News & Reports News Year 2010 June , 2010 8th June 2010

8th June 2010

Transport
Iran-Turkey-Pakistan railway to begin

The cargo rail system between Iran, Turkey and Pakistan will begin regular operations by next August.Pakistani Minister of Railways Haji Gholam Ahmed Billour announced that the tri-nation cargo railway will inaugurate August 1, 2010, when Turkey is to launch the first cargo train in Istanbul destined for Islamabad, Fars News Agency reported Sunday.

Billour added that following the initial trip, regular transport of cargo trains will continue to operate between the three countries.

The remarks by the Pakistani official came in an address to the country's parliament, according to the report.

Billour also emphasized Pakistan's interest in expanding his country's rail communications with Iran and Turkey.








International Trade
Iran denies 45bn euro conversion

The head of the Central Bank of Iran (CBI) has denied reports that the country is converting 45 billion euros from its reserves into dollars and gold ingots.


A Wednesday report carried by Iranian daily Jaam-e-Jam said the country planned to sell 45 billion euros from its foreign exchange reserves in reaction to the eurozone debt crisis.

Iranian newspapers on Sunday quoted CBI Governor Mahmoud Bahmani as dismissing the report as "incorrect."

The reported conversion of Iran's reserves from euro into dollar and gold ingots came amid a new phase of economic crisis in European states such as Greece and Spain.

Following the report, the euro eased slightly versus the dollar from around $1.2227 to $1.2213, Reuters reported.

Iran has been converting its foreign exchange reserves to euros as the global economic downturn resulted in a sharp devaluation of the dollar.





Susidy
Iran plans to cut subsidized fuel

Iran plans to cut rationed subsidized gasoline after the implementation of an economic reform plan to cut food and energy subsidies.Iran said last month the economic reform plan would be implemented in the second half of the current Iranian calendar year, which ends in March 2011.


Head of Iran's Transportation and Fuel Management Office Mohammad Rouyanian said on Sunday that the gasoline rationing program, which began in 2007, would continue until the beginning of the economic reform plan, IRNA reported.

"After the implementation of the subsidy plan, gasoline will be sold on free market price," he noted, without saying at what price the gasoline would be sold.

Under the rationing plan introduced in 2007, drivers can buy 60 liters of subsidized fuel per month for 1,000 rials per liter (around $0.11) -- beyond this amount gasoline is available for a price of 4,000 rials.

The government of President Mahmoud Ahmadinejad plans to phase out subsidies over five years and compensate those in need with direct cash payments.

The government says the cuts would make Iran less dependent on gasoline imports; however, economists believe the subsidy reform plan will stoke up inflation by causing a dramatic rise in prices.
(presstv)




UK Economy
UK mulls financial disaster scenarios

Britain's Financial Services Authority (FSA) has asked the country's largest banks to model a number of disaster scenarios in response to Europe's deepening financial crisis.

According to analysts, banks in Britain have a total exposure of more than £100 billion to Greece, Portugal and Spain alone. In one scenario, British banks have been asked to model the possibility of Greece defaulting on its loans.

The request is part of a "risk map" by senior officials at FSA to examine potential quandary that British banks may encounter as a result of the eurozone country's growing economic troubles.

Even after an EU rescue package worth €750 billion (£620 billion) was set up to help bailout EU countries on the verge of bankruptcy, European markets continue to remain on edge.

New concerns have risen over Hungary's finances as their new government recently announced that its predecessors falsified data on the country's finances. Moreover, the euro has slid below $1.20 for the first time since March 2006, with analysts expecting it to hit the same level as the dollar.

British Chancellor George Osborne is expected to announce a new tax on British banks as well as cuts to welfare programs and public sector pay in his emergency budget on June 22, which has been backed by the G20 groups of leading nations.

Prime Minister David Cameron has signaled that Britain faces "years of pain ahead," as the government tries to cope with its own financial crisis.
(presstv)







Iranian consortium to replace Shell, Repsol in South Pars

Following the definite walkout of European oil companies Shell and Repsol from the phases 13 and 14 of Iran's South Pars project, the upstream development of these two phases will be handed over to the Iranian Khatam-ol-Osea Consortium for $5 billion.


