Ever so slowly, the euro zone economy awakes

Moribund. Decrepit. Sclerotic. Popular words to describe the economy shared by the 19 countries of the euro zone - but perhaps no longer apt.

Very slowly - and primarily because of massive stimulus from the European Central Bank - the euro zone is showing signs of recovery. It is a dawn that policymakers are struggling to nurture into broad daylight.

It also may not be felt equally across the board, viz Spain and Greece's unemployed versus Germany's busy builders.

But putting aside for the moment that the euro zone's nascent recovery is happening just as China is wobbling and financial markets are unhinged, the numbers look generally positive.

Economic growth was running at an annual rate of 1.6 percent in the third quarter. While this may not seem robust, it is roughly twice the average annual growth rate between 2003 and 2014 (itself dragged down by the sharp contraction of 2009), and the equal highest rate since 2010.

So, for the euro zone, reasonably good. ECB forecasters and economists polled by Reuters expect it to grow at a slightly faster pace this year at around 1.7 percent.

Other data - though sometimes mixed - also points to a stronger-than-advertised economic performance.

Unemployment has been falling fairly steadily. It was at 10.5 percent in November, which is high, but the lowest in more than four years and well below the 12 percent of 2013.

Consumer confidence is on the rise and economic sentiment is at a more than four-year high. Manufacturing, as measured by purchasing managers' indexes, rose firmly into expansion in 2015, albeit still shy of its 2013 peak.

RELATIVELY SPEAKING

Finding positives in such data risks comparison with a polite visitor complimenting a dreary industrial city on its surprisingly good orchestra.

But given where the euro zone has been - and the many prophets of its political and economic doom - its relative improvement is being noticed.

"The world’s third largest economic bloc is actually doing rather well," said Andrew Milligan, head of global strategy at Standard Life Investments, which is favoring European equities, bonds and property in its portfolios as a result.

"A number of drivers are supportive," he said, listing "monetary and fiscal policy, a somewhat healthier banking system, better real wages growth helped by lower energy costs, and pent up demand as consumer confidence improves in those countries that have had a hard few years."

The danger is that it could all be knocked down in a second by what the finance minister of non-euro zone Britain, George Osborne, has dubbed a "dangerous cocktail" of threats to the world economy.

Chief of these is the economic slowdown in China, which is the broader European Union's second-biggest trading partner behind the United States. China and the EU trade around 1 billion euros between them a day, according to the European Commission.

UBS calculates that a one percentage point slowdown in Chinese growth would slice 0.1 to 0.3 percentage points off EU growth, which it says "should be manageable".

A similar slowdown in emerging markets would lop 0.2 to 0.4 percentage points off growth.

A case can be made, however, that in Europe - and the euro zone in particular - the economy has been growing even while China and emerging markets have slowed.

In the first half of 2015, for example, big gun Germany's export growth to China fell to just 0.8 percent and engineering exports shrank by 4.9 percent. Yet German gross domestic product (GDP) growth was running at 1.8 percent at last count even with the slide.

The overriding issue, though, is that the ECB's 60 billion euro ($66 billion) a month stimulus package is in no danger of ending and can offset much of the impact of trouble overseas.

Lower commodity prices will help too, whatever the concerns about deflation.

Of course, were the United States and the world economy as a whole to have a serious wobble, the euro zone would too.

But for now, the negative adjectives about the euro zone may be overdone.

Sanctions impact on Russia to be longer term, U.S. says BRUSSELS | BY ROBIN EMMOTT

Western sanctions on Moscow are intended to exert long-term pressure on Russia and not to push it "over the economic cliff," a U.S. State Department official said on Tuesday.

EU and U.S. restrictions imposed on Moscow in 2014 over the Ukraine conflict shaved about 1.5 percent off Russian economic output in 2015, the official said, citing data from the International Monetary Fund.

The effect of falling world oil prices was far greater, said the official, who requested anonymity, meaning that Russia's economy shrank 3.8 percent in 2015.

"The direct effect is pretty small ... at about 1 to 1.5 percent. It's the indirect effect that's larger," the official said, adding that international companies previously considering 20-year investments in Russia were scaling back to five years.

"The sanctions are designed not to push Russia over the economic cliff," the official, who was on a visit to Brussels, said. "That would be bad for the Russian people."

