Financial Mirror 2015 09 23

FinancialMirror MOHAMED EL-ERIAN

KENNETH ROGOFF

Refugees and reform in Europe PAGE 16

The age of Bobby Fischer

Issue No. 1150 €1.00 September 23-29, 2015

PAGE 20

Can Tsipras bring back economic prosperity?

ECONOMISTS PLAY DOWN NEW ‘GREXIT’ FEARS - SEE PAGES 10 - 11

New buildings and modern architecture SEE PAGE 13

September 23 - 29, 2015

2 | OPINION | financialmirror.com

FinancialMirror UCy: when will it grow up?

Published every Wednesday by Financial Mirror Ltd.

EDITORIAL

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The University of Cyprus faces a serious dilemma, which has dogged the island’s premier educational institution ever since it was established – is it the University of Cyprus or the University of Greek Cypriots?

In its past 25 years, the university, and all those who have defended (rightfully) its academic independence have considered the greater public good as its main mission. And so it should be.

But repeated efforts by so-called nationalists, or “patriots” as they like to call themselves, refuse to consider the UCy ever becoming an international educational institution of excellence, that happens to be based in Cyprus and its main focus is Cyprusrelated studies. Instead, they want to maintain the “Greek character” of the university, and we have seen endless efforts by meddling politicians, many of whom have no right to talk about free education in the first place.

Only this week, the university’s Senate decided to set the record straight as regards enrolling students already accepted in other universities, based on their International Baccalaureate, GCE or other equivalent, although a bit late for this year’s freshers.

In other words, the majority of students who have graduated from private schools or even those from public schools who have opted for international exams in order to secure a place at a foreign university.

Perhaps, this is also an opportunity for the UCy to benchmark its own entrance criteria against that of the privately-funded universities within Cyprus, which will settle the score, once and for all, in this private-public rivalry. A foolish conflict at a time when education should become the driving force of our struggling economy, and turn the island into a truly education centre of excellence in the region.

All the noise created by a bunch of racist students (provoked by brainless teacher unions) aimed to serve one interest only – to keep the University of Cyprus under control to ensure that only half-witted students are accepted, by default, and to justify the poor level of academic teaching of the public sector in general.

The Senate was very right to say that accepting the aforementioned students “serve the academic principles of the University and the needs of the youth of Cyprus.” These efforts, it said, aim to “create opportunities, social progress and development,” based on the essence of science and excellence. After all, Cypriot students should be allowed to study wherever they like.

It is high time that the UCy adopted an international image and appealed to non-Cypriot students as well, whereas some foreign institutions pride themselves of their high level of intake of international students. Only then will it be able to break out of the conservative ideas of the past century and strive to compete with leading universities of the world, something it will never be able to do at present, no matter how hard some truly deserving academics and researchers try.

THE FINANCIAL MIRROR THIS WEEK 10 YEARS AGO

CSE roars, deficit at 3.9% The Cypriot bourse roared to another record close, the highest in 3 ? years, with institutionals such as Deutsche Bank issuing strong ‘buy’ signals on BOC, while the state budget deficit hit 3.9% of GDP in the second quarter, according to the Financial Mirror issue 637, on September 21, 2005.

CSE roars: The Cyprus Stock Exchange broke a new high in three and a half years as the rally on banking shares showed no sign of cooling down. The main driver was Laiki, 5% up at CYP 1.69, its highest since August 2001. BOC saw a moderate 0.4% gain to CYP 2.34, driven mainly by interest in Athens, with a

20 YEARS AGO

Lift exchange controls, Severis eyes foreign investors The head of the Chamber of Commerce has called for all exchange restrictions to be lifted as Cyprus is on its course to Europe, while investment guru Nicos Severis launched a new index to attract foreign buyers to the Cyprus bourse, according to the Cyprus Financial Mirror issue 128, on September 20, 1995.

Exchange controls: The crucial challenge facing Cyprus is the new situation in relations to its accession course to Europe, GATT, the internationalisation of economic affairs and the liberalisation of transactions, goods and services, said

weekly gain of 5% and 56% year-to-date. Deutsche Bank issued a buy signal and a price of EUR 4.72 (CYP 2.70), while Artion Securities set a target of EUR 4.81 (CYP 2.75).

CSE on track: Marios Clerides, the Securties and Exchange Commission Chairman, said that the stock exchange “is on the right track” of clearing its house, admitting that stricter regulations were time consuming, but not so much as to kill off the Cypriot bourse, said the man credited with bringing order to the chaos that prevailed after the 1999 boom and bust.

Budget deficit: The budget deficit in the second

quarter of 2005 widened to CYP 76.7 mln, compared with 49.1 mln a year earlier, amounting to 3.9% of GDP, estimated at CYP 1.977 bln. With the government aiming for a lower deficit of 2.9% of GDP by the end of the year, the tax amnesty that ended in the first quarter pushed the first half into a surplus.

Paphos marina: A fresh attempt to expand and upgrade the marina at Potima in Paphos as “the gateway to the west” will be made this year with a build-operate-transfer (BOT) plan for 1,000 boats and increasing the development area from 15,000 sq.m. to 40,000, while improving the lease from 45 years to 90.

Andronikou charges: Yiannos and Rea Andronikou of the Suphire Group face 28 counts of misappropriation of the CYP 4.88 mln EAC Staff provident Fund. They were released on CYP 50,000 bail pending a hearing on September 28.

KEVE President Phanos Epiphaniou, telling the chamber’s annual meeting that Cyprus continues to face acute problems of reduced competitiveness.

Severis index: The Cyprus stock market, currently riding an 18-month bull-run, has failed to attract foreign fund managers and Nicos Severis has decided to launch the Severis Cyprus Investible Index for this purpose.

PW merge: Price Waterhouse and Costouris &

Michaelides said they were in merger talks to create the third largest firm by January 1, 1996, with 100 staff and seven partners. Due to secrecy on billings and client numbers, the office size determined the rank, with Coopers & Lybrand first in Cyprus, followed by KPMG Provident funds: The number of active provident funds were 1,400 for 120,000 people and the total sum invested is estimated at CYP 280 mln. Most of them were young and more than half were ‘serious’ as they had investments in excess of CYP 100,000, said Phidias Pilides, partner at Coopers & Lybrand.

Maritime conference: Cyprus intends to adopt a series of measures to upgrade the quality of its commercial fleet and meet international regulations on safety and quality, officials at the fourth Maritime Cyprus conference said. The Cyprus flag ranked fourth worldwide with 2,600 ship and a capacity of 25 mln tonnes.

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September 23 - 29, 2015

financialmirror.com | CYPRUS | 3

Wilbur Ross: “Second half will be more meaningful” for Bank of Cyprus Happy that John Hourican is staying longer, “good candidates to succeed him”

Following somewhat disappointing first half results, where Bank of Cyprus announced a profit of about EUR 60 mln, albeit a significant turnaround from the EUR 337 mln losses it reported in the final quarter of 2014, the bank’s vice chairman and biggest shareholder believes the “second half will be a more meaningful period.”

The island’s biggest lender that was twice bailed out by shareholders and depositors, has reported two quarters of profits, improved its funding structure, boosted capital and lowered its reliance on EU emergency funds. This seems to make Wilbur L Ross Jr. more determined to hold on to the 18% stake controlled by himself and co-investors.

“There is a lot of noise in the June numbers, but the bank is meeting its plans to divest units, trim (its costs) and reduce the dependence on the Emergency Liquidity Assistance (ELA),” he told the Financial Mirror.

From a EUR 11.4 bln in ELA debt it had inherited after Laiki Popular Bank crashed in 2013, the bank said it halved its ELA exposure during the second quarter to EUR 5.9 bln, thanks to a continuation of positive customer flows and deleveraging, and by a further 500 mln post quarter-end to EUR 5.4 bln at the end of August.

“The gradual elimination of capital controls has affected deposits and the second half will be a more meaningful period,” for new deposits as well, Ross said, adding that the

“delay of the foreclosure and insolvency laws until August was a problem,” as regards the bank’s slow recovery of assets and loan restructuring efforts.

“We have no immediate plans to sell (the portfolio of) non-performing loans nor to raise any more money for equity,” he said, in response to suggestions that banks in Cyprus, laden with NPLs, had been waiting for the foreclosures bills to pass through parliament in order to offload distressed loans or NPL portfolios to other investors

or funds willing to take on the risk.

He also denied talk of a need for more capital at the bank.

Looking ahead, and considering that the energy, transport and tourism markets have all been affected by the slow growth in China, Ross expressed confidence in the Cypriot authorities as regards efforts to help the economy recover.

“The government is developing a robust growth strategy,” he said, adding that the ‘China factor’ is irrelevant.

Reports also suggested that outgoing CEO John Hourican, who announced his resignation in April on “personal grounds” with the intention of returning to Ireland to spend more time with his family, will now be staying on until the end of November, when the bank’s AGM will be held.

Hourican was supposed to have left at the end of August, but the board meeting to choose his successor, scheduled for earlier that month, never took place.

“We are happy John is staying longer and have good candidates to succeed him,” Ross, said.

As regards the recent elections in Greece and the 1.3 bln euros he and his co-investors pumped into Eurobank Ergasias, the third-largest bank, Ross was more subtle.

“The Greek election results and the asset quality review (later this year) and stress tests will determine the outlook for the Greek banks,” he said.

September 23 - 29, 2015

4 | CYPRUS | financialmirror.com

Solution will boost economic development Anastasiades: “We have a vision to transform Cyprus and unlock its full potential”

President Nicos Anastasiades said in Chicago that relations with the United States are of a strategic importance and “we have a vision to transform Cyprus and to unlock its full potential, for the benefit of its people.”

Speaking at the Chicago Council on Global Affairs before departing for New York to address the UN General Assembly, he added that a solution to the Cyprus problem will act as a catalyst for the economic development for the decades to come and with huge potential benefits for many sectors of the economy including energy, shipping, tourism and transport.

The President said when he took office he and his economic team were well aware that the economy was running into trouble as the financial sector had run an unsustainable credit boom for more than a decade, which fuelled a property and consumption boom.

He said the impact of the decision to impose a haircut on Greek sovereign debt left the

Cyprus banks on the brink of collapse while there was a severe fiscal crisis and the public coffers were literally on the brink of exhaustion. In efforts to avoid an economic collapse, “we agreed on a programme of economic reform and fiscal consolidation”.

“To avoid the upcoming Armageddon and considering that the second largest systemic bank had already reached the point of no return, we had to adhere to an unprecedented and still questionable Eurogroup decision, which included a severe haircut of bank deposits”, the President remarked.

Anastasiades said his government had to make this programme work. “Just two and a half years later, I stand before you and state with confidence that we expect a smooth and successful completion of the programme within the next few months”.

Most importantly, I can proudly present Cyprus as a success story of economic

reform, said Anastasiades, noting that “we are emerging stronger from the crisis and we can be very optimistic for the future”.

Cyprus, he said, “has officially exited recession, and is registering growth as of this year. A much stronger growth than anyone had expected. We are on the road towards full recovery”, with a “restructured and fully recapitalised banking sector and with a strong presence of major US investors like Wilbur Ross and Third Point”, the fiscal imbalances fully addressed and Cyprus returning to the international markets much earlier than any other programme country.

Changes include a pension reform, a bold welfare reform, a public administration reform including a revision of the wage-bill, labour market reforms, and a tax administration reform. Critical growth will also come from an ambitious privatisations programme, a digital strategy and a judicial reform “to transform our bureaucracy from a

red-tape to a red carpet for investors”, Anastasiades added.

Regarding the Cyprus problem, he said a settlement will reunite the country, its people, the economy, and will establish good relations with Turkey and will comprise all the parameters conducive to economic development, business and investment; regional stability, and open markets.

“This is what we are currently negotiating with our Turkish Cypriot compatriots”, he said, “to reach an agreement on evolving the Cyprus Republic to a carefully designed Federal structure that will work for Cyprus”, while the EU is now becoming a more active player.

“The solution will act as a catalyst for the economic development for the decades to come. With huge potential benefits for many sectors of the economy; Energy, Shipping, tourism, or transport are just the most obvious”.

August sees record in tourist arrivals, ytd up 5% CTO eyes 400,000 tourists from China The Cyprus Tourism Organisation (CTO) aims to attract around 400,000 Chinese tourists, its Chairman Angelos Loizou said on Tuesday, saying that efforts are underway to resolve visa issues for Chinese citizens.

A meeting will take place next Thursday at the Foreign Ministry and “once the problem is solved, the CTO can attract around 400,000 Chinese tourists,” he said.

Speaking of the forthcoming visit of President Nicos Anastasiades to China, Loizou said that the President will be accompanied by a CTO delegation to explore why past efforts to attract tourists from China were unsuccessful.

As regards the casino resort, regulations for which were announced last week, the CTO Chairman said it will attract some 500,000 more tourists a year.

Loizou said revenues from 2.4 mln tourists who visited last year amounted to 2.035 bln uros with tourists spending on average 829 euros per person or 77.5 euros per day. He said the U.K. remains the main tourist market for Cyprus, followed by Russia, Greece, Sweden, Germany and Israel. He added that tourists prefer Paphos and Polis and then Famagusta, Limassol, Larnaca and Nicosia.

From January to August 2015, there was an increase in tourist arrivals excluding June, while April and August saw record numbers of arrivals.

For the winter 2014/2015 season, the CTO Chairman said that there was an increase in arrivals of 68% from Israel, 49% from Arab countries, 22% from Germany and 12% from Greece.

