurobonds - and the Irish PM Enda Kenny said the idea would be on the table.

The summit is focusing on growth.

European stock markets fell about 2% amid anxiety that Greece might have to exit the euro. The eurozone is said to be preparing for such a scenario.

Ms Merkel said Wednesday’s informal talks would not result in decisions, but would influence formal summit talks in late June.

The leaders would look at ways to deepen the EU internal market, boost mobility in Europe’s labour market and better target European Investment Bank funding for projects. Such measures could help stimulate growth, she said.

It is the first opportunity for President Hollande to shift the emphasis from austerity to growth - a key message he gave to French voters, who elected him on 6 May. The Socialist leader’s victory is seen as a challenge to the prevailing austerity drive in the EU.

Pictured:Mr Hollande is pressing Germany to do more to ease the eurozone’s debt burden

Former extreme nationalist becomes Serbian president

Surprise victory of former hardline nationalist over incumbent Boris Tadic could delay Serbia’s accession to EU

Serbia’s hopes of fast-track integration into Europe suffered a severe setback when President Boris Tadic was voted out of office in a victory for a more nationalist rival in the latest European election to kick out an incumbent.

With most of the vote counted, Tomislav Nikolic, a former strident nationalist, took the presidency from the pro-western Tadic by two to three percentage points.

The outcome confounded the pre-election opinion polls and expectations in Brussels, and could also condemn Serbia to a period of political paralysis, with a rightwing president “cohabiting” with a centre-left-dominated government. Parliamentary elections a fortnight ago delivered a mixed verdict, with no clear majorities.

Tadic, the west’s preferred candidate, failed to win a third presidential term, but could still become prime minister if his Democratic party cobbles together a parliamentary majority. This would portend endless feuding between the head of state and the head of government.

But Tadic promptly conceded on Sunday night, apparently deciding that the election defeat meant he could not be prime minister. Under Tadic, Belgrade recently won a green light to start the long route to EU membership. It had hoped to begin negotiations later this year.

An early start to talks, however, is now less likely, with Nikolic, a former leading light in an extreme nationalist party headed by a war crimes suspect, less likely to make the concessions on the breakaway country of Kosovo that Brussels will deem necessary for opening negotiations.

“Serbia will keep the EU path but also protect Kosovo. Serbia is a modern country – I will co-operate with everyone,” said Nikolic.

Pictured: Tomislav Nikolic, the president-elect of Serbia, has promised that ‘Serbia will keep the EU path’. Photograph: Marko Drobnjakovic/AP

Police detain 400 “Blockupy” activists in Frankfurt

(Reuters) - German police said they detained 400 anti-capitalist protesters in Frankfurt on Friday for defying a ban on demonstrations against austerity policies implemented to tackle the intensifying euro zone debt crisis.

The demonstration in the German financial capital was part of a four-day-long “Blockupy” protest, due to run until Saturday, against capitalism and austerity measures.

“Hungry? Eat a banker,” read one banner protesters held up outside the Messeturm skyscraper housing Goldman Sachs’ offices. Reuters’ Frankfurt office is also in the building.

Police closed several main roads in Frankfurt - including a main artery into the city that passes by the Messeturm - and flooded the center with officers. There was no violence.

The protesters are angry at the misery they say governments are inflicting on people with their response to the crisis, which has intensified since inconclusive elections in Greece this month fueled concerns about its future in the euro zone.

“The Greek austerity measures are making Greece go kaputt even faster,” said protester Leonard Loch, 37, from Hamburg.

The European Central Bank reported no trouble on Friday and commercial banks, many of whom have made contingency plans to cope with the protests, said their operations were running smoothly.

“Our operating business is not curtailed. We were well prepared,” said a Commerzbank spokeswoman.

Pictured: Protesters march during an anti-austerity demonstration in Frankfurt May 18, 2012. Credit: REUTERS/Kai Pfaffenbach

Merkel ‘suggests Greek referendum on euro membership’

Germany’s leader has had telephone contact with the Greek president, amid continuing speculation that his country may have to leave the eurozone.

Greek officials said Chancellor Angela Merkel had suggested Greece could hold a referendum on the euro when it votes in national elections next month.