Sanctions on Russia's banking, energy and defense sectors, imposed from July 2014, are part of the West's efforts to pressure Russia to help end the crisis in eastern Ukraine, which has killed more than 9,000 people since April 2014.

Russian President Vladimir Putin was quoted on Monday as telling Germany's Bild newspaper that sanctions "are severely harming Russia", although he also noted a bigger impact from global oil oversupply that is weakening energy prices.

With neither the West nor Russia able to resolve the Ukraine crisis so far, the European Union and the United States will keep economic sanctions on Russia until the end of July 2016.

That means Russian companies cannot borrow from the EU and the U.S. banks and on markets for more than 30 days, limiting oil producers such as Rosneft from raising funds for investment.

"From what we know and from my conversations with market participants, other countries are not bridging the gap," the official said, although he added that China has offered some financing at higher rates and with shorter maturities.

Any lifting of sanctions on Russia is tied to the implementation of a peace deal on Ukraine which was negotiated by the leaders of France, Germany, Ukraine and Russia almost a year ago.

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Catalonia parliament elects new pro-independence leader

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© Lluis Gene, AFP | Catalonia’s newly elected pro-independence leader, Carles Puigdemont, in Barcelona on January 10, 2016

Text by NEWS WIRES

Latest update : 2016-01-10

The majority secessionist lawmakers in Catalonia's parliament voted in a new leader Sunday, tasking him with overseeing the wealthy region's breakaway from Spain in a last-minute show of unity after months of bitter infighting.

Carles Puigdemont was elected regional president with 70 votes for, 63 against and two abstentions, giving Catalonia's high-profile independence movement a fresh lease of life and drawing a sharp rebuke from Spanish Prime Minister Mariano Rajoy, who vowed to fight for his country's unity.

"The government won't allow a single act that could harm the unity and sovereignty of Spain," Rajoy warned in a live, televised appearance in Madrid.

After months of acrimony, Catalonia's pro-independence faction that won regional parliamentary elections in September finally came to an agreement this weekend over who should lead the new local government.

The focus of the squabble had been Artur Mas, the incumbent, separatist regional president whom the far-left CUP party – part of the secessionist faction that won the polls – rejected over his support for austerity and corruption scandals linked to his party.

And with Mas stubbornly refusing to step aside as a weekend deadline to form a government loomed,Catalonia seemed to be heading for fresh elections, which would have been the fourth since 2010.

But in a surprise move Mas agreed to step aside on Saturday, naming the relatively unknown politician Puigdemont as his successor.

The 53-year-old mayor of Girona – who comes from a fervently pro-independence family – will now appoint his cabinet.

"We need... to start the process to set up an independent state in Catalonia," Puigdemont said in a speech to the northeastern region's parliament ahead of the vote.

'Power vacuum in Madrid'

The last-ditch agreement to form a Catalan government stands in stark contrast to the situation in Madrid, where the national government is in limbo following inconclusive December polls.

Rajoy's conservative Popular Party (PP) came top in the December 20 elections but lost its absolute majority, leaving him struggling to form a coalition government as other parties refuse to support him.

"The (separatist) coalition is profiting from the power vacuum in Madrid," headlined online daily El Espanol on Sunday.

So far the PP's traditional Socialist rivals (PSOE), who came second in the elections, have refused to back him.

But ironically, the newly reached separatist deal may put pressure on the PSOE to stand united with the PP over its opposition to Catalonia breaking away from Spain.

"We reiterate our support for the caretaker government to enforce the law and defend the Constitution," Socialist lower house parliamentary group spokesman Antonio Hernando told reporters earlier Sunday.

And Fernando Martinez-Maillo of the PP stressed that there was "no better way to confront secessionism than to see the Popular Party and the Socialist party join forces."

'Alarm bells' ringing again

One of Spain's 17 semi-autonomous regions with its own language and customs, Catalonia already enjoys a large degree of freedom in education, health and policing.

But fed up after years of demands for greater autonomy on the taxation front – complaining it pays more to Madrid than it gets back – the region veered towards separatism.

Polls show most in the 7.5-million-strong region support staging a Scotland-style referendum on independence – which Rajoy has categorically refused to allow – but in fact are divided over whether to make the break from Spain.

In November, separatist lawmakers passed a motion in parliament breaking from Spain and calling for complete independence in 18 months.