NPLs up 1.3% to €27.4 bln The total value of non-performing loans in the Cypriot banking system rose 1.3 per cent or by EUR 351.5 mln to ?27.4 bln in July, accounting for 47.4% of total exposures, the Central Bank of Cyprus said. This was up from the June figure of 46.37%.

The share of NPLs as a percentage of total loans to nonfinancial companies was 56.77%, while bad loans to small and medium size enterprises rose 1.6% or by 145.7 mln in July to EUR 8.9 bln. Households NPLs also rose, up 0.5% to EUR 12.7 bln in July.

Tourist arrivals in August were the highest ever, rising 5.1% year-on-year to 392,272, while the January-August figures also showed an increase of 6.2% y-o-y to 1,842,700, according to the Cyprus Tourism Organisation.

Monthly arrivals saw a revival of the British market, with tourist numbers up 15.7% y-o-y to 156,701, followed by Israel (+27.3% to 16,802), Germany (+67.5% to 13,997) and Greece (+19.8% to 8,949), with increases also recorded from Ukrane, Poland and Lebanon.

The CTO said that the year-to-date figures showed that the 19.6% drop in tourists from Russia and Scandinavia (10.1%), was more than compensate by an increase from other markets.

In the first eight months of the year, increases were recorded from the UK (16.3%), Germany (34.8%), Israel (46.2%), Greece (41.6%), France (30.6%), Holland (41.8%),

Poland (38%) and Ukraine (15.8%).

The official “summer season” arrivals from April to August also marked a new record, up 5.2% y-o-y to 1,652,710, based on the benchmark year of 2001.

The CTO said in an announcement that the whole sector should remain vigilant to keep up a steady increase of arrivals at a time when foreign earnings and services are the main revenue earners for the economy that has just seen two consecutive quarters of growth and officially exited recession after three years.

However, the next big challenge should be tackling seasonality, the CTO said, explaining that incentives such as subsidising unemployed skilled workers and lower winter tariffs for electricity should continue through the winter months as well, when as many hotels as possible should remain open.

Cabinet approves ‘balanced’ budget, dev spending up 5% The Cabinet has approved the 2016 budget, which Finance Minister Haris Georgiades described as ‘balanced’ and included a 5% increase in development spending.

However, noting that the effort to maintain a reasonable management of fiscal finances must continue, the Minister said that the budget deficit has been ‘contained’ and that there would be no need for new measures or new taxes.

Georgiades said there is instead an increase in primary government expenditure and steps are being taken towards a gradual decrease of tax burdens which does not imply a relaxation of the effort for prudent fiscal management.

The budget provides for a 1.3% increase in revenue to over EUR 5.9 bln and a 0.3% reduction of expenditure excluding loan repayments to below EUR 6.1 bln. The 5% increase in development expenditure will offset a 16% drop in interest payments.

The government also revised its expected 2015 revenue and expenditure to below EUR 5.9 bln and below 6.7 bln, respectively.

“We estimate that growth rate in 2015 will be quite satisfactory, allowing us to leave recession definitely behind us and we shall support this recovery and growth course also in 2016,” the Minister added.

Georgiades was quoted as saying that there is no room for relaxation of the government’s effort and consistency even after Cyprus completes its economic and financial reform programme in March, which was the condition for a ?10 bln bailout from international lenders.

The government aims at balanced budgets “by aligning public finances with the course of the real economy,” he said.

“With respect to taxes, we have presented incentives, most of which have been approved last summer which encourage

investment in our country.”

In order to further consolidating growth and make it sustainable, the government will put forward further reforms aiming at reducing unemployment and the “high level of non-performing loans” and restoring in “a final way” Cyprus’s sovereign rating, which will make resorting to a new bailout unnecessary, he said.

RCB Bank opens 6th branch Limassol-based RCB Bank, one of four systemic banks in Cyprus that passed the ECB stress tests last October with flying colours, has opened a new branch on the Limassol waterfront, which has been designated as the flagship branch for its domestic corporate and retail clients.

The Molos Limassol branch raises the total number of branches in the network to six, with a new Nicosia branch opened on the busy Limassol Avenue just two weeks ago.

All branches operate at the more business-friendly hours of 9am to 5pm, despite labour agreements forcing other banks to roll down their shutters by 3pm.

September 23 - 29, 2015

September 23 - 29, 2015

6 | CYPRUS | financialmirror.com

Paying for property compensation

By Tom Lawrence The Cyprus problem negotiations are deep into the issue of property. This is one of the most complex issues of the negotiations for a number of reasons.

First, it is highly emotive, as it reignites memories of conflict and displacement for both communities. According to (sometimes conflicting) official sources, between 142,000 and 180,000 Greek Cypriots and 42,000 Turkish Cypriots were displaced in 1974. Around 25,000 Turkish Cypriots, 200 Greek Cypriots and 500 Armenians were displaced in 1963-64 and another 20,000 Greek Cypriots after 1974.

Second, there are the legal aspects. The European Court of Human Rights (ECHR), through the Loizidou case, has established the continuing ownership of those dispossessed.

However, in the more recent Demopoulos judgment that upset many Greek Cypriots, it also put a dent in the notion that owning the property translates into a “blanket policy of restoring property to owners without taking into account the current use or occupation of the property in question”.

Socioeconomic challenges Third, and most tricky in practical terms, it involves economic and social challenges. If all Greek Cypriots who were displaced in 1974 moved back with their offspring to their original homes, what would you do with all the Turkish Cypriots and others displaced as a result of this? Do you send them back to Paphos? And if you do, are their homes still standing? What happens to their current jobs, their schooling and so on? Even in an Annan-style scenario with full reinstatement in territorial adjustment areas and partial reinstatement in the Turkish Cypriot constituent state, the housing need created could be very large. The UN estimated in 2003 that about 67,000 people would be dislocated through territorial adjustment and reinstatement. That’s just under one-third of the entire population at the time.

Are there enough places to house them? And what if the reinstated Greek Cypriots do not actually move in? Do we spend EUR 2 bln building 22,000 new homes for displaced Turkish Cypriots or do we incentivise reinstated Greek

Cyprus and Israel “writing a new bold chapter” Cyprus and Israel together “have been writing a new bold chapter in their relations in recent years”, President Nicos Anastasiades told members of the American Jewish Committee in Chicago as regards “our mutually beneficial partnership.”

“The exchange of high level meetings, most recently in June by myself in Israel and in July by Prime Minister Netanyahu in Cyprus, is merely the tip of the iceberg,” he said. “We are two countries in a turbulent yet important neighbourhood that faces many common challenges. For Israel, Cyprus is a stable, predictable and reliable partner and vice-versa”.

He said the discovery of hydrocarbons had created impetus in bilateral relations which had opened new horizons in regional cooperation. “This translates into much needed energy security, diversification, and exports for both countries,” Anastasiades said.

He also praised the AJC for being “instrumental in identifying and promoting the relationship with Cyprus, as well as in helping advance our relationship with Israel and the United States.”

Anastasiades also said that the strategic importance of energy cooperation between Cyprus and Israel was of particular importance to the U.S. and Europe, mainly in offering an alternative energy corridor route for the EU. “At the same time we believe that the huge recent discovery of the Zohr natural gas field in the exclusive economic zone of Egypt enhances the prospects for further synergies in the region,” the president added.

He added that bilateral cooperation is not only limited to energy and security, but extends in an array of fields including tourism, economic exchanges, agriculture and high tech industries. “In a nutshell, Cyprus and Israel are true strategic partners,” he said.

The value of Greek Cypriot property in the north is €68 bln, but at IPC rates it could be €30 bln

Cypriots to rent or lease to them?

Will anyone foot the bill?

At the other extreme, if no Greek Cypriots get their property back, who will pay for the compensation? According to research by the University of Cyprus, Greek Cypriot privately held and Church property in the north was worth EUR 68 bln in 2009-2011. One can argue with the methodology: it is based on applying inflation rates to decades-old data. Anyone who has worked with long timeseries knows that this is likely to produce large statistical discrepancies.

Another way of estimating the compensation value of the property in the north is extrapolating from the compensation paid by the Immovable Property Commission (IPC). The ECHR declared in the Loizidou just satisfaction ruling that the amount that would have been offered by the IPC constituted a “fair basis”, which suggests that it is happy with the methodology. However, it is common for Greek Cypriots to say that the IPC is not paying enough.

Yet even at IPC rates, the bill is big. The IPC has to date paid compensation of GBP 208 mln for 15,380,508 square metres or 1,538 hectares. That’s about GBP 135,000 per hectare. There are 188,000 hectares of Greek Cypriot property

in the north, so that puts a “compensation value” of Greek Cypriot private property in the north at GBP 25 bln. At today’s exchange rates that is well over EUR 30 bln.

You can cut this by around one-third by swapping the 54,000 hectares of Turkish Cypriot land in the south with a similar amount on the north. Through territorial adjustment and/or reinstatement you might cut it by another third.

But that still leaves us with EUR 10 bln, which is half of all-island GDP. We need to be honest with ourselves and admit that no country is going to get this kind of funding past their parliaments.

Remember that EU leaders were unwilling to fork out less than EUR 8 bln to recapitalise the banking sector in 2013, and insisted instead on the infamous haircut on bank deposits. Even if poorer east European members were prepared to pour that kind of money into wealthier Cypriot pockets, it would be highly inflationary, leading to a massive loss of competitiveness.

If compensation is not going to bust the state, therefore, the Property Commission will have to find innovative ways of raising finance from all the affected property on its books, and compensation will have to be paid out slowly, over time, and in mainly non-cash forms.

That is as much a political challenge as an economic one.

‘Progress on some chapters’ Anastasiades tells UK Cypriots President Nicos Anastasiades told a gathering of UK Cypriot community leaders over the weekend that “some progress has been achieved on important chapters” of the negotiations with Mustafa Akinci to resolve the Cyprus problem.

Earlier, Anastasiades met with prime Minister David Cameron with whom he discussed progress on the Cyprus talks, as well as regional issues surrounding security in the Middle East and energy plans in the eastern Mediterranean, as well as some of London’s views on matters related to EU reform.

The visit to Britain was a stopover on his way to New York to attend the UN General Assembly this week.

British Cypriots demonstrated their solidarity and support for President Anastasiades at a dinner in his honour on Saturday organised by the National Federation of Cypriots in the UK, held at the Greek Cypriot Brotherhood in London.

Accompanied by Government Spokesman Nicos Christodoulides and the Cyprus High Commissioner, Evripides Evryviades, Anastasiades briefed the Federation members about the latest developments in the negotiations, touching upon specific chapters of the talks.

He also highlighted the need for Turkey to show the necessary goodwill and send clear signals, through specific actions, to enhance the ongoing settlement process.

President Anastasiades said that the Turkish Cypriot leader, Mustafa Akinci, and he share the same vision of Cypriots being in charge of their island, of Cyprus being reunited and of human rights being guaranteed, with all Cypriots being equal citizens of the EU. Recognising this reality, he noted, helps to create an essential personal relationship which permits a more candid dialogue. “The atmosphere has indeed been different after Mr

Mustafa Akinci became leader of the Turkish Cypriot community and the talks, even though we are still in the primary stages, have achieved some progress on important chapters,” added Mr Anastasiades.

Welcoming President Anastasiades to London, the President of the National Federation of Cypriots, Christos Karaolis said: “The progress and rapport that you have developed with the Turkish Cypriot leader, Mr Mustafa Akinci, over the last six months gives us all a sense of cautious optimism that we might soon have a solution that removes the Turkish troops and settlers from the island, respects the human rights of all Cypriots and reunites our beloved island so that all Cypriots, Greek Cypriots, Turkish Cypriots, Maronites, Armenians, Latins, can live and prosper together.” He also commended President Anastasiades on his “perseverance, patience and determination” in safeguarding the human rights of all Cypriots.

September 23 - 29, 2015

COMMENT | 7

Iran sees greater Cyprus role in the region

By Dr Andrestinos Papadopoulos Ambassador a.h.

Iran’s Deputy Foreign Minister for Asia and Pacific Affairs Ibrahim Rahimpour visited Cyprus for contacts with Cypriot officials and he spoke to Dr Andrestinos Papadopoulos about the relations between the two countries that have been strengthened in recent years.

What is your assessment of the bilateral relations between the two countries, and the role Cyprus has yet to play in the Middle East?

The bilateral relations between Iran and Cyprus over the past decades have been of positive nature, and enjoy an expanding trend even though this mood has slightly suffered from unjust and unfair sanctions on the Iranian people.

However, despite these pressures, the two countries have maintained a good level of relations, expressing their interest in the promotion of cooperation. Signing agreements during the last year is a vivid illustration on the determination of both sides to provide a conductive ground for expansion of cooperation. With the new political and international perspective, we believe that everything is ready to boost the relation between two countries.

Regarding the role that Cyprus can play in the Middle East, we believe that all neighbouring countries are determinants of the future of this region, and any progress on this domain will reflect its effect onto all the surrounding countries. Cyprus as a member state of the EU is well located to play a crucially valuable role in maintaining peace and stability of the eastern Mediterranean and the wider Middle East.

The Sunni extremism that has manifested in the form of the Islamic state (ISIS) in the already convulsive Middle East has caused severe instability in this region.

What is your perception of the role Iran can play?

