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| Geithner reaches out to Brazil on China issue Posted: 07 Feb 2011 07:02 AM PST BRASILIA (Reuters) - U.S. Treasury Secretary Timothy Geithner reached out to Brazil on Monday by citing a shared concern -- China -- and endorsing Brazil's approach for dealing with global economic distortions.
While on a one-day visit to Brazil, Geithner told an audience in Sao Paulo that emerging markets such as Brazil had been buffeted in recent years by other countries with large current account surpluses and inflexible currencies. Geithner did not mention China by name. Yet his comments will likely be well-received by the Brazilian government, which is seeking closer ties with Washington in part out of hope that the two countries can work together to convince China to let its currency appreciate faster. "As countries with large surpluses act to strengthen domestic demand in their economies, open their capital markets and allow their currencies to reflect fundamentals, we will see more balance in the flow of capital, less upward pressure on Brazil's currency, and more robust growth in Brazil's exports, especially manufacturing exports," Geithner said at a think-tank in Sao Paulo. After strains in recent years over trade disputes and Brazil's cozy relationship with Iran, new President Dilma Rousseff has openly sought closer ties with the United States since she took office on Jan. 1. The undervalued Chinese yuan -- part of what Brazil has called a global currency war -- has posed a major problem for Brazil's otherwise prosperous economy by fast eroding its trade balance and transferring jobs abroad. Geithner also added that countries such as Brazil that face an "outsized burden" due to their strong currencies "may need to adopt carefully designed macro-prudential measures" -- a tacit endorsement of capital controls that Brazil has recently implemented to ease strong inflows. Geithner's comments came three days after the Treasury released a long-delayed report that declined to name China as a currency manipulator, but said the yuan was "substantially undervalued." Geithner's visit is also designed to lay the groundwork for a trip by U.S. President Barack Obama in March, which officials on both sides say will signal a better era of cooperation between the Western Hemisphere's two biggest economies. Rousseff, a pragmatic leftist, believes that closing ranks with Washington is one of the only avenues available to convince China to correct trade imbalances, advisers say. "The United States is thrilled with the language the Brazilian government has been using in regards to global economic issues, in particular, regarding China," said Mauricio Cardenas, director of the Latin America studies program at the Brookings Institution, a Washington think tank. COMMODITIES MARKETS Rousseff also wants to work with Washington against France's proposal to tighten international commodity market regulations, a move it argues benefits only wealthy food importers and could stifle output by major food producers. Lael Brainard, a U.S. Treasury undersecretary who is accompanying Geithner on the trip, said Brazil and the United States share common ground on the G20 commodities agenda and want to keep the focus on improving market functioning. "The approach that we'll want to take there is to improve transparency in the commodity markets," she said. "But it's with a view to making markets function more effectively as opposed to supplanting markets." Rousseff is also reevaluating a large jet fighter deal, which France's Dassault was widely thought to have won, thus reconsidering bids by U.S.-based Boeing and Sweden's Saab. Geithner, who will meet with Brazilian Finance Minister Guido Mantega and central bank chief Alexandre Tombini, will also aim to discuss shared bilateral goals such as how best to rein in government spending and rebalance global growth. (Additional reporting by David Lawder and Glenn Sommerville in Washington) (Editing by Theodore d'Afflisio) Copyright © 2011 Reuters | ||
| Mubarak cabinet meets, "Nile Revolution" digs in Posted: 07 Feb 2011 07:02 AM PST CAIRO (Reuters) - President Hosni Mubarak's new cabinet on Monday held its first full meeting since an uprising started nearly two weeks ago, with no concrete progress in talks with Islamists and an opposition who demand his immediate exit.
