Cristina Kirchner's extraordinary Twitter rant as she lashes out over Falklands

 

By Harriet Alexander 4:47PM GMT 28 Mar 2013

The president of Argentina has lashed out at Britain's sovereignty of the Falkland Islands in an extraordinary Twitter rant, claiming that "even three-year-old children" would dismiss the UK's position.

"The UN, the Decolonisation Committee … the world … are demanding dialogue, ALL TOGETHER," tweeted Cristina Kirchner Photo: AFP/GETTY

Cristina Kirchner, the firebrand ruler of Argentina, took to the social media site following a meeting of the UN special committee of decolonisation, firing off a stream of 27 tweets in under two hours.

"An English territory more than 12,000km away? The question is not even worthy of a kindergarten of three year olds," she wrote on Wednesday night.

On Tuesday Héctor Timerman, the foreign minister, had travelled to the meeting in New York to meet with Ban Ki-moon, the UN Secretary General. Mr Timerman demanded talks with Britain on the sovereignty of the islands, following a referendum in which the Falkland Islanders voted overwhelmingly to maintain their current status quo.

But Mrs Kirchner was relentless in her championing of the cause.

Twitter: Cristina Kirchner - Territorio inglés a más de 12 mil kms de distancia? La pregunta no aguanta ni jardín de infantes de 3 años.

"The UN, the Decolonisation Committee … the world … are demanding dialogue, ALL TOGETHER," she tweeted to her 1.8 million followers.

"The greater fatherland supports without reservation our claim, for historical, documental and geographical reasons and the most elementary of logic ..."

Moments later she added, full of sarcasm: "Complete multilateralism and anti-colonialism. 'Very good'. See how I love to speak English?"

Mark Lyall Grant, Britain's ambassador to the UN, said it was "untenable" for Argentina to reject the islanders 99.8% vote in favour of remaining under British rule.

Mike Summers, a member of the Falkland Islands Assembly, presented the results of the referendum to the UN in New York last week.

"The referendum result makes it clear that we have no desire to be governed by Argentina. Continued harassment of our economic development and intimidation of those who want to do business with us and invest in the Islands will not change this fact. The more Argentina presses our small community, the harder will be our resolve," Mr Summers said.

Following on from her comments on the Falklands, the 60-year-old president then embarked on a series of lengthy reminiscences about her mother, Ofelia, who wanted her to learn the language, and about her recollections of living under the military junta, which took control on March 24, 1976.

"March 24th, in the Plaza. Men in red uniform, describing themselves as being on the Left. Threatening, with clubs in their hands.

"Yes, I know, I'm old. But I remember these things as if I'd seen them only yesterday. This memory sometimes hurts me deep in my soul."

She then began an in-depth retelling of an encounter she had had with a young, taunted gay man named Pedro.

"Attacked, beaten, humiliated for being gay, by those who call themselves Catholics," she said.

"This is the Fatherland for all of us – a freedom which I did not have when I was Pedro's age – in which each one of us can say what they think and what they like."

Cristina Kirchner's extraordinary Twitter rant as she lashes out over Falklands - Telegraph

Even now, after all that's happened to Cyprus, they’re queuing up to join the euro

By Jeremy Warner 8:18PM GMT 28 Mar 2013

It defies belief that Poland and others are still keen on joining the economic doomsday machine of the single currency

Despite an ongoing financial maelstrom, the euro hasn’t yet lost a single member, and indeed is continuing to add them Photo: ALAMY

It was a while back, so it’s hard to remember the exact question, but I certainly recall the answer. Visibly angered by my suggestion that the euro was an unsustainable construct, Michel Barnier, European commissioner for internal markets, insisted that not only was it perfectly sustainable, it was so manifestly desirable that within five to 10 years it would have expanded to include all 27 members of the European Union bar one – the one being us, naturally.

With the euro zone crisis already in full flood, his prediction appeared at the time to border on the delusional. Here was another eurocrat with his head buried in the sand. Yet I have to admit that, contrary to all rational economic analysis, the numbers do seem to be stacking his way.

Despite an ongoing financial maelstrom, the euro hasn’t yet lost a single member, and indeed is continuing to add them. Estonia joined last year, Latvia enters next year and Romania the year after. Meanwhile Monaco, San Marino and Vatican City have concluded agreements allowing them to use it as their official currency. Similar arrangements come into force for Andorra soon. Bulgaria operates a currency board with the euro, while Kosovo and Montenegro have unilaterally adopted it without even being members of the EU. They therefore have no say in policy decisions.

Most astonishing of all, Poland’s prime minister, Donald Tusk, appeared this week to join the queue by suggesting a referendum on the matter. The trade-off here is that by agreeing to the vote he may get the parliamentary majority needed for the constitutional changes deemed necessary for euro membership.

I say “most astonishing of all”, because Poland is actually the best example there is of the merits of giving this economic doomsday machine as wide a berth as possible. Appreciation of the zloty during the boom helped the country escape the loss of competitiveness that afflicted the euro zone periphery, where big influxes of credit from the core caused wages and trade deficits to balloon. By the same token, devaluation allowed Poland largely to avoid the deep slump that engulfed much of Europe when the banking crisis took hold, and to enjoy relatively good economic growth ever since.

Of course, the natural market remedy of currency realignment doesn’t always work – as Britain demonstrates – in preventing the build-up of imbalances. Yet even here it has provided at least a degree of protection. If the UK had been in the single currency, the credit-fuelled boom of the Noughties would have been even bigger and the subsequent bust infinitely worse. We would have been Spain to the power of 10. As William Hague remarked 15 years ago, the problem with the euro is that of being “trapped in the economic equivalent of a burning building with no exits”.

That Mr Tusk should wish to begin a national debate in which he hopes to convince a sceptical population of the merits of euro membership is astonishing enough, given Poland’s great escape thus far; that he should do so in the very week that the euro zone has brutally thrown poor little Cyprus onto the economic scrapheap makes it almost unbelievable.

It all goes to show just how powerful the idea of ever deeper union remains for a Continent still so recently wracked by war and conflict. This is particularly the case for the former Soviet satellites, barely more than 20 years out from beneath the Russian yoke.

Like all euro zone aspirants, Mr Tusk expects Poland to become not Greece, Cyprus, Portugal or Spain, but Germany, the Netherlands, Finland or Austria. He’s a poster child for Angela Merkel’s vision of the new euro as a federation of German lookalikes.

Good luck to him. His foreign minister, Radek Sikorski, is even bolder in his ambitions. Once in the euro, he said a few months ago, Poland would quickly displace Britain as one of the three most influential countries in Europe. This is what the European “project” does to politicians: it puffs them up with their own sense of self-importance to the point where they can no longer think straight.

It’s easy enough to see why the politicians are rather keener than the people they govern. As members of the euro, they get to sit at the high table with Angela Merkel and indulge in the make-believe of equal influence and partnership. Unfortunately, this lasts only as long as it takes to run into trouble or step out of line, at which point the national leader finds he has no say in the matter at all. If the rules were applied consistently and universally, then the consequent punishment might just about be considered to have some sort of “greater good” merit. But they are not.

Cyprus was thought too small to matter and therefore a good subject for experimentation. Yet in performing the dissection, Europe has managed both unfairly to victimise a member state and to set precedents that threaten to deepen the crisis elsewhere. By hair-cutting uninsured deposits in insolvent banks – a reasonable enough principle in itself, but not in the midst of an all-embracing systemic financial crisis – policymakers are spreading panic to weaker banks in the rest of the euro zone and therefore prompting economically debilitating capital flight from the periphery to the core.

Capital controls have further established a form of apartheid where some Euros are more equal than others. What can happen to Cyprus can happen to any of the euro zone foot lings. And Mr Tusk wants to join such an economic death-trap?

Even now, after all that's happened to Cyprus, they’re queuing up to join the euro - Telegraph

Cyprus has finally killed myth that EMU is benign

 

By Ambrose Evans-Pritchard 7:55PM GMT 27 Mar 2013

The punishment regime imposed on Cyprus is a trick against everybody involved in this squalid saga, against the Cypriot people and the German people, against savers and creditors. All are being deceived.

If Cyprus tries to claw back competitiveness with an 'internal devaluation', it will drive unemployment to Greek levels (27pc) and cause the economy to contract so fast that the debt ratio explodes Photo: AP

It is not a bail-out. There is no debt relief for the state of Cyprus. The Diktat will push the island’s debt ratio to 120pc in short order, with a high risk of an economic death spiral, a la Grecque.

Capital controls have shattered the monetary unity of EMU. A Cypriot euro is no longer a core euro. We wait to hear the first stories of shops across Europe refusing to accept euro notes issued by Cyprus, with a G in the serial number.

