Archive for December, 2012
Washington D.C. slowly started to return work yesterday ahead of the looming “Fiscal Cliff” that would see the largest tax hikes since 1968 and massive military spending cuts kick in on January 1.
There was a sign that there may be a way through deadlock in Congress, Republican House of Representatives Speaker John Boehner urged the Democrat-controlled Senate to act to pull back from the cliff and offered to at least consider any bill the upper chamber produced.
President Obama is cutting short his Christmas vacation in Hawaii and will return Thursday to attempt to revive the budget crisis talks, which stalled last week.
But the White House and Republicans are still far apart, as hopes for legislation to prevent the economy from tumbling off the fiscal cliff switch to the Senate.
Democrats control a majority in that chamber but still need some support from Republicans across the aisle for a likely attempt to raise taxes on the wealthy.
A senior administration official told reporters traveling with Obama in Hawaii that senior Republican leaders in Congress, Senator Mitch McConnell and Boehner, should step up to head off the looming tax and spending hit.
“It’s up to the Senate Minority Leader not to block a vote, and it’s up the House Republican leader, the Speaker of the House … to allow a vote,” the official said.
Months of congressional gridlock on how reduce the deficit and rein in the nation’s $16 trillion federal debt have begun to affect ordinary Americans.
Shoppers might have spent less this holiday season for fear of looming income tax increases and reports of lacklustre retail holiday sales added to the urgency for a deal. U.S. stocks fell on Wednesday, dragged lower by shares of retail companies.
To avoid defaulting on the national debt if the budget crisis spins out of control, the Treasury Department announced measures essentially designed to buy time to allow Congress to resolve its differences and raise the debt borrowing limit.
Obama flies back from Hawaii overnight and is due in the White House on Thursday morning.
Speaker Boehner and his House Republican leadership team said in a statement that “the Senate must act first.”
That puts the ball in the court of the Democrats in the Senate, which is likely to base any legislation on a bill it passed earlier this year to continue tax breaks for households with incomes below $250,000.
A spokesman for Senate Majority Leader Harry Reid issued a strongly worded statement calling on Republicans to “drop their knee-jerk obstruction.”
“The Senate bill could pass tomorrow if House Republicans would simply let it come to the floor,” the spokesman said.
A Senate bill would likely contain an extension of expiring unemployment benefits for those who have been out of work for extended periods.
With the 435 members scattered throughout the country because the House is in recess, House Republican leaders scheduled a conference call for Thursday with members to possibly discuss bringing the chamber back into session to deal with the fiscal cliff.
The budget fight is not just about taxes, however.
The country faces $109 billion in across-the-board spending cuts starting in January unless a deal is reached to either replace or delay them. Democrats want to switch the spending cuts to tax increases for the most part.
House Republicans have passed a bill to stop the military portion of the spending cuts and place the entire burden on domestic activities, including some social safety net programs.
But the main focus is on how to stop tax hikes on January 1.
Obama himself recently offered to raise the threshold to $400,000, before negotiations with Boehner broke off.
Boehner and other Republican leaders said in a statement that if the Senate sends the House new fiscal cliff legislation, “The House will then consider whether to accept the bills … or to send them back to the Senate with additional amendments.
“The House will take this action on whatever the Senate can pass, but the Senate first must act.”
But even if a handful of Senate Republicans support Democrats on a measure to avoid the worst of the fiscal cliff, time is short. When the Senate returns on Thursday it is due to work on a disaster aid bill to help New York and New Jersey recover from Superstorm Sandy and other measures.
All 191 House Democrats might have to team up with at least 26 Republicans to get a majority if the bill included tax hikes on the wealthiest Americans, as Obama is demanding.
Some of those votes could conceivably come from among the 34 Republican members who are either retiring or were defeated in the November elections and no longer have to worry about the political fallout.
An alternative is for Congress to let income taxes go up on everyone as scheduled. Then, during the first week of January, lawmakers would strike a quick deal to reduce them except on people in the highest brackets.