ISIS is actually a symbol of extremism and barbarianism that has nothing to do with any religion, race, ethnic or geography. The crimes and atrocities committed by ISIS cannot be justified by any religious teaching. Should all countries express their disgust towards extremism and extremists by their deeds rather than words, this phenomenon and its elements will be dismissed.

The fight against extremism is a globally unifying challenge which calls for all countries’ participation. From the beginning, Iran has time and again renounced any form of extremism, and it’s well known that Iran was the only country that helped the Iraqi government to defend Baghdad against ISIS. To our regret, there are countries with vested interest in chaos and tension in the Middle East that have mobilised all their financial and spiritual possibilities to help brew and create extremist groups helping with the establishment of such groups in the regions of interest.

Getting back to Cyprus, what are your views on recent developments regarding the Cyprus issue and energy in

this country?

The Cyprus issue and helping toward a solution has always been a matter of attention for Iran. The sad division of the island has cost Cypriots from both communities not only the peace, but also the prosperity of at least two generations.

As a friendly country to Cyprus, we are closely monitoring the resumption of the negotiations. The results-oriented approach and determination on both sides are promising signs and a matter of appreciation. The will and dedication of leaders of both communities to reach a durable agreement is unprecedented and we admire such efforts.

Dealing with such an old issue, perhaps interdependent with the new dimensions, the negotiating parties are quite naturally facing a number of technical problems that should be reviewed meticulously to finding a suitable solution for each one of them.

But with such dedication, we wish to believe that the final solution is achievable. The official position of Iran is clear, keeping close relations with both the Turkish and Greek communities, and using these relations to contribute towards reaching a sustainable and mutually agreed solution towards peace and prosperity for all Cypriots in a unified Cyprus.

Discovering new energy resources in Cyprus can definitely contribute to the prospective of hope and prosperity of this country more than ever.

The Islamic Republic of Iran, with great experiences in the field of exploration, drilling, and refining of oil and gas, and also training specialists in these fields can help Cyprus as a reliable partner.

During the February visit of Minister Lakkotrypis to Tehran, good negotiations were held between the officials of both countries, and I do hope we will be able to start our cooperation in this field.

September 23 - 29, 2015

8 | COMMENT | financialmirror.com

WHEN YOU’RE GETTING OLD...

(You may think you’re wiser… and it can be good fun) A chap I know sent me a note the other day, which (omitting the four-letter and other rude words) included the lines: “How old are you now, you silly old ****? You must be 90! So why the **** are you still writing that stuff every week?” My answer was simple: “Because I like writing”.

I was 23 when I started doing it for my living. It was film publicity, but as an independent PR person, I moved on after a few years of that to more general material, mostly about cooking, food and wine. When I gave up PR on our move to Cyprus “to retire” I found I needed to write with a deadline, so I offered my services to local papers and magazines and have written every week for more than 20 years.

I did actually tell my chum I shall be 85 next week. “Going to stop then?” he asked. I thought for a moment and I remembered going to a wake in London to celebrate the life of a far, far greater wine and food writer than I, Andre Simon, whose life spanned 93 years, during which he wrote 104 books.

For 33 years he was one of London’s leading champagne sippers; for another 33 years active president of the Wine & Food Society. “My target is another 15 years”, I replied, “If editors will still print what I write”.

The wake for M. Simon last two days, and was held at a restaurant run by a well known food writer, Marguerite Costa and her quite-alot- younger husband, chef Bill Lacey. How much it cost, I shudder to think - hundreds of people seemed to drop in to drink the health of the departed – to the point where the wine stock ran out and crates more had to be brought in from a neighbouring wine shop.

This week I shall be finishing a A mid-1970s picture of Andre Simon (right) and the book that has been in work a long young Hugh Johnson, who became Britain’s most time – my account of life as a child celebrated wine writer. in England before, during and after World War II. With the help of my son and daughter in regard to cover design and preparing it as an E-book, I hope it will be available on-line in a week or two.

MORE MEALS ON WHEELS

FOOD, DRINK and OTHER MATTERS with Patrick Skinner table for four across the aisle.

I had been given what seemed to be a substantial cash sum to pay for meals. But I felt concern as the foursome started with large Scotch and sodas and continued with a bottle of an excellent Burgundy from British Railways Cellars (at that time they had one of the finest and most extensive range of French wine). Then a second. A third. And a fourth. Ralph Thomas, saw the concern on my face. “Don‘t worry Patrick, we’re paying for this – and for your half bottle of Beaune!”

We spent the whole five hours of the trip in the dining car and when Ralph Thomas paid the bill shortly before arrival at Newcastle he gave the waiters a very substantial tip, which saw us off with great goodwill. My three charges were completely sober by this time – more so than I was after my little half bottle!

CLASSIC CYPRUS FOOD – 2 Keftedes and Bulgar Wheat Pilaf Ingredients 500 grams of minced meat. Use pork if you wish, but the traditional Keftedes uses lamb.

1 tsp salt and black pepper 1/2 tsp chopped parsley 1 tsp chopped fresh mint 1 medium-large onion, peeled and finely chopped 1 level tsp baking powder 2 tbsp grated cheese (like Cyprus Tilsit, which is perfect) 3 medium potatoes, peeled and finely grated, with as much water squeezed out as possible) 2 good sized eggs 1 piece pitta bread, whizzed into breadcrumbs 1 tsp lemon juice Method 1. Place all the ingredients in a large bowl and mix well together.

2. Cover the bowl and refrigerate for half an hour.

3. Use a deep fryer or heavy pot with plenty of sunflower oil.

4. Heat the oil.

5. Shape the mixture into little balls (around the size of a table tennis ball).

6. Deep fry in batches of 10 – 12 until the outsides are crisp and golden brown. Keep cooked Keftedes warm and serve as quickly as possible.

A pour-gourri Pilaffi will go well with this, plus a chopped salad and a bottle of young and fruity red wine. In Lebanon and Jordan they will accompany such food with Arak, and I have to say, Ouzo does go well with this kind of food.

For a good Pilaf…

Ingredients 200 grams of coarse Pour-Gourri (also known us Burghul or Bulgar Wheat) 50 grams of Doritis Capellini a’ Matasse or very fine noodles (Vermicelli) crushed into very small pieces 250 ml of tomato juice 750 ml of water (a wine bottleful) 1 small onion, sliced very finely 3 tablespoons oil Juice of half a lemon and salt and pepper to taste

Lunch service on the London to Liverpool line, c.1912. Illustration from a substantial new book of 645 pages, about railways in Britain: “The Railways: Nation, Network and People” (Profile, GBP 25.00)

I have written now and then about “meals on the move” – on the sea, in the air, but mostly on the train. There is just something about the atmosphere, which these days, unless you have a snack or an airline style tray, is very expensive. Even into the 1970s there were dining cars, tables and service not very different from the picture above.

My mind goes back many years, to when I was in the film business and part of my job was to take film stars, producers and directors around Britain to promote their films. On only the second occasion I did this, I took an evening Pullman train from London to Newcastle, accompanying the famous British film actor Dirk Bogarde, his manager/partner Tony Forwood, and producer and director Betty Box and Ralph Thomas. We were promoting the launch of one of the famous “Doctor” films made by the team (still available on DVD). The journey was close on 300 miles and took five hours. As the train started, we immediately made for the dining car, where I sat by myself at a table for two and the four film people at a

Method 1. Heat the oil in a saucepan and fry the onion.

2. When the onion is transparent, add the noodles and fry, stirring constantly until they start to brown. Be careful not to burn them.

3. Add the water, tomato juice and lemon juice and bring to the boil.

4. Put in the Pour-Gourri, stir, season to taste, reduce heat and simmer very gently with the pan lid on until the liquid is absorbed. Taste to see the Pour-Gourri is cooked, if it is not, add a little more water.

As a variation on this, sometimes I leave out the tomato juice, and use stock instead of water, putting in some chopped sun-dried tomatoes with the Pour-Gourri.

Another idea, which makes a good vegetarian main dish is to fry small, sliced fresh mushrooms with the onion, then odd some chopped tomatoes.

When this is almost cooked, add the Pour-Gourri and top up with vegetable stock.

Go to www.eastward-ho for more recipes, food and wine news and notes.

September 23 - 29, 2015

financialmirror.com | COMMENT | 9

Why the Fed buried monetarism

By Anatole Kaletsky The US Federal Reserve’s decision to delay an increase in interest rates should have come as no surprise to anyone who has been paying attention to Fed Chair Janet Yellen’s comments. The Fed’s decision merely confirmed that it is not indifferent to international financial stress, and that its risk-management approach remains strongly biased in favor of “lower for longer.” So why did the markets and media behave as if the Fed’s action (or, more precisely, inaction) was unexpected?

What really shocked the markets was not the Fed’s decision to maintain zero interest rates for a few more months, but the statement that accompanied it. The Fed revealed that it was entirely unconcerned about the risks of higher inflation and was eager to push unemployment below what most economists regard as its “natural” rate of around 5%.

It is this relationship – between inflation and unemployment – that lies at the heart of all controversies about monetary policy and central banking. And almost all modern economic models, including those used by the Fed, are based on the monetarist theory of interest rates pioneered by Milton Friedman in his 1967 presidential address to the American Economic Association.

Friedman’s theory asserted that inflation would automatically accelerate without limit once unemployment fell below a minimum safe level, which he described as the “natural” unemployment rate. In Friedman’s original work, the natural unemployment rate was a purely theoretical conjecture, founded on an assumption described as “rational expectations,” even though it ran counter to any normal definition of rational behaviour.

The theory’s publication at a time of

Asia-Pacific surpasses North America in number of millionaires The number of millionaires in the Asia-Pacific region has surpassed North America, according to a study released by Capgemini and RBC Wealth Management. There are a total of 4.69 mln high net-worth individuals (defined as having investable assets in excess of $1 mln) across the Asia-Pacific region, marginally ahead of North America’s 4.68 mln.

The latter is still ahead in overall wealth controlled by those individuals - $16.2 trln.

However, HNWIs in Asia-Pacific own $15.8 trln and this is also predicted to surpass North America’s collective wealth at some stage this year, driven by a surge in super wealthy individuals in China and India.

(Source: Statista)

worldwide alarm about double-digit inflation offered central bankers exactly the pretext they needed for desperately unpopular actions. By dramatically increasing interest rates to fight inflation, policymakers broke the power of organised labour, while avoiding blame for the mass unemployment that monetary austerity was bound to produce.

A few years later, Friedman’s “natural” rate was replaced with the less value-laden and more erudite-sounding “nonaccelerating inflation rate of unemployment” (NAIRU). But the basic idea was always the same. If monetary policy is used to try to push unemployment below some predetermined level, inflation will accelerate without limit and destroy jobs.

A monetary policy aiming for sub-NAIRU unemployment must therefore be avoided at all costs.

A more extreme version of the theory asserts that there is no lasting tradeoff between inflation and unemployment. All efforts to stimulate job creation or economic growth with easy money will merely boost price growth, offsetting any effect on unemployment.

Monetary policy must therefore focus solely on hitting inflation targets, and central bankers should be exonerated of any blame for unemployment.

The monetarist theory that justified narrowing central banks’ responsibilities to inflation targeting had very little empirical backing when Friedman proposed it. Since then, it has been refuted both by political experience and statistical testing. Monetary policy, far from being dissipated in rising prices, as the theory predicted, turned out to have a much greater impact on unemployment than on inflation, especially in the past 20 years.

But, despite empirical refutation, the ideological attractiveness of monetarism, supported by the supposed authority of “rational” expectations, proved overwhelming. As a result, the purely inflation-oriented approach to monetary policy gained total dominance in both

central banking and academic economics.

That brings us back to recent financial events. The inflation-targeting models used by the Fed (and other central banks and official institutions like the International Monetary Fund) all assume the existence of some pre-determined limit to noninflationary unemployment. The Fed’s latest model estimates this NAIRU to be 4.9-5.2%.

And that is why so many economists and market participants were shocked by Yellen’s apparent complacency.

With US unemployment now at 5.1%, standard monetary theory dictates that interest rates must be raised urgently. Otherwise, either a disastrous inflationary blowout will inevitably follow, or the body of economic theory that has dominated a generation of policy and academic thinking since Friedman’s paper on “rational” expectations and “natural” unemployment will turn out to be completely wrong.

What, then, should we conclude from the Fed’s decision not to raise interest rates? One possible conclusion is banal. Because the NAIRU is a purely theoretical construct, the Fed’s economists can simply change their estimates of this magic number. In fact, the Fed has already cut its NAIRU estimate three times in the past two years.

But there may be a deeper reason for the Fed’s forbearance. To judge by Yellen’s recent speeches, the Fed may no longer believe in any version of the “natural” unemployment rate.

Friedman’s assumptions of ever-accelerating inflation

and irrationally “rational” expectations that lead to single-minded targeting of price stability remain embedded in official economic models like some Biblical creation myth. But the Fed, along with almost all other central banks, appears to have lost faith in that story.

Instead, central bankers now seem to be implicitly (and perhaps even unconsciously) returning to premonetarist views: tradeoffs between inflation and unemployment are real and can last for many years. Monetary policy should gradually recalibrate the balance between these two economic indicators as the business cycle proceeds.

When inflation is low, the top priority should be to reduce unemployment to the lowest possible level; and there is no compelling reason for monetary policy to restrain job creation or GDP growth until excessive inflation becomes an imminent danger.