The curbs are draconian. There will be a forced rollover of debt. Cheques may not be cashed. Basic cross-border trade is severely curtailed. Credit card use abroad will be limited to €5,000 (£4,200) a month. “We wonder how such capital controls could eventually be lifted with no obvious cure of the underlying problem,” said Credit Suisse.

The complicity of EU authorities in the original plan to violate insured bank savings – halted only by the revolt of the Cypriot parliament – leaves the suspicion that they will steal anybody’s money if leaders of the creditor states think it is in their immediate interest to do so. Monetary union has become a danger to property.

One can only smile at the denunciations of Euro group chief Jeroen Dijsselbloem for letting slip that the Cypriot package is a template for future EMU rescues, with further haircuts for “uninsured deposit holders”.

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That is not the script. Cyprus is supposed to be a special case. Yet the “Dijssel Bomb” merely confirms that the creditor powers – the people who run EMU at the moment – will impose just such a policy on the rest of Club Med if push ever comes to shove. At the same time, the German bloc is lying to its own people about the real costs of holding the euro together. The accord pretends to shield the taxpayers of EMU creditor states from future losses. By seizing €5.8bn from savings accounts, it has reduced the headline figure on the EU-IMF Troika rescue to €10bn.

This is legerdemain. They have simply switched the cost of the new credit line for Cyprus to the European Central Bank. The ECB will have to offset the slow-motion bank run in Cyprus with its Emergency Liquidity Assistance (ELA), and this is likely to be a big chunk of the remaining €68bn in deposits after what has happened over the past two weeks.

Much of this will show up on the balance sheet of the Bundesbank and its peers through the ECB’s Target2 payment nexus. The money will leak out of Cyprus unless the Troika tries to encircle the island with razor wire.

“In saving €5.8bn in bail-out money, the other euro area countries will likely be on the hook for four to five times more in contingent liabilities. But, of course, the former represents real money that gives politicians a headache; the latter is monopoly central bank money,” said Marchel Alexandrovich, from Jefferies.

Chancellor Angela Merkel will do anything before the elections in September to disguise the true cost of the EMU project. It has been clear since August 2012 that she is willing let the ECB carry out bail-outs by stealth, as the lesser of evils. Such action is invisible to the German public. It does not require a vote in the Bundestag. It circumvents democracy.

Mrs Merkel can get away with this, provided Cyprus does not leave EMU and default on the Bundesbank’s Target2 claims, yet that may well happen.

“I wouldn’t be surprised to see a 20pc fall in real GDP,” said Nobel economist Paul Krugman. “Cyprus should leave the euro. Staying in means an incredibly severe depression.”

“Nobody knows what is going to happen. The economy could go into a free fall,” said Dimitris Drakopoulos, from Nomura.

The country has just lost its core industry, a banking system with assets equal to eight times GDP, and has little to replace it with. Cyprus cannot hope to claw its way back to viability with a tourist boom because EMU membership has made it shockingly expensive. Turkey, Croatia or Egypt are all much cheaper. Manufacturing is just 7pc of GDP. The IMF says the labour cost index has risen even faster than in Greece, Spain or Italy since the late 1990s.

What saved Iceland from mass unemployment after its banks blew up – or saved Sweden and Finland in the early 1990s – was a currency devaluation that brought industries back from the dead. Iceland’s krona has fallen low enough to make it worthwhile growing tomatoes for sale in greenhouses near the Arctic Circle.

If Cyprus tries to claw back competitiveness with an “internal devaluation”, it will drive unemployment to Greek levels (27pc) and cause the economy to contract so fast that the debt ratio explodes.

The IMF’s Christine Lagarde has given her blessing to the Troika deal, claiming that the package will restore Cyprus to full health, with public debt below 100pc of GDP by 2020.

Yet the Fund has already been through this charade in Greece, and her own staff discredited the doctrine behind EMU crisis measures. It has shown that the “fiscal multiplier” is three times higher than thought for the Club Med bloc. Austerity beyond the therapeutic dose is self-defeating.

Some in Nicosia cling to the hope that Cyprus can carry on as a financial gateway for Russians and Kazakhs, as if nothing has happened. RBS says the Russians will pull what remains of their money out of Cyprus “as soon as the capital controls are lifted”.

The willingness of the Cypriot authorities last week to seize money from anybody in any bank in Cyprus – even healthy banks – was an act of state madness. We will find out over time whether this epic blunder has destroyed confidence in the country as a financial centre, or whether parts of the financial and legal services sector can rebound.

Yet surely there is no going back to the old model, even though the final package restricts the losses to the two banks that are actually in trouble. Savers above €100,000 at Laiki will lose 80pc of their money, if they get anything back. Those at the Bank of Cyprus will lose 40pc.

Thousands of small firms trying to hang on face seizure of their operating funds. One Cypriot told me that the €400,000 trading account of his father at Laiki had just been frozen, leaving him unable to pay an Egyptian firm for a consignment of shoes.

The Cyprus debacle has taught us yet again that EMU has gone off the rails, is a danger to stability, and should be dismantled before it destroys Europe’s post-War order.

Whether it marks a watershed moment in the crisis is another matter. Italy, Spain, France and Portugal have their own crises, moving to their own rhythm.

The denouement will arrive when the democracies of southern Europe conclude that recovery is a false promise and that the only way to end mass unemployment is to break free of EMU’s contractionary regime.

It will be decided by Italy, not Cyprus.

Cyprus has finally killed myth that EMU is benign - Telegraph

Cyprus: tax haven status turns into a trap for British pensioners

 

By Ian Cowie Your Money Last updated: March 26th, 2013

Cyprus encouraged many British pensioners to retire to the island with favourable tax treatment – but that proved cold comfort when the credit crisis forced banks to close.

Cyprus encouraged many British pensioners to retire to the Mediterranean island with a fixed 5pc tax rate in retirement and the ability to receive British State and company pensions without deduction of any tax.

Under the terms of the tax treaty between the United Kingdom and Cyprus signed long before the credit crisis, pensioners received favourable treatment. For example, each individual pensioner could choose to pay a flat rate of 5pc income tax on their worldwide income in excess of a small personal allowance.

Alternatively, each individual pensioner could choose to be allowed a larger allowance or tax-free band and then pay tiered rates of tax up to 30pc on income in excess of the threshold. There was no Inheritance Tax nor any Wealth Tax in Cyprus.

The tax treaty also enabled all forms of British pension – including Government pensions such as the civil service and local authority schemes – to be paid without deduction of British tax to pensioners who are tax-resident in Cyprus.

One financial adviser told me: “Many individuals retired to Cyprus to make their pensions go further. The UK/Cyprus double taxation treaty enables individuals who live in Cyprus to remit their UK occupational, personal and state pensions to Cyprus free of withholding tax in the UK.

“The pensions are then taxed in Cyprus at a flat concessionary rate of 5pc. For this reason, UK individuals with a large pension income stream can exchange income tax at 40pc in the UK for a rate of 5pc in Cyprus. This is one of the attractions of retirement there.”

But the credit crisis and the closure of Cypriot banks – plus the imposition of capital controls – make all those incentives seem like halcyon days a very long time ago. Here and now, tax haven status can turn into a trap if the economy proves to be built on sand. Avoiding tax is small comfort if you cannot withdraw cash from the bank or take your own money out of the country.

While pensioners can scarcely be expected to keep an eye on the macroeconomics of national finance – which can even take national leaders, like the Russian prime minister Dmitry Medvedev, by surprise – it demonstrates the dangers of allowing tax considerations to determine your choice of retirement location. Or as the City saying goes: "Don't let the tax tail wag the investment dog."

Read more by Ian Cowie on Telegraph Blogs

Ian Cowie was named Consumer Affairs Journalist of the Year in the London Press Club Awards 2012. He has been head of personal finance at Telegraph Media Group since 2008, having been personal finance editor since 1989. He joined the paper in 1986. He is @iancowie on Twitter.

Cyprus: tax haven status turns into a trap for British pensioners – Telegraph Blogs

Cyprus bailout: savings raid 'could happen elsewhere'

Helena Smith in Nicosia, Ian Traynor in Brussels, Miriam Elder and Jill Treanor

The Guardian, Monday 25 March 2013 21.24 GMT

Markets take fright as finance chief suggests Cyprus rescue could set the template for future eurozone bailouts

Laiki, one of the two largest Cypriot banks, is to remain closed until Thursday. Photograph: Milos Bicanski/Getty Images

Fears that bank accounts could be raided in any future eurozone bailouts spooked markets on Monday, as Cypriots prepared for their banks to reopen for the first time in over a week on Thursday following a deal to secure a €10bn lifeline.

