Business

BRISBANE, Australia — President Barack Obama on Saturday said the United States cannot "carry the world economy on our back" and urged Group of 20 (G-20) leaders to work harder to create jobs by revving up growth.

His appeal during a speech on the sidelines of the G-20 summit in Brisbane comes with the US economy finally kicking into gear just as challenges emerge elsewhere to the world growth outlook, notably in Europe, China and Japan.

"Over the last few years the US has put more people back to work than all other advanced economies combined," Obama said, with the US unemployment rate falling to 5.8 per cent in October, its lowest level since July 2008.

"But America can't be expected to just carry the world economy on our back," he added. "So here in Brisbane, the G-20 has a responsibility to act, to boost demand and invest more in infrastructure and create good jobs for the people of all our nations."

The leaders of the world's top industrial economies are set to pledge at their summit in Brisbane to boost their combined growth by at least $2 trillion via domestic policy reforms, and so generate millions of new jobs.

They were initially expected to sign off on a vow to lift growth by 2 per cent over the currently projected level in the next five years.

But a draft copy of the Brisbane Action Plan said that, owing to worries about sluggish conditions worldwide, the leaders will agree to reforms that could accelerate growth by 2.1 per cent.

"We have developed comprehensive growth strategies that address these challenges," the plan says, according to The Australian newspaper. "Analysis by the IMF and OECD indicates that full implementation of these strategies will lift our collective gross domestic product by 2.1 per cent through to 2018 above the trajectory implied by the policies at the time of the St Petersburg summit [last year]."

G-20 nations, which make up 85 per cent of the world economy, plan to meet the goal by accelerating infrastructure investment, financial reform and encouraging free trade.

Obama, who jetted into Brisbane early Saturday after attending an East Asia summit in Myanmar and the APEC forum on Asia-Pacific trade in Beijing, mentioned abolishing protectionism and cracking down on corruption as key to hitting the growth goals.

He said the US "will continue to promote economic growth that is sustained and shared" and work to "tear down barriers to trade and investment and combat the corruption that steals from so many citizens".

AMMAN — Jordan Phosphate Mines Company (JPMC) maximised its operational profit by 217.3 per cent, or JD22.9 million, during the first nine months of this year, according to a disclosure the corporation sent to the Amman Stock Exchange.

As a result of achieving a JD33.5 million operational profit, compared to JD10.5 million registered during the January-September period of last year, JPMC succeeded in emerging from a JD6.7 million loss posted at the end of June 2014 to a JD8.7 million net profit as of September 30, 2014.

"This shows that the corporation generated a JD15.4 million profit during the third quarter of this year, JD10.1 million higher than the JD5.3 million posted during the same period of 2013," JPMC indicated in the disclosure.

The corporation noted that the profit was attained after making a  JD6.5 million provision for staff incentives in the third quarter, or an accumulated JD19.5 million for the incentives for the full period until the end of September 2014, as per labour deals agreed in previous years.

The disclosure revealed that JPMC's sales during the first nine months of this year amounted to JD523.1 million, 25.3 per cent higher than the JD417.5 million recorded during the same period of last year.

JPMC attributed the rise in sales to a noticeable increase in phosphate exports at the end of the third quarter as the volume went up by 997,000 tonnes reaching 4.3 million tonnes.

This volume represented a 41.7 per cent surge as exports during January-September 2013 stood at 3.1 million tonnes.

Sales of fertilisers also soared by 61.2 per cent, or 172,000 tonnes reaching 453,000 tonnes at the end of September 2014 compared to 281,000 tonnes at the end of September 2013.

"Sale prices were affected this year by stiff competition in the international market," the corporation indicated in the disclosure pointing out that the phosphate average sale price per tonne dropped by $16 compared to the price level that prevailed at the end of last year's third quarter.

Similarly, the fertiliser sale price went down by $43 per tonne by the end of this year's third quarter compared to the price level at the end of September 2013.

Furthermore, JPMC listed other factors that affected production costs, mentioning, as examples, higher mining fees, an increase in fuel prices, and a rise in water and electricity charges.

"To counter the effect of these increases on the costs per each unit of    output, the company resorted to ramp up phosphate and fertiliser production at the end of this year's third quarter," the disclosure said.