This does not imply permanent near-zero US interest rates. The Fed will almost certainly start raising rates in December, but monetary tightening will be much slower than in previous economic cycles, and it will be motivated by concerns about financial stability, not inflation. As a result, fears – bordering on panic in some emerging markets – about the impact of Fed tightening on global economic conditions will probably prove unjustified.

The bad news is that the vast majority of market analysts, still clinging to the old monetarist framework, will accuse the Fed of “falling behind the curve” by letting US unemployment decline too far and failing to anticipate the threat of rising inflation. The Fed should simply ignore such atavistic protests, as it rightly did last week.

Anatole Kaletsky is Chief Economist and CoChairman of Gavekal Dragonomics and the author of Capitalism 4.0, The Birth of a New Economy. © Project Syndicate, 2015. www.project-syndicate.org

September 23 - 29, 2015

10 | GREECE | financialmirror.com

Can Tsipras’ election victory lead Greece back to economic prosperity?

By Costis Stambolis The electoral gamble by Alexis Tsipras eventually paid off, if we are to judge by last Sunday’s electoral result when his radical left Syriza party claimed an easy victory with 145 seats and 35.46% of the votes, 7.4% ahead of its main rival the New Democracy party. The September 20 snap election was called

by Tsipras in an effort to restore his party’s unity by getting rid of its extreme left wing hard core communist fraction, following a split during parliamentary voting for the new bailout programme last July and August.

Results confirmed that Tsipras, who was sworn in as Greece’s Prime Minister on Monday evening, was able to renew the coalition he previously had formed, when he first came to power last January, with the “Independent Greeks”, a right wing nationalist party, which although attracted only 4.3% of the vote and won ten parliamentary seats was enough to supplement Syriza’s presence thus giving the coalition a clear majority of 155 seats in the 300-seat parliament.

The re-election, with almost the same strength as in January, of a party which because of its amateurish handling of the economy brought the country to a standstill, closed the banks and introduced wide ranging capital controls, still in strength, can only be interpreted in psychological terms, according to political scientists in Athens.

For Syriza’s re-election, note the above sources, certainly reflects some deep underlying changes in Greeks’ societal behaviour and anticipatory thinking. For the return to power of Syriza, which actually bankrupted the country last July by calling an ill-conceived referendum just to demonstrate its opposition to Europe, while at the same time was seeking a huge financial bailout, shows the ill placed political priorities of a large faction of society. A faction which places its trust in an inexperienced government only because it showed its resistance to previous bailout programmes, only to introduce, in order to prevent one more bankruptcy, a new more austere and far more costly bailout programme.

Psychology and changes in social behaviour apart, the new Syriza government will now have to face a reality check as it will have to handle some tough economic and political challenges. Top priorities for the newly elected government, as stated by the Prime Minister, remain the stabilisation of

Alexis Tsipras talks to President Prokopis Pavlopoulos after being sworn in as Prime Minister, the second time this year

the economy, the regaining of trust in the country’s financial system followed by bank recapitalisation and the lifting of capital controls. In this respect, the previous finance and economy ministers, Eucleides Tsakalotos and George Stathakis respectively, will retain their old posts while George Chouliarakis, the government’s top negotiator with the EU is expected to be appointed junior minister in charge of overseeing the implementation of the bailout programme.

Analysts in rating agencies believe that the election result reduces political uncertainty, but dangers still loom large

concerning the new government’s ability to implement the bailout agreement with the creditors reached on July 13 and approved by a large parliamentary majority of Greece’s parliament last August. In sharp contrast to his previous tenure as Prime Minister, during the traumatic period from the end of January until late August, Alexis Tsipras now appears to be more reconciled with economic and market reality and certainly with EU governance requirements.

“We have difficulties ahead,” Tsipras told his supporters immediately upon learning the election results. “Recovery cannot come through magic but through lots of work, stubbornness and struggle,” he said.

Although market sentiment appears at first mildly positive as business leaders are relieved that a new government managed to be formed quickly, serious doubts linger as to the government’s ability to reverse the economy’s downturn.

Many thousands of workers have been laid off over the last 34 months while the economy is set to contract by an estimated 3.0% y-o-y, by the end of this year.

Anthimos Thomopoulos, chief executive of Piraeus Bank, the country’s largest, although appeared hopeful he observed, as quoted by the Financial Times, that “essentially we are where we were some five years ago in terms of the things that need to be done. Except now, we have an enthusiastic, dynamic prime minister with a popular mandate to do it. And its positive”.

Mathios Rigas, CEO of Greece’s only oil producing company, also sounded positive when he said “that in the sense that we now have a government with a fresh mandate and a clear mission and without its previous extreme left faction, that can only be good for business. It remains to be seen, though, whether they will be able to handle everyday matters that often make running a business in Greece a nightmare”.

However, many EU officials remain deeply skeptical that a renewed Syriza-led government can deliver in implementing the three year EUR 86 bln bailout programme, restore business confidence and return Greece to an economic growth path. Part of this skepticism stems from the attitudes expressed by some factions within the Syriza party which, in spite of electoral success, are questioning the lack of consensus within the party and appear determined to slow the fast pace of reform which the bailout programme implies.

Costis Stambolis is a Financial Mirror correspondent, based in Athens. cstambolis@iene.gr

Syriza decision to partner with ANEL angers S&D

By Sarantis Michalopoulos EurActiv Greece Alexis Tsipras’ decision to renew cooperation with the right-wing Independent Greeks party (ANEL) in the new government was a “strategic mistake”, Socialists & Democrats chief Gianni Pittella told EurActiv Greece.

Left-wing leader Alexis Tsipras won his second mandate as premier on September 21, despite a controversial austerity deal struck with European leaders.

The leftist Syriza got 35.5% of the vote ensuring 145 seats in the 300-seat parliament, followed by the conservative New Democracy with 28.1% (75 seats).

But, as in the previous mandate, Tsipras decided immediately after the elections to form a coalition with the right-wing ANEL, triggering the strong reaction of S&D officials.

The Syriza-ANEL government will now have 155 seats in the parliament.

It’s the first time that Pittella has taken such a hard line against Tsipras, considering that during the tough negotiations between Athens and its international creditors, the S&D group was quite supportive of Tsipras.

“We consider Tsipras’ decision to form a government with the right-wing party ANEL a strategic mistake which could badly affect the path of reforms in Greece,” Pittella said.

Similar concerns were also expressed by the President of the European Parliament, Martin Schulz. Speaking to France Inter radio, Schulz said he could not understand Tsipras’ decision to renew his coalition with the Independent Greeks.

“I called him [Tsipras] a second time to ask him why he was continuing a coalition with this strange, far-right party,” Schulz said.

“He pretty much didn’t answer. He is very clever, especially by telephone. He told me things that seemed convincing, but which ultimately, in my eyes, are a little bizarre.”

Pittella continued, saying that the best

option for the good of Greek people “would be a coalition government established with all progressive forces, namely To Potami and Pasok”.

“Such a government would be the best guarantee for stability and for a responsible implementation of the memorandum, without setting aside the social dimension, which is paramount for the population most at need.”

Potami scored 4% of the vote, down from the 6% in the general elections in January, while the Pan-Hellenic Socialist Movement (Pasok) increased its share of the vote from 4.7% in January to 6.3%.

Several Syriza lawmakers have a socialist background, and publicly support a centreleft shift.

The official S&D party members in Greece are Pasok, as well as Potami.

In a recent interview with EurActiv Greece, ex-Syriza health minister Panagiotis Kouroumplis stressed that a progressive pole was needed in Greek politics.

“Syriza should be the centre of a wider progressive party that will emerge as a

counterweight to right-wing, conservative and neoliberal policies”.

Asked if the S&D would be ready to “embrace” Syriza, Pittella did not rule it out.

“I don’t know whether Tsipras foresees this final goal. Should it be the case, we will verify the political opportunity of this choice along with our comrades of Pasok and To Potami, already official members of the S&D Group,” he said.

Surprisingly, during the run-up to the Greek elections, S&D did not openly support Pasok and Potami.

On the contrary, in a press release published after the announcement of the elections results, S&D emphasised the need for a “progressive government with all the progressive forces”, which would include Syriza, Pasok and Potami.

Pittella continued, saying that the S&D group openly committed in the tough negotiations with the European Commission, to help “not Syriza or Tsipras, but the Greek people, to find the best solution that would prevent Greece from abandoning the eurozone”.

September 23 - 29, 2015

financialmirror.com | GREECE | 11

Athens must abandon euro to survive

By Constance Baroudos Greece had its fifth election in six years on Sunday. For the second time this year Syriza won the majority of votes and formed a coalition with the Independent Greeks.

Together, the two political parties hold 155 of the 300 seats in parliament. Now Athens will focus on implementing the austerity measures that came with the third bailout package.

Polls before the Greek election last week showed a close tie between Syriza and New Democracy, but it was no surprise Syriza won. Even though Prime Minister Alexis Tsipras was not able to fulfill previous campaign promises to decrease austerity measures while keeping Greece in the euro, Greek citizens still appreciate the seven month public battle he fought against Athens’ creditors — the European Commission, European Central Bank (ECB) and the International Monetary Fund (IMF) — in an attempt to reach a better deal for his people.

Since New Democracy is partly responsible for creating Athens’ current fiscal mess, it is no surprise it failed to attain a majority of votes, holding 75 seats. While Tsipras no longer inspires hope for citizens, he is perceived as the lesser of two evils because the other political leaders are considered toxic.

The unique aspect of this election is that a new party, Popular Unity, formed as a result of the country’s financial rollercoaster. Popular Unity was founded by defectors of Syriza that abandoned the party after Tsipras accepted the third bailout package with the support of opposing parties in the summer. Popular Unity’s campaign stance is to revert back to the national currency, the drachma, and abandon the euro so that Greece can regain economic sovereignty and be able to devalue its currency to attract foreign investment.

According to Costas Isychos, Popular Unity’s spokesman, “The eurozone is a social, political and economic space designed for German surpluses and deficits in Europe’s An unholy alliance? Alexis Tsipras has reconfirmed junior coalition partner ANEL leader Panos Kammenos as Defence Minister periphery. For countries like ours it is wrong.” It is not surprising that Popular Unity did not have much support because Greeks do not want to revert back to a national Unity to regain economic sovereignty and at least have a Athens’ economy with drastic measures, and borrowing currency – they want to keep the euro and have less austerity chance of improving their economic state even though they money repeatedly will produce different results for Greece’s economy, but that is the definition of insanity. Greece’s so that the economy can improve. Greeks will continue to would have to endure years of depression.

After struggling for seven months, Prime Minister Tsipras unemployment is 26%, youth unemployment is over 50%, feel that they have little power to drive the direction of their country’s future as Athens no longer possesses economic was pressured to accept a third deal with intense austerity and its Gross Domestic Product has decreased by 25% since measures. If a third bailout was not agreed to, Greece would 2010. Athens’ creditors do not care about the future of the sovereignty – its creditors do.

Sadly, a political party that aligned with the majority of have had to revert to a national currency since the ECB country, its people, or the selling of historical national assets, Greeks’ desires, to remain in the euro with no austerity, was capped its liquidity assistance to Greek banks. Because Greek they just want taxpayer dollars returned that were used to not an option in this last election. It is impossible for Athens’ citizens identify themselves as Europeans, they were not in bailout Greece’s private lenders.

Just because Greece has borrowed more money and the economy to improve since Greeks cannot find jobs and favour of abandoning the euro – Tsipras’ back was against media has gone silent does not mean Athens’ fiscal house is the wall.

The third bailout package comes with tax hikes, government spending has decreased. Combine these fiscal problems with the hundreds of thousands of refugees that pension reductions, and deep cuts to the health and social in order – far from it. In fact, it is likely Greece will need to will likely remain in Greece since the northern European welfare systems. Greek citizens will start to feel these painful borrow more money in the future if it does not receive debt relief since the country’s loans are skyrocketing and its countries have closed their borders, violating the Schengen effects in October.

The new Greek government will begin to focus on new economy is not experiencing growth. Furthermore, Agreement, and Athens’ economic challenges will multiply priorities. In the first hundred days, wage and pension costs important economic decisions that affect Greek citizens are quickly.

Under normal circumstances, it would be best for Athens will be cut, early retirement will be reformed, banks will be not being made by elected representatives, but by the to negotiate the terms of its debt with creditors. However, recapitalised, a timetable will be set to lift capital controls, European Commission, ECB and the IMF. Sooner or later Greece’s creditors are not willing to find a bearable path and more than half of the state electricity network will be Greeks will become sick of having no say in economic forward for Athens with better conditions, as seen by the privatised along with other reforms. Greece hopes to receive decisions. With high unemployment and Greek youth fleeing “state of emergency” plan creditors formed during the last debt relief in January. This is important because even the IMF abroad for opportunities, the Greek economy will continue to round of negotiations (no set template exists to boot a declared Athens’ debt as “unsustainable” and restructuring struggle as long as it remains in the euro. member of the euro out of the currency). It is time for Greek necessary to make the debt load maintainable. This is citizens to wake up and understand that agreeing to bailout commonsense since Athens has been borrowing money for Constance Baroudos is a Policy Analyst and Programme deals causes more harm than good. In reality, the agreements years that has been recycling itself, going to banks to pay Director at the Lexington Institute in Arlington, Virginia are just buying more time without solving the root problem: interest.

Athens’ creditors think cutting spending, revamping lack of growth. Hence, Greeks should have voted for Popular http://lexingtoninstitute.org

Economists play down new Grexit fears Following Alexis Tsipras’ victory in the Greek general elections, the debate surrounding a potential exit from the Eurozone is not expected to rear its head for the time being. EurActiv Germany reports.

