Asean Establishes Landmark Economic and Security Bloc

Jakarta Globe, Trinna Leong, November 22, 2015

Asean leaders joined China's Premier Li Keqiang at the summit in Kuala Lumpur,
Malaysia. (AFP Photo/Fred Dufour)

Kuala Lumpur. Southeast Asian nations on Sunday established a formal community that attempts to create freer movement of trade and capital in an area of 625 million people with a combined economic output of $2.6 trillion.

The community declaration was signed by leaders of the 10- member Association of Southeast Asian Nations (Asean) in Kuala Lumpur, this year's host of the group's annual summit.

Twelve years in the making, the Asean community is a landmark in the 48-year history of a group founded at the height of the Cold War as an anti-communist bulwark.

The Asean Community includes a political, security and socio-cultural dimension in a region with governments ranging from communist in Vietnam and quasi-military in Myanmar to the kingdom of Brunei and the boisterous democracy of the Philippines.

But it is the economic community that offers the most concrete opportunities for integration in a region whose combined gross domestic product (GDP) would make it the world's seventh-largest economy.

In practice, Asean has already virtually eliminated tariff barriers among the 10 countries, said Malaysian Prime Minister Najib Razak, the summit host, at the signing ceremony. "We now have to ensure that we create a truly single market and production base, with freer movement of goods and services."

At the closing news conference, however, he said Asean had no specific deadline for achieving zero tariffs, but would aim for "meaningful deliverables that can be done every year when we meet at the Asean summit."

The combined GDP of the Asean economies is expected to grow from $2.6 trillion to $4.7 trillion by 2020, Najib said, and could become the world's fourth-largest economy as a bloc as early as 2030.

The countries aim to harmonize economic strategies, recognize each other's professional qualifications and consult more closely on macroeconomic and financial policies.

They have also agreed to enhance the connectivity of their transportation infrastructure and communications, better facilitate electronic transactions, integrate industries to promote regional sourcing, and enhance private-sector involvement in the economy.

Eight groups of professionals will be able to work more easily throughout the region: engineers, architects, nurses, doctors, dentists, accountants, surveyors and tourism professionals.

Asean groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Reuters

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"Message for South America" - Nov 16, 2015 (Kryon Channelling by Lee Carroll) - New


"The End of History" -  Nov 20, 2010 (Kryon channelled by Lee Carroll)

" ... South America and the New Energy

South America is starting to consider the same thing. My partner was just there and I allowed him to see the energy of the potential future in that land.

I would like to paint history for you regarding South America. There was a time when every single country had a dictator. Less than 15 years ago, they had failing economies and currencies that were worthless. Trouble and strife and killings were the norm. Marauding drug lords openly killed in the streets and corruption was everywhere. Even the politicians created fear and many disappeared overnight, never to be seen again. Today it isn't that way. Today, there is an ongoing stability as one country after another brings a new, positive, stable energy to their cultures. So, without a concentrated effort by any kind of multi-national leadership or direction, how could this have changed in only 15 years?

Within the entire continent, there's only one dictator left. What's happening? If you think that's amazing, there is a move afoot that you're not going to hear about yet. But they're discussing it right now, so let me tell you what they're thinking. "What would happen if we took these countries and eliminated the borders?" Sound familiar? They're talking about it. In back rooms where nobody is reporting it, they're saying, "What about a plan of eventually having one currency from the top of Columbia to the bottom of Chile? And we would be strong and we would be unified." And dear ones, I'm here to tell you, that it's going to work, and it might not take 50 years. Soon the one dictator will be gone, and the unification can begin.

There's a shift happening on this planet ...."

President Mahama To Lead Process Towards ECOWAS Currency

SpyGhana, Ghana News,  

President John Dramani Mahama has pledged to lead the process towards the attainment of a common monetary convergence in Ghana and other Economic Community of West African States (ECOWAS) by 2015.

President John Dramani Mahama

He has also promised to support efforts at achieving a common currency in the sub- region by 2020.

The President made the pledge when Kadre Desire Ouedraogo, Chairman of ECOWAS and other Commissioners of the ECOWAS Commission, called on him at the Flagstaff House, Kanda.

Also present at the meeting were Vice-President Kwesi Bekoe Amissah-Arthur, the Chief of Staff, Prosper Douglas Bani, Seth Terkper, Minister of Finance and Economic Planning, and Hannah Tetteh, Minister of Foreign Affairs and Regional Integration.