Consequently, it added, the phosphate third quarter output went up to 5 million tonnes at the end of September 2014, compared to 4 million tonnes at the end of September 2013.

Similarly, the fertiliser third quarter output shot up to 431,000 tonnes  at the end of September 2014 compared to 319,000 tonnes at the end of  September 2013.

Financially, the disclosure showed that JPMC's total assets at the end of September 2014 amounted to JD1,200.5 million, of which JD459.5 million were current assets and JD741 million were fixed assets. At the end of 2013, total assets stood at JD1,112.5 million.

Total liabilities amounted to JD429.6 million, of which JD344.6 million were current liabilities and JD85 million were long term. At the end of last year, total liabilities stood at JD350.2 million.

Shareholders' equity totalled JD771 million at the end of September 2014, higher than the JD762.3 million as of December 31, 2013. 

NEW DELHI/WASHINGTON/GENEVA — India and the United States settled a dispute on Thursday that had paralysed the World Trade Organisation (WTO) and risked derailing a $1 trillion package of reforms of global customs procedures.

The deal, which needs to be backed by all 160 WTO members, has resurrected hopes that the trade body can now push through those reforms, opening the way up for further negotiations.

India had plunged the WTO into the deepest crisis in its 20-year history in July by vetoing a deal on streamlined customs rules due to a lack of progress on its demands to be allowed to stockpile food without observing the usual WTO rules on agricultural subsidies.

That put the WTO's future in doubt just months after it appeared to have overcome decades of stalemate on the issue at a meeting in Bali in Indonesia.

"This breakthrough represents a significant step in efforts to get the Bali package and the multilateral trading system back on track," WTO Director General Roberto Azevedo said.

"Implementation of all aspects of the Bali package would be a major boost to the WTO, enhancing our ability to deliver beneficial outcomes to all our members," he added.

The International Chamber of Commerce (ICC), which has said streamlining customs procedures could add $1 trillion and 21 million jobs to the world economy, said the breakthrough would open the door to new trade talks.

"Today's breakthrough is a real victory for all of us: Governments, consumers and business," said ICC Secretary General John Danilovich.

Linda Dempsey at the US National Association of Manufacturers described the customs deal as "an unparalleled opportunity to boost global growth and commerce by the simple task of cutting red tape, streamlining border processing and adding transparency to customs operations worldwide".

The breakthrough is the second at the WTO in days, following a US-China pact to cut tariffs on IT products, also billed as a $1 trillion advance. It also comes hot on the heels of a US agreement with China on carbon emissions.

The US-Indian deal is likely to be hailed as a victory for India's Prime Minister Narendra Modi, who has stressed the importance of ensuring that its 1.25 billion people have enough to eat. His tough stance had also risked isolating him at his first Group of 20 (G-20) summit of world leaders in Brisbane, Australia, this weekend.

But Thursday's compromise included no major revision of the original WTO deal struck last December, which provided for India's food stockpiling to be shielded from legal challenge by a "peace clause".

A source familiar with the negotiation said the compromise replaced the "constructive ambiguity" about the duration of the peace clause with clear language that it would remain until a permanent solution was found.

"There's no renegotiation of Bali," the source said.

The peace clause is subject to disclosure requirements that India has not yet met and also requires that its policy does not distort trade.

Modi instructed aides early last week to strike a deal.

"From Modi's perspective, it's a major victory to say we've got an indefinite stay of execution on our food subsidy scheme," said Frederic Neumann, co-head of Asian Economics Research at HSBC in Singapore.

A food security law passed by India's last government expanded the number of people entitled to receive cheap food grains to 850 million.

In a recent disclosure to the WTO, India said its state food procurement cost $13.8 billion in 2010-11, part of the total of $56.1 billion it spends on farm support. Wheat stocks, at 30 million tonnes, are more than double official target levels.

SEATTLE/WASHINGTON — The United States on Wednesday stepped up calls on European policy makers to do more to avoid a "lost decade" of low growth, saying steps taken by the European Central Bank (ECB) may not be sufficient on their own.

US Treasury Secretary Jack Lew gave an unusually blunt assessment of what he thinks Europe needs to do, arguing that France and Italy should rein in budget deficits more slowly and that it was "critical" Germany and the Netherlands open their fiscal purse strings.