The move was later ruled illegal by Spain's Constitutional Court, but Catalonia's secessionist lawmakers quickly rose up in defiance, saying the resolution was here to stay.

As week after week passed with no government in sight, however, outsiders began to doubt that the separatists would ever be able to implement their independence plan.

Mas on Sunday attempted to put these doubts to bed.

"In the past few weeks (in Madrid), they were saying enthusiastically that Catalonia was sinking, they were so enthusiastic that they had started to relax," he told members of his CDC party on Sunday.

"But from yesterday, all the alarm bells started ringing again."

Singer M.I.A. blasts 'arrogant' PSG over refugee video row

British singer M.I.A. branded French football club PSG “arrogant” on Tuesday after it demanded she remove images of a modified version of the club’s shirt in the video for her latest single “Borders”, which deals with the refugee crisis.

The war of words erupted after the singer on Monday tweeted a copy of a legal letter she received from PSG’s deputy chief executive Jean-Claude Blanc in which he which he warned her she could face legal action if she did not remove the club’s shirt from the video and compensate the Qatar-ownedFrench league leaders for “harm suffered”.

In the video, M.I.A., real name Mathangi Arulpragasam, can be seen sporting the club’s white away shirt. The logo of the club’s sponsor, “Fly Emirates”, has been changed to “Fly Pirates”.

The video also shows images of migrants climbing fences and packed into boats in a commentary on the recent influx of people into Europe fleeing war and poverty.

“We consider that the use of our brand and image in a video clip denouncing the treatment of refugees is a source of discredit to our club and distorts its public communication policy,” Blanc’s letter reads.

“More than being surprised, we simply do not understand why we are associated, through our logo and the official jersey of our team’s players, to such denunciation [sic],” it says.

‘Extremely arrogant’

Speaking about the matter in depth for the first time, M.I.A. told UK magazine Noisey in an interview published Tuesday of her dismay at the club’s reaction.

“I just find it extremely arrogant that they are trying to police something like that,” she said.

She dismissed suggestions she had chosen the PSG shirt because of the club’s sponsorship by Qatar and United Arab Emirates  – countries that have been criticised for their treatment of refugees and migrants.

World leaders make history with climate deal in Paris

Delegates from 195 nations reached an unprecedented agreement on global climate change on Saturday in the French capital after years of often fruitless negotiations for a legally binding deal to limit carbon emissions.

French Foreign Minister Laurent Fabius brought the historic UN negotiations in Paris to an end as relieved ministers stood for several minutes to applaud.

"I see the room, I see the reaction is positive - I hear no objection. The Paris climate accord is adopted," Fabius declared, officially ending the summit with a knock of a little green hammer. 

"It may be a small gavel but it can do big things," he said.

The landmark deal comes after negotiators from key nations - including China, the United States, and India - gave their approval to a draft accord presented by host France earlier in the day.

The legally binding pact limiting greenhouse gas emissions provides the world a road map for breaking away from fossil fuels that have powered the global economy since the Industrial Revolution.

The deal - to take effect from 2020 - ends years of disagreement between rich and poor nations over how to carry out what will be a multi-trillion-dollar effort to slow down global warming and deal with its consequences already occurring around the planet.

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Read more: Will the climate deal be enough to save the planet?

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"We have opened a new chapter of hope in the lives of seven billion people on the planet," said India's Environment Minister Prakash Javadekar.

"We have [the planet] on loan from future generations. We have today reassured these future generations that we will all together give them a better Earth."

Cap on greenhouse gases

The Paris accord sets a target of limiting warming of the planet to "well below" 2 degrees Celsius compared with pre-industrial levels, while aiming for an even more ambitious goal of 1.5°C.

To do so, the emissions of greenhouse gases will need to peak "as soon as possible", followed by rapid reductions, the agreement states.

The Earth has already warmed almost 1°C, which has caused major problems for many people around the world - particularly in developing countries - such as more severe storms, droughts, and rising seas, according to scientists.

Developing nations had insisted rich countries must shoulder the lion's share of responsibility for tackling climate change as they emitted most of the greenhouse gases since the Industrial Revolution.

The US and other rich nations countered that emerging economies must also do more.

Who is responsible for what's happening to our planet?