The ECOWAS Authority of Heads of State at its last Extraordinary Session in Dakar, Senegal, in October, 2013, selected President Mahama and the President of Niger, Mahamadou Issoufou, to monitor and supervise the implementation of the monetary corporation project towards the attainment of the monetary convergence by 2015, and a common currency by 2020.

The four criteria for the attainment of the monetary convergence are the reduction in the rate of inflation, achieving minimal budget deficit, a significant financing of the economy by the Central Bank, and a Foreign Exchange Reserve of up to six months.

President Mahama said the attainment of a common currency in West Africa would facilitate business transactions among the people of the various countries in the sub-region, while the monetary convergence would enable the sub-region to negotiate with other continental groupings as a bloc, instead of being separate countries.

He mentioned that the on-going public financial management reforms in Ghana would position Ghana to consolidate the inflation target that it has achieved, and move the country ahead to achieve the other targets on reducing budget deficit, a significant financing of the economy the Central Bank and Foreign Exchange Reserve of up to six months by 2015.

According to him, by 2011, Ghana had achieved almost all of the four targets, but slacked in the process due mainly to some economic pressures, and indicated that the on-going reforms would prevent the reversal.

Vice-President Amissah-Arthur stressed the need for all member countries to demonstrate political will towards the attainment of the monetary convergence and the common currency.

Mr Ouedraogo expressed confidence in the ability of President Mahama to use his diplomatic skills to lead the monetary co-operation project towards the attainment of the monetary convergence and the common currency among ECOWAS by 2020.

He said the ECOWAS Commission had prepared a memorandum and wanted President Mahama to review it and offer his advice on the way forward for the realization of the single monetary zone by 2020.

Mr Ouedraogo explained that the first step was for the member-countries to achieve monetary convergence by 2015 to prepare the way for the attainment of the common currency by 2020.

Source: citifmonline

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"A Summary" – Apr 2, 2011 (Kryon channelled by Lee Carroll) (Subjects: Religion, Shift of Human Consciousness, 2012, Intelligent/Benevolent Design, EU, South America, 5 Currencies, Water Cycle (Heat up, Mini Ice Ace, Oceans, Fish, Earthquakes ..), Middle East, Internet, Israel, Dictators, Palestine, US, Japan (Quake/Tsunami Disasters , People, Society ...), Nuclear Power Revealed, Hydro Power, Geothermal Power, Moon, Financial Institutes (Recession, Realign integrity values ..) , China, North Korea, Global Unity,..... etc.) - (Text version)

“…. Human Nature is Changing

There's a new concept afoot, a change in Human nature. We've spoken about this before. How many of you studied European history? And in school, did your mind fill up with all of the dates you had to memorize? Who conquered whom and when? Over and over and over, every single country had their turn conquering another country. Borders moved constantly. As far back as you want to go, that's what Humans did. They separated, gathered, and conquered. But as little as 50 years ago, it all stopped.

We've said this before. Fifty years ago, a seed, an idea, was planted at the end of World War II. "Let's put these European countries together," they said. "Let's even drop the borders and eventually give them one currency." Do this and they'll never war again, they predicted, for countries with common economic sources don't go to war! And that's exactly what's happened. Did it work? It's fairly fresh, but their money is threatening to take over the strength of your money, did you notice? It's worth more than yours. They still struggle to make it work and balance it. But then again, you do the same in the United States, always fine tuning the unity.

South America is considering the same thing right now. The seeds are being planted in Brazil. Within a generation, they would love to see the borders dropped and one currency. Can they do it? Perhaps. Perhaps it will take longer. Why do it? Because they see the European Union with the strongest currency on Earth. We've said this before. Here is a prediction: Perhaps not in your time, but there'll come a day when there are only five currencies in the world, because continents will start understanding that unification creates peace and prosperity. Separation creates chaos. What a concept.  …”

Africa - "The End of History"- Nov 20, 2010 (Kryon channeled by Lee Carroll)

"..  Let me tell you where else it's happening that you are unaware - that which is the beginning of the unity of the African states. Soon the continent will have what they never had before, and when that continent is healed and there is no AIDS and no major disease, they're going to want what you have. They're going to want houses and schools and an economy that works without corruption. They will be done with small-minded leaders who kill their populations for power in what has been called for generations "The History of Africa." Soon it will be the end of history in Africa, and a new continent will emerge.