The British-Dutch Shell teamed up with Spain's Repsol and signed a deal with the National Iranian Oil Company in January 2002 to invest in South Pars' phase 13, Press TV reported.

Ever since the deal was signed, Shell has been delaying decisions on multi-billion dollar investments in phase 13 plans, reportedly due to global political pressures.

However, Iran set a deadline for Shell and Repsol in April 2009, giving them until the following month to clarify their involvement in the project.

After nine years of negotiations Iran's oil minister has eventually ordered related officials to stop talks with these firms and turn to Iranian contractors, according to the Mehr News Agency.

The Iranian Khatam-ol-Osea Consortium is made up of several large Iranian companies, namely Khatam-ol Anbia Construction Headquarters, OIEC, SADRA, ISOICO, IDRO, and NIDC.

South Pars field is a gas condensate field located in the Persian Gulf. It is the world’s largest gas field, shared between Iran and Qatar.

Iran holds the world’s second largest gas reserves and third largest oil reserves.







Iran issues €250mn South Pars bonds

Tehran begins to offer 250 million euros ($306.6 million) in bonds in Iranian banks abroad to finance the development of the country's South Pars gas field.


Iran plans to issue a total amount of one billion euros in bonds in four stages in a bid to develop the giant gas field.

In the third stage of the plan, branches of Iran's Bank Mellat in foreign countries began issuing the bonds on Thursday, IRIB reported.

Iran has the world's second largest natural gas reserves after Russia. However, the development of Iran's oil and gas sector has been hampered by lack of investment and runaway growth in domestic consumption.

The South Pars gas field is jointly owned by Iran and Qatar. The Iranian share of the field has reserves of about 14 trillion cubic meters of gas, which accounts for about eight percent of the total world reserves.








Iran 'restricting euro transactions

As the stagnant European economy weighs heavily on the euro forcing it into a downward spiral, the Central Bank of Iran (CBI) unveils a major plan for converting 45 billion of its euro reserves into dollar and gold ingots.


The CBI's new monetary policy comes against a backdrop of a new phase of economic recession in European states of Greece and Spain which has caused a drop in the value of euro against the dollar in international markets.

There are growing fears that the economic crisis would likely hit other eurozone countries as well.

Meanwhile, informed sources in Iran told Iranian daily Jaam-e-Jam that the monetary plan was to be carried out in three phases, adding that the first stage of the program had already begun.

The new decision comes as the financial crisis that began in the US about two years ago resulted in the sharp devaluation of the dollar, pushing the Iranian government to order the replacement of the greenback with the euro in the country's foreign exchange accounts.
Other countries such as the Persian Gulf littoral states are also reported to be taking major steps for the conversion of their euro reserves into dollar and gold ingots.





The European energy giant, Royal Dutch Shell, which had stopped gasoline sales to Iran resumes business with Tehran after a six-month hiatus.



Shell delivered 30,000 tons of gasoline to the Iranian port of Bandar Abbas last month, the International Oil Daily reported.

The company's last delivery to Iran was in October 2009.

Shell was among the group of international oil companies, which stopped selling refined petroleum to Iran in March 2010 following the US-led campaign to impose tougher UN sanction against the country.

India's Reliance Industries, Russia's Lukoil, Switzerland's Glencore and the Malaysian Petronas are among the firms that cut ties with Iran.







IMF to hold talks with Hungary amid rising financial fears

The International Monetary Fund said Friday it would send a senior official to Hungary for talks with the new government early next week, amid rising concerns about the country’s public finances.


“Our new mission chief for Hungary, Christoph Rosenberg, is going to Budapest on Monday for a short visit to meet the new government and discuss the economic situation and prospects with senior officials,” an IMF spokesperson told AFP.

“The IMF staff looks forward to working with the new government and, as usual, will cooperate closely with European Commission staff who will also be in Budapest,” said the spokesperson, who did not want to be identified.

Viktor Orban of the center-right Fidesz party was sworn in as prime minister on May 29. His party won control of parliament in April elections.

The new government replaced a minority administration that had governed Hungary since April 2009.

Hard hit by the global economic crisis, Hungary received a 20-billion-euro (24-billion-dollar) rescue from the IMF, the World Bank and the European Union in November 2008.

