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Kuwait’s 2013 Inflation may average at 3.5% Page 22 Wataniya Telecom posts KD 75.5m net profit for 2012 Page 23
SUNDAY, FEBRUARY 17, 2013
Al Mazaya wins ‘Super brand Kuwait Page 25 Page 26
Al Mulla, Behbehani Motor celebrate National and Liberation Days
MOSCOW: Participants of G20 states finance ministers and central bank governors meeting pose for family picture in Moscow yesterday. —AFP
G20 defuses talk of ‘currency war’ No accord on debt Japan escapes direct flak ●
MOSCOW: The Group of 20 nations declared yesterday there would be no ‘currency war’ and deferred plans to set new debt-cutting targets in an indication of concern about the fragile state of the world economy. Japan’s expansive policies, which have driven down the yen, escaped criticism in a statement thrashed out in Moscow by financial policymakers from the G20, which groups developed and emerging markets and accounts for 90 percent of the world economy. After late night talks, finance ministers and central bankers agreed on wording closer than expected to a joint statement issued last Tuesday by the Group of Seven rich nations backing market-determined exchange rates. A draft communique seen by delegates on Friday had steered clear of the G7’s call for economic policy not to be targeted at exchange rates. But the final version included a G20 commitment to refrain from competitive devaluations and stated monetary policy would be directed at price stability and growth. “The language has been strengthened since our discussions last night,” Canadian Finance Minister Jim Flaherty told reporters. “It’s stronger than it was, but it was quite clear last night that everyone around the table wants to avoid any sort of currency disputes.” The communique did not single out Japan for aggressive monetary and fiscal policies that have seen the yen drop 20 percent, a trend that may now continue. “The market will take the G20 statement as an approval for what it has been doingselling of the yen,” said Neil Mellor, currency strategist at Bank of New York Mellon in London. “No censure of Japan means they will be off to the money printing presses.” The statement reflected a substantial, but not
MOSCOW: Saudi Finance Minister Ibrahim Al-Assaf (right) and Central Bank Governor Fahad Al-Mubarak (left) touch their faces as they pose for family picture after a meeting of G20 states finance ministers and central bank governors in Moscow yesterday. —AFP complete, endorsement of Tuesday’s statement by the G7 nations - the United States, Japan, Britain, Canada, France, Germany and Italy. “We all agreed on the fact that we refuse to enter any currency war,” French Finance Minister Pierre Moscovici told reporters. The text also contained a commitment to credible medium-term fiscal strategy, but stopped short of setting specific goals. A debt-cutting pact struck in Toronto in 2010 will expire this year if leaders fail to agree to extend it at a G20 summit of leaders in St Petersburg in
September. European Economic and Monetary Affairs Commissioner Olli Rehn said he expected concrete debt targets to be agreed at the September meeting. “We have a common view on the need to have a credible medium-term plans for fiscal consolidation, which is also essential so we have foundation for sustainable growth,” he told Reuters. The United States says it is on track to meet its Toronto pledge but argues that the pace of future fiscal consolidation must not snuff out demand. Germany and others are pressing for another
round of binding debt-cutting goals. Backing in the communique for the use of domestic monetary policy to support economic recovery reflected the US Federal Reserve’s commitment to monetary stimulus through quantitative easing, or QE, to promote recovery and jobs. QE entails large-scale bond buying — $85 billion a month in the Fed’s case-that helps economic growth but creates money, much of which has leaked into emerging markets, threatening to destabilize them. That was offset in the communique by a com-
mitment to minimize “negative spillovers” of the resulting financial flows that emerging markets fear may pump up asset bubbles and ruin their export competitiveness. “Major developed nations (should) pay attention to their monetary policy spillover,” Vice Finance Minister Zhu Guangyao was quoted by state news agency Xinhua as saying in Moscow. “Major developed countries’ implementation of excessively relaxed currency policy has an influence on the world economy.” Russia, this year’s chair of the G20, said the group had failed to reach agreement on mediumterm budget deficit levels and also expressed concern about ultra-loose policies that it and other big emerging economies say could store up trouble for later. Finance Minister Anton Siluanov said a rebalancing of global growth required more than an adjustment of exchange rates. “Structural reforms in all countries, either with a positive or negative balance of payments, should play a bigger role,” he said in an address to Saturday’s talks. The G20 put together a huge financial backstop to halt a market meltdown in 2009 but has failed to reach those heights since. At successive meetings, Germany has pressed the United States and others to do more to tackle their debts. Washington in turn has urged Berlin to do more to increase demand. On currencies, the G20 text reiterated its commitment last November, “to move more rapidly toward mores market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments”. It said disorderly exchange rate movements and excess volatility in financial flows could harm economic and financial stability. —Reuters