They could also pass a measure putting off the $109 billion in automatic spending cuts that most lawmakers want to avoid.
Once the clock ticks past midnight on December 31, no member of Congress would have to vote for a tax increase on anyone – taxes would have risen automatically – and the only votes would be to decrease tax rates for most Americans back to their 2012 levels.
Hopes of a pre-Christmas deal on the U.S. Fiscal Cliff appeared to be dissolving after The White House accused Republicans of mounting a pointless diversionary vote to prevent the looming year-end fiscal crisis.
If the two sides cannot reach a deficit-cutting agreement before the end of the year, taxes for all Americans will rise and huge automatic spending cuts will be triggered, which could cause a recession and jolt the global economy.
But talks between President Barack Obama and House Speaker John Boehner on averting the “fiscal cliff” have stalled and Republicans now plan to vote on a fallback “Plan B” that the White House sees as pointless grandstanding.
However, Obama has vowed to veto the plan, and Senate Majority Leader Harry Reid said he will not bring it up for a vote in the Democratic-controlled chamber. White House spokesman Jay Carney called it a “multi-day exercise in futility.”
Still, passage of Plan B could give Boehner the political cover he needs to strike a deal that would break with decades of Republican anti-tax orthodoxy.
“Time’s running short. I’m going to do everything I can to protect as many Americans from an increase in taxes as I can,” Boehner told a news conference.
Though it does not raise taxes on as many affluent Americans as Obama wants, the bill would put Republicans on record as supporting a tax increase on those who earn more than $1 million per year – a position the party opposed only weeks ago.
That could make it easier eventually to split the difference with Obama, who wants to lower the threshold to households that earn more than $400,000 annually. Obama also faces resistance on his left flank from liberals who oppose cuts to popular benefit programs, which Republicans say must be part of any deal.
Obama and Boehner will need to engage in more political theater to get lawmakers in both parties to sign on to the painful concessions that will have to be part of any deal to avert the cliff and rein in the national debt, analysts say.
Even as he pressured Obama and the Democratic Senate to approve his plan, Boehner indicated that he was not willing to walk away from the bargaining table.
“The country faces challenges, and the president and I, in our respective roles, have a responsibility to work together to get them a result,” Boehner said.
Obama and Boehner aim to reach a deal before the end of the year, when taxes will automatically rise for nearly all Americans and the government will have to scale back spending on domestic and military programs. The $600 billion hit to the economy could push the U.S. economy into recession, economists say.
Investors so far have assumed the two sides will reach a deal, but concerns over the fiscal cliff have weighed on markets in recent weeks. The S&P 500 index of U.S. stocks was up 0.4 percent in Thursday trading, despite a round of strong data on economic growth and housing.
Shares crept up after Boehner said he was prepared to work with Obama to prevent the fiscal cliff from kicking in.
Lawmakers are eager to wrap up their work and return home for the Christmas holiday, but congressional leaders kept the door open for last-minute action.
The Senate was expected to leave town on Thursday or Friday, but Reid said it could return next week to vote on any deal.
Boehner indicated the House would stay in session after Thursday’s vote, scheduled for 7:45 p.m. EST (0045 GMT on Friday).
Several influential conservative groups have condemned Plan B, and some Republicans are expected to vote against it. But passage appeared likely after the House narrowly voted by 219 to 197 to bring the bill to the floor for debate.
The U.S. Chamber of Commerce, an influential business group that has often tangled with the Obama administration, offered grudging support.
To placate conservatives, Boehner also scheduled a vote on legislation that would shift $55 billion in scheduled defense cuts to cuts in food and health benefits for the poor and other domestic programs.
That measure also would roll back some of the Dodd-Frank financial regulation reforms of 2010. It is not expected to become law.
Facebook banned because of its popular use by opposition activists to organise large-scale demonstrations in protest of the 2009 presidential election has an unlikely new member: Iranian supreme leader Ayatollah Ali Khamenei.