Markets took fright after the head of the group of eurozone finance ministers indicated that the Cyprus rescue could be a template for similar situations. Cyprus is the first of five bailouts in the eurozone where depositors have been hit.

"What we've done last night is what I call pushing back the risks," Jeroen Dijsselbloem, the Dutch finance minister, told Reuters and the Financial Times after clinching an agreement for Cyprus. "If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders," he said.

Bank of Cyprus and Laiki, the two largest domestic banks, will remain shut until Thursday while the latter is split into a good and bad bank and a levy – of potentially 40% – is imposed on accounts of more than €100,000.

A big percentage of those deposits belong to Russians. On Monday the Russian president, Vladimir Putin, said there would be a deal to rework the terms of a €2.5bn loan to the Mediterranean island, which had become attractive for its low tax regime and lax vetting laws.

Cyprus president Nicos Anastasiades made a televised address in which he admitted that measures would be in place to stop money pouring out of the banks when they reopen. "The central bank will implement capital controls on transactions. I want to assure you that this will be a very temporary measure that will gradually be relaxed," he said.

Markets were initially buoyed by news of the "painful" bailout for Cyprus, clinched late on Sunday night following threats by the European Central Bank to switch off liquidity to Cypriot banks, which, carried by international deposits, had grown to eight times the €17bn economy.

But markets reacted badly later in the day after Dijsselbloem's remarks. As markets tumbled, he issued a clarification insisting that bailout programmes were "tailor-made" and that "no models or templates are used".

Nevertheless, all markets erased their early gains to close down on the day. The FTSE 100 index lost 0.2% and the German stock market fell 0.5%. Bank shares fell across Europe while the euro, which had nudged up through $1.30 initially, fell back to below $1.29. US markets, which had largely shrugged off the Cypriot problem, were also lower, with the Dow Jones Industrial Average down over 70 points, 0.5%.

Cypriots had reacted to the agreement with European leaders with relief as it appeared that at least deposits below €100,000 had been spared the levy.

In the streets and cafes of Nicosia, and on TV chat shows aired in homes across the nation state, the feeling was that the country had been saved but at a high price.

Interior minister Sokratis Hasiko encapsulated the mood, describing the EU-IMF-backed bailout as the best of a bad range of choices.

"We had got to the point where we were discussing a [depositor] haircut of between 50 and 60%," he said, adding that the Cypriot parliament's rejection of the first accord, with its highly controversial levy on depositors big and small, had been hugely negative for the country's banks. "So this is the best we could get."

There were warnings the impact could reach beyond Cyprus, particularly with repercussions from Russia, where the prime minister, Dmitry Medvedev, said: "They are continuing to steal what has already been stolen." This was a phrase Lenin used to answer the allegation that the Bolsheviks were thieves. Russian officials have repeatedly compared the Cypriot bank levy to Soviet-era expropriation.

"For sure there is anger," said Marios Cosma, head of K Treppides, a firm that serves international clients, mainly rich Russians. "For the first time in Europe, you have a situation where depositors are being called to 'bail in'."

While Cyprus' banking sector has exploded, other countries have even larger banking sectors relative to GDP. Malta's and Luxembourg's banking sectors are relatively larger, more than 20 times' GDP in the case of Luxembourg. Malta's finance minister wrote an article in the Malta Times expressing concern about what would happen if it encounters similar problems in the eurozone.

In Cyprus there were calls for a referendum on the bailout package. "It is illegal and undemocratic," said Christos Tombazos, general secretary of the Pancyprian Federation of Labour. "We're talking about massive changes to the banking system. It should go to referendum for the Cypriot people to decide."

Russian officials attempted to assuage fears over Russian investments on the Mediterranean island. Russian Commercial Bank, a wholly owned subsidiary of state-owned bank VTB, would "not be affected or its losses will be insignificant", said Igor Shuvalov, a deputy prime minister.

The Bank of Cyprus is 9.7% owned by Dmitry Rybolovlev, a Russian based in Monaco whose wealth is estimated at $9.1bn according to Forbes.

One Russian oligarch, Alexander Lebedev, played down the amount he stood to lose in Cyprus as no more than $10,000. "It's not worth talking about," he said. "Cyprus was always a transit jurisdiction – money would pass through and then go to Lithuania, Latvia, Belize, Switzerland, everywhere. There are plenty of ways [to avoid capital controls], they can split accounts."

The multimillionaire owner of the Evening Standard and Independent expressed doubts that capital controls to be imposed by the Cypriot government in order to stem a bank run would work. "Certain schemes can be put into place," Lebedev said by telephone from Moscow. "This is how Cyprus was making money."

Cyprus bailout: savings raid 'could happen elsewhere' | World news | The Guardian

Israel owes us an explanation on Zygier: Carr

 

David Wroe Defence correspondent

March 26, 2013

Ben Zygier.

Israel has still not provided Australia with a ''comprehensive accounting'' of the circumstances that led to the arrest, imprisonment and suicide of the Mossad agent Ben Zygier, Foreign Minister Bob Carr has said.

Speaking outside the White House, where he had just met US Vice-President, Joe Biden, Senator Carr said his department had ''asked [Israel] for all information relevant to Australia's concerns on this and we will continue to do that''.

''Australia has a clear interest, a distinct point of view on this – an objection to Australian passports being used by Australian citizens or dual citizens who are off working for foreign intelligence agencies,'' Senator Carr said.

''I am not aware there has been a comprehensive accounting for what has happened, for what gave rise to his arrest, his detention, his suicide.''

He said such activities could create a risk for all travelling Australians. Senator Carr said he had not yet made his concerns clear personally as he had been concentrating on his duties in America. But Israel was aware of his concerns due to his previous public statements.

His comments come after the opposition on Monday called on the Gillard government to demand an immediate explanation from Israel as to whether Mossad misused Australian passports in its employment of Mr Zygier.

Julie Bishop, the Coalition spokeswoman on foreign affairs, said on Monday that Senator Carr should ask Israel whether Mr Zygier was using his Australian nationality as cover when he was working as a Mossad spy.

''If Mr Zygier was using his Australian passports while working for Mossad, and that use was approved, I would expect the Australian government to be registering a protest with the government of Israel,'' she said.

Ms Bishop was responding to reports in Fairfax Media and German news magazine Der Spiegel that Mr Zygier was assigned to infiltrate European companies doing business with Middle Eastern nations hostile to Israel.

After he was recalled to a desk job for poor performance, Mr Zygier attempted to recruit as a double agent an Eastern European man with close links to Lebanese Shiite group Hezbollah. Instead, the man persuaded Mr Zygier to give up the names of top Israeli informants in Lebanon as a way of proving he really worked for Mossad. Those informants were subsequently arrested and jailed.

Mr Zygier, known as Prisoner X, killed himself in his Israeli prison cell on December 15, 2010, after being arrested on serious national security charges.

Ms Bishop said what she called the lack of action on the Zygier affair contrasted sharply with the 2010 expulsion of an Israeli diplomat after Mossad used fake Australian passports to carry out an assassination in Dubai.

Deakin University international relations expert Damien Kingsbury said it would be ''clearly … overstepping the mark on the bilateral relationship'' for Israeli intelligence to use Australian passports.

A former intelligence officer, who did not want to be named, said the reports raised further questions, such as how Mr Zygier actually made it as far as he did.

''How did [Mossad] keep him that long? There's got to be more to the picture.''

with Nick O'Malley

Israel owes us an explanation on Zygier: Carr

Netanyahu apologises to Turkish PM for Israeli role in Gaza flotilla raid

Harriet Sherwood in Jerusalem and Ewen MacAskill in Washington

The Guardian, Friday 22 March 2013 15.43 GMT

Obama brokers call between Netanyahu and Erdogan as Israel says sorry for role in 2010 naval raid that left nine Turks dead

Nine Turkish activists were killed when Israeli commandos boarded the Mavi Marmara in 2010 to stop a it reaching Gaza. Photograph: AFP/Getty Images

Barack Obama has persuaded Israel to apologise to Turkey for the loss of nine lives on board the Mavi Marmara – the lead ship in an aid flotilla trying to breach the blockade of Gaza – in a deal that paves the way for diplomatic relations to be restored between the two countries.

News of the US-brokered deal came on Friday as Obama was leaving Israel at the end of his first official visit during which he was praised for an emotional speech tailored to mainstream Jewish opinion but criticised for doing nothing practical to advance stalled peace negotiations and downplaying Palestinian suffering.

The apology to Turkey for the May 2010 incident had been resisted by Israel until now, despite pressure from the international community. Both are close US allies – Turkey is a member of Nato – so the president was well placed to broker the deal.