On the crucial issue of financing, developed countries agreed to muster at least $100bn a year from 2020 to help developing nations.

However, following US objections, it was not included in the legally binding section of the deal.

US Secretary of State John Kerry called it "a victory for all of the planet and for future generations".

"This is a tremendous victory for all of our citizen... We have set a course here. The world has come together around an agreement that will empower us to chart a new path for our planet, a smart and responsible path, a sustainable path," he said.

Environmental groups said the Paris agreement was a turning point in history and spelled the demise of the fossil fuel industry, pointing particularly to the significance of the 1.5°C goal.

"That single number - and the new goal of net zero emissions by the second half of this century - will cause consternation in the boardrooms of coal companies and the palaces of oil-exporting states," Greenpeace International chief Kumi Naidoo said.

Russia warns Turkey over Aegean warship incident MOSCOW | BY KATYA GOLUBKOVA

Russia on Sunday warned Turkey to stop staging what it called provocations against its forces in or near Syria after one of its warships fired warning shots at a Turkish vessel in the Aegean to avoid a collision.

The Russian Defence Ministry said one of its warships, the destroyer Smetlivy, had been forced to fire the warning shots on Sunday morning and that it had summoned the Turkish military attache over the incident.

"The Turkish military diplomat was given a tough explanation about the potentially disastrous consequences from Ankara's reckless actions towards Russia's military contingent fighting against international terrorism in Syria," the Defence Ministry said in a statement.

"In particular, our deep concerns about more Turkish provocations towards the Russian destroyer Smetlivy were conveyed."

Earlier on Sunday, the ministry said that the Turkish fishing vessel failed to respond to Smetlivy's warnings and changed course sharply only after shots were fired before passing within just over 500 meters of the warship.

"Only by luck was tragedy avoided," the ministry said.

Turkish Foreign Minister Mevlut Cavusoglu, who was in Rome for talks on Libya, said Ankara was investigating the matter and would make a statement once it had more information.

He also reiterated Turkey's position that it wanted to resolve its difficulties with Russia. "We want to solve the tension with dialogue," he said, in comments broadcast by TRT Turk.

The incident is likely to heighten tensions between the two nations who are seriously at odds over Syria and the Turkish shooting down of a Russian military jet last month.

Russian President Vladimir Putin, who called the downing of the plane a "stab in the back", has since imposed economic sanctions on Turkey as a retaliatory measure.

How the world learned its lesson and got a climate deal PARIS | BY RICHARD VALDMANIS AND EMMANUEL JARRY

It was an agreement born from a fear of failure, delivered by the smoothness of French diplomacy.

Six years earlier, countries had bitterly walked away from global climate talks in Copenhagen without a deal. The decision to reassemble in Paris to try again at getting almost 200 countries to sign a pact on cutting carbon emissions was a gamble: another collapse could the end world’s ability to forge a common approach to dealing with climate change.

And no political leader wanted his reputation stained by a repeat of the debacle in Copenhagen.

So there was no detail of hospitality too small for the French hosts this time, no country negotiator who would go unflattered by Laurent Fabius, the French foreign minister who presided over the conference.

Fabius had been the youngest French prime minister in history in the 1980s; now he was an elder statesman looking to carve a bigger place in it. Over two weeks under the global spotlight, his sonorous voice and relentless optimism would come to define the public tone of the proceedings.

But behind the scenes, the talks witnessed the confrontations and five-past-midnight compromises to be expected when sleep-deprived negotiators from almost every country in the world are supposed to come to a consensus.

They ultimately found it, remarkably only one day later than planned. But the path to the standing ovations at the end was strewn with disputes over money, the emergence of an effective new climate coalition of states, and hours of wrangling over what “should” or “shall” be done.

FRENCH WAYS

For the survivors of Copenhagen, the key to success in Paris would be preparation.

UN Secretary General Ban Ki-moon complained that the political leaders had not been well-prepared for the Copenhagen meeting, and this time he and the French conducted extensive advance work to get other leaders personally engaged.

They also decided that, if leaders were to come to Paris, they would do so at the beginning to lend the talks some political oxygen, rather than arriving for a scramble at the end.

So on Nov. 30, the sprawling conference hall near the Le Bourget airfield on the outskirts of Paris hosted world leaders, who were supposed to deliver three minutes of encouragement. Fabius wandered the conference center before they arrived, tapping microphones and checking the video monitors under a podium made of recycled wood.