However their German counterparts denied she had made such a proposal.

The crisis in the eurozone is expected to dominate G8 talks in the US this weekend.

The reports of the German-Greek contacts came as US and French leaders ended talks in Washington focusing on the economy.

‘Shared conviction’

In a telephone call with President Karolos Papoulias, Mrs Merkel “conveyed thoughts about a vote parallel to the election with the question to what extent do the Greek citizens wish to remain within the eurozone,” said a statement from the office of Greece’s interim prime minister.

“However, it is clear that the matter is beyond the competence of the caretaker government,” the statement went on.

But a spokeswoman in Berlin said: “The information reported that the chancellor had suggested a referendum to the Greek President Karolos Papoulias is wrong.”

The caretaker government was sworn in this week after elections failed to produce a viable coalition to run the country.

New elections have been scheduled for 17 June.

Portuguese Find Oasis from Crisis in Former Colony

Headhunters in Lisbon are currently lining up highly skilled Portuguese workers for good paying jobs in Angola, an African country currently experiencing enviable growth. There is no economic crisis in the former Portuguese colony and it offers something that is currently scarce in Portugal: jobs.

What does a Portuguese father of four school-age children do when he makes only €900 ($1,141) a month?

He decides to emigrate.

That’s why António Sàágua, 45, a soon-to-be economic migrant, is sitting in the stark gray office of Ema Partners International on a sunny spring afternoon. The employment agency, located on a quiet side street off of Lisbon’s grand Avenida da Libertade, places skilled personnel and managerial staff. Sàágua is dressed as if he were going for a job interview, in a suit, a starched shirt, gold cufflinks and polished shoes.

The applicant has a lot to show for himself, including a degree in ergonomics and a doctorate in marketing management. He teaches at a leading business school in the Portuguese capital. He also has 20 years of experience as a team leader in the healthcare industry. “I was a pioneer in organizing work processes for my clients in ways that made more sense while saving costs at the same time,” he says with a thin smile. But despite his qualifications, he is earning less than €1,000 a month in his current job, which involves reorganizing a hospital near Lisbon. It means that he can no longer afford to send his children to a private school and keep the family’s centrally located apartment, which has a view looking out over blossoming trees.

Jorge Fonseca, 42, slaps Sàágua on the back and greets him as “amigo.” On this day, he will train his “friend” in one of the agency’s secluded offices for his upcoming job interviews. Fonseca, wearing gold-rimmed glasses and looking overdressed in a dark blue suit, approaches all of his clients with the same cheery demeanor. He is their “career coach,” which includes digging up about 1,000 potential employers from the company’s database for each of his clients and fine-tuning their application documents. An economist with contacts around the world, Fonseca dashes back and forth between the laptop on his desk and the conference room, printing out lists of contacts and abbreviated versions of the leading career advice books published abroad. He is obsessed with the details as he prepares Portuguese executives for a new professional future.

For most of them, that future will be far away from home, and increasingly in Angola, Portugal’s former colony in southwestern Africa. More than 10 percent of the clients busy headhunter Fonseca has successfully placed in the last year have gone to Angola. Sàágua, too, can imagine a future for himself as a healthcare executive in Angola. In the pharmaceutical industry, for example, he is receiving offers with monthly salaries of €8,000-10,000.

Pictured: Boomtown Luanda in Angola: Since a peace agreement was signed 10 years ago, the country has developed into a major African oil producer. The former Portuguese colony is on the rise. Amidst the backdrop of the economic crisis in Europe, many Portuguese are taking advantage of Angola’s economic opportunities. Close to 150,000 Portuguese have already obtained visas for Angola.

South Sudan troupe sees new country’s struggle in Shakespeare

South Sudan Theatre Company performs ‘Cymbeline’ in Juba Arabic for the Globe to Globe festival in London to acclaim. The play resonates for them.

LONDON — Posthumus, the protagonist of Shakespeare’s “Cymbeline,” marched through the Herculean columns of the Globe theater, stopped abruptly at the front of the stage and looked up at an audience of hundreds — most of whom didn’t speak a whisper of the language they were about to hear.