Be aware that the strength may not come from the expected areas, for new leadership is brewing. There is so much land there and the population is so ready there, it will be one of the strongest economies on the planet within two generations plus 20 years. And it's going to happen because of a unifying idea put together by a few. These are the potentials of the planet, and the end of history as you know it.

In approximately 70 years, there will be a black man who leads this African continent into affluence and peace. He won't be a president, but rather a planner and a revolutionary economic thinker. He, and a strong woman with him, will implement the plan continent-wide. They will unite. This is the potential and this is the plan. Africa will arise out the ashes of centuries of disease and despair and create a viable economic force with workers who can create good products for the day. You think China is economically strong? China must do what it does, hobbled by the secrecy and bias of the old ways of its own history. As large as it is, it will have to eventually compete with Africa, a land of free thinkers and fast change. China will have a major competitor, one that doesn't have any cultural barriers to the advancement of the free Human spirit. …." 

Mexico and Indonesia Can Work to Bring Asia and Latin America Closer

Jakarta Globe, Jose Antonio Meade Kuribrena, June 15, 2013

(JG Image)

Mexico’s multilateral engagement stems from a basic principle of our foreign policy — to play a responsible and increasingly influential role in the construction of emerging international constructions.

To this end, we need to engage key partners, and many of whom currently found both across Asia and Latin America.

Both regions have become key players whose political and economic weight cannot be overlooked as the world sets out to secure a better standard of living for the world’s population based on more effective international institutions, deeper cooperation on development and more democratic decision-making processes.

Both regions rank high in Mexico’s priorities, as President Enrique Pena Nieto’s recent activities have shown, such as a very productive visit to China and Japan last April and Chinese President Xi Jinping’s successful recent state visit to Mexico, welcoming in a new era of relations between the two countries.

Equally important has been Mexico’s work with Latin American partners in the Community of Latin American and Caribbean States created in Mexico in 2010 and in the Pacific Alliance, a multilateral and ambitious Latin American integration effort centered on free trade and a clear orientation toward Asia.

Indeed, both the Asia-Pacific and Latin America stand as fresh engines of growth in a world with a need for renewed cooperation, dialogue and leadership among industrialized countries striving for economic recovery and political revitalization.

This is why the Forum of East Asia-Latin America Cooperation matters as a tool to facilitate and strengthen cooperation between our countries, and serve as an important piece in the new global architecture we are creating.

Working relationship

Similarities as emerging nations may lead to plenty of opportunities to work together on joint development projects that will greatly benefit our societies.

Cross-regional dialogue within FEALAC means the possibility to exert a positive influence in areas such as sustainable development, climate change, the UN Millennium Development Goals, the World Trade Organization’s Doha Development Round and much more.

Firstly, it is important to agree on a strategy to revitalize the Forum itself, give it more international visibility and lay the groundwork for increased and truly bi-regional cooperation among member countries.

Successful practices and experiences can be shared with other organizations, such as the Asia-Pacific Economic Cooperation forum and the CELAC-European Union summit mechanism to identify viable proposals to help deepen relations between all regions involved.

To improve the way specific groups go about their tasks by, for instance, reinforcing methodology and establishing terms of reference and monitoring guidelines, as well as exploring more general ways to strengthen cooperative organizations’ structure and high-level meeting strategy.

It is regarding this that relationships between Indonesia, a rapidly developing and diverse country, become more crucial than ever.

Mexico’s role

In this spirit, it is important to underline that Mexico stands ready to implement all the recommendations included in FEALAC Vision Group’s report.

We are aware of the importance of this moment in the history of relations between East Asia and Latin America.

Indonesia is the largest economy in Southeast Asia and one of the fastest growing economies in the region.

As co-chair of this 6th Forum’s meeting, Indonesia will certainly facilitate making progress to improve development strategies in our respective regions.

To Mexico, Indonesia is a gateway to Asia. Our diplomatic relations are reaching the 60-year mark and we can say that over this period our governments and societies have adapted successfully to the many challenges we have faced, with our economies contributing responsibly to finding solutions to global issues concerning us all.

Multilaterally, Mexico and Indonesia cast similar votes in the United Nations 85 percent of the time, meaning our countries do share a significantly common perspective on global issues.