According to White House officials aboard Air Force One, Israeli prime minister Binyamin Netanyahu placed a call to his Turkish counterpart Recep Tayyip Erdogan while closeted with Obama in a trailer on the tarmac at Ben Gurion airport in the last minutes before the president's departure for Jordan. Obama joined the call at one point.

The Israeli prime minister's office said Netanyahu "apologised to the Turkish people for any errors that could have led to the loss of life". Erdogan accepted the apology, White House officials said.

This was the "first step" towards normalisation of relations between the two countries, US officials said, and had been the subject of talks between Obama and Netanyahu in Jerusalem this week.

Arriving in the Jordanian capital Amman Obama went into talks with King Abdullah II on the escalating crisis in neighbouring Syria as well as the prospects for reviving Israeli-Palestinian negotiations.

On the Israeli-Turkish deal the president said the "the timing was good" to restore the ruptured relationship, though it was "a work in progress".

A statement from Netanyahu's office said: "The two men agreed to restore normalisation between Israel and Turkey, including the dispatch of ambassadors and the cancellation of legal steps against IDF soldiers.

"Prime Minister Netanyahu … expressed regret over the deterioration in bilateral relations and noted his commitment to working out the disagreements in order to advance peace and regional stability."

It added: "The prime minister made it clear that the tragic results regarding the Mavi Marmara were unintentional, and that Israel expresses regret over injuries and loss of life. In light of the Israeli investigation into the incident, which pointed out several operational errors, Netanyahu apologised to the Turkish people for any errors that could have led to loss of life and agreed to complete the agreement on compensation."

A statement released in Obama's name on Friday afternoon said: "The United States deeply values our close partnerships with both Turkey and Israel, and we attach great importance to the restoration of positive relations between them in order to advance regional peace and security.

"I am hopeful that today's exchange between the two leaders will enable them to engage in deeper co-operation on this and a range of other challenges and opportunities."

The US has been deeply concerned about the deterioration in relations between its two key allies in the region since the flotilla debacle. Nine Turkish activists were killed when Israeli commandos boarded the Mavi Marmara in an operation to prevent it and other ships in the flotilla from reaching Gaza. The bloody confrontation was met with a wave of international condemnation, and Israel was forced to ease its stringent blockade of the tiny Palestinian enclave.

Turkey cut all diplomatic ties with Israel following the incident, and demanded that the Gaza blockade be lifted before normal relations would be restored. In Gaza, which has been ruled by the Islamist movement Hamas for almost six years, Turkey was hailed as a champion of Palestinian rights.

Reconciliation talks ran into trouble recently when Erdogan called Zionism a "crime against humanity" and compared it to fascism. But on Friday, a senior US official, briefing journalists on the flight from Tel Aviv to Amman, said brokering the deal become possible after Erdogan backtracked on those comments.

In an interview with a Danish paper this week, Erdogan did not retract his words but said they had been misinterpreted.

Netanyahu told Erdogan "he had seen his interview in a Danish newspaper and that he, Netanyahu, appreciated those comments", the US official said.

Asked if Obama had brokered the deal, the official said: "I think it would be accurate to say the president has been making this point to both leaders for going on a couple years now. So I think it's well known by both Turkey and Israel the importance we place on seeing these two close friends of ours have normalised relations."

He added: "No one is claiming that this resolves every potential difference between Israel and Turkey. I think we said, and I think they would tell you, this was an important step because one of the key things that had been dividing them was their strong differences over the Mavi Mara incident and Turkey's desire for an apology and compensation."

Israel will now move ahead on existing plans to pay up to £4m ($6.1m) in compensation to the dead activists' families.

The deal to end the rift allows Obama to claim a significant diplomatic victory from his first trip as president to Israel. While his speech to Israeli students on Thursday was widely praised, he risked accusations that he had achieved nothing of substance. There was no new plan to kick-start the Israeli-Palestinian peace process, little movement on how to deal with Iran's nuclear programme and nothing concrete on Syria.

But the end of the Israeli-Turkish standoff is progress. With so much turmoil and uncertainty in the region, the US wants to be able to count on Turkey and Israel working in tandem.  

The rift created problems beyond just the symbolism. Turkey, as a member of Nato, was able to block Israeli participation in proposed multilateral exercises. The US, which backs Turkey's bid for membership of the European Union, sees it as an important player in Syria. Nato helped beef up military defences along the border last year.

Before flying to Jordan, Obama visited the Yad Vashem Holocaust memorial in Jerusalem. In the afternoon he crossed the pre-1967 "green line" to visit the Church of the Nativity in Bethlehem. A desert storm forced him to abandon the presidential helicopter and instead travel by road, passing through the eight-metre-high concrete wall that cuts off the West Bank city from Jerusalem.

Obama's first visit to the Holy Land since becoming president appeared to have succeeded in its main aim of reassuring Israel of the "unbreakable alliance" with the US and recalibrating the hitherto frosty relationship between its leaders. Palestinians remained deeply sceptical about his ability to force real change.

John Kerry, the US secretary of state, is to explore renewing the talks. "We'll keep plugging away," Obama said in Amman. "We'll see if we can make it happen."

Netanyahu apologises to Turkish PM for Israeli role in Gaza flotilla raid | World news | The Guardian

Southern Europe lies prostrate before the German imperium

 

By Charles Moore 8:54PM GMT 22 Mar 2013

Cyprus is only the first victim of a one-size-must-fit-all policy that is made in Berlin

'Cyprus is capitulating not out of euro-patriotism, but out of fear; this is not European “solidarity”, but coercion.' Above, Cypriots demonstrate outside the parliament in Nicosia Photo: BLOOMBERG

Othello. “What’s the matter, think you?”

Cassio. “Something from Cyprus, as I may divine;

It is a business of some heat.”

Shakespeare is on the money. Then, as now, Cyprus was the toy of foreign powers. Othello was sent there from Venice to repel the Turks, though luckily they all got blown away in a tempest. Since then, Russia, Britain, Greece and, always, Turkey, have taken an interest. Even today, Britain has an important listening post for the Middle East there, 60,000 expatriates, 3,500 troops in our sovereign bases and a continuing role as a guarantor power. Cypriots still drive on the left.

Lord Salisbury, who won control of Cyprus for Britain from Turkey in 1878, once sent an envoy there. People complained that the man knew neither Greek nor Turkish. “Good,” said Salisbury, “then he will hear fewer lies.”

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That is the authentic tone of an imperial power. Today that power is Germany. We have heard enough lies, the Germans are saying haughtily to the Cypriots, now shut up and do what we want. Yesterday, Angela Merkel, the German Chancellor, ordered that “Cyprus must realise that its business model is dead”.

It is hard to tell whether this was true before she said it. Some argue that the problems in Cypriot banking were hugely exaggerated by the country’s outgoing Communist government for electoral reasons. But this has become irrelevant. If the business model was not dead before the intervention of Brussels, Frankfurt, Berlin and the IMF, it is now. No one with any choice in the matter will want to put his money in a Cypriot bank any more.

This now-dead business model supported banking assets worth eight times more than the country’s GDP, so its demise will hurt for a long time. If you are an independent country, even a small one, you can recover from economic shocks surprisingly quickly. Look at Iceland, which, like Cyprus, was awash with Russian money, but, unlike Cyprus, is not in the euro zone. It ended up, when its banks collapsed, with each Icelander theoretically on the hook for an average of $330,000. It decided that, after all, it preferred fishing to banking; it had its own currency. Now it is back on the way to economic health. No such luck for Cyprus. From now on, it will be told what to do by the nations and organisations into whose hands it seems about to surrender itself. It cannot make decisions for its own good. It is a tiny, far-flung, vulnerable part of the new German Europe.

So let us look at this question not from an economic but an imperial point of view. One problem of imperial rule is that it can be worse for the satellites of the empire if the centre is democratic. A benign despot can at least take a long view about the welfare of his fiefdom. Elected rulers usually cannot. Television footage this week has been of weeping, angry crowds in Nicosia and Limassol, but the crowds that matter are the ones that have not taken to the streets in Berlin or Munich or Hamburg. They get their next vote in the German general election in September. They dislike shelling out for what they see as feckless Mediterraneans: they detest the idea of doing so for what they see as crooked Russians. The conflict between Teuton and Slav has never ceased. Mrs Merkel’s policy for Cyprus has to be constructed round what her Teutons want.

It is another feature of democratic regimes that they are instinctively uncomfortable with imperial pretensions; so they seek the moral high ground, like a mountaineer who just keeps climbing higher when he’s lost in the fog. We British liked to think that we were bringing civilisation and the rule of law to our colonies. The Americans have tended to deny an imperial role altogether and talk about safeguarding democracy.