Launched a few days ago, the Facebook page “Khamenei.ir” displays photographs of the 73-year-old cleric alongside speeches and pronouncements by the man who wields ultimate power in the Islamic republic.
While there are several other Facebook pages already devoted to Khamenei, the new one, whose number of “likes” quadrupled on Monday to over 1,000, appeared to be officially authorized, rather than merely the work of admirers.
The page has been publicized by a Twitter account of the same name that Iran experts believe is run by Khamenei’s office.
Both US-based social media sites are blocked in Iran by a wide-reaching government censor but they are still commonly used by millions of Iranians who use special software to get around the ban.
In 2009, social media were a vital tool for those Iranians who believed the re-election of President Mahmoud Ahmadinejad was rigged. Facebook was used to help organize street protests of a scale not seen since the Islamic Revolution of 1979.
The protests—which the government said were fuelled by Iran’s foreign enemies—were eventually stamped out by the security forces and their political figureheads remain under house arrest.
Khamenei’s Facebook page has so far shared a picture of a young Khamenei alongside the founder of the Islamic republic, Ayatollah Ruhollah Khomeini, in the early 1960s.
It shares a similar tone, style and content with accounts devoted to disseminating Khamenei’s message on Twitter and Instagram and to the website http://www.khamenei.ir, a sophisticated official website published in 13 languages.
Experts said the social media accounts showed that Iran, despite restricting access to such sites inside the country, was keen to use them to spread its world view to a global audience.
“Social media gives the regime leadership another medium of communication, one that can share their message with a younger and far more international demographic,” said Afshon Ostovar, a Middle East analyst at CNA, a US-based research organization.
Iran is locked in a decade-long dispute with the West over its nuclear programme, which the US and its allies suspect is aimed at developing a bomb, something Iran has repeatedly denied. Iran, the West and regional states are also often opposed on issues such as the violence raging in Syria and the Israeli-Palestinian conflict.
Iranian authorities have said they are trying to build a national intranet, something sceptics say is a way to further control Iranians’ access to the global web. Tehran tried to block Google Inc.’s email service this year but soon reopened access.
Syrian rebels took full control of the Yarmouk Palestinian refugee camp on Monday after fighting raged for days in the district on the southern edge of President Bashar al-Assad’s Damascus powerbase, rebel and Palestinian sources said.
The battle had pitted rebels, backed by some Palestinians, against Palestinian fighters of the pro-Assad Popular Front for the Liberation of Palestine-General Command (PFLP-GC). Many PFLP-GC fighters defected to the rebel side and their leader Ahmed Jibril left the camp two days ago, rebel sources said.
“All of the camp is under the control of the (rebel) Free Syrian Army,” said a Palestinian activist in Yarmouk. He said clashes had stopped and the remaining PFLP fighters retreated to join Assad’s forces massed on the northern edge of the camp.
The battle in Yarmouk is one of a series of conflicts on the southern fringes of Assad’s capital, as rebels try to choke the power of the 47-year-old leader after a 21-month-old uprising in which 40,000 people have been killed.
Government forces have used jets and artillery to try to dislodge the fighters but the violence has crept into the heart of the city and activists say rebels overran three army stations in a new offensive in the central province of Hama on Monday.
On the border with Lebanon, hundreds of Palestinian families fled across the frontier following the weekend violence in Yarmouk, a Reuters witness said.
Syria hosts half a million Palestinian refugees, most living in Yarmouk, descendants of those admitted after the creation of Israel in 1948, and has always cast itself as a champion of the Palestinian struggle, sponsoring several guerrilla factions.
Both Assad’s government and the mainly Sunni Muslim Syrian rebels have enlisted and armed divided Palestinian factions as the uprising has developed into a civil war.
Syrian Vice President Farouq al-Sharaa said in a newspaper interview published on Monday that neither Assad’s forces nor rebels seeking to overthrow him can win the war.