Mubarak, 82, who has refused calls to end his 30-year-old presidency before September polls, saying his resignation would cause chaos in the Arab world's most populous nation, has tried to focus on restoring order. Protesters, barricaded in a tent camp in Tahrir Square in the heart of Cairo, have vowed to stay until Mubarak quits and hope to take their campaign to the streets with more mass demonstrations on Tuesday and Friday. The banned Islamist Muslim Brotherhood movement was among the groups that met Egyptian government officials at the weekend, a sign of how much has already changed in an uprising that has rocked the Arab world and alarmed Western powers. Opposition figures reported little progress in the talks. While protesters want Mubarak to step down immediately, many worry that when he does leave, he will be replaced not with the democracy they seek but with another authoritarian ruler. With a government pledged to reform, an opposition with limited political experience, a constitutional process that mitigates against haste, and a key strategic role, Egypt's next steps must be considered carefully, U.S. officials say. The opposition has made big gains in the past two weeks. Mubarak has said he will not run again for president, his son has been ruled out as next in line, a vice-president has been appointed for the first time in 30 years, the ruling party leadership has quit and the old cabinet was sacked. Perhaps more important, protesters now take to the streets almost with impunity in their hundreds of thousands. Before Jan. 25, a few hundred would have met a crushing police response in this U.S. ally whose army receives $1.3 billon in aid annually. "OVER THE HORIZON" Appearing to soften her position for Mubarak to step down, U.S. Secretary of State Hillary Clinton has said her policy on Egypt looks "over the horizon" to its possible democratic future -- a future that must be carefully planned. The cautious U.S. approach to the unrest shaking its strategic Middle East partner has come at a cost, putting the Obama administration out of step with the protesters who say Mubarak must quit now for serious political talks to take place. As allies coalesced around the U.S. position, German Chancellor Angela Merkel's spokesman Steffen Seibert said it was clear that the Mubarak era was in its final phase and there would be other leaders. "That is what's important for us, that this new direction is clear and irreversible," he said, adding: "It's not so important that individual people resign or whether there is a competition to have the quickest possible election." Former Trade Minister Rachid Mohamed Rachid, sacked by Mubarak along with the rest of the cabinet, said: "I believe the presence of Mubarak in the next phase of transition for the next few months is very critical." Determined protesters in Tahrir (Liberation) Square were settling into a routine on Monday after a bloody revolt which the United Nations says may have cost 300 lives so far. Activists have called the uprising the "Nile Revolution". Keen to get traffic moving around Tahrir Square, the army tried early on Monday to squeeze the area the protesters have occupied. Overnight campers rushed out of their tents to surround soldiers attempting to corral them into a smaller area. Wary of the army's effort to gain ground to try and restore the traffic flow in central Cairo, dozens of protesters slept inside the tracks of the army vehicles. The powerful army's role in the next weeks is considered critical to the future of Egypt. "The army is getting restless and so are the protesters. The army wants to squeeze us into a small circle in the middle of the square to get the traffic moving again," protester Mohamed Shalaby, 27, told Reuters by telephone. Egypt's government tried to get the country back to normal when the working week began on Sunday. Banks reopened after a week-long closure with lines of customers accessing accounts but hours, and withdrawals, were limited. Schools remained shut. In another move to restore normality, authorities shortened the curfew, largely ignored by the hard-core protesters, to start at 8 p.m. and end at 6 a.m.. Many Egyptians, including those who took part in nationwide demonstrations last week against Mubarak, are keen to get back to work and are worried about the effects of the crisis on stability, the economy and the important tourism sector. Egypt's pound weakened to a six-year low on the second day of trade after a week-long closure. State-controlled banks seemed to be selling dollars to support the pound. "Things are stable. I can't say they're good, but they're not collapsing," said a trader at a Cairo-based bank. The bourse remained closed until Sunday because of the political turmoil and Egypt's central bank reduced the size of its Treasury bill offering, possibly out of concern that nervous investors would not buy the full amount. Government ministers will hold their first full meeting at 2:00 p.m. (1200 GMT) since Mubarak reshuffled his cabinet on Jan. 28 in an attempt to appease protesters enraged by years of corruption, economic hardship and political oppression. MUSLIM BROTHERHOOD The presence at the weekend talks of the banned Muslim Brotherhood, whose members have for years been repressed by Mubarak's feared security forces, was a significant development that would have been unthinkable before the uprising. Egypt's courts have repeatedly rebuffed the Brotherhood's requests for recognition as a party on the grounds that the constitution bans parties based on religion. In the past three decades, Brotherhood members were tortured, repressed, arrested and tried in military courts under emergency laws implemented when Mubarak took over after the assassination of Anwar Sadat by Islamist soldiers from his army. The government insists it investigates accusations of torture and says it uses emergency laws to fight terrorism. The government said after the weekend meeting, chaired by Vice President Omar Suleiman, they agreed to draft a road map for talks, indicating Mubarak would stay in power to oversee change. It would also move to release jailed activists, guarantee press freedom and lift Egypt's emergency laws. A committee was set up to study constitutional change. The opposition said the government failed to meet its demand for a complete overhaul of Egypt's political system. Abdel Monem Aboul Fotouh, a senior Brotherhood figure, said the government statement represented "good intentions but does not include any solid changes". Opposition activists reject any compromise which would see Mubarak hand over power to Suleiman but serve out his term -- essentially relying on the old authoritarian system to pave the way to full civilian democracy and saving his face. Nobel Peace laureate Mohamed ElBaradei, who has emerged as a figurehead for the opposition coalition, criticised fledgling negotiations and said he was not invited. "It is all managed by the military and that is part of the problem." he told NBC. (Reporting by Samia Nakhoul, Marwa Awad, Shaimaa Fayed, Alexander Dziadosz, Yasmine Saleh, Sherine El Madany, Jonathan Wright, Andrew Hammond, Tom Perry and Alison Williams in Cairo; Erika Solomon in Dubai, Writing by Angus MacSwan and Peter Millership; Editing by Andrew Dobbie) Copyright © 2011 Reuters |
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