Now it is the Germans’ turn to exercise an imperium. Their re-entry into the comity of nations has been based on the idea that they are peaceful, law-respecting, internationalist, politically vegetarian. They support an ever-closer European Union because they want to be a “European Germany” to avoid a “German Europe”. They are perfectly genuine about wishing to overcome what is euphemistically called “the problem of history”. So they are obsessed with the importance of rules, of obeying them and being seen to obey them. They have been good boys, and by doing so, they have prospered mightily.

But as they have grown stronger, their love of rules has turned into an instrument of their power. We are good European citizens, the Germans argue, and we have done well. So the answer is for everyone in the euro zone to behave just like us and they will do well too. One size must fit all, and that size is made in Germany. What the Germans leave out of account is that the single currency which, for them, is artificially low in international value is, for most of the rest of the euro zone, punitively high. What helps them crushes others. After victory in 1945, Churchill broadcast that Germany “lies prostrate before us”. Today, most of southern Europe lies prostrate before Germany.

Mrs Merkel does not see it this way, but if she were to impose upon her own country the levels of unemployment which her euro zone policies inflict upon Spain or Greece or Italy, she would be out of office tomorrow. It is in the nature of imperial power that it is very much slower to feel the pain of those it rules at a distance than that of its own people. That is why its colonial subjects tend to dislike it, even when it is well-intentioned and orderly.

By this point, many people, especially Germans, will be furiously objecting to my line of argument. This is not imperialism, they will say, this is a new concept of doing things called the European Union. The euro zone is on its way, they go on, to the safe harbour of a banking union and a fiscal union, to a United States of Europe in all but name. Then all will have equal rights and equal protection. To get this union right, though, we mustn’t have “legacy debts”: these problems of transition are tough, but if they are firmly dealt with, all will be well.

And possibly, one distant day, it will be. Possibly, just as people all over the known world could once say “Civis Romanus sum” (“I am a Roman citizen”), so they will be able to say, “I am a European”, and know that they are safe and free under the blue flag with its golden stars. It may be for that reason that the euro zone decision-makers decided to make an example of Cyprus. They knew that it was puny. They believed, probably correctly, that it would have to obey. They hoped to show the world, which doubts, that they mean what they say.

But the exertion of such power is a very ugly thing. When you see it exerted you also see who is accorded respect and who isn’t. In this case, ordinary depositors have been disrespected and parliamentary processes have been bullied into giving the “right” answer. Cyprus is capitulating not out of euro-patriotism, but out of fear. This is not European “solidarity” but coercion.

In all this long euro-crisis, Britain has rightly held aloof, but at the same time urged the euro zone to deepen and strengthen itself. This is inconsistent reasoning. If tiny Cyprus can be so much trouble in building the great euro-Empire, what does that say about the likely harmony of the ultimate whole?

Southern Europe lies prostrate before the German imperium - Telegraph

Is spending your last years in the sun avoiding British taxation really worth it?

 

Ian Jack The Guardian, Friday 22 March 2013 17.42 GMT

Images of British retirees in Cyprus worried about losing their savings – while having enjoyed low taxation and the UK fuel allowance during 17C winters – raised conflicted feelings in me

British expatriates living in Cyprus. The striking thing is how retirement in the sun has become such an ordinary ambition, writes Ian Jack. Photograph: Christopher Kingswood/SOLO Syndication

Expatriates have come in all shapes and sizes. Gérard Depardieu in his Belgian village, Robert Louis Stevenson on his South Sea island, Karl Marx in London, Ronnie Biggs in Brazil: all left their homeland for the great elsewhere, but a common motive is hard to find. Somehow they can't be described as migrants; "expatriate" suggests that to some degree they stand apart from the host country and may eventually return to their own. Well into the second half of the last century, at least to this young reader of Somerset Maugham, the word conveyed a picture of an elegant English novelist in his villa on the Cote d'Azur, or a lonely rubber planter going crazy in his Malayan bungalow.

But that was then. The word got brisker when shortened to "expat" – I first heard that applied to British oil workers in the Gulf – and brisker still when the adjective "Brit" was stuck in front of it. "Brit expat" isn't a phrase that easily fits the leisured world of the parasol, the day-old London newspaper and the creased linen suit.

This week the Daily Mail photographed 13 of them grouped outside a coffee shop in the Cypriot village of Pyrgos. "They arrived in Cyprus dreaming of a carefree life in the Mediterranean sunshine," the copy began, "but last night these expats were left in a state of anxiety after their Cypriot current and savings accounts were frozen in the EU raid." Not a linen suit in sight: jeans, T-shirts and tracksuit tops predominated in a pink-faced, grey-haired crowd who had resettled there from London, Lancashire, Kent and Sussex, and retired from jobs in nursing, accounting and engineering. The sums they stood to lose under the proposed levy ranged from €100 to a few €1,000, with the exception of the €15,000 calculated by a Wembley émigré who ran an alcohol import business. You might have met them at any British garden centre or bus stop. They spoke of ordinary pensions and meagre savings grubbed from hard work. Nobody mentioned the tax rate, though this rather than sunshine alone is the main reason that 60,000 British expats, including 12,000 pensioners and many more approaching pensionable age, have chosen as their final home a politically divided island with a flight time from Heathrow of at least four-and-a-half hours.

In the words of a puff-piece about island property for sale, Cyprus's "deep respect for senior citizens is especially appealing to retirees". The respect has a fiscal dimension; the Cyprus economy needs to attract elderly Britons as well as Russian oligarchs. A taxation treaty with the UK means that British pensioners can elect to pay a fixed 5% rate on state or private pensions above a threshold of €3,417 a year, or they can opt into Cyprus's tiered system, which has a top rate of 30%, and get their first €19,500 tax-free. When pensioners are registered as tax residents after a stay of 183 days, bank interest and share dividends become tax-free too, while the only asset liable to capital gains tax is property. UK inheritance tax is harder to avoid, but not impossible. And all this time, because Cyprus is a member of the EU, your British state pensions will rise every year in line with British inflation and your winter fuel allowance will come rolling in, even though Cyprus has the warmest winter climate of any country in the EU and the December temperature in the coastal zone, where your house is almost certainly located, is rarely colder than 17C (62F) by day and 8C by night. Finally – a great comfort – three quarters of the population speaks English and traffic drives on the left.

So, looking at these faces in the Mail again, I feel rather conflicted. They look straightforward and pleasant folk who, as they say of themselves, have worked and saved hard to afford their years in the sun, and when people begin to count up the summers that may lie ahead of them, the sun does assume an unprecedented importance. On the other hand, did it occur to nobody that a country prepared to lure them with tiny or zero tax rates might have a shaky financial foundation? That a risk was involved? Caveat emptor seems to have occurred to few. In the Daily Telegraph only six months ago, a property correspondent was writing that it would be "a mistake to see Cyprus as a mirror image of Greece" because its GDP was higher and its unemployment lower, and it had cut a few taxes that would benefit the foreign house buyer. If you read the Telegraph, as many expats do (as a target market, they have a special section online), then you might have been reassured. No matter how patriotic the newspaper, Robert Browning is not the moving spirit of these pages. Not so much "Oh to be in England … " as: "Oh to be in Cyprus with an English winter fuel allowance."

The striking thing is how retirement in the sun has become such an ordinary ambition, achievable for less than the average price of a British house (£234,000), assuming you have one to sell, and a £20,000 pension between two, assuming you don't want to fly back to Britain too often. According to a study in 2006 by the Institute of Public Policy Research, about 5.5 million British people live permanently abroad – the largest number in Australia and the next largest in Spain – which means that the UK has the largest expatriate population of any country in Europe. In Spain, more than a fifth of around 760,000 British expats are aged over 64. A lifestyle that was once confined to the ailing British rich in Victorian resorts such as Menton, Biarritz and Pau has spread down the social scale. Milk-white Englishwomen may no longer take to their beds for their jours de repos and the internet makes the English language and some form of companionship constantly available, but the same sense of separateness from the native population surely persists.

Here, for example, is some advice on "how to succeed as an expat" posted on the website created for them by HSBC, which has interest in their money. "Try to read local news – at least the headlines. It makes you live less in a bubble." "Eat like a local." "Learn the basics of Hungarian. It may seem impossible but it can be done."