"Resolute action by national authorities and other European bodies is needed to reduce the risk that the region could fall into a deeper slump," Lew said at the World Affairs Council in Seattle.

Speaking ahead of the summit of leaders from the Group of 20 (G-20) nations in Australia this week, he said eurozone countries should pursue a combination of fiscal, monetary and structural policies to support growth.

His comments suggested the eurozone's sluggish recovery will come under the G-20 spotlight, as it has during their last two sessions.

The 18-nation
eurozone is skirting close to recession, growing just 0.1 per cent in the second quarter, and the currency bloc is also not far from outright deflation.

To prop up the economy and move inflation higher, the ECB has started to pump more money into the region's banking system, and has said it is ready to take further action if needed.

In contrast, the US economy is growing solidly. Lew warned, however, that the world could not rely on strong US growth alone to support demand. He urged countries to use fiscal policies to boost demand if they could afford to.

Germany, Europe's biggest economy, has been under particular pressure to increase government stimulus to support demand in the eurozone.

Lew also said Italy and France should pursue structural reforms but cautioned it was still unclear whether such reforms will be enough in the case of Japan.

Japan has launched a broad programme of monetary easing, spending and reform to generate economic growth and pull out of damaging deflation. At the same time, Tokyo has raised taxes in a bid to rein in its large deficits.

Lew said that if Japanese officials decided to go ahead with another planned consumption tax increase, they should use other policies to more than offset the drag on the economy.

He held out the US recovery from the 2008-2009 Great Recession as an example for Washington's main G-20 partners.

"Over the past four and a half years, the private sector has created more than ten and a half million new jobs, the longest stretch of private sector job growth in our nation's history," he said.

"In fact, we have created more jobs since the pre-crisis peak than Europe and Japan combined," the treasury secretary added.

But he also said that the United States itself needs to do more to strengthen economic momentum, citing President Barack Obama's proposals for immigration and tax reforms, a higher minimum wage, and more spending on infrastructure.

Separately, the International Monetary Fund (IMF) on Wednesday warned of downside risks to its growth projections for the eurozone, and urged the ECB to act if prices in the currency bloc continue to drift lower.

The IMF's warning echoes an increasing fear among global policy makers that Europe is not on track to spur economic growth, something that should be a key topic for discussion when leaders of the G-20 economies meet in Australia.

The IMF, the Washington-based lending institution charged with policing global economic and financial stability, in October predicted the eurozone would expand 0.8 per cent this year and 1.3 per cent next year.

But a raft of disappointing data in the last month has put even those modest economic projections in doubt, including "surprisingly" weak data for domestic demand in Germany, the eurozone's biggest economy, the IMF said in a report prepared for the G-20 meeting.

A report on Friday is expected to show the eurozone's economic growth in the third quarter is in line with the 0.1 per cent pick-up posted in the prior three months. Prices have risen just 0.4 per cent over the past year.

The ECB has a mandate to keep inflation below but close to 2 per cent.

The IMF said it welcomed recent moves by the ECB to keep interest rates low and pump more money into the region's banking system.

"But if the inflation outlook does not improve and inflation expectations continue to drift down, the ECB should be willing to do more, including purchases of sovereign assets," the IMF said in its report.

It also warned of the risks tied to geopolitical tensions in Ukraine and the Middle East, and of financial market corrections due to divergent policies from the world's major central banks.

The US Federal Reserve last month decided to end its bond-buying stimulus programme, while the Bank of Japan has dramatically increased its pace of money creation and the ECB agonises over whether to follow suit.

A deep stock market sell-off in mid-October also spooked policymakers concerned that a market rout could hurt confidence.

"The recent increase in volatility is a reminder about the challenges ahead," the IMF said.

BAGHDAD/ERBIL — The government of Iraq and the semi-autonomous region of Kurdistan have reached a deal to ease tensions over Kurdish oil exports and civil service payments from Baghdad, Iraq's finance minister told Reuters on Thursday.

Hoshiyar Zebari said the central government had agreed to resume payments from the federal budget for Kurdish civil servants' salaries.

Zebari, who is a Kurd, described the step as a "major breakthrough" that would reduce friction between the Kurdistan Regional Government (KRG) and Baghdad.