Sharaa, a Sunni Muslim in a power structure dominated by Assad’s Alawite minority, has rarely been seen since the revolt erupted in March 2011 and is not part of the president’s inner circle directing the fight against Sunni rebels. But he is the most prominent figure to say in public that Assad will not win.
Sharaa said the situation in Syria was deteriorating and a “historic settlement” was needed to end the conflict, involving regional powers and the U.N. Security Council and the formation of a national unity government “with broad powers”.
“With every passing day the political and military solutions are becoming more distant. We should be in a position defending the existence of Syria. We are not in a battle for an individual or a regime,” Sharaa was quoted as telling Al-Akhbar newspaper.
“The opposition cannot decisively settle the battle and what the security forces and army units are doing will not achieve a decisive settlement,” he said, adding that insurgents fighting to topple Syria’s leadership could plunge it into “anarchy and an unending spiral of violence”.
Sources close to the Syrian government say Sharaa had pushed for dialogue with the opposition and objected to the military response to an uprising that began peacefully.
In a veiled criticism of the crackdown, he said there was a difference between the state’s duty to provide security to its citizens, and “pursuing a security solution to the crisis”.
He said even Assad could not be certain where events in Syria were leading, but that anyone who met him would hear that “this is a long struggle…and he does not hide his desire to settle matters militarily to reach a final solution.”
In Hama province, rebels and the army clashed in a new campaign launched on Sunday by rebels to block off the country’s north, activists said.
The Syrian Observatory for Human Rights, an opposition-linked violence monitor, said fighting raged through the provincial towns of Karnaz, Kafar Weeta, Halfayeh and Mahardeh.
It said there were no clashes reported in Hama city, which lies on the main north-south highway connecting the capital with Aleppo, Syria’s second city.
Qassem Saadeddine, a member of the newly established rebel military command, said on Sunday fighters had been ordered to surround and attack army positions across the province. He said Assad’s forces were given 48 hours to surrender or be killed.
The opposition conservative Liberal Democratic Party (LDP) of Shinzo Abe has won the Japanese election, exit polls predict.
The LDP, which enjoyed almost 50 years of unbroken rule until 2009, is projected to have an overall majority in the new parliament.
Mr Abe has already served a Japan’s Prime Minister between 2006 and 2007.
He campaigned on a pledge to end 20 years of economic stagnation and to direct a more assertive foreign policy at a time of tensions with China.
Exit polls by television broadcasters showed the LDP winning nearly 300 seats in parliament’s powerful 480-member lower house, while its ally, the small New Komeito party, looked set to win about 30 seats.
That would give the two parties the two-thirds majority needed to over-rule parliament’s upper house, where they lack a majority and which can block bills, which would help to break a policy deadlock that has plagued the world’s third biggest economy since 2007.
“We need to overcome the crisis Japan is undergoing. We have promised to pull Japan out of deflation and correct a strong yen. The situation is severe, but we need to do this,” Abe said on live TV. “The same goes for national security and diplomacy.”
Parliament is expected to vote Abe in as prime minister on December 26.
Analysts said that while markets had already pushed the yen lower and share prices higher in anticipation of an LDP victory, stocks could rise further and the yen weaken if the “super majority” was confirmed.
Top executives of the LDP and the New Komeito confirmed that they would form a coalition. “The basis, of course, is a coalition between the LDP and the New Komeito. But if there’s room to cooperate with Japan Restoration Party, we need to do so,” said LDP Secretary-General Shigeru Ishiba, referring to a new, right-leaning party that was set to pick up about 46 seats.
“I think there is room to do this in the area of national defence,” he said, referring to cooperation with the Japan Restoration Party. The New Komeito is more moderate than the LDP on security issues.
Exit polls showed Prime Minister Yoshihiko Noda’s Democratic Party of Japan (DPJ) winning only 65 seats, just over a fifth of its tally in 2009.