His voice boomed, and he raised his arms and curled his hands into fists. “All these people have come from the newest country in the world,” shouted actor Francis Paulino Lugali in Juba Arabic, “and this country is South Sudan!”

And so with bells around their ankles, makeshift props and rushed rehearsals, the world’s newest country made its mark on the world stage when a humble but talented troupe performed “Cymbeline” on one of theater’s most hallowed grounds.

The show is part of a pre-Olympics festival called Globe to Globe running through early June. After it’s all over, the open-air replica of Shakespeare’s original theater on the banks of the River Thames will have hosted the playwright’s 37 plays by groups from dozens of countries in a kaleidoscope of languages.

They include: “Richard II” in Palestinian Arabic, “Macbeth” in Polish, “The Merchant of Venice” in Hebrew, “Hamlet” in Lithuanian, “A Midsummer Night’s Dream” in Korean and a hip-hop remix of “Othello” by the Chicago Shakespeare Theater.

For the South Sudan Theatre Company members, who earned standing ovations and four of five stars from the British newspaper the Guardian for their performance, the triumph is especially meaningful as their fledgling nation tries to emerge from violent conflicts that have consumed its recent past and threaten its future.

South Sudan formally separated from its northern neighbor in July, but the two countries are now sliding toward a ruinous war over their contested border and precious oil reserves and pipelines.

Many of those involved in producing “Cymbeline” earlier this month said the northern government has tried to portray the south as incapable of running its own country. They said the performance was a way — albeit a small one — to prove they could stand on their own two feet.

“As a new country, we want to develop a new culture,” said Cirino Hiteng Ofuho, the South Sudanese minister of culture, youth and sports, who traveled to England to mingle with British officials and watch the play.

“This is really an introduction of a new nation, in Shakespeare,” Hiteng Ofuho said.

Pictured: Aviragus (Malai Maluak) prays over Innogen (Margaret Kowarto) in the South Sudan Theatre Company’s well-received production of “Cymbeline.” (Ari Bloomekatz / Los Angeles Times / May 16, 2012)

theeconomist:

KAL’s cartoon: this week, a sculpture.

Greeks withdraw €3bn in 10 days since election

Greece’s savers making daily bank visits as analysts warn faster capital flight could push country out of euro before June’s poll

Greeks have withdrawn €3bn (£2.4bn) from the banking system since the country’s inconclusive elections on 6 May, with tellers saying savers were making two or three visits a day to local banks.

Savers fear Greece leaving the eurozone and returning to the drachma. An aide to the outgoing prime minister, Lucas Papademos, said there were “serious fears that the banks were running out of money”.

Greece’s president, Karolos Papoulias, warned on Monday that €700m had been withdrawn but said he had been assured by the governor of the Greek central bank, George Provopoulous, that there was no panic yet.

According to minutes of a meeting on Monday, Papoulias said: “Withdrawals and outflows by 4pm when I called him [Provopoulous] exceeded €600m and reached €700m. He expects total outflows of about €800m, including conversions into German bunds [bonds] and other such things.”

Greeks have been slowly withdrawing cash from the banking system ever since the country first needed a bailout two years ago. Nearly a third of bank deposits were withdrawn between January 2010 and March 2012.

A crucial €18bn cash injection to stabilise Greece’s banks has been held up at the European financial stability fund’s Greek offshoot, the Hellenic financial stability fund (HFSF), for nearly two weeks with officials in Brussels refusing to release the funds because of the political instability in the wake of the elections. That had still not been released by tonight and is now not expected to be released for another four days despite the efforts of the Papademos government to expedite the recapitalisation of Greek banks.

The delay to the recapitalisation was said to have forced the European Central Bank to stop dealing with some Greece banks, leaving local banks to receive funding from the central bank until the banks received their cash injection.

Pictured:Greeks are withdrawing large amounts of money fearing their country will leave the eurozone and return to the drachma. Photograph: Phil Noble/PA

It’s a messy business for these German riot police carrying a demonstrator covered in paint as they clear the camp of Occupy protesters in front of the European Central Bank in Frankfurt.

Photograph: Kai Pfaffenbach/Reuters

(Source: Guardian)