Besides, Mexico and Indonesia are also part of key multilateral forums — like the G20, APEC and certainly FEALAC — where our input and leadership have proved fundamental for establishing the foundations for numerous agreements that led to concrete action by all actors.

This anniversary is indeed a welcome opportunity to take stock of what we have achieved already and to identify the areas requiring a closer look.

Such an appraisal will show our excellent relations for six decades can serve as a solid foundation for fine-tuning a partnership that has flourished politically, economically and culturally, and will hopefully continue to do so well into the future.

Last March I was honored to welcome Indonesia’s Minister of Foreign Affairs, Marty Natalegawa, to Mexico City.

On that occasion, I stressed the importance of giving more content to our relations by signing the agreements we have already negotiated and finalized, in areas as diverse as air transport, tourism and health, to mention a few.

As part of my visit to Indonesia this week, I would like to convey to the Indonesian government and people a message of friendship and cooperation from President Pena Nieto.

I would also like to convey his intention to participate in the APEC Leaders’ Meeting in Bali next October.

Indonesia’s priorities for this summit coincide with many of Mexico’s development objectives, which add to our interest in joining forces with the Indonesian government in making the APEC meeting a success.

Mexico and Indonesia represent the good tides and fair winds that currently benefit both Latin America and Asia Pacific. Let us take advantage of this circumstance to come closer and work hand in hand for the benefit of our peoples.

Sixty years of friendship are undoubtedly a solid base on which to build a common future.

Jose Antonio Meade Kuribrena is Mexico’s Secretary of Foreign Affairs.

Asean Bank Pact Moves Closer

Jakarta Globe, ID/Grace Dwitiya Amianti on 6:49 pm April 27, 2013.

Indonesian banks, many of which are eager to expand abroad, lag their
 Southeast Asian peers with regard to the size of their assets. (Bloomberg
Photo/Dimas Ardian)

Central banks in Southeast Asia inched closer to agreeing on rules allowing commercial banks to expand within the region in a deal that may pave the way for Indonesian lenders such as Bank Mandiri and Bank Negara Indonesia to broaden their horizons.

Officials from central banks at the 10 countries in the Association of Southeast Asian Nations on Friday came closer to agreeing on requirements for Southeast Asian banks to do business in other nations in the region. To qualify for the improved market access, banks must reach the status of Qualified Asean Banks.

Requirements to be a QAB will include having headquarters in Asean and meeting certain thresholds on capital adequacy and consolidation, restrictions on large exposures, accounting and transparency.

Mulya Siregar, executive director of banking research and regulation at Bank Indonesia, said the region’s central bankers agreed that a preliminary document about the agreement principles was being finalized.

“This will be complete by the end of this year,” Mulya said, adding that the final decision would rest with Asean leaders. The Asean leaders are scheduled to meet at a summit in October in Brunei.

Mulya said that even though the general requirements for QAB had been laid out, the final decision of a bank expanding  to other country had to be reached by mutual agreement between the bank’s home country and its host country.

A home country’s QAB can enter a host country within the Asean region only if the host country has its own QAB that wishes to enter the former.

“This has to be done simultaneously to ensure a reciprocal treatment,” Mulya said.

Sigit Pramono, chairman of the Indonesia Banking Association (Perbanas), welcomed the advance in reciprocal talks.

Sigit said he was confident that Indonesia banks could meet the requirements to be QABs. But he warned that the country’s bank still lacked the human resources to compete abroad.

“We understand the local market very well, but we still lack, for example, English proficiency,” Sigit said.

State-owned banks Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia are currently applying to open full branches in Singapore.

Meanwhile, Bank Mandiri is also holding back from opening a full branch in Malaysia due to capital requirement and ATM permits that it deems too restrictive.

Bank Mandiri applied to the Monetary Authority of Singapore in 2009. Discussion with the MAS is progressing as part of Bank Indonesia’s push for reciprocity.

The Indonesian central bank is assessing a $6.8 billion bid by Singapore’s DBS Group Holdings to buy control of Bank Danamon Indonesia from Singapore sovereign wealth fund Temasek Holdings. Bank Indonesia Governor Darmin Nasution, whose term ends in May, hinted two weeks ago that DBS is likely to learn the outcome of its bid early next month. He said a decision by the authorities in Singapore on whether to allow greater market access from Indonesian banks is a key factor.