“A Grexit is still on the table,” said Commerzbank’s chief economist Jörg Krämer on Monday. “No matter who is in power, the room for manoeuvre is limited,” said Nordea’s European chief economist, Holger Sandte. “For the financial markets based outside of Greece, the whole matter is rather dull.”

Thomas Gitzel, chief economist at VP Bank, suspects that in Brussels, the institutions breathed a sigh of relief, because, “the EU would prefer to seek reforms with

Tsipras, rather than against Tsipras.”

Tsipras has had to grapple with Eurozone representatives over the terms of the third bailout deal and had hoped for post-election momentum. The Syriza leader had been under constant pressure to secure the much-needed EUR 86 bln in aid to stave off state bankruptcy.

His resignation after the package had been agreed upon also served to help expel opponents in his own ranks.

“The new Greek government will implement the reforms that have been agreed, but not as quickly as has been seen in the past years,” Krämer predicted. Conflicts

with creditors are entirely expected. There is the possibility that the Greek crisis could come to the boil once again.

Creditor patience seems to know no limits though.

“The financial markets know that and should as a result not be swayed by the upcoming skirmishes between Greece and the international community,” said Krämer.

His colleague at Nordea insisted that the reform programme agreed upon between Greece and her creditors must now be implemented. “The trickiest aspects of the deal include recapitalisation of the banks and debt relief, which will only be achieved if Greece moves forward with the reforms.”

September 23 - 29, 2015

12 | PROPERTY | financialmirror.com

August sales of U.S. homes dip, even with lower prices

By Paul Ausick The National Association of Realtors (NAR) reports that the seasonally adjusted annual rate of existing home sales in August fell 4.8% to 5.51 mln from a downwardly revised total of 5.58 mln in July.

Existing home sales have increased on a year-over-year basis for 11 consecutive months and are now 6.2% higher than in August 2014.

The consensus estimate called for sales to reach 5.5 mln, according to a survey of economists polled by Bloomberg.

Housing inventory increased by 1.3% in August to 2.29 mln homes, which is equal to a supply of 5.2 months, up from a 4.8-month supply in July and sharply above the total of 1.88 mln homes in inventory at the end of December 2014.

According to the NAR, the national median existing home price for all housing types in August was $228,700, up 4.7% compared with August 2014, the 42nd consecutive month of rising home prices. In July the national median price was $234,000.

NAR’s chief economist said: “Sales activity was down in many parts of the country last month — especially in the South and West — as the persistent summer theme of tight inventory levels likely deterred some buyers. The good news for the housing market is that price appreciation the last two months has started to moderate from the unhealthier rate of growth seen earlier this year.”

The percentage of first-time buyers bounced to 32% in August, up from 30% in July, matching the highest share of first-time buyers set in May. In August of 2014, firsttime buyers accounted for 29% of all sales.

Sales of single-family homes fell 5.3%

from July at a seasonally adjusted annual rate of 4.69 mln, up 6.1% compared with August a year ago. Sales of multifamily homes decreased by 1.6% year over year to an annual rate of 620,000 units.

Foreclosed and short sales accounted for 7% of August sales, down from 8% in August 2014. Foreclosures sold at an average 18% discount to the August median price, and short sales sold at a discount of 12%.

All homes were on the market for an average of 47 days in August, up from 42 days in July.

Foreclosed homes were on the market for an average of 66 days and short sales took a median of 124 days to sell. Non-distressed homes took 45 days to sell, and 40% of homes sold in August were on the market for less than a month.

The NAR also reported the following regional data: - August existing-home sales in the

Northeast remained unchanged at an annual rate of 700,000 and are now 6.1% above a year ago. The median price in the Northeast was $271,600, which is 2.4% higher than August 2014.

- In the Midwest, existing-home sales declined by 1.5% to an annual rate of 1.28 mln in August, but remain 5.8% above August 2014 sales. The median price in the Midwest was $181,100, up 4% from a year ago.

- Existing-home sales in the South dropped 6.6% to an annual rate of 2.14 mln in August and are now 5.9% above August 2014. The median price in the South was $196,300, up 6% from a year ago.

- Existing-home sales in the West tumbled 7.8% to an annual rate of 1.19 mln in August and remain 7.2% above a year ago.

The median price in the West was $321,300, which is 7.1% above July 2014. (Source: 24/7 Wall St.com)

iHome - A new jewel by A. Athanasiou A.Athanasiou Group presents the iHome project, one of the most advanced residential high-rise projects in Limassol, which consists of two towers with up to 82m height. Work has already begun for the preparations of the construction, the completion of which is estimated in November 2017. iHome is located in one of the most popular tourist areas of Limassol only 100m from the sea and is surrounded with a green zone area of 3,000 sq.m., which guarantees panoramic sea views from each apartment.

Residents will be able to order exquisite meals with “delivery and breakfast foods,” as well as enjoy a coffee, eat lunch or meet friends in the fully equipped lounge.

The variety of facilities and services include 24hours security, a butler, lobby in each building, gym, changing rooms, controlled entry, 32X10 pool and underground parking.

For children, it has a playground and swimming lessons with professionals, as well as housekeeping services such as laundry and maintenance.

Rising trend in leading indicators of housing construction in 1H 2015

By Dr Petros Sivitanides Building permits are leading indicators of housing construction activity, but not so much the number of permits issued as the number, total area, and value of housing units that have received building permit.

The number of building permits published by the Statistical Service refers to the number of residential projects that have received building permission and may be misleading, if used as a leading indicator of residential construction activity, instead of the other three indicators (number, size and value of housing units that have received aproval).

The data published by the Statistical Service regarding the building permits that were issued in the first half of 2015 demonstrate this point.

Specifically, the number of residential building permits issued during January-June 2015 decreased by 2.3% compared to the number of permits issued during the same period in the previous year.

However, it would be wrong to conclude that this signals a decline in the upcoming residential construction activity, as all the other three leading indicators point to the opposite direction, that is, an increase of the upcoming residential building activity.

As shown in the table, the total number of housing units that received a building permit in the first half of 2015 increased by 15% compared to the number of dwelling units that had received building permit in the first half of 2014 (1,547 versus 1,351, respectively), while their value and their total area increased by 26% (from EUR 273 mln in the first half of 2014 to EUR 343 mln in the first half of 2015) and 22% (from 286,982 square meters to 349,279 sq.m.), respectively.

The number, size and value of residential units in apartment buildings that received authorisation in the first half of 2015 registered a significantly higher annual increase compared to the corresponding indices for detached singlefamily houses.

Specifically, the number of dwelling units in apartment buildings increased by 37% (from 272 to 372) their value by 71% (from EUR 27 mln to 47 mln) and their total area by 56% (from 31,685 sq.m. to 49,322 sq.m.). During the same period, the number of detached single-family houses that received building permit increased by 7% annually, while their size and their value increased by 13% and 17%, respectively.

The data on building permits for all types of real estate point to similar trends. Although the number of all building permits (including all property types) that were issued in the first half of 2015 also recorded a negative trend on an annual basis (-2.5%), the total square meters and the value of all

projects approved increased by 17% and 19%, respectively, signalling an increase in the upcoming construction activity, and not a decrease, provided that in the meantime there will be no developments that would discourage the implementation of the approved projects.

The increased activity from the supply side of the property market in the first half of 2015 (as indicated by the data on building permits) may signal an improvement in the expectations of real estate developers, which in turn may have been triggered by the increased activity in the real estate market (as indicated by the increased number of sales contracts that were submitted to the Land Registry), as well as by the first signs of the return of the Cyprus economy to the path of growth.

Petros Sivitanides is Associate Professor and Director of Real Estate programmes at Neapolis University Paphos www.nup.ac.cy

September 23 - 29, 2015

financialmirror.com | PROPERTY | 13

New buildings and modern architecture µy Antonis Loizou Antonis Loizou F.R.I.C.S. is the Director of Antonis Loizou & Associates Ltd., Real Estate & Projects Development Managers

In recent years, the state seems to have changed its policy and has become more tolerant in relaxing planning regulations, especially with regard to large scale projects within (and outside) major towns.

With the available areas of land, even those that are relatively large, how can an architect be expected to prepare an inspirational architectural solution when the land coverage factor is fixed, as is the building coefficient, and of course the height – almost impossible to create an imaginative design. What we often see in international architecture magazines and considering the few and some not so new designs, a new approach to planning, but especially relaxation, we do not seems to be lagging behind in quality modern architecture style. We have all seen some commendable, mainly office complexes, such as the new Wargaming HQ on Severis avenue in Nicosia, the student halls in Engomi (Rotos), and even the Twin Towers on the Limassol beachfront. There are also the Ministry of Finance and the Supreme Court, the central Planning offices and others, while in terms of hotels I can distinguish the Elysium (Paphos) the Anassa (Polis) the Sunrise Pearl and the timeproven hotels like the Le Meridien and Four Seasons.

We therefore have local, especially young architects with superior quality and knowledge, in addition to the more mature traditional firms of architects who have escaped, when given the opportunity, from the tight limits of our urban planning system.

We are now overwhelmed with holiday complexes, mainly 2-floor structure that occupy the most valuable of properties, the seafront, many of which look like rows of military barracks or refugee camps, such as in the Protaras area, Larnaca-Mazotos, Latchi and Paphos. The only exception is Limassol with local developers and owners reaching to new heights. The new proposal for the development of the space between the old and new port for the construction of offices and other high rises, with vast open spaces and ample parking, is the best that could happen – perhaps becoming the new Manhattan of the eastern Mediterranean, in addition to the other significant new projects in this town, such as the Oval.

In my opinion, except for special parameters like building coefficients, the rest should be left up to the project architect to develop a vision with looser interpretations and applications.

The high-rise buildings which define and architectural skyline of each town is what is missing from the local architecture of Cyprus, which has remained strictly subject to the existing regulations introduced in the ’60s.

So, do we have architects who know how to design the

details of their plan based on new trends? From my personal experience of about 40 years in the business, one of the few modern architects of his time was the late Alkis Ioannidis who used to design each window and each nail to be used.

There are certainly others of the older school.

• Owners – The meddling by the owners in the architecture is the worst, espealow them to have a say. See, the example of a certain bank in Nicosia which is a mixture of Byzantine architecture, glass, stone, etc.

• Maintenance expenses – These modern buildings have almost double maintenance costs not only because of relaxed common spaces but also because of the large exposures that require increased air conditioning, while the external cleaning of the shell is a problem (due to the absence of proper provisions).

• Regarding privately owned offices or complexes, there might not be a particular problem of maintenance, but in the case of shared ownership of offices or apartments, this could be a sticking point. In a premium project on the Larnaca seafront, the average common expenses and maintenance cost of apartments is about 5,000 euros per unit. For sure, this project will end up a rundown building in a short time.

The outdated law on tenancy is one of the reasons of poor maintenance, while another basic criterion is our mentality where we have yet to learned the facts of cohabited life.

• These new buildings, with large open spaces are usually of metal construction. But do we have but the right civil engineers to design such buildings and factories to manufacture the rods? To my knowledge, the architectural plans are usually to a firm in Italy where the steel is built for construction.

• The tall buildings and those with high standards needed ample parking spaces - at least two basements, while the purchase of adjacent land for use as parking (instead of three basements) may be advantageous. They also need 2-3 lifts. In a recent building design that was presented to our office for our opinion on its marketability, for the two underground

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and nine overground floors, there were two lifts to the 4th floor after which only one continued further up. Creative architecture based on wrong principles – they will now have to add another two external glass elevators to the 4th floor and above.

• Suppliers – Do we have quality suppliers here, such as heavy-duty aluminium manufacturers, which the local craftsmen can utilise? In a recent experience in Limassol, one aluminium installer removed some components of the factory-made frame in Germany because he considered unnecessary, and which then cost 8,000 euros to bring in the original German craftsmen to fix the problem onsite.

So much for younger architects. I believe that until we can deal with problems related high rises (such as winds, etc.), hiring foreign architects in some cases may be necessary, such as the case of the hotel Burj Al Arab in Dubai for which the BBC made a 2-hour documentary to explain the problem of cleaning the ground floor aquarium and the humidity that is caused by internal jets that rise three floors. On the same note, lessons should be learned from the Egyptian Museum, the Parliament in Berlin and many others.

I wonder sometimes if these opinions are based on hot air because these views were expressed ten years ago with the worst example being the development of the Paralimni coastal front, where the building coefficient for hotels was cut from 70% was 30% and in housing from 40% to 30% and this after the recommendations of the then urban planner Alexandros Demetriou calling for the increase in the coefficient and height. These were rejected at the time by the Town Planning even mocking to say that “we are not Las Vegas”. What, then, is the problem to break away from rigid minds of the past?

We have a Minister of Interior who seems decisive and perhaps should be persuaded to adopt a new planning policy, if the state’s own technicians advisors let him. www.aloizou.com.cy ala-HQ@aloizou.com.cy

September 23 - 29, 2015

14 | MARKETS | financialmirror.com

Fed decision plunges bourses into the red

By Oren Laurent President, Banc De Binary

The Fed decision following the September 16-17 FOMC meeting was expected by some, and roundly criticised by many others. Whether or not the decision was the correct one has to be viewed in context of the larger global picture.

That the Fed decision is supposed to take US domestic economic conditions into account was put aside in this particular instance as a result of global economic weakness.