The deal was reached after talks between Iraqi Oil Minister Adel Abdul Mehdi and Kurdish Prime Minister Nechirvan Barzani in the Kurdistan region on Thursday.

Baghdad stopped paying for KRG civil servant salaries in protest against the Kurds' exporting oil to Turkey independently.

Under the agreement, Iraqi Kurdistan will give 150,000 barrels per day of oil exports — equal to around half its overall shipments — to the federal budget.

In Erbil, the KRG confirmed the agreement.

"What they have agreed is that Baghdad will release some funds — $500 million — and the KRG will give 150,000 barrels per day of oil to Baghdad," KRG spokesman Safeen Dizayee told Reuters.

Exports still under control of Kurds 

He said a KRG delegation headed by the prime minister would travel to Baghdad soon to hammer out a more comprehensive deal and the regional government would not hand over control of exports to Baghdad.

A similar agreement was proposed in April but never advanced to a deal.

In July, then Iraqi foreign minister Zebari said the Kurdish political bloc withdrew from the national government in protest against Prime Minister Nouri Al Maliki's accusation that Kurds were harbouring Islamist insurgents in their capital.

The Kurds later rejoined the administration. But tensions persisted.

Maliki, one of the most divisive figures to emerge from the US occupation of Iraq, was later replaced by Haider Al Abadi.

He is seen as a moderate Shiite capable of cooperating with Sunni Muslims, Kurds and other sects.

Iraqi leaders are under pressure to bury differences in order to counter Islamic State militants who have seized chunks of the country in the north and west.

There are about 5 million Kurds in majority Arab Iraq, which has a population of more than 30 million. Most live in the north, where they run their own affairs, but remain reliant on Baghdad for a share of the national budget.

LONDON/ZURICH/NEW YORK — Regulators fined six major banks including Citigroup and UBS a total of $4.3 billion for failing to stop traders from trying to manipulate the foreign exchange market, following a year-long global investigation.

HSBC, Royal Bank of Scotland (RBS), JP Morgan  and Bank of America also face penalties resulting from the inquiry that has put the largely unregulated $5 trillion-a-day market on a tighter leash, accelerated the push to automate trading and ensnared the Bank of England.

In the latest scandal to hit the financial services industry, dealers shared confidential information about client orders and coordinated trades to make money from a foreign exchange benchmark used by asset managers and corporate treasurers to value their holdings. Dozens of traders have been fired or suspended.

Dealers used code names to identify clients without naming them and created online chatrooms with pseudonyms such as "the players", "the 3 musketeers" and "1 team, 1 dream" in which to swap information. Those not involved were belittled and traders used obscene language to congratulate themselves on quick profits made from their scams.

Britain's Financial Conduct Authority (FCA) fined five lenders $1.77 billion, the biggest penalty in the history of the City of London, and the US Commodity Futures Trading Commission (CFTC) ordered them to pay a further $1.48 billion.

"Today's record fines mark the gravity of the failings we found and firms need to take responsibility for putting it right," FCA Chief Executive Martin Wheatley said.

"Banks had to understand that responsibility for good business practice went beyond their compliance departments, which are tasked with ensuring internal and external rules are followed.," said Wheatley.

"They must make sure their traders do not game the system to boost profits or leave the ethics of their conduct to compliance to worry about," he added.

The US Office of the Comptroller of the Currency, which regulates banks, also fined the US lenders $950 million and was the only authority to penalise Bank of America.

Switzerland's regulator FINMA ordered UBS, the country's biggest bank, to pay 134 million francs ($139 million) after it found serious misconduct in both foreign exchange and precious metals trading. It also capped bonuses for dealers in both units at twice their basic salary for two years.

FINMA will appoint a third party to monitor the bank's observance of its rules after discovering it had received whistleblower reports about alleged trader misconduct in 2010 but failed to investigate them properly.

Despite Wednesday's payout, which brings the total fine for benchmark manipulation to over $10 billion in two years, banks  still face further penalties as the US Department of Justice, the Federal Reserve and New York's financial regulator conclude their own investigations.

US authorities have tended to be more aggressive than their European counterparts in punishing big banks for misconduct. 

"We made the judgement that while more information is always better, we didn't believe that the picture would materially change even if we spent additional years continuing to investigate," said Aitan Goelman, director of enforcement at the CFTC.