Despite having strong lending growth and high margins, Indonesian banks are behind regional peers in terms of assets.

State lender Bank Mandiri ($66 billion), Bank Rakyat Indonesia ($57 billion) and Bank Negara Indonesia ($35 billion) are at 11th, 13th and 19th place respectively in Southeast Asia, with private lender Bank Central Asia ($46 billion) holding 16th place.

EU warns Britain: financial rules apply to you too

Commissioner Olli Rehn says City of London will still be subject to regulation from Brussels

guardian.co.uk, Ian Traynor, Monday 12 December 2011

Olli Rehn: 'The UK’s excessive deficit and debt will be the subject of
 surveillance like other [EU] member states.' Photograph: Yves Herman/Reuters

The European commission on Monday underlined the negative impact of David Cameron's summit gambit by pledging that the City's financial institutions would be subject to new regulations hatched in Brussels.

Emphasising the EU's determination to dismiss Cameron's abortive attempt to secure exemptions for the City, Olli Rehn, the commission vice-president in charge of economic and monetary affairs, was scathing about the prime minister's campaign. This was rejected by the Brussels summit on Friday, triggering a British veto of German plans to anchor a new eurozone fiscal union in a renegotiated Lisbon treaty.

Cameron's move isolated Britain in Europe as seldom before, producing weekend headlines and comment across Europe that the UK was on the way out of the EU.

"We want a strong and constructive Britain in Europe, and we want Britain to be at the centre of Europe, and not on the sidelines," said Rehn, sounding more sorrowful than angry at what is seen in Brussels as Cameron's self-inflicted wound. "If [Cameron's] move was intended to prevent bankers and financial corporations in the [City of London] from being regulated, that is not going to happen. We must all draw lessons from the financial crisis, and that goes for the financial sector as well."

Launching a new set of economic convergence policies – known as the "six-pack" and which come into force on Tuesday – Rehn admitted that Britain's blocking of attempts to reopen the Lisbon treaty could create problems for the EU. Potentially, the move makes it legally more difficult to establish the eurozone's "fiscal compact" – the main result of last Friday's summit – by March.

Because of the British block, at least 23 and possibly 26 of the 27 EU states are now to agree a new international treaty among themselves as the answer to the eurozone debt crisis. The aim is for all eurozone countries to enact laws setting binding debt ceilings and with quasi-automatic penalties and fines for those countries breaking the rules. Germany, the architect of the new regime, wants to strengthen the key European institutions – the European commission and the European court of justice – giving them formidable powers of intervention in enforcing the new regime.

But on the central innovation – automatic fines for deficit sinners – Rehn conceded that it could be difficult to give the new regime as much clout as Berlin would like. The Germans want the commission to enforce the regime independently by recommending punishments for eurozone countries running excessive budget deficits. The penalty would be triggered automatically unless a qualified majority of eurozone governments then voted to overturn it. Rehn said the Lisbon treaty would need to be changed for this to happen – but it cannot be changed because of the British veto on Friday.

While eurosceptic Tory backbenchers may be pleased by the potential legal stalemate, the Cameron veto may be generating more unintended consequences. For months it has been British government policy to back EU efforts to stabilise the euro through an effective fiscal union. Cameron and the chancellor, George Osborne, have been stressing the "relentless logic" of fiscal union, supporting it strongly provided that Britain is not involved. Britain's veto and its resistance to having EU bodies involved in policing the fiscal compact could leave the new regime weaker, setting back attempts to stabilise the euro, which Britain says is also crucial for the UK economy.

"I regret very much that the UK was not willing to join the new fiscal compact, as much for the sake of Europe and its crisis response as for the sake of British citizens and their perspectives," said Rehn. "I would also like to remind you that the UK government has also supported and approved the six-pack of new rules tightening fiscal and economic surveillance, which enters into force tomorrow.

"The UK's excessive deficit and debt will be the subject of surveillance like other member states, even if the enforcement mechanism mostly applies to the euro area member states."

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Europe announces a fresh, 'credible' Greek rescue deal

Deutsche Welle, 22 July 2011 

Greece's second aid package is
larger than the first

European leaders say the eurozone, the International Monetary Fund and the private sector will all contribute towards a second package of emergency loans for Greece, as a debt-dominated summit concludes in Brussels.