“Ah, we have Prince Charles,” he said to an aide, consulting the speakers’ list.

The opening day speeches were seen as a success. UN officials were relieved at the relatively cooperative tone from Russian President Vladimir Putin who was among several leaders who assured Ban privately before the outset that Russia would not block a deal, UN officials said later.

Fabius pulled together a team of officials and diplomats from across the French civil service to facilitate the talks. “He treated it less like a climate negotiation and more like a trade deal,” said one UN veteran of past climate talks.

He also constantly praised delegates for their hard work and insights, before telling them exactly what schedule of debate they had to follow to finish by their self-imposed deadline of Friday, Dec. 11.

He gave the job of writing the accord’s preamble to Venezuela’s minister Claudia Salerno, whose country had been perhaps the harshest critic of the Copenhagen process that was seen as a collusion of big powers dictating to small countries, making her personally vested in finding compromises.

Not all developing countries were easily won over, however. A central sticking point throughout the talks was the degree to which the agreement would be legally binding on countries, especially the rich ones who are expected to provide the hundreds of billions of dollars in funding to cover the transition to a low carbon future.

The differences were expressed in wrangles over wording. Hard, legally binding commitments were proceeded in the text as items that countries “shall” do.

Those items that were simply good intentions fell into the “should” do category.

HALF A DEGREE CLOSER

Facing unbudging demands to put their financial commitments into legal language, U.S. negotiators knew they had to break the poor vs. rich country divide. Their tactic was to sign up to a loose coalition of countries called the High Ambition Coalition.

The European Union takes credit for starting the group as far back as 2011, when it was a loose alliance between the EU and small island states.

As Paris approached, it expanded to include African, Caribbean and Pacific nations, developing an agenda that included the goal of keeping the global temperature rise to 1.5 degrees Celsius (2.7 Fahrenheit) over pre-industrial levels by the end of the 21st century.

The number had almost been banished from serious discussion ahead of Paris. But the American decision to “join” the High Ambition Coalition brought the 1.5 goal back into play, sweetened with pledges of hundreds of millions of dollars to help island and developing states mitigate the ill-effects of climate change.

Although the promise is only aspirational, the re-emergence of references to 1.5 degrees in the Paris text brought several influential developing countries into the U.S. camp. Soon Canada joined, then Australia and Brazil, a collection of wealthy, heavy-polluting western countries marching into the plenary hall alongside the Marshall Islands.

China’s negotiators dismissed the High Ambition Coalition as a stunt. “This is a kind of performance by some members,” said Liu Zhenmin, deputy head of the China delegation. But the solidarity of the developing nation bloc was broken.

LAST BRIDGES AND HICCUPS

Climate change summits have developed a particular theater of their own. In one moment, it was possible to see actor Alec Baldwin expressing his fears for the planet to journalists, across from an Indonesian pavilion hosting a party to show off its pilot green energy hospitals.

But much of the real work was done by people not even at Le Bourget. After visiting at the start, U.S. President Barack Obama and Chinese President Xi Jinping discussed roadblocks by telephone, and the two countries appeared to be mostly on the same page.

Other housekeeping of the text was taken care of. Negotiators insured that a specific reference to climate effects on “occupied territories” was taken out to keep the politics focused on climate issues.

By Saturday, Fabius the pieces were falling into place. “I think we’re done here,” said a happy Marshall Islands foreign minister Tony de Brum on Saturday morning.

There was to be one last hiccup. The final text had settled on 143 items prefaced by “shall,” 40 with “should.” But in one section, the words appeared to have been flipped.

Suddenly, there was a delay in the hall where delegates had convened amid smiles and air kisses to seal the deal.

Fabius and U.S. Secretary of State John Kerry left the room, replaced by rumors of trouble. But then the French minister was back. A technical glitch, he explained, brought on by the fatigue of a drafter.

The organizers announced corrections to a few typographical errors, and tellingly switched one last “should” for a “shall” before Fabius swiftly brought the gavel down.

(Writing by Richard Valdmanis and Bruce Wallace; Additional reporting by Alister Doyle,Valerie Volcovici, Barbara Lewis, David Stanway and Nina Chestney in Paris; editing by Anna Willard)