Britain, France Hail Syria Disarmament Plan

EU’s Barroso leans on France to step up reforms

European Commission President Jose Manuel Barroso answers members of the European Parliament remarks at the end of a debate on the state of union, in Strasbourg, September 11, 2013. REUTERS/Vincent Kessler

President Francois Hollande’s government amended labor laws earlier this year and outlined an overhaul of the indebted pension scheme last month. “France is going in the right direction but more ambition wouldn’t do any harm, especially on the question of France’s competitiveness,” Commission chief Jose Manuel Barroso said in an interview on Europe 1 radio. S&P said France had yet to demonstrate that it can consolidate spending. France has revised its public deficit forecasts, acknowledging it would take advantage of an extra two years granted by the EU to put its finances back on track while preserving fragile economic growth. “In the short or long term the government will have to face this issue,” Moritz Kraemer, S&P’s chief sovereign ratings officer said in an advance extract of an article due to be published in German newspaper Die Welt on Monday. “There is no reason to assume that France is not also able to deal with its public expenditure but that would require a broad consensus and so far there has been no pressure that would encourage that,” Kraemer added. Barroso said France could not expect to get further leeway if the deficit was not at the 3 percent ceiling in 2015. As its labor costs rose faster than in neighboring Germany over the last decade, France’s share of international export markets has declined, costing hundreds of thousands of jobs in the industrial sector. The government raised its deficit forecasts on Wednesday, putting the 2013 shortfall at 4.1 percent of economic output, up from a previous estimate of 3.7 percent and above a target of 3.9 percent the Commission recommended in May. Barroso called the forecasts “a bit of a disappointment” and said the Commission would have preferred to a pension reform that raised the retirement age. Though the reform will lengthen the number of years worked, it does not change the legal retirement age of 62 years for a full pension, one of the lowest in Europe. ITALY ‘TIRED OF CRISIS’ S&P’s Kraemer said major euro zone debtor Italy, which has been in recession since 2011, was primarily facing a “growth problem” rather than a “deficit problem”. “But is this being tackled decisively? That can be called into question,” he was quoted as saying. A Senate vote on Wednesday on whether former prime minister Silvio Berlusconi should be expelled from parliament after a conviction for tax fraud could provoke the breakup of Erico Letta’s fragile government.

Conflict in  Syria

counterpart about the agreement they had reached on Syria’s chemical weapons, which British and French officials have praised. (Philippe Desmazes / Agence France-Presse / Getty Images / September 14, 2013) Also By Henry Chu September 14, 2013, 11:19 a.m. LONDON Britain and France, previously strong advocates for armed reprisals against Damascus, welcomed the U.S.-Russian deal struck Saturday outlining a plan for the Syrian government to give up its chemical weapons stockpile by the middle of next year. Both London and Paris called the plan an important step forward in trying to resolve the bloody conflict between Syrian President Bashar Assad and the rebels who have fought for more than two years to topple his government. The priority must now be full and prompt implementation of the agreement, British Foreign Secretary William Hague said. The onus is now on the Assad regime to comply with this agreement in full. The international community, including Russia, must hold the regime to account. The disarmament plan was announced Saturday by U.S. Secretary of State John F. Kerry and Russian Foreign Minister Sergei Lavrov after three days of talks in Geneva. The agreement calls on Assad to give an accounting of his chemical arsenal within a week and to allow international inspectors full access to weapons sites by November. The plan also allows for a United Nations resolution authorizing punitive action, such as sanctions, if Assad does not comply. The U.S. insists that military intervention should be an option as well, but Russia, which backs the Assad regime, opposes the use of force. The plans timetable is extremely ambitious, and the technical challenges of inspecting, impounding and securing a large arsenal of chemical weapons in the middle of a raging civil war are great. Kerry is scheduled to meet with Hague and French Foreign Minister Laurent Fabius in Paris on Monday to discuss the new diplomatic developments.

France’s Moscovici Rebuffs European Concern on Pensions

France is going into the right direction in terms of economic reforms but there is still much more to do. Hollandes pension plan will extend working lives to 43 years by 2035 from 41 years currently. Yet the increase avoids accelerating an increase in the effective retirement age until 2020, relying instead on higher contributions from employees and employers to trim the retirement systems deficit in the meantime. The government has pledged to offset the increase for employers to hold down labor costs, though it has yet to specify how. Negative Impact The pensions overhaul must not add costs for business or discourage employment, Rehn said earlier this week in Le Figaro newspaper. Were still waiting to hear how the negative impact on labor costs will be compensated. Moscovici said he had a long meeting with Rehn last week in St. Petersburg and that the discussion was serious and constructive. The two men have excellent relations, he said. Hollandes Socialist government also announced this week that it expects to have a budget deficit equivalent to 4.1 percent of gross domestic product this year and 3.6 percent in 2014, before bringing the shortfall below 3 percent the following year. The commission had predicted a 2013 deficit of 3.9 percent of GDP. The difference is due to the slower-than-expected economic recovery, Moscovici said, adding that the 2014 deficit-reduction effort will rely on 15 billion euros ($20 billion) of spending cuts and only 3 billion euros of tax increases, in line with commission recommendations. Resilient Economy France is a country that is changing quickly, Moscovici said. The objective is to have a more resilient economy, he said. The finance minister also pointed to Frances low borrowing costs as evidence of the credibility of its policy. The premium France pays over Germany to borrow for 10 years is currently 56 basis points, down from 80 points in November last year and more than 200 points in late 2011. The country also pays about 40 points less than the U.K. to borrow for a decade.