European Union President Herman van Rompuy said after Thursday's summit in Brussels that the bloc had reached three important decisions which had unanimous support within eurozone.

"We improved the Greek debt sustainability, we took measures to stop the risk of contagion, and finally, we committed to improve the eurozone's crisis management," Rompuy said in the opening moments of his official address.

The EU president said that the instability of the Greek economy, coupled with the resultant jitters on international markets, ultimately could have threatened the single European currency and the economic recovery in Europe and the wider world.

"Convening this meeting focused the minds and accelerated finding a solution. I could not allow a difficult situation to become a dangerous one," Rompuy said.

The nuts and bolts

European leaders in conjunction with the International Monetary Fund (IMF) agreed to lend Greece an additional 109 billion euros (157 billion dollars) in order to cover its financing shortfalls and prevent Athens from defaulting on its sovereign debt.

The program will include lower interest rates and extended maturities as well as a voluntary contribution from private sector financial institutions amounting to 37 billion euros, according to a statement released by the leaders after the summit.

Merkel and Sarkozy struck an
agreement before the summit

European Central Bank chief Jean-Claude Trichet reacted coolly to concerns that even voluntary participation by the private sector could provoke rating agencies to downgrade Greece's credit worthiness.

"I don't think experts consider that what has been done would trigger a credit event," Trichet said after the summit.

'European package'

Greece's second aid package, including private contributions, will total at least 146 billion euros. The package comes in addition to the 110 billion euros Athens was promised as part of its first bailout in 2010.

"The only thing we're asking for is the right to make deep changes in our country to make our country a viable one, one of growth and jobs creations," Greek Prime Minister George Papandreou said. "This is a European success, a European package."

The breakthrough deal was made possible after German Chancellor Angela Merkel and French President Nicolas Sarkozy came to an agreement in Berlin on Wednesday.

Sarkozy said that Europe was prepared to stand with Athens and guarantee its credit worthiness in the event that credit agencies declare Greece in limited default.

"We have agreed to create the beginnings of a European Monetary Fund," he said.

Author: Spencer Kimball, Mark Hallam (AFP, Reuters, dpa)

Editor: Joanna Impey

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Chinese FM calls for further ASEAN Plus Three cooperation for regional prosperity

Foreign ministers and delegates of ASEAN and China, Japan and the
 Republic of Korea, pose for group photos during the ASEAN and China,
Japan and the Republic of Korea foreign ministers' meeting held in Bali,
Indonesia, July 21, 2011. (Xinhua/Chen Duo)

S&P warning puts damper on Eurogroup plans

Deutsche Wellle, 5 July 2011

Standard & Poor's is critical of
the banks' plans

The Standard & Poor's rating agency says a debt rollover plan pushed by French banks would amount to a default, putting a damper on European efforts to solve the Greek debt crisis.

French banks last week thought up what they figured was a really good plan: a debt rollover plan under which some of the Greek bonds would be voluntarily renewed when they become due, but on different terms, giving Greece some breathing space without actually reducing the amount owed to creditors.

German banks, which together with French banks and insurance companies are among the major holders of Greek debt, agreed to the plan - and so did the German finance ministry.

But the ratings agency Standard & Poor's warned on Monday that this option "would likely amount to a default under our criteria." The other two major rating agencies, Fitch and Moody's, did not react immediately, but it was expected that they could well come to a similar assessment.

S&P warning calls into question second bailout package

Since German banks have made it clear that any solution to the Greek debt crisis which rating agencies viewed as a default was not viable, that would call into question the voluntary contribution of banks and insurance companies to a second bailout package designed to help Greece through to 2014.

Eurozone finance ministers put off
deciding on a second bailout package
to help Greece

At the weekend, the finance ministers of the 17 eurozone countries put off a decision about such a bailout, which is expected to amount to 80 to 90 billion euros ($116 to 131 billion) because of conflicts over the extent of private sector involvement in the effort.

The eurozone ministers did sign off an 8.7 billion euros loan to Greece which is part of an 110 billion euros package agreed upon last year. Without this loan, the Greek government would have faced insolvency within weeks. But without a second bailout deal, a funding shortfall is imminent between 2012 and 2014.

Criticism grows louder of rating agencies' power

With the controversy surrounding a second bailout package due to the assessment of Standard & Poor's, criticism of the big rating agencies' power is growing louder.