Is a few final years spent avoiding British taxation and cloud cover worth this price? Neighbours abandoned, friends and family left behind, the intricacies of belonging severed: and in exchange the company of yet-to-be-met people of roughly the same age, marching under brilliant skies in lockstep to what Larkin called the inevitable. At the end of Paul Scott's Staying On, which is a fine novel of expatriate life, an English widow berates her dead husband for leaving her alone in India: "Why did you leave me here … now, until the end, I shall be alone, whatever I am doing, here as I feared, amid the alien corn, waking, sleeping, alone for ever and I cannot bear it … Oh, how can you make me stay here by myself while you yourself go home?"

Cyprus in 2013 isn't as cut-off as an Indian hill station in 1970. Even so, taking the clouds and the tax on the chin seems to me the better deal.

Is spending your last years in the sun avoiding British taxation really worth it? | Ian Jack | Comment is free | The Guardian

Britons afraid to challenge radical Islam, says former Obama adviser

By John-Paul Ford Rojas 10:15AM GMT 15 Mar 2013

British people are too afraid to offend a "vocal and aggressive" section of the Muslim community who demand that their cultural values are accepted by wider society, according to a former adviser to Barack Obama.

Professor Krauss, left, was taking part in a debate entitled: "Islam or Atheism: Which Makes More Sense?"

Professor Lawrence Krauss said he had been shocked when taking part at a debate hosted by an Islamic group at a leading British university to find that men and women were segregated.

The professor, a leading physicist and prominent atheist, threatened to walk out unless organisers agreed to let men and women sit together, which was eventually agreed - but was then astonished to find himself being accused of intolerance by angry members of the audience.

He said there had been no such problems when he recently took part in a similar debate in Australia.

But he suggested in Britain people were often too polite to object to such practices as well as being cowed by those eager to protest whenever they felt "their cultural norms are not being met".

He said: "People are not only afraid to offend, but afraid to offend a vocal and aggressive group of people.

"There is a segment of the Islamic community that is very vocal about this."

The professor said: "I think the notion that these cultural norms should be carried out within a broader society that not only doesn't share them but that is free and open is a very serious problem."

Authorities at University College London have launched an investigation into the event last Saturday, at which people who attended were separated into men, women and coupled seating areas - with women at the back.

Professor Krauss said he was later told by one woman who attended that she went into the lecture theatre holding hands with a male friend and pretending he was her boyfriend to be able to sit in the mixed section.

Richard Dawkins, the prominent British atheist, has claimed that the university allowed "sexual apartheid" to take place and said "heads should roll".

The event was organised by a group called the Islamic Education and Research Academy, which has now been banned from holding events on the UCL campus.

Professor Krauss, who served on Mr Obama's science policy committee during his 2008 election campaign, was taking part in a debate entitled: "Islam or Atheism: Which Makes More Sense?"

Footage posted online showed him saying "quit the segregation or I'm out of here" after security staff tried to throw out three men who had gone to sit in the women's section of the audience.

Eventually his request was met and the event continued but some members of the audience were upset with him. One even shouted "intolerant" as he left, which he found "remarkable".

A woman who spoke in the debate said she was uncomfortable sitting among men.

Professor Krauss said he told her that he respected her feelings but added: "You are in a public arena and not in a mosque, not in a private event."

He told the Daily Telegraph: "The notion that because these cultural norms make some people feel uncomfortable in broader society, that broader society should accommodate that discomfort, is complete nonsense."

It was "vitally important" that institutions such as universities were secular and avoided segregation of any kind, he added.

"It is the obligation of people who don't feel comfortable with that to decide how they are going to mesh with broader society, not the other way around.

"It is not cultural racism. For better or worse, we live in a free society, and we live in a secular, open society."

Professor Krauss said it was the first time he had experienced such segregation.

"I did a debate with an Islamic group in Australia which worked out fine. There were no issues and there was certainly not even the proposal that there should be segregation."

The IERA has admitted seating areas were separated by gender at the UCL debate but said that it did not enforce segregation and had launched a "thorough internal investigation" into what took place.

Britons afraid to challenge radical Islam, says former Obama adviser - Telegraph

David Cameron tells Pope Francis white smoke over Falklands was clear

By Tim Ross, Brussels 3:28PM GMT 15 Mar 2013

David Cameron has publicly clashed with the new Pope over the Argentine pontiff’s claim that Britain “usurped” the Falkland Islands.

Pope Francis, who is a former Archbishop of Buenos Aires, has previously described the disputed territory as belonging to “the homeland” of Argentina.

However, the Prime Minister told him he should “respect” the islanders’ referendum vote for the Falklands to remain British.

Mr Cameron even dared to make a joke at the expense of the Vatican’s ancient election processes.

“The white smoke over the Falklands was pretty clear,” he said.

His comments, at a press conference at the European Council summit in Brussels, follow the islanders’ referendum that delivered an overwhelming majority in favour of the Falklands remaining a UK overseas territory.

Pope Francis, who is the first to be chosen from South America to lead Roman Catholics around the world, has already placed on record his belief that “Las Malvinas” are Argentine.

Last year, at a Mass at Buenos Aires for the 30th anniversary of the 1982 Falklands War, the future Pope told worshippers: “We come to pray for all who have fallen, sons of the homeland who went out to defend their mother, the homeland, and to reclaim what is theirs, that is of the homeland, and it was usurped.”

Asked at a press conference in Brussels whether he agreed with Pope Francis on the issue of the Falklands, Mr Cameron said: “I don't agree with him - respectfully, obviously.

“There was a pretty extraordinarily clear referendum in the Falkland Islands and I think that is a message to everyone in the world that the people of these islands have chosen very clearly the future they want and that choice should be respected by everyone.

“As it were, the white smoke over the Falklands was pretty clear.”

The world first learnt that the conclave of cardinals had chosen a new Pope this week through the traditional signal of white smoke rising from a stovepipe chimney in the roof of the Sistine Chapel.

British sources insisted that Mr Cameron was not intending to be disrespectful to the Pope or the Vatican.

Argentina has used the election of the new Pope to renew international pressure for talks over the future of the disputed territory.

Cristina Kirchner, the president of Argentina, has already attempted to recruit the new Pope in her campaign to take control of the Falklands.

In a thinly-veiled reference to the long-running dispute, she called on the pontiff to persuade “major world powers” to engage in “dialogue”.

The islands in the South Atlantic have been British territory since 1833 but are also claimed by Argentina, which calls them the Malvinas.

In the referendum last week, only three votes were opposed to the Falklands remaining a British overseas territory, against 1,513 who voted in favour.

After the vote, Britain urged “all countries” to accept the result and respect the islanders’ views.

President Kirchner maintains that the wishes of the islanders are not relevant.

David Cameron tells Pope Francis white smoke over Falklands was clear - Telegraph

Argentina's Cristina Kirchner suggests Pope Francis could mediate over Falklands

 

By Aislinn Laing 3:04PM GMT 14 Mar 2013

Cristina Kirchner, the Argentine president, has suggested that Jorge Bergoglio, the Argentine cardinal elected to be the new Pope Francis, will help mediate on her country's dispute with Britain over the Falkland Islands.

Argentine President Fernandez greets Cardinal Bergoglio at the Basilica of Lujan Photo: REUTERS

In a televised address, Mrs Kirchner wished Pope Francis "luck" and expressed the wish that "in his pastoral mission, he carries the message to the great world powers that they participate in dialogue".

While never explicitly referring to the Falklands, known to Argentines as Las Malvinas, Mrs Kirchner raised her voice and her hands when referring to the "major world powers", and was applauded and cheered by a large crowd of supporters.

"We wish him all the luck in the world in his pastoral mission and what it means for Latin America and Argentina – we hope that it will be significant for our region," she said.

"(We hope) that (his mission) takes the message to the major powers in the world to participate in dialogue ... that the great powers in the world, who have arms and financial power, can be convinced to finally heed the emerging countries and that they commit to a dialogue of civilisations where things are resolved by diplomatic channels rather than by force."

She added: "We trust plainly in this vision and we ask God that he help make it possible that just causes also sometimes triumph in this blessed land we call Earth, because I am sure that God and the Virgin also wish it so."

Earlier this week, she dismissed the referendum in the Falkland Islands, in which residents voted in favour of remaining a British overseas territory as a "parody", likening it to "squatters voting to continue to illegally occupying a building".

Pope Francis's views on the Falkland Islands remain unclear, but he once told a congregation of Argentine veterans that those who died there during the 1982 war with Britain were "reclaiming what is theirs".

During a Mass on April 2 last year to mark the 30th anniversary of the start of the war, the then Cardinal Bergoglio called for the vindication of "all" of those who fought against the British over the Falklands Islands.

"We come to pray for those who have fallen, sons of the homeland who set out to defend his mother, the homeland, to claim the country that is theirs and they were usurped," he said.

"Many young people were there and could not return. Others returned but none could forget.