After tapping the IMF lifeline three times for a total of 8.7 billion euros (10.4 billion dollars), the Hungarian government said in November 2009 that it no longer needed to draw on the credit thanks to improved investor confidence in the country’s economy and bonds.

Currently, 1.7 billion euros (2.0 billion dollars) in financing remains available and immediately accessible.

Alarming comments by government and party officials sent the Hungarian currency, the forint, and the Budapest stock exchange plunging on Friday, and the cost of insurance against a sovereign default -- credit default swaps -- climbed as concerns mounted about a Greece-style debt crisis.

Secretary of State Mihaly Varga said the public deficit would be 7.5 percent of gross domestic product (GDP) this year, nearly double the 3.8 percent estimated by the previous Socialist government, in coordination with the IMF.

Lajos Kosa, vice president of the Fidesz party, said the Hungarian economic situation was “very critical, the state is comparable to that of Greece” and that “the bankruptcy of the state is close.”

In an apparent attempt to calm the storm, a spokesperson for the prime minister said he would make an announcement on the economy on Monday.








Global Economy
G-20 finance chiefs agree on need to curb deficits

Finance ministers and central bankers from the world’s leading economies agreed Saturday on the need to cooperate in fending off financial market turmoil and keeping the world economic recovery on track.


In a statement that will serve as an outline for talks later this month by national leaders, including President Barack Obama, the Group of 20 endorsed rescue policies for Europe and the need to rebalance growth by supporting more domestic demand and greater trade by developing countries.

The agreement included no major new initiatives, but bridged differences over details of far-reaching financial reforms with calls to step up regulatory changes and cut back on massive budget deficits.

“The recent volatility in financial markets reminds us that significant challenges remain and underscores the importance of international cooperation,” the statement said.

Countries must “put in place credible, growth-friendly measures, to deliver fiscal sustainability,” it said, noting that the policies would have to fit each country’s unique situation.

The group welcomed measures taken by the European Union, the European Central Bank and the IMF, including a $1 trillion bailout, to help countries cope with the fallout from unsustainably high debt levels.

“All of us have a strong interest in seeing those programs succeed in restoring confidence,” U.S. Treasury Secretary Timothy Geithner told reporters after the meetings ended.

Europe’s sovereign debt crisis has sparked worries that the global economy could succumb to a second downturn following the meltdown sparked by the collapse of U.S. investment bank Lehman Brothers in 2008.

The G-20, founded in 1999, shifted its focus to crisis management after the Lehman Brothers collapse. In addition to its annual finance meetings, it has been holding summits since late 2008.

CAPTION: U.S. Treasury Secretary Timothy Geithner addresses a press briefing after the closing of the G20 Finance Ministers and Central Bank Governors Meeting in Busan, South Korea Saturday, June 5, 2010.









High jobless rate fosters 'protectionism'

The head of the World Trade Organization says the growing unemployment provokes a threat to the global economy by promoting protectionism.


Speaking to the French financial paper La Tribune on Wednesday, WTO General Director Pascal Lamy characterized the unemployment as "the source of protectionist temptation," AFP said.

He warned that joblessness had "got worse, particularly in developing economies."

The International Labor Office estimates that global unemployment is likely to remain high through 2010.

According to the ILO data, eurozone nearly has 15 million unemployed.










Unemployment
HP to cut 9,000 jobs in 10 years

Nine thousand workers at the Hewlett-Packard are going to lose their jobs over next several years as the computer giant pushes to modernize its infrastructure.


The world's largest personal-computer maker is planning to spend $1 billion to automate its global data centers and restructure itself.

"We have an opportunity to further accelerate our competitive advantage," said Ann Livermore, head of HP's enterprise services business, during a conference call to discuss the changes, the Wall Street Journal reported Tuesday.

"We think the next 10 years are going to be about who can automate the delivery of services," she said.

According to the company, the move will save up to $700 million over three years.

HP said its plan to restructure would also allow the hiring of some 6,000 sales and delivery employees to boost the company's services.

The company possesses a global workforce of more than 300,000 workers. The US-base computer giant shed around 39,000 workers in 2005 and 2008 when the company decided to reorganize.