Britain's Serious Fraud Office is also conducting a criminal investigation and there is the threat of civil litigation from disgruntled customers.

Exasperation

Reflecting exasperation that banks failed to monitor their trading desks adequately despite promises to overhaul their culture and controls, the British FCA launched a review of the spot foreign exchange industry that may spread to other markets such as derivatives and precious metals.

The misconduct at the banks ran from 2008 until October 2013, over a year after US and British authorities started punishing banks for rigging the London Inter-Bank Offered Rate (LIBOR), an interest rate benchmark.

RBS, which is 80 per cent owned by the British government, received client complaints about foreign exchange trading as far back as 2010. The bank said it regretted not responding more quickly to the complaints.

The other banks were similarly apologetic.

Barclays was not part of Wednesday's settlement after pulling out of talks with the FCA and the CFTC to try to seek "a more general coordinated settlement" with regulators.

The FCA said that the five other banks had been given a 30 per cent discount on their fines for settling early and that its enforcement activities were focused on those five plus Barclays, signalling that Deutsche Bank would not face a fine from it.

The CFTC declined to comment on whether the agency was looking at other banks.

Bank of England

The currency inquiry struck at the heart of the British establishment and the City of London, the global hub for foreign exchange dealing.

The Bank of England (BoE) said on Wednesday that its chief foreign exchange dealer, Martin Mallet, had not alerted his bosses that traders were sharing information.

The British central bank, whose Governor Mark Carney is leading global regulatory efforts to reform financial benchmarks, has dismissed Mallet but said he had not done anything illegal or improper.

It also said it had scrapped regular meetings with London-based chief currency dealers, a sign the BoE wants to put a distance between it and the banks after the scandal.

The investigation has provoked major changes to the foreign exchange market with a clamp down on chatrooms, the suspension or firing of more than 30 traders, an increase in automated trading and new regulatory changes to benchmarks which world leaders are expected to sign off on at the Group of 20 summit in Brisbane this weekend.

AMMAN — Jordan's inflation rate increased by 3 per cent by the end of October compared with the same period of last year, according to the Department of Statistics (DoS) report. The rise was attributed to higher rents, besides an increase in the prices of tobacco, cigarettes, clothes, footwear, education and transport. This was coupled with a decrease in the prices of vegetables, hygienic products, fat and oil as well as telecommunications.  

AMMAN —  The US Agency for International Development said in a press statement on Wednesday that US Ambassador Alice G. Wells attended the opening of the Middle East and North Africa Information and Communications Technology Forum (MENA ICT) on Wednesday to underscore the US government’s commitment to Jordan’s growing ICT sector. The ambassador toured the forum at King Hussein Business Park to get acquainted with  national, regional and international opportunities in the sector from Jordanian ICT leaders. Also on Wednesday, Jordan Commerce Chamber (JCC) board members met with Wells and discussed means to boost economic cooperation and strengthen the partnership between the private sectors of the two countries. At the meeting, JCC Chairman Nael Kabariti highlighted the strong historic relations between the two countries and called on the US to increase its investments in the Kingdom, especially in the area of small- and medium-sized enterprises, in particular. 

PARIS — With fossil fuels set to meet most of the increased global demand for energy, the International Energy Agency (IEA) warned Wednesday that climate change targets are at risk and conflicts could still wreak havoc with supplies.

"The global energy system is in danger of falling short of the hopes and expectations placed upon it," the IEA said in its World Energy Outlook 2014 report.

The Paris-based body, which advises industrial oil consuming nations, forecasted global energy demand will grow 37 per cent by 2040, with fossil fuels key to meeting that increased demand despite concerns about global warming.

It warned global energy security is at risk in the oil market as "reliance grows on a relatively small number of producers".

It noted that the Middle East "remains the only large source of low-cost oil", but conflict in the region "has rarely been greater since the oil shocks in the 1970s" that left consuming countries desperately short of fuel supplies. 

While oil prices are currently at four-year lows, it sees them rising as demand increases from 90 million barrels per day (mbpd) in 2013 to 104 mbpd in 2040.

It said that higher prices and new policies will gradually constrain the pace of their consumption and reduce their weight in overall energy use.

That view is shared by top oil producers.