"Many scars, many families destroyed by permanent absence or a return cut short. The country needs to remember them all."

His comments in front of former conscripts and families of the 649 who died were recorded by Buenos Aires news agency Diarias y Noticias and widely reported in Argentina at the time.

Argentina's Cristina Kirchner suggests Pope Francis could mediate over Falklands - Telegraph

Germany's anti-euro party is a nasty shock for Angela Merkel

 

By Ambrose Evans-Pritchard 5:00PM GMT 10 Mar 2013

Political revolt against the euro construct has spread to Germany.

Alternative for Germany has greater potential to unsettle Mrs Merkel than previous Eurosceptic groups Photo: Getty Images

A new party led by economists, jurists, and Christian Democrat rebels will kick off this week, calling for the break-up of monetary union before it can do any more damage.

"An end to this euro," is the first line on the webpage of Alternative für Deutschland (AfD). "The introduction of the euro has proved to be a fatal mistake, that threatens the welfare of us all. The old parties are used up. They stubbornly refuse to admit their mistakes."

They propose German withdrawl from EMU and return to the D-Mark, or a breakaway currency with the Dutch, Austrians, Finns, and like-minded nations. The French are not among them. The borders run along the ancient line of cleavage dividing Latins from Germanic tribes.

The plans draw on work by Hans-Olaf Henkel, former head of Germany's industry federation (BDI) and a chastened europhile -- the "worst error of my professional life", he told me.

The appeal of German exit is obvious. It is the least traumatic way to end the 20pc to 30pc misalignment between North and South, the cancer eating Europe. Club Med keeps the euro. It enjoys instant devaluation, while still able to uphold euro debt contracts. The spectre of sovereign defaults recedes.

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The party hopes to contest the federal elections in September, winning enough votes to scramble a tight race. Chancellor Angela Merkel suddenly has a "UKIP problem" on the her right flank.

Should she sign off on a bail-out out for Cyprus -- safeguarding the "dirty funds of Russian oligarchs", as the AfD puts it -- she will be raked by heavy fire.

That will test her solidarity mantra, and she can turn on a Pfennig. She ditched her nuclear energy policy days after surveying the post-Fukushima polls.

Nobody knows how much support AfD could command. Protest parties usually flop in Germany, but the Free Voters won 10pc in Bavaria in 2008 on a Right-leaning, eurosceptic ticket, and there have never been circumstances quite like this before.

The slide towards fiscal union is a constitutional revolution. It erodes the budgetary supremacy of the Bundestag and threatens to eviscerate Germany's vibrant post-war democracy. Large matters.

The AfD leader Bernd Lucke says Beppe Grillo's threat to default on Italy's external debt has demolished claims that Germany's rescue pledges will never be called.

"The Italian election shows how dangerous the whole euro crisis really is. Whether countries can and will pay back their debts is dependent on the unpredictable voting choices of their peoples," he said.

Professor Lucke, an expert on Real Business Cycle Theory, says German voters may not have mastered EMU mechanics but they can see it is going off the rails. "Everybody understands that 50pc youth unemployment in Greece and Spain is a catastrophe," he said.

The latest ZDF poll shows that 65pc of Germans think the euro is damaging, and 49pc think Germany would be better outside the EU. This is no doubt "soft", yet what is clear is that the all-party consensus on EMU gives voters nowhere to turn.

The rebels may struggle to cross the 5pc threshold for seats in the Bundestag, but they do not have to take seats to plague Angela Merkel over the next six months. She is already in trouble. Her Free Democrat (FDP) allies have crashed to 4pc in the polls.

Alternative für Deutschland threatens to take votes from the Right. On the other side, the Green resurgence to 16pc makes up for the sluggish Social Democrats. As things stand, the Left is slightly ahead. Angela Merkel is on course to lose office.

"Merkel will have to be even tougher on Europe, she cannot allow herself to be outflanked," said David Marsh, author of books on the euro and the Bundesbank. "She will try to keep up a steely facade and hope everything stays calm until September, but the next crisis may come to a head before that."

Indeed it may. Italy does not have a government, and putatitve premier Pier Luigi Bersani has vowed break out of the "austerity cage", explicitly rejecting policies that anchor the EU backstop for Italian bonds.

Fitch expects Italy's public debt to hit 130pc of GDP this year, up from 125pc forecast a few months ago. The country has one foot in a debt compound trap already. One more shock will do it.

This latest deterioration is self-inflicted, the result of contractionary EU policies that have pushed Euroland into a double-dip slump, and ravaged Italy in particular with fiscal tightening of 3pc of GDP in 2012.

This policy was deranged. Italy's primary budget was already near balance. Fiscal overkill caused to the economy to contract by 2.6pc in 2012, and the debt ratio to rise even faster. In flogging Italy's economy to death, EU elites have destroyed political consent for the reforms that are most needed.

For Germany's Alternative, September may come too soon. Michael Wohlgemuth from Open Europe says they lack the organization for a quick breack-through, but their moment may come in next year's vote for Euro-MPs.

"By then the real costs of the bail-outs for German taxpayers will be clearer. People sense that at a crisis is looming, but they have not yet felt it," he said.

The tragedy for Germany is that the bill for EMU will come due just as the country's aging crunch hits. Germany will have impoverished itself for no useful purpose, and without winning much love in the process.

Some say Germany is "winning" because its firms are conquering Club Med markets with a rigged exchange rate, but that is a Pyrrhic triumph. Latins will not tolerate this, once they grasp that the "gains" of their internal devaluations -- ie 1930s wage cuts -- are dwarfed by the greater losses of a wasted youth.

There are no winners. Each country is blighted in turn, and in different ways. Like Goethe's Sorcerer's Apprentice, they have launched an experiment they cannot control. The broom has a fiendish will of its own

Germany's anti-euro party is a nasty shock for Angela Merkel - Telegraph

Romanian and Bulgarian migration into Germany: 'They come to look for a better life. But someone must pay for that'

 

By Harriet Alexander, Duisburg 7:00AM GMT 10 Mar 2013

The mayor of the German city of Duisburg sparked nationwide soul-searching when he announced that his city could not cope with the influx of Romanian and Bulgarian migrants. But, as Harriet Alexander found out, most Germans blame not the new arrivals, but the EU.

"They come here because it's a cheap place to live, and there are lots of empty houses," said Leyla Ozmal, the council's representative for Bulgarian and Romanian integration Photo: Shantan Kumarasamy

Rolf Karling drives his van laden with bread into the car park every evening. Within minutes it is empty – the loaves seized by hundreds of grappling hands, stuffed into hungry mouths.

But this is not a war zone, it is a high-rise housing estate in northern Germany. And the people he feeds are Romanian migrants who have flocked to the north western city of Duisburg in their thousands, but are without work, unable to feed their families, and crammed into tiny, crumbling apartments.

"They have created a Romanian refugee camp right here in the centre of the city," said Mr Karling, whose charity hands out food to the needy. "They call this place a 'Problemhaus'. But it's not a Problemhaus – it's a ticking time bomb."

German cities have seen a six-fold increase in migration from Bulgaria and Romania since the two countries joined the EU in 2007. Last week Germany once again successfully pressured the EU to delay a decision on allowing both countries into the Schengen passport-free zone, responding to fears over the effects of flinging open borders to countries known for high levels of corruption and organised crime.

"Does freedom of movement mean we have to assume that people from all over Europe who believe that they can live better on welfare in Germany than they can in their own countries will come to Germany?" said Hans-Peter Friedrich, German interior minister. "This danger cannot be allowed to come true."

 

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Germany is currently home to around 249,000 migrants from both countries - double the number officially in the UK. And the situation confronting Chancellor Angela Merkel gives something of a foretaste of what could possibly happen in Britain.

At the end of this year, a temporary ban on Romanian and Bulgarian citizens coming to the EU to seek work will expire. When the EU's two poorest nations joined in 2007, they could visit the UK and be contracted for highly-skilled jobs, work self-employed, or labour where there was a shortage of British manpower, but not – unlike other EU citizens – come merely to look for work.

At the moment Britain is officially home to 93,000 Romanians and 42,000 Bulgarians, who are entitled to housing benefits, child support and council tax credits. They cannot claim unemployment allowances unless they have been in employment in the UK for 12 months.

Yet from next January they will be entitled to come without a job - abandoning Bucharest or Sofia, where the average net monthly pay is £340 and £283 respectively, in favour of the UK – where the average worker takes home £1442 a month. The same will apply in Germany.

"I can't wait until New Year," said Katia Borisova, 33, serving up glasses of tea at the Café Sofia in Duisburg. "My 10-year-old daughter is with my parents at home in Plovdiv. I want her to be with me. And when she is here, I will be able to claim €180 a month in childcare support – in Bulgaria it is €7."