The DPJ, which swept to power in 2009 promising to pay more heed to consumers than companies and reduce bureaucrats’ control over policymaking, was hit by defections just before the vote.
Party executive Kohei Otsuka told NHK that Noda would likely have to quit the party leadership over the defeat, in which several party heavyweights lost their seats.
Many voters had said the DPJ failed to meet election pledges as it struggled to govern and cope with last year’s huge earthquake, tsunami and nuclear disaster, and then pushed through an unpopular sales tax increase with LDP help.
Voter distaste for both major parties has spawned a clutch of new parties including the Japan Restoration Party, founded by popular Osaka Mayor Toru Hashimoto.
With Japan stuck in a two-decade slump and receding behind China as the region’s most important economic player, people appear to be turning back to the LDP, which led Japan for so many decades.
The LDP’s vows to build a stronger, more assertive country to answer increasing pressure from China and threats of North Korean rocket launches also resonated with voters. Abe has repeatedly said he will protect Japan’s “territory and beautiful seas” amid a territorial dispute with China over some uninhabited islands in the East China Sea.
“I feel like the LDP will protect Japan and restore some national pride,” Momoko Mihara, 31, said after voting for the Liberal Democrats in the western Tokyo suburb of Fuchu.
Fierce clashes took place ahead of the referendum on Egypt’s draft constitution between Islamists and opposition protesters in the Egyptian city of Alexandria. At least fifteen people were wounded, medics said, and several cars set on fire in violence between opposition protesters and Islamists wielding machetes which began after a Muslim preacher called for support for the constitution.
A year ago, Egyptians were thrilled to know that finally their country’s constitution would reflect their democratic hopes and aspirations. Yet the document that they will now vote on is more likely to dash those hopes and dim Egyptians’ prospects for democracy.
The constitutional drafting process was rushed, without the input of liberals, non-Muslims and women, all of whom boycotted the process, owing to the preponderance of Islamists.
The Muslim Brotherhood, and primarily President Mohamed Morsi, is banking on the assumption that the strength of Egypt’s Islamist vote will earn him enough support among “regular Egyptians,” and that the opposition will have little impact on the referendum’s outcome.
One political adviser for the ruling Freedom and Justice Party — the Muslim Brotherhood’s political wing — even boasted that the Brothers could easily mobilize 20 million supporters. The Brothers dismiss those who have demonstrated in the streets during the past three weeks as Mubarak sympathizers.
Morsi’s decision on Nov. 22 to grant himself absolute authority for the spurious purpose of defending the revolution is not new for Egypt. A succession of dictator-presidents ruled the country under a state of emergency for more than 40 years. While Morsi has now bowed to pressure to annul a decree granting him powers without judicial oversight, it seems only yesterday that people were prepared to put their fears aside and trust that Morsi was ready to rule in the interests of all Egyptians.
Eric Trager of the Washington Institute for Near East Policy notes that Morsi’s previous role in the Muslim Brotherhood’s Guidance Council sheds some light on the motives behind his current behavior.
In the past, Morsi advocated a platform that excluded Christians from political life and granted Islamic scholars oversight authority to ensure that all legislation complied with Shariah law. He also worked to expunge young members of the Freedom and Justice Party that he deemed to hold dissenting views.
While the draft constitution does contain positive provisions, many are causing concern. For example, Article 11 authorizes the state to “safeguard ethics, public morality and public order, and foster a high level of education and of religious and patriotic values.” This leaves plenty of room for interpretation by the government. In addition, the mosque of al-Azhar is promised an advisory role in Islamic legislation.
The Brothers’ political opponents have not been silent. On Dec. 8, the National Salvation Front announced that the draft “does not represent the Egyptian people.” Moreover, ordinary Egyptians have responded viscerally and swiftly to Morsi’s moves, perhaps more so than he had anticipated. Strikes were called, newspapers halted publication and fears of widespread insurrection remain high. Hundreds have been injured in street clashes in Cairo. The president’s supporters have declared that “defending Morsi is defending Islam.”