Obama bypasses Congress with public economic pitch WASHINGTON: Weeks before President Barack Obama’s State of the Union address, White House aides were locking down a plan for the sales pitch that would follow during three days of travel focused on his main themes. The effort to promote Obama’s proposals on jobs, wages and education involved visits to Asheville, North Carolina, Decatur Georgia, and Chicago, participating in a Google+ chat and mobilizing the president’s formidable former campaign apparatus. One thing it didn’t include? Congress. For the White House, this is a campaign for public opinion, not one to write specific legislation. When it comes to broadening early education or raising the minimum wage, Obama is not ready to make lawmakers a part of the process yet. Instead, Obama is trying to change an economic debate that has been focused on deficits and on managing the national debt to one about middle-class opportunities and economic growth. Just into his second term, Obama and his aides want to move away from the type of budget confrontations that have defined the past two years and take advantage of his re-election to pressure Republicans. “If the Republicans reflexively oppose every-
thing the president does, we have to go directly to the American people to marshal their support to get things done,” Obama senior adviser Dan Pfeiffer said. “The metric we’re looking at is whether you start to see fissures in the Republican coalition.” This president, like recent ones before him, has gone to the public before in hopes of persuading lawmakers. It hasn’t always proved a winning tactic. President Bill Clinton failed to use the public to win support for his health care overhaul. President George W. Bush was unable to make changes to Social Security in his second term. Obama tried to muster public support to fight climate change but the legislative effort came up short. Even Obama’s all-out effort on behalf of sweeping health care changes only succeeded in keeping Democrats unified, not in winning over Republicans. But Obama and White House aides are heartened by what they believe were successful public appeals for extending a payroll tax cut in 2010 and for preventing a doubling of interest rates on federal student loans last summer. What made those different was that they addressed pressing issues: The payroll tax cut
was expiring at year’s end and interest rates on student loans were set to double last July 1. Expanding preschools and raising the minimum wage from $7.25 to $9 an hour by the end of 2015, on the other hand, are policy ideas just sprung on Congress during last Tuesday’s prime-time speech. “When there is no clear path between what he called for in the State of the Union and then going on the road, and there’s no road map about exactly when we’re going to get into these issues, it’s a little bit like shouting in the forest,” said Patrick Griffin, the White House legislative director under Clinton. “Something has to be queued up in order to make these visits work.” David Winston, a Republican pollster and strategist who advises House Republicans, said the key to a successful policy campaign is twofold. “The first and central is how important is solving whatever problem is being defined,” he said. “The second one is does the defined benefit solve the problem.” He argues that even though Obama in 2010 won the health care fight in a partisan showdown, the public didn’t judge health care to be as important as dealing with the economy. As a result, Republicans won
control of the House in elections that year. The White House strategy now in part recognizes that the economy remains the No. 1 public concern even as the president engages Congress on issues such as immigration and gun violence. It was finally on Friday, his last road trip of the week, when Obama brought his message back to guns. But even then, like in his State of the Union speech, he connected it to his main economic themes. Speaking not far from his Hyde Park home on Chicago’s South Side, Obama linked the near-daily violence to communities where there is little economic hope. At the White House, Pfeiffer argues that it would be pointless to present Congress with legislation on preschools and minimum wage increases now when the president is just raising the profile of the two issues and when he’s already working with Congress on other matters. “There’s a lot of traffic in the legislative process right now,” he said. “If we were to send a bill up on some of these things tomorrow, you guys would all write that the president has overloaded the system.” In pushing his agenda, Obama is wielding extra muscle that he didn’t
employ before, relying on his reconfigured reelection campaign operation. The organization has reappeared as a nonprofit group ready to engage in legislative fights and grass-roots mobilization to supplement the White House. The group, Organizing for Action, planned a tele-town hall Saturday hosted by Rahm Emanuel, the Chicago mayor who was Obama’s White House chief of staff. The event was intended to press the same themes Obama has pushed for the past four days. Another expected participant was Austan Goolsbee, former chairman of Obama’s Council of Economic Advisers. The group’s board of directors includes former White House press secretary Robert Gibbs and top campaign officials such as Stephanie Cutter and Julianna Smoot. Obama senior campaign adviser David Axelrod will serve as a consultant. All retain strong ties to the White House; Axelrod and Emanuel were in the West Wing last week. Griffin, the former Clinton aide, said such an organization would introduce a brand new element to White House outreach. He recalled Clinton’s failed effort on health care and his attempt to go over the head of Congress in 1993. —AP