It is a chain of events that is sparking a war of words between Brussels – which insists that the EU's rules must be respected – and the UK and Germany, which are deeply concerned about the impact of unrestricted migration from the duo of deprived nations.

Many countries are also scrabbling to find ways to rethink their welfare system to stop an influx of "benefits tourists". And it is worrying Whitehall. On Wednesday Nick Clegg chaired a meeting to examine a wide-ranging plan to deter EU migrants from coming to Britain, and to discuss how British benefits could be tightened without breaching EU law.

Other British politicians are calling for the government to be upfront about how many Romanians and Bulgarians they think will arrive. The think tank Migration Watch claims that 50,000 a year will come from Bulgaria and Romania, though the government is reluctant to be drawn on figures – aware of the previous mistaken prediction that only a few thousand Poles would come to the UK when all restrictions were lifted in 2004. In fact, more than half a million Poles have since made Britain their home.

There has even been talk of a negative publicity campaign in Bulgaria and Romania to dissuade people from travelling to the UK, while ambassadors from the two countries in both Britain and Germany have appealed for calm, telling worried Britons that most of their countrymen who wanted to are already resident.

Mihai Botorog, the Romanian consul in Bonn - the nearest consulate to Duisburg - said "practically no one" was planning to come after the restrictions were eased.

"I look with concern at these claims that now a wave of migration is preparing to come from the land of Dracula," he told The Sunday Telegraph. "Of the Romanians currently in Germany, 80 per cent have a job. And of all Germany's welfare claimants, only 0.23 per cent are Romanian. There are the same mix of gifted and not gifted people as any other nation - and being poor does not mean you are any less respectable."

Yet in Germany, the impact is already being felt. The country was a natural choice for Romanians and Bulgarians seeking a better life. It has had the same restrictions on working as the UK, but is geographically closer, economically stronger, and has the added bonus of a vast Turkish community – meaning that Bulgarians, with their very similar language, can feel at home.

For Turgut Ezcan, however, the influx has not been welcome. "I'm moving back to Turkey," he said, as he showed The Sunday Telegraph around the Duisburg district of Hochfeld – an area previously dominated by Turks, but now home to the city's 4,000 Bulgarians.

It is a socially deprived neighbourhood of grim Soviet-style housing blocks, its alleys littered with rubbish thrown out of the windows by their residents. Gangs of men in leather jackets loiter on the streets, as Mr Ezcan, 41 – who speaks seven languages – translated snippets of their conversations.

"Out of 1,000 Bulgarian people, maybe 20 will be working," he said. "The Turkish cafés are empty during the daytime as we have jobs; the Bulgarian ones are full. Turks have been here for fifty years and are integrated, speaking German. But this is different."

He points out a shiny BMW X6, and whispers that the owner is the local pimp, bringing girls from Bulgaria for prostitution. A large silver Mercedes cuts across our path. The cocaine dealer, he nods.

"I've lived here for 15 years, but it is really going downhill. The streets are untidy, there is lots of noise at night, and you can't leave your bike outside as it'll get stolen.

"I earn €2,300 a month as a lorry driver. But the Bulgarians tell my boss they will do my job for €1,000 a month – and they don't need visas, unlike me. Turkey is booming now, so it is time to go home."

Miram Usolu, 23, left her home in Shumen, eastern Bulgaria, three years ago. "It's really not easy to live in Bulgaria," she said, sitting with her husband and two young sons in a park. "But here the children can go to school and have a future. I earned €200 a month with McDonalds in Bulgaria; here I earn €1,200 for doing exactly the same job."

The sudden arrival has left the Hochfeld International Centre struggling to cope. For over 25 years Karoline Robins has helped new arrivals to the area – translating for the first wave of Turks and then Arabs, then the refugees from the former USSR, and now the Eastern Europeans.

"But it's very difficult at the moment, and we are run off our feet," she said. "They are only looking for a better life for their families – but the existing cultural programmes weren't really suitable for them."

Dr Michael Willhardt, who runs a PR agency, is one of the few native Germans to remain in the district. "I've lived here all my life, and have always tried to keep the area in good shape, attract young professionals, and make it a pleasant place to be," he said. "We feel totally abandoned by the government, who do nothing to support these people and leave us in this state," he said. "If you invite in guests, you have to have someone at the welcome desk."

Inside Duisburg's ornate 1870s town hall – one of the few buildings to survive the Second World War bombing that wiped out 80 per cent of this industrial town – the local politicians agree that more must be done.

The town of 490,000 has a traditionally large immigrant population – Turks were invited to come in the 1960s to work in the steel and coal factories – but has since suffered from a steep decline. Unemployment is 12.8 per cent (compared to 6.8 per cent nationally), one of the highest levels in the country.

"They come here because it's a cheap place to live, and there are lots of empty houses," said Leyla Ozmal, the council's representative for Bulgarian and Romanian integration. "But they are exploited by landlords and forced into ghettos. We want laws to prevent this overcrowding.

"And we also need money from Berlin and Brussels to help fund their health care, education and basic needs. Some other cities in Germany look at us and think we are scandalising the issue – but we are not. We simply recognise the problem and say that something urgently needs to be done."

Mrs Ozmal – herself the daughter of Turkish immigrants – describes Duisburg as being "at the end of a long rope from Brussels via Berlin, ending up here". The problem is heightened, she said, by the fact that Duisburg is heavily in debt: the city owes €2.1 billion to the federal government, and yet next year estimates it will have to start paying €15 million annually in housing benefits to the Romanians and Bulgarians.

The city has set up a series of remedial classes for Bulgarian and Romanian children, teaching them German, basic literacy and maths so that they can eventually enter mainstream education. But since 2007, these classes have cost the city €12 million.

"Brussels and Berlin have their heads in the sand," she said. "We are one of the few cities to face up to the scale of the problem. They are quite entitled to be here, but we must be able to pay for it."

For all the clouds on the horizon, central Duisburg is a remarkably peaceful place. On Tuesday the extreme-Right regional party, Pro NRW, will stage a demonstration in the city – but the mayor is confident his rival anti-fascist rally on the same day will draw far greater crowds.

"Europe is all about integration and tolerance," said Luisa Marongiu, 53, a cleaner. "My parents emigrated here from Italy. If people don't like it – what is the alternative? Go back to the USSR and close all borders?"

Retired teacher Christian Eichblatt, 70, said: "If they come just to get benefits then obviously that's not good. But I can understand them wanting to escape poverty. The real problem is that Germany and the EU have not done enough to make their own countries positive places to live."

Across the Rhine, however, is another story. In the district of Rheinhausen – where the "Problemhaus" is located – the German residents are worried.

Berbel Kohla, 47, who lives opposite the teeming building, no longer leaves her Mercedes outside her home for fear it will be torched. The balconies of the seven-storey block – where 400 people are crammed into 46 flats – are packed with carpets, mattresses, children's' toys and a collection of car hubcaps. Smashed windows are patched up with splintering chipboard. Gaggles of street-wise children run rings around rubbish and overturned shopping trolleys.

"The problem is that there is no work for them," said Hans-Ludwig Ziegun, 65, a pharmacist who lives opposite. "They come from real poverty and just don't understand how things work here. The noise is incredible."

As The Sunday Telegraph watched, the landlord pulled up in a huge Dodge pick-up truck – its silver Ram's head logo glinting against the gleaming black bodywork. The children were immediately dispatched to clean up the rubbish and carry out rows of mattresses lining the corridors, while the parents were lined up and angrily berated by the Balkan owner – who also owns Duisburg's largest brothel.

Sandu Vassili, 20, a resident of the block who is originally from the Romanian town of Urziceni, said: "We don't want any trouble." Speaking in French – he lived near Strasbourg until then-President Sarkozy offered immigrants €300 to leave – he added: "We just want to work and make a better life for our families."

Andree Dura, 24, agreed. He arrived a month ago from Spain, where he had lived with his wife and three children. "I spent six years in Spain and never had any trouble, but now there is no work so people suggested I come here. I like it here, I want to stay."

Their attitude does not surprise Rolf Karling, the social worker.

"Those idiots in Brussels had absolutely no idea what they were doing," he said. "They wanted Romania and Bulgaria to be part of the EU because they were scared Russia might get its claws into them – but they never thought it through.

"Now we are faced with this. And it's going to get worse – two, three, four million will come. You open the floodgates from a very poor country to very rich ones. Wouldn't you move?"

Additional reporting by Harry Alsop

Romanian and Bulgarian migration into Germany: 'They come to look for a better life. But someone must pay for that' - Telegraph