Today, Morsi seems as besieged as Syria’s President Bashar Assad. The military has barricaded the presidential palace and, until the results of the referendum are announced, they are under orders to protect Egypt’s state institutions.
Outside the Mideast, the United States has scaled back its relations with Egypt since the government’s weak response to the attack on the U.S. embassy in September, which signaled a rapid deterioration in bilateral relations. America’s top priority now is to ensure that the peace treaty with Israel is maintained.
The European Union cannot afford to engage in wishful thinking when it comes to Morsi’s ambitions and the Muslim Brotherhood’s agenda. The EU’s “more for more” policy has made human rights a cornerstone of its foreign policy toward states in the union’s neighborhood. And, though Morsi’s recent role in mediating discussions between Hamas and the Israeli government was invaluable in preventing a serious regional conflict, his government’s actions are undermining prospects for further cooperation with Europe.
No matter how Morsi attempts to sideline his domestic opponents, Egypt is in no shape to ignore the rest of the world. It lacks a stable economy, relying heavily on tourism and imports to feed the country’s more than 80 million people. Power cuts and public-service strikes are a regular feature of daily life.
Egypt’s government needs to secure consistent foreign financing to keep the country afloat, providing leverage for international opposition to Morsi’s efforts to impose an agenda that runs contrary to Egyptians’ fundamental rights. Egypt can thrive only on the basis of honest adherence to a democratic process.
The current constitutional crisis has caused many to wonder how Egypt will face future political tests. The referendum’s outcome will prove an important guide regarding the direction the country is likely to take. Will it embrace a new Islamic authoritarianism, or build the democracy that Egyptians have risked their lives to secure?
A classic spat broke out today when David Cameron was warned by the French that he cannot treat Europe as an ‘a la carte’ menu, where Britain picks and chooses which bits it likes.
French President Francois Hollande insisted signing up to the euro bloc was ‘for life’ and ruled out allowing the UK to take back powers already surrendered to Brussels.
French President Francois Hollande called for like-minded EU countries to push ahead with further, deeper integration, even if it means leaving behind more Eurosceptic states which insist on protecting sovereignty.
Speaking after a two-day summit on the debt crisis where the 17 states that share the euro agreed on arrangements for a single supervisory system for their banks, Hollande indicated that a two-speed European Union was all but inevitable.
Britain and other non-euro states such as Sweden and the Czech Republic are determined to stay out of the banking union.
Under EU rules, groups of countries can already push ahead via so-called “enhanced cooperation” on specific policies, something which until now has only been used on areas such as a planned financial transaction tax, divorce and patent law.
“There is the possibility for those who want to go further, to do more, for those that want to find new resources and means to organise themselves – so yes, I would plead that from 2014 we go further with enhanced cooperation,” he told a news briefing.
Germany holds a national election in late 2013 and under the rough timetable set out by EU leaders at the summit, 2014 is the year in which the bloc pushes ahead with more ambitious measures to deepen economic and ultimately political union.
“No country should be excluded (from greater integration) but at the same time no country should be forced into it either,” Hollande said when asked about Britain’s case.
But he added: “The Europe we have is not a Europe which can be stripped of its existing competencies.”
Separately, British Prime Minister David Cameron, much of whose Conservative Party is Eurosceptic, suggested the push towards greater integration among the 17 euro states would allow Britain to loosen or at least modify its ties to the bloc.
“The existence of the euro is driving change in Europe, it is driving countries that are inside the euro to integrate more, to coordinate more,” he told reporters.
“It will lead to opportunities for us in the UK to make changes in our relationship with the European Union that will suit us better, which the British people will feel more comfortable about.”
That is likely to include withdrawing from large parts of justice and policing legislation, as well as taking a hard line on how far it is willing to cooperate on sharing risk and oversight in finance and banking, two traditionally powerful sectors of the British economy.