Last week, the Organisation of the Petroleum Exporting Countries (OPEC) predicted that fossil fuels, oil, gas, coal, will still "play the leading role in satisfying world energy needs" but will dip from 81.6 per cent to 78.4 per cent of total energy consumption. 

The IEA sees the fastest rate of growth among fossil fuels for natural gas, where demand should increase by more than half, becoming the leading fuel in the OECD (Organisation for Economic Cooperation and Development) energy mix by 2030.

The dispute between Russia and Ukraine over a separatist insurgency in the east of the ex-Soviet country has reignited concerns about gas security, especially for European markets.

The IEA noted those fears but said they were partly allayed by a growing number of suppliers, and that the alternative of "liquefied natural gas (LNG) offers some protection against the risk of supply disruptions".

Call for safer energy 

As for coal, while the supply is abundant and secure, "its future use is constrained by measures to tackle pollution and reduce carbon dioxide emissions," it said.

While the share of fossil fuels in energy consumption will drop to just under three quarters by 2040, their impact on global warming and climate change is undiminished.

The IEA called for urgent action as it estimates the world is currently set to emit by 2040 the amount of carbon dioxide that would bust the international goal of limiting the global temperature increase to 2 degrees Centigrade.

"It is clear that the 2 degrees Centigrade objective requires urgent action to steer the energy system on a safer path," said the IEA, which plans to issue a special report in advance of a crucial UN climate summit in Paris next year.

While a major alternative to fossil fuels, the IEA sees an uncertain future for nuclear power as Japan and a number of European countries reduce or phase it out over safety concerns.

Global nuclear capacity will nevertheless increase by almost 60 per cent, with China alone accounting for 45 per cent of the growth.

But this will only increase its share in the energy mix by one point to 12 per cent, still below its peak two decades ago.

It pointed to renewable energy technologies to help fill the shortfall in power generation as they are gaining ground, helped by global subsidies amounting to $120 billion in 2013.

The share of renewables, wind, solar, hydropower, biofuels, increases most in the OECD major industrialised nations, reaching 37 per cent of power generation, the IEA concluded.

LONDON — Leading world economies are spending $88 billion (71 billion euros) a year in fossil fuel exploration subsidies, sapping investment from low-carbon alternatives and increasing the risk of “dangerous climate change”, according to a report.

The report by Britain’s Overseas Development Institute think tank said that these subsidies “could drive the planet far beyond the internationally agreed target of limiting global temperature increases to no more than two degrees Celsius”.

The report was published in conjunction with Oil Change International, a US advocacy group, and comes ahead of a meeting of Group of 20 (G-20) leaders this weekend in Brisbane, Australia.

Britain, Russia, the United States and Australia had some of the highest national subsidies, indicated the report, which pointed in particular to Washington providing $5.1 billion to fossil fuel industries last year — almost double the level in 2009.

The report also pointed to investments made by state-owned companies as a form of subsidy particularly prevalent in Brazil, China, India, Mexico, Russia and Saudi Arabia.

“Levels of support range from $2-$5 billion in Russia, Mexico and India, to $9 billion in China, $11 billion in Brazil and $17 billion in Saudi Arabia,” it pointed out.

It identified public finance as a third form of subsidy for supporting fossil fuel exploration, highlighting its use in Canada, China, Japan, Russia and South Korea.

The report said the funds were “uneconomic investments” and “a publicly financed bailout for carbon-intensive companies” at the expense of wind, solar and hydro-power.

“Without government support for exploration and wider fossil fuel subsidies, large swathes of today’s fossil fuel development would be unprofitable,” the report added.

It gave as an example the Prirazlomnoye project, Russia’s first Arctic offshore site, saying that “even with extensive tax breaks and public investment in infrastructure, the project is of dubious commercial viability”.

“Two-thirds of the reported internal rate of return of 14 per cent can be traced to tax breaks,” it said.

It also pointed to “a large gap between G-20 commitment and action” since the G-20 powers had agreed five years ago to phase out “inefficient” fossil fuel subsidies.

The authors called on governments to “act immediately” to phase out subsidies and said that carbon should be priced “to reflect the social, economic and environmental damage associated with climate change”.

The report said fossil fuel exploration subsidies were only part of the picture with global subsidies for the production and use of fossil fuels adding up to $775 billion in 2012 compared to $101 billion for renewable energy spent in 2013.