The International Monetary Fund (IMF) cautioned central banks around the world not to raise interest rates at this critical juncture. Massive uncertainty remains following the equities meltdown in China, where trillions of dollars was wiped off the Shanghai Composite index and the Shenzhen Index in August. This plunged European and American bourses into a tailspin, and the current market predicament is best described as precarious.

The 12 member FOMC and Board of Governors at the Federal Reserve decided almost unanimously (with one dissenting voice) to adopt a dovish tone and stick with the short-term interest rate at current levels 0%-0.25%. This has far-reaching implications for market sentiment, and multiple asset categories which will be impacted by the decision.

Following the Fed decision announcement on Thursday, September 17, US indices plunged. This seems counterintuitive given that equities markets in the US should embrace low interest rates. Had there been a rate hike, the cost of borrowed money would have increased, leading to sharp declines in company profits, earnings per share and dividends paid out to shareholders. This did not happen, yet equities markets plunged. The reasoning behind the sharp sell-off in US equities is perhaps best explained by the expectations of stakeholders in the market.

The biggest losers on Wall Street were banks, financial institutions, asset managers and the like. They were expecting windfall profits from their customers and investors

in the event that the Fed hiked interest rates by the anticipated 0.25%. Had this happened, billions upon billions of dollars in added revenue streams would have been generated by banks, with more interest earned on mortgages, long-term loans, credit facilities, etc. As a result of no changes being made, sharp selloffs in this sector took place, and dragged down the Dow Jones, NASDAQ and the S&P 500. The S&P 500 dropped 1.6% to 1,958.03, the Dow Jones dropped 1.7% to 16,384.58 and the NASDAQ composite index dropped 1.4% to 4,827.23. Remember that banks and financial institutions comprise a large percentage of the overall value of Wall Street bourses.

So why did the Fed decide not to hike rates?

Besides the IMF cautioning against a rate hike, the Fed was more concerned with two important elements: - US core inflation is currently 1.2% and the Fed is targeting an inflation rate of 2% before it hikes interest rates; - Global weakness continues to dominate, led by sharp contractions in the performance of the Chinese economy.

That the Fed is concerned about the state of Chinese stock markets, and the Chinese economy at large is especially notable. What many analysts considered to be a regionspecific problem is now being viewed as an issue that has the potential to upset the global economic balance. In other words, the problem in China has to be contained and nobody wants to create greater uncertainty by raising interest rates at this time.

Here’s what would have happened had the Fed raised interest rates. The USD would become more desirable vis-avis a basket of currencies. This would strengthen the dollar and weaken currencies that were being traded for the dollar.

Ultimately, this decision would hurt US exports, which would lead to contractions in US economic performance over the long-term. While a strong US dollar allows the US to purchase more foreign goods and services, this would upset the balance of trade and be detrimental to US economic growth.

Another issue is that of emerging market currencies.

Capital flight continues to leave Brazil, Russia, China, India and South Africa en masse. The decision not to hike interest rates initially led to a strengthening of emerging market

currencies, but all gains were given back as anxiety returned to the speculative market. The Fed did not rule out a rate hike in October, November or December. Therefore, emerging market countries have won the battle, but not the war.

Speculators have capitalised on this pervasive anxiety among traders, sending currencies like the South African Rand, Turkish lira, the Brazilian real and others into a downward spiral.

What asset categories benefit from the Fed decision?

During times of market uncertainty, the one asset class that always benefits is gold. And this is precisely what happened in the run-up to the Fed decision and in post decision activity. As mentioned, equities should rally when interest rates are low, but they didn’t in this case. The reason is that there is tremendous uncertainty in the markets especially now that the Fed was unable to make a domestic decision because of weakness in China. This shows that US stock markets are more vulnerable than what many traders and investors believed.

Nobody wants to plough money into the equitiy markets if they think that interest rates are going to rise within the next couple of months. Gold is a non-interest-bearing asset.

This precious metal, along with platinum and silver, spiked following the Fed decision. Gold for delivery in December increased by 1.9% to $1137.80 per ounce, and the weekly gain in the precious metal was 3.1%. Remember that the demand for gold is inversely related to the strength of the dollar. An interest-rate hike would strengthen the USD and send gold reeling. Now you’re likely to see a mini rally in the price of gold, but large selloffs will possibly take place closer to the next Fed policy meeting.

Please note that this column does not constitute financial advice.

A day of consolidation within the markets Markets Report b

By Lukman Otununga, Research Analyst at FXTM

The consequences of the Federal Reserve leaving rates unchanged continues to linger within the USD as its state of heightened sensitivity leads to anxiety among market participants. The USD is still exposed to pressure, but has clawed back some of the losses of last week with the Dollar Index meandering around 95.89. The USD gains have translated to the American equities, which closed back into green territory on Monday whilst enforcing some pressure on commodities such as Gold. With the Fed expressing that a rate hike may be based on the global and financial developments relating to China growth, if the China flash PMI on Wednesday falls below expectations it may lead to volatility within the USD, exposing the dollar to further weakness.

In the Eurozone, the decelerating growth of emerging markets and the global decline in commodities have punished the cultivation of inflation. Eurozone inflation was revised lower to 0.1% in August which suggested that a threatening streak of collapsing prices could be returning to Europe. China’s slowdown which has led to the unwinding of the carry trade thus bolstering the EUR, has made exports from Europe less enticing. The stacks are weighed against the EUR, and the ECB which has been threatening to implement ‘quantitative easing’ (QE) as a weapon to induce domestic growth within Europe, may move ahead with this policy measure in the near future.

Commodity currencies are continuing to remain under pressure, with both the NZD and AUD looking vulnerable to further losses. Despite the slight incline last week, both the AUDUSD and NZDUSD still look bearish and may be exposed to more losses this week as market participants focus on the developments in China.

With no further major economic data releases on Tuesday, the markets may consolidate in wait for the China flash PMI on Wednesday.

GBPJPY: The GBPJPY has undergone a hefty correction to the 188.0 regions. The pair is currently in a range with support at 185.00 and resistance at 188.00. A break below the 185.00 support may open a path to the next relevant support at 182.50. Currently lagging indicators are conflicting, whilst the MACD points to the downside, prices are above the daily 20 SMA. AUDCAD: The AUDCAD is turning technically bullish.

Prices must keep above the 0.9400 support for this daily

bullish outlook to remain valid. A breakout above 0.9500 may open a path to the next relevant resistance at 0.9650.

AUDNZD: There exists a battle within the AUDNZD. Both AUD and NZD are commodity currencies which have been exposed to weakness due to the developments within China and the overall decline in commodity prices.

Technically, the AUDNZD is bullish on the daily timeframe as long as prices can keep above the 1.1200 support. The next relevant resistance resides at 1.1400.

AUDCHF: The AUDCHF trades around the sticky 0.6950 level but remains bullish. Prices are above the 20 daily SMA and the MACD is about to cross to the upside. A breach above 0.7000 may open a path to 0.7100 but prices must keep above the 0.6850 support.

For information, disclaimer and risk warning note visit: www.ForexTime.com FXTM is an international forex broker regulated by the Cyprus Securities and Exchange Commission (CySEC), and FT Global Limited is regulated by the International Financial Services Commission (IFSC).

September 23 - 29, 2015

financialmirror.com | MARKETS | 15

The US and China: Entente discordiale Marcuard’s Market update

by GaveKal Dragonomics The US-China relationship is a strange beast. The world’s two biggest national economies, which together account for more than a third of global output, are locked in a close economic and financial embrace, but are also strategic and (to a much lesser extent) military rivals. This makes the relationship more intricate than any the US has had with a number-two country since it rose to the top of the world economic charts in the late 19th century. Britain was the

genial uncle from whom it would inherit the scepter of global domination. The Soviet Union was a pure villain, to be worn down by a long battle of political containment and economic attrition. Japan was a reliable if often incomprehensible vassal. China is authoritarian and militarily independent, but not an enemy; economically indispensable, but not a friend.

These complexities tend to turn meetings between the two countries’ leaders into an uncomfortable variety show of political shadow-boxing and economic acrobatics.

This week’s state visit by Xi Jinping to the US is perhaps the most extreme example yet. It starts in Seattle with a forum at which the leaders of some of America’s leading technology firms will be forced to endure a sanctimonious speech by Chinese internet czar Lu Wei, who oversees a system of censorship and techno-nationalism that has effectively made it impossible for American internet giants such as Facebook and Google to operate in China, clearing the way for the growth of Chinese internet champions such as Alibaba, Baidu and Tencent. One of the attendees will be Tim Cook, whose company—Apple—has become the most valuable on earth in part because China’s fast-growing middle class enthusiastically pays high prices for Apple

www.marcuardheritage.com

gadgets assembled by low-wage Chinese workers, with the profits flowing to American capitalists.

The highlight of the visit will be a White House state dinner which was probably saved from cancellation only because Beijing dispatched a last minute delegation to beg Washington to delay the imposition of economic sanctions to punish China for its aggressive cyber-intrusions and industrial espionage. At the preceding press conference, it’s possible that we will get announcements of a landmark agreement to restrict cyber-warfare, a reaffirmation of the two countries’ commitment to push for a strong global climate agreement, and progress towards a bilateral investment treaty (BIT) that would substantially increase flows of direct investment by US firms in China.

The BIT nicely exemplifies the contradictions of the bilateral economic relationship. American big business, via the US Chamber of Commerce, has loudly condemned China’s protectionism, discriminatory anti-trust enforcement, and persistent disrespect for intellectual property. Yet many of these same businesses, through the USChina Business Council, have been equally loud in their demands that Washington accelerate talks on the BIT, so that they can put even more money at risk in China.

Two key points are worth remembering as we head into the week’s theatricals.

First, pragmatism trumps ideology.

The outward political relationship between the two seems as chilly as it has ever been.

Yet the underlying economic dynamics remain positive, and for all the bluster on both sides, the level of cooperation remains substantial. Some of this cooperation is grand: the US-Iran nuclear deal would have been impossible without China’s willingness to adhere to strict economic sanctions against Tehran. Much is mundane: the design of China’s deposit insurance system, launched in May, depended on years of consultations with the US Federal Deposit Insurance Corporation. The point is that the conversation that goes on behind the headlines is far more active, and far more productive, than most people in either country are aware.

Second, what ultimately stabilises the relationship is that the US remains vastly the more powerful nation, despite all the stories about America’s decline and “the inexorable shift of power from West to East.” A key reason, often overlooked, is that the US magnifies its power through the edifice of the global institutions it built after World War II, including a robust network of alliances; 700 military installations in nearly 40 countries; and multilateral organisations such as the OECD, the World Bank and the International Monetary

Disclaimer: This information may not be construed as advice and in particular not as investment, legal or tax advice. Depending on your particular circumstances you must obtain advice from your respective professional advisors. Investment involves risk. The value of investments may go down as well as up. Past performance is no guarantee for future performance.

Investments in foreign currencies are subject to exchange rate fluctuations.

Marcuard Cyprus Ltd is regulated by the Cyprus Securities and Exchange Commission (CySec) under License no. 131/11.

Fund, whose importance stems less from the money they disburse than from the ideas they propagate.

China, meanwhile, is a solitary country with no alliances and no institutions through which it can influence global opinion. Its much-touted “replacements” for US institutions, such as the internationalised renminbi and the Asia Infrastructure Investment Bank, remain sketches on the drawing board, with little practical impact.

China has essentially one card to play, which is access to its large and fast-growing market. It has played that card skillfully for many years. In the end, though, it knows it can only thrive by coming to terms with its biggest customer.

The snubs and recriminations will continue, but so will the economic symbiosis.