ECB member Ewald Nowotny is
one of the rating agencies' critics

European Central Bank policymaker Ewald Nowotny told Austrian public radio that the rating agencies were placing obstacles in the way of those banks willing to contribute to Greece's financial stabilization.

The Bavarian finance minister, Georg Fahrenschon of the conservative Christian Social Union party, or CSU, told the German newspaper Passauer Neue Presse that the warning issued by S&P was "inappropriate." And Joachim Poss, finance expert for the Social Democrats in the German Parliament, told Deutsche Welle that the game the US rating agencies were playing had to make one "uneasy."

The three major rating agencies hold a collective market share of roughly 95 percent. Their special status has been cemented by law - at first only in the US, but then in Europe as well.

"The ratings from the big three were declared mandatory for European firms active in the US market," Thomas Straubhaar, the director of the Hamburg Institute of International Economics told Deutsche Welle.

The agencies rate the creditworthiness of companies and countries, as well as the quality of funds and stocks. Their assessment determines the conditions under which firms, banks or countries may borrow money on the capital markets.

"We can't have private companies, whose primary goal is maximizing profit, behaving like sovereign judges passing down opinions that are binding for disinterested third parties," Straubhaar said.

EU makes efforts to curb the influence of the three big players

Over a year ago, the heads of the state and governments of the 27 European member states called upon the Union's executive body, the European Commission, to come forward with proposals on how to supervise credit rating agencies. The Commission then proposed to set up a a new European supervisory authority, the European Security Markets Authority (ESMA).

The European Commission set up a new supervisory body for
rating agencies.

ESMA started work on January 1, promising to compel rating agencies to disclose the methodology of their ratings. But so far, the power of the big rating agencies appears unfettered.

Apart from calling for closer supervision of the big rating agencies, many European politicians have supported the creation of a European ratings agency. An independent European rating agency was indispensable, Bavarian finance minister Georg Fahrenschon said.

But economists are not so sure such a European agency would change much. "We don't need rating agencies to tell us that Greece is on the verge of bankruptcy," said Thomas Straubhaar. "A European agency would not be able change anything about this fact, nor could it correct it."

And Torsten Hinrichs of Standard and Poor's told Deutsche Welle investors were already free to place their trust in a whole range of agencies.

So even if a European ratings agency was to come into existence, it would still have to establish itself on the market and gain investors' trust.

Author: Andrea Rönsberg

Editor: Nicole Goebel

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Moody's may cut Portugal on growth, debt concerns (Dec 21, 2010)

Moody's slashes Ireland to Baa1, warns more may be ahead (Dec 17, 2010)

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Don't bet against euro: German finance minister

President: EU can be ASEAN strong partner to develop together

Antara News, Thu, May 5 2011

Related News

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• Myanmar president first to arrive for ASEAN summit

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono in his opening speech at the First ASEAN-EU Business Summit here Thursday said the European Union (EU) can be a strong partner with ASEAN to develop together.

"Europe has a much longer experience in economic integration and community building. ASEAN has and will continue to learn from the European experience," President Yudhoyono, as the ASEAN Chair, said in the Business Summit attended by around 400 businessmen from European and Southeast Asian counties.

According to Yudhoyono, ASEAN and EU clearly are important to each other, as EU is the second largest trading partner for ASEAN, and the largest investor, while ASEAN is EU`s fifth largest trading partner.

He also said that the ASEAN-EU Summit should also be used as a chance to play a role in changing the paradigm on which economic policies are made, to turn the tide of events in favour of both regions.

"This Business Summit is timely for ASEAN, as we make a final sprint to achieve a true ASEAN Community by 2015. But, in realizing this objective, we are not without challenges," he said.

The world recovery is gaining strength, but output gaps and unemployment remain high in advanced economies, while new challenges are building in emerging economies, according to the Indonesian head of state.

Much has also been gained in achieving an ASEAN economic community, he said.

"When leaders agreed on the vision of an ASEAN Community in 2003, the size of the ASEAN economies was $700 billion, and now it becomes $2.9 trillion. If we include ASEAN and the six partners which it already has trade agreements - China, Japan, Korea, India, Australia and New Zealand - then the size is amount to $15 trillion, or the same economic size as EU and US," the president stated.

Editor: Bambang

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