WORLD CURRENCIES PER US DOLLAR CURRENCY

RATE

EUROPEAN

Belarussian Ruble British Pound * Bulgarian Lev Czech Koruna Danish Krone Estonian Kroon Euro * Georgian Lari Hungarian Forint Latvian Lats Lithuanian Litas Maltese Pound * Moldavan Leu Norwegian Krone Polish Zloty Romanian Leu Russian Rouble Swedish Krona Swiss Franc Ukrainian Hryvnia

BYR GBP BGN CZK DKK EEK EUR GEL HUF LVL LTL MTL MDL NOK PLN RON RUB SEK CHF UAH

17520 1.5509 1.748 24.1577 6.6686 13.9864 1.1186 2.398 277.6 0.62823 3.0863 0.3838 19.7 8.2152 3.7417 3.9472 66.0417 8.347 0.9725 21.6099

AUD CAD HKD INR JPY KRW NZD SGD

0.7137 1.3235 7.75 65.615 120.5 1178.56 1.582 1.4132

BHD EGP IRR ILS JOD KWD LBP OMR QAR SAR ZAR AED

0.3770 7.8078 29856.00 3.9295 0.7065 0.3023 1510.00 0.3849 3.6416 3.7500 13.4499 3.6727

AZN KZT TRY

1.0467 263.99 2.9969

AMERICAS & PACIFIC

Australian Dollar * Canadian Dollar Hong Kong Dollar Indian Rupee Japanese Yen Korean Won New Zeland Dollar * Singapore Dollar MIDDLE EAST & AFRICA

Bahrain Dinar Egyptian Pound Iranian Rial Israeli Shekel Jordanian Dinar Kuwait Dinar Lebanese Pound Omani Rial Qatar Rial Saudi Arabian Riyal South African Rand U.A.E. Dirham ASIA

Azerbaijanian Manat Kazakhstan Tenge Turkish Lira

Note:

The Financial Markets

CODE

* USD per National Currency

Interest Rates Base Rates

LIBOR rates

Swap Rates

CCY

CCY/Period

1mth

2mth

3mth

6mth

1yr

USD GBP EUR JPY CHF

USD GBP EUR JPY CHF

0.20 0.51 -0.12 0.03 -0.79

0.26 0.54 -0.07 0.06 -0.76

0.33 0.59 -0.04 0.08 -0.73

0.53 0.75 0.02 0.12 -0.67

0.84 1.05 0.14 0.23 -0.56

0-0.25% 0.50% 0.05% 0-0.10% -0.75%

CCY/Period USD GBP EUR JPY CHF

2yr

3yr

4yr

5yr

7yr

10yr

0.83 1.02 0.07 0.09 -0.69

1.10 1.19 0.13 0.10 -0.58

1.33 1.36 0.24 0.12 -0.50

1.55 1.53 0.39 0.18 -0.32

1.89 1.74 0.66 0.27 -0.08

2.23 1.95 1.03 0.47 0.28

Exchange Rates Major Cross Rates

CCY1\CCY2 USD EUR GBP CHF JPY

Opening Rates

1 USD 1 EUR 1 GBP 1 CHF 1.1186 0.8940

100 JPY

1.5509

1.0283

0.8299

1.3865

0.9193

0.7419

0.6630

0.5351

0.6448

0.7213

0.9725

1.0878

1.5083

120.50

134.79

186.88

0.8071 123.91

Weekly movement of USD

CCY\Date

25.08

01.09

08.09

15.09

22.09

CCY

Today

Last Week

USD GBP JPY CHF

1.1494

1.1214

1.1156

1.1259

1.1142

0.7286

0.7284

0.7286

0.7298

0.7180

137.20

135.29

132.63

135.06

134.07

GBP EUR JPY

1.0728

0.0776

1.0822

1.0889

1.0817

CHF

1.5509 1.1186 120.50 0.9725

1.5435 1.1295 119.82 0.9703

%Change -0.48 +0.97 +0.57 +0.23

September 23 - 29, 2015

16 | WORLD | financialmirror.com

Refugees and reform in Europe

By Mohamed A. El-Erian Αuthor of When Markets Collide

There is a simple truth beneath the growing human tragedy of Europe’s refugee crisis, and the European Union cannot address the massive influx of exhausted, desperate people in a manner compatible with its values unless governments and citizens acknowledge it. Simply put, the historic challenge confronting Europe also offers historic opportunities. The question is whether Europe’s politicians – who have failed to deliver on far less complicated issues over which they had a lot more control – can seize the moment.

The scale of the challenge is immense, with the flow of refugees extremely difficult to monitor and channel, let alone limit.

Fleeing war and oppression, tens of thousands of people are risking life and limb to find refuge in Europe – a phenomenon that will continue as long as chaos persists in countries of origin, such as Syria, and countries facilitating transit, such as Iraq and Libya.

In the meantime, Europe’s transport networks are under stress, as are shelters, border crossings, and registration centres.

Common asylum policies – including, for example, the basic rule that asylum-seekers should be registered at their point of entry

into the EU – are not functioning or are being bypassed. And the cherished concept of effortless travel within the border-free Schengen Area is under threat.

These problems are aggravated by coordination failures. Attitudes toward refugees vary widely across countries, with Germany taking a particularly enlightened approach that contrasts sharply with Hungary’s notably heartless one. Some countries, such as the Czech Republic, have blocked deals to share the burden fairly among European Union members, including through mandatory quotas.

Add to that the preferences of the refugees – who, after risking everything to get to Europe, have strong feelings about where they would like to settle – and the policy challenges are enormous, particularly in the short run. European politicians have yet to catch up with the reality on the ground, let alone get ahead of it. And their failure is exacerbating the risks to the EU’s political cohesion that emerged over the Greek crisis.

Politicians have a powerful incentive to get Europe’s response to the refugee crisis right. Beyond the need to alleviate the human misery that fills television screens and front pages of newspapers lies the imperative not to miss the significant medium-term opportunities that migration provides.

Although there are pockets of high unemployment in Europe today, the ratio of workers to elderly people will decline considerably in the longer term. And, already, labour-market flexibility has been

undermined by structural inertia, including difficulties in retooling and retraining workers, particularly the long-term unemployed.

As the German government and some corporate leaders, including the CEO of Daimler-Benz, have already recognised, an open-minded approach to refugee absorption and integration can help to mitigate some of Europe’s protracted structural problems.

After all, a significant proportion of the incoming refugee population is said to be educated, motivated, and committed to building a better future in their new homes.

Capitalising on this, European decisionmakers can turn a severe short-term challenge into a powerful long-term advantage.

An enlightened policy response to the refugee crisis could help Europe in other ways as well. Already, it is unlocking additional fiscal outlays in countries like Germany – which, despite having the means, did not previously have the will to spend – thereby helping to alleviate an aggregatedemand imbalance that, together with structural impediments to growth and excessive indebtedness in some countries, has held back the region’s recovery.

The current situation could also provide the catalyst needed to make decisive progress on the EU’s incomplete political, institutional, and financial architecture. And it could compel Europe to overcome the political obstacles blocking solutions to longstanding problems, such as providing the cover needed for certain European

creditors to grant deeper debt relief for Greece, whose already-massive fiscal and employment problems are being exacerbated by the influx of refugees. It can even drive Europe to modernise its governance framework, which allows a few small countries to derail decisions supported by the vast majority of EU members.

Pessimists would immediately point out that Europe has struggled to come together even on far less complex and more controllable issues, such as the protracted economic and financial crisis in Greece. Yet history also suggests that shocks of the scale and scope of the current refugee crisis have the potential to spur remarkable policy responses.

Europe has the opportunity to turn today’s refugee crisis into a catalyst for renewal and progress. Let us hope that its politicians stop bickering and start working together to take advantage of this opening. If they fail, the momentum behind regional integration – which has brought peace, prosperity, and hope to hundreds of millions of people – will weaken considerably, to the detriment of all.

Mohamed A. El-Erian, Chief Economic Adviser at Allianz and a member of its International Executive Committee, is Chairman of US President Barack Obama’s Global Development Council and the author, most recently, of When Markets Collide. © Project Syndicate, 2015. www.project-syndicate.org

Cost of refugees for Germany to reach €10 bln, says Ifo If a total of 800,000 asylum-seekers do indeed come to Germany this year, as forecast by the Federal Ministry of the Interior, it would cost the state around 10 bln euros, according to the Munich-based Ifo Institute.

This figure does not take into consideration family members joining the refugees or any educational measures; and is therefore a conservative estimate, the research centre said.

The qualification structure of immigrants from the crisis-afflicted states of Syria, Iraq, Nigeria and Afghanistan is probably poor. According to data from the World Bank, the illiteracy rate even among the 14-24 year old age group is 4%, 18%, 34% and 53% in these countries, respectively. Even in the most developed of these countries (Syria) only 6% of the population has a university degree, which is not equivalent to a German diploma in many cases.

Although refugees tend to be male and younger than the demographic average age, one thing is still clear: they are poorly prepared for the German labour market. In addition to language courses, Germany will also need to invest in training, which will generate extra costs.

Many refugees will remain in Germany in the long-term and bring their relatives into the country. Migratory pressure from North Africa and the Middle East will remain high purely due to the demographical situation in these countries.

To avoid the refugee crisis becoming a long-term financial burden for German taxpayers, refugees have to get paid employment as fast as possible, so that they can meet their own living costs. There are fears, however, that many of them will not be able to find a job with a minimum wage of 8.50 euros in place because their productivity is just too low. It would be, therefore, a good idea to lower the minimum wage across the board to prevent unemployment from rising.

Raising Hartz IV standard rates in the present situation is a very bad idea, as this would reduce incentives for refugees to look for work and generate an additional fiscal burden.

Model simulations by the Ifo Institute show that even in the case of a suspension of minimum wage legislation and Hartz IV rates remaining stable, the supposed immediate integration of immigrants into the German labour market does not stand to benefit the German economy. Although there are some labour market advantages, they are outweighed by higher unemployment rates and net transfers to immigrants.

How do Americans feel about taking in refugees?

Americans overwhelmingly favor taking in refugees, according to a recent YouGov poll.

52% of respondents said that the United States should provide refuge to people fleeing war and oppression while 21% said it should not.

However, when it comes to Syrian refugees, Americans take a harder line. When asked if their country should accept more or fewer Syrians, 30% said fewer, 26% said more and 19% said they want it to stay the same.

(Source: Statista)

September 23 - 29, 2015

financialmirror.com | WORLD | 17

We should not be afraid

By Angel Gurria Europe is facing an historic moment. By the end of this year, the number of people applying for asylum in the European Union will exceed one million. The human cost of this refugee crisis is appalling. Yet, in all but a handful of cases, the response of Europe’s governments has been tentative, at best: acknowledging the need to do more, while fearing the implications.

Some politicians fear the burden that migrants will impose on local communities and taxpayers. Others fear extremists masquerading as genuine refugees. Above all, many are scared of public opinion, which – for all the heart-warming scenes of welcome and support for asylum-seekers – remains hesitant and even hostile to the prospect of still more migrants from war-torn, troubled countries, especially if they practice a different religion.

European leaders cannot afford to be afraid. The refugee crisis is not one from which they can opt out. No magic wand will empower leaders to transport more than a million people back across the Aegean and the Bosphorus to Mosul and Aleppo, or across the Mediterranean to Eritrea, Somalia, and Sudan.

The reintroduction of border controls and the construction of fences may buy time for over-stretched countries, but no one can seriously expect to keep out people who are so desperate to move.

Given the dire conditions in the countries from which they are fleeing, perhaps half of the asylum-seekers will qualify for residency under even the strictest rules. So, whatever the sensitivity or ambivalence of public opinion, European leaders will have to find a bold, coordinated, and unified response.

There are three challenges. The first is to agree on a fair allocation of refugees within Europe; despite their vast numbers, these desperate people must be provided with shelter, food, and support. This will be difficult enough.

The second challenge is to start the

process of integrating refugees into Europe’s societies and economies. Some refugees will find it relatively easy to find jobs. A university-educated Syrian civil engineer arriving in Munich will need to learn some German; but, once this is done, he or she is unlikely to have to wait too long before employers come knocking. Other asylumseekers have lower levels of education, and many may well be traumatised by their experience of war and exodus. It will take time and effort to integrate them – and many voters will be skeptical of the process,

especially given that successful integration or assimilation will not come cheap.

However, paying the price to accept and integrate today’s asylum-seekers could reap significant benefits for the Europe of tomorrow. Our work at the OECD shows that migration, if well managed, can spur growth and innovation. Unfortunately, in the past, migration has not always been well managed: migrants have been concentrated in ghetto-like conditions, with few public services or employment prospects.

Even so, the evidence from the OECD’s 34 member countries is that immigrants generally pay more in taxes and social security contributions than they receive in individual benefits. Today, we’ve released a policy brief on the current refugee crisis. Put simply, Europe needs migrants and the new skills they can bring. Otherwise, as its population falls, it will struggle to pay pensions and health-care costs in the future (already in the decade to 2010, immigration accounted for 65% of the increase in the EU workforce).

Many will argue that refugees who lack the skills that the economy demands will be harder to integrate

than other newcomers. Perhaps so.

But, because we now know a great deal about what has worked in resettling migrants, we can hope to avoid the mistakes of the past – not least by documenting and sharing the experiences of the countries that have managed migration well.

This brings us to the third, and greatest, challenge that European leaders have to overcome: the fear of migrants. Integration is a precondition for the public acceptance of future legal flows. The presumption is that “we” are integrated, whereas “they” are not.

And yet almost everyone has a migrant somewhere in their family tree, often not many generations back. The distinction between “us” and “them” is not as sharp as we might assume.

None of today’s leaders expected to face a human tragedy on the scale of what we now see in the Mediterranean and across Europe.

But how they respond will determine how they are judged by their citizens and by history.

This is not a numbers game.

Leaders should shift their attention from questions concerning “how many” and “where” to the “what” of the crisis – namely, what they should be doing to integrate these newcomers into their societies and economies. They must exercise their leadership to convince the public that migrants – above all, those most in need of protection – give more than they take. In this moment of crisis, we should all heed the words of the Mexican novelist Carlos Fuentes: “Recognize yourself in he and she who are not like you and me.”

Angel Gurría is Secretary-General of the OECD. © Project Syndicate, 2015. www.project-syndicate.org

September 23 - 29, 2015

18 | WORLD | financialmirror.com

The data revolution for sustainable development

By Jeffrey Sachs, Enrico Giovannini, Robert Chen and Shaida Badiee There is growing recognition that the success of the Sustainable Development Goals (SDGs), which will be adopted on September 25 at a special United Nations summit, will depend on the ability of governments, businesses, and civil society to harness data for decisionmaking. The key, as I have highlighted before, is to invest in building innovative data systems that draw on new sources of real-time data for sustainable development.

We live in a data-driven world. Advertisers, insurance companies, national security agencies, and political advisers have already learned to tap into big data, sometimes to our chagrin; so, too, have countless scientists and researchers, thereby accelerating progress on new discoveries. But the global development community has been slower to benefit – not least because too much development data are still being collected using cumbersome approaches that lag behind today’s technological capabilities.

One way to improve data collection and use for sustainable development is to create an active link between the provision of services and the collection and processing of data for decision-making. Take health-care services. Every day, in remote villages of developing countries, community health workers help patients fight diseases (such as malaria), get to clinics for checkups, receive vital immunisations, obtain diagnoses (through telemedicine), and access emergency aid for their infants and young children (such as for chronic under-nutrition). But the information from such visits is usually not collected, and even if it is put on paper, it is never used again.

We now have a much smarter way to proceed.

Community health workers are increasingly supported by smart-phone applications, which they can use to log patient information at each visit. That information can go directly onto public-health dashboards, which health managers can use to spot disease outbreaks, failures in supply chains, or the need to bolster technical staff. Such systems can provide a real-time log of vital events, including births and deaths, and even use so-called verbal autopsies to help identify causes of death. And, as part of electronic medical records, the information can be used at future visits to the doctor or to remind patients of the need for follow-up visits or medical interventions.

Education provides the same kind of vast opportunity.

Currently, school enrollment rates tend to be calculated based on student registrations at the beginning of the school year, even though actual attendance may be far below the registration rate. Moreover, officials wishing to report higher enrollment rates sometimes manipulate registration data, so we never get an accurate picture of who is actually at school.

With mobile apps, schools and community education workers can log student and teacher attendance on a transparent, real-time basis, and follow up more easily with students who drop out, especially for reasons that could be

overcome through informed intervention by community education workers. This information can be fed automatically into dashboards that education administrators can use to track progress in key areas.

Such data collection can accelerate sustainable development by improving decision-making. But that is only the first step. The same techniques should also be used to collect some of the key indicators that measure progress on the SDGs. In fact, measuring progress at frequent intervals, and publicising the successes and shortfalls, is vital to keeping

the world on track to meet its ambitious long-term targets.

Doing so would not only enable us to reward governments that are fostering progress; it would also keep laggard governments accountable for their weak performance and, one hopes, motivate them to redouble their efforts.

The need for such real-time measurement became apparent over the last 15 years, when the world was pursuing the Millennium Development Goals. Given that many key indicators are not yet collected in real time, but only through laborious retrospective household surveys, the indicators for the key poverty-reduction goal are as much as five years out of date for many countries. The world is aiming for 2015 targets for poverty, health, and education, with, in some cases, key data only up to 2010.

Fortunately, the information and communications technology revolution and the spread of broadband coverage nearly everywhere can quickly make such time lags a thing of the past. As indicated in the report A World that Counts: Mobilizing the Data Revolution for Sustainable Development, we must modernise the practices used by statistical offices and other public agencies, while tapping into new sources of data in a thoughtful and creative way that complements traditional approaches.

Through more effective use of smart data – collected during service delivery, economic transactions, and remote sensing – the fight against extreme poverty will be bolstered; the global energy system will be made much more efficient and less polluting; and vital services such as health and education will be made far more effective and accessible.

With this breakthrough in sight, several governments, including that of the United States, as well as businesses and other partners, have announced plans to launch a new “Global Partnership for Sustainable Development Data” at the UN this month. The new partnership aims to strengthen data collection and monitoring efforts by raising more funds, encouraging knowledge-sharing, addressing key barriers to access and use of data, and identifying new big-data strategies to upgrade the world’s statistical systems.

The UN Sustainable Development Solutions Network will support the new Global Partnership by creating a new Thematic Network on Data for Sustainable Development, which will bring together leading data scientists, thinkers, and academics from across multiple sectors and disciplines to form a center of data excellence. We are delighted to be chairing this network, which has at its core a commitment to turn facts and figures into real development progress. We firmly believe the data revolution can be a revolution for sustainable development, and we welcome partners from around the world to join us.

Jeffrey D. Sachs is Professor of Sustainable Development, Professor of Health Policy and Management, and Director of the Earth Institute at Columbia University. Enrico Giovannini is a professor at University of Rome Tor Vergata.

Robert Chen is Director of the Center for International Earth Science Information Network (CIESIN). Shaida Badiee is Managing Director and co-founder of Open Data Watch. © Project Syndicate, 2015 www.project-syndicate.org

September 23 - 29, 2015

financialmirror.com | WORLD | 19

Dying to live...

By Samuel Kargbo I was a young medical officer working at the Emergency Unit of the Ola During Children’s Hospital in Sierra Leone when I advised the mother of a child with severe malaria to tell a blatant lie. Her daughter Mariama needed a life-saving blood transfusion. But her mother had no money to pay for the screening tests and to compensate the blood donor. I had seen many children die while their parents frantically sought the necessary funds.

Determined to save Mariama’s life, I told her mother to go home and announce the death of her daughter. I knew this would provoke the sympathy of her relatives, and they would scrape together their meager resources to ensure a proper funeral. The mother agreed, and when she returned six hours later, she threw enough money on the table to cover all of Mariama’s care: a blood transfusion and treatment for malaria and worm infestation. A few days later, I discharged the still weak but recovering four-year-old from the hospital.

Though Mariama’s illness did not move her relatives to action, her death did. The same thing happened, on a much larger scale, during the Ebola epidemic in West Africa.

It is believed that the epidemic first took hold in the forested regions of Guinea in December 2013, then gradually spread into Sierra Leone and Liberia. The international community watched as the disease ravaged the three countries, decimating villages, wiping out entire families, and bringing economies to a standstill. But, at the start, it attracted little attention. The international community was content to ignore the truth, until the epidemic had become so widespread that they no longer could. By then, however, it was too late to avert a major catastrophe.

We are still learning the full extent of the Ebola disaster in West Africa. For fear of catching the disease, schools were closed, with students and teachers staying at home. Indeed, many workers stayed home as well, causing restaurants, bars,

and hotels to cease functioning and the economy to grind to a halt. Half of all private-sector jobs were lost. Farmers’ selfisolation led to a 30% drop in agricultural output.

People’s social lives stalled as well. A curfew was imposed in many districts, and longdistance travel was discouraged.

In several towns, accepting a visitor into your home meant the risk of a heavy fine.

Nonetheless, the disease spread into urban areas and, like a wildfire, engulfed the three countries and spilled into others. To date, more than 8,500 infections and 3,500 deaths have been reported just in Sierra Leone.

The health sector has perhaps been the hardest hit. The death of more than 220 health-care workers left only 3.4 skilled health personnel for every 10,000 citizens. As fear of Ebola mounted, many citizens stopped using health services, reflected in a 23% drop in births in hospitals or clinics, a 21% drop in children receiving basic immunisation, and a 39% drop in children treated for malaria. As a result, these countries experienced a resurgence in vaccine-preventable diseases, malaria, maternal and child deaths, and acute malnutrition. In this sense, the worst may be yet to come.

But Sierra Leone is picking up the pieces, and has embarked on a two-year recovery plan. The first priority is to get the number of Ebola cases to zero and keep it there. This means changing the conditions that allowed it to spread so rapidly in the first place.

The first step is to rebuild the health-care system. The plan demands the restoration of health-care services in 40 hospitals and 1,300 primary health-care facilities across the country, so that children and mothers can receive free essential care, vaccinations, and treatment for diseases like tuberculosis, HIV/AIDS, and malaria. Moreover, in order to bolster safety – and restore confidence – in the health-care system, the plan calls for better infection-control practices

and training for a new cadre of skilled workers. And it includes closer cooperation with community groups, which should be engaged in disease surveillance and response.

The post-Ebola recovery will not be quick, easy, or cheap.

In Sierra Leone alone, it is expected to cost $1.3 bln – $896.2 mln of which has yet to be procured. To close that gap, we need help from our African partners and the broader international community.

Many years ago, without the help of a lie, Mariama would have died. Today, we do not need lies. We need genuine engagement, open communication, and mutual accountability, at the local, national, regional, and global levels. We have already seen how a lack of essential healthcare services can devastate a country, taking thousands of lives and shattering many more.

We came together as a country to beat Ebola, and we are committed to prevent future epidemics. With ongoing international support, we will do just that.

Samuel Kargbo is Director of Health Systems, Policy, Planning, and Information in the Ministry of Health and Sanitation of Sierra Leone. He is a 2015 Aspen Institute New Voices Fellow. © Project Syndicate, 2015 - www.project-syndicate.org

Why Apple gets higher market share and a higher analyst price target

By Chris Lange Coming off a strong keynote presentation, Apple Inc. (NASDAQ: AAPL) is ready to take the market by storm with its new promotions. Despite the market sell-off in August, Apple has weathered it well and now has plans that will further help it take control and grow its market share in the high-end smart phone market. Canaccord Genuity reiterated a Buy rating and raised its price target to $160 from $155, implying an upside of 40% from current prices.

At the same time, the firm increased its calendar 2015 and 2016 earnings per share (EPS) estimates to $9.17 and $10.22 from $9.01 and $9.64, respectively.

This rating is based on the firm’s survey work and analysis of leading carrier store traffic and price promotions, and it anticipates Apple will maintain very strong share of the premium tier smartphone market. In fact, Canaccord Genuity believes the iPhone 6s products should enable Apple to continue to post strong sales and high-end smartphone market share gains, as it believes the iPhone 6/6s Plus smartphones generated very strong replacement sales from existing iPhone consumers who slowed the pace of iPhone upgrade purchases during the relatively disappointing iPhone 5 and 5s product cycles.

Another prediction the firm has is that the new Apple instalment plan programmes combined with similar to more aggressively priced instalment programmes from leading carriers will improve the rate of iPhone upgrade sales to the growing installed base of iPhone users. In fact, with only 27% of the iPhone installed base having upgraded to the iPhone 6/6 Plus devices by the end of the fiscal third quarter of 2015, Canaccord Genuity anticipates continued strong replacement sales through the 2015 calendar year and beyond.

Do iPhone apps crash after major iOS updates?

When Apple releases a major update of its mobile operationg system iOS, as it did last week with iOS 9, millions of users rush to update their iDevices. However, once they made the switch to the new OS, users shouldn’t be surprised to see apps crashing more often than they are used to.

According to data supplied by app intelligence firm Crittercism, app crash rates follow a distinct

pattern. When a new iOS version is released, crash rates tend to spike as it takes developers some time to fix errors and fully understand the new OS. After the initial spike, crash rates quickly return to a normal level and continue to gradually decline as developers get more and more acquainted with the operating system. (Source: Statista)

September 23 - 29, 2015

20 | BACK PAGE | financialmirror.com

The age of Bobby Fischer

By Kenneth Rogoff

The brilliant new Hollywood movie “Pawn Sacrifice” portrays the life of tormented chess genius Robert James “Bobby” Fischer from his early days as a prodigy to his historic 1972 match, at age 29, with Russian world champion Boris Spassky. Actor Toby Maguire portrays Fischer with remarkable authenticity – indeed, pitch-perfect for those of us who met Fischer in his prime.

The film depicts a match that became a signature event in the Cold War between Russia and the United States. It also makes one wonder whether a creative genius like Fischer, deeply troubled yet supremely functional at the chessboard, would be able to exist in today’s unforgiving online world.

Fischer certainly got attention back then, but information was filtered very differently than it is today. Journalists used to lead the way, rather than slavishly following the flow of superficial Internet traffic. The story of an erratic kid from Brooklyn taking on the Soviet empire in its national sport made good copy for journalists, who understood the significance of the event. The match garnered front-page headlines in major newspapers around the world on a daily basis for two months, with commentators providing live move-by-move analysis for up to five hours each day.

Back then, there were only a few television channels.

There were no DVD players or pay-per-view services. Still, that was not the only reason people remained glued to their TV sets to watch the match. The surreal environment, the amazing chess turns, and the Cold War backdrop made Fischer one of the most famous people in the world that summer. I won’t humour myself that it was the chess analysis that drew attention, although I was a commentator for public television on the pivotal 13th game.

For the American champion, the match was the consummation of two decades of chasing the title, starting from his days as a child prodigy. After a lifetime of living in relative poverty for a superstar (even though he frequently appeared on the cover of major magazines), Fischer finally

found himself playing in a match with a $250,000 purse. Of course, it was a pittance compared to the $2.5 mln that each fighter was guaranteed in the 1971 Ali-Frazier fight. But Fischer recognised that US culture marginalises any pursuit that does not produce big money, so he viewed the six-figure cash prize as the ultimate symbol of advancement in his sport.

For Russia, the match was not about money; it was about hearts and minds. The chess world had long been the perfect battleground on which to prove the superiority of the Communist system. Although most Westerners today pretend that we always knew that Russian-style Communism would fail, it was not so obvious back then. The leading introductory economic textbook of the time, by Nobel laurate Paul Samuelson, was still predicting that Russia might overtake the US as the world’s largest economy. To be fair, Russians valued chess enormously, even if it did not produce a lot of income. In many ways, chess was Russia’s national sport. No wonder Fischer’s quixotic pursuit of the championship led American policy mastermind Henry Kissinger to call Fischer and urge him not to back out, as he had threatened to do.

Whatever his status in the US, Fischer was certainly the most beloved American in Russia. The majesty of his play transcended propaganda in a country where everyday people

could appreciate and understand the innate beauty of the game. In the run-up to the championship, Fischer trounced two very good opponents with unheard of 6-0 scores, an astonishing result when so many grandmaster games end in draws. Russian fans were so excited by Fischer’s unprecedented achievement that they reportedly jammed Moscow telephone exchanges to get information. After a while, operators would simply pick up the line and say “6-0” and hang up. In the end, even Spassky paid the ultimate tribute to Fischer’s genius, clapping along with the audience after Fischer’s inspired sixth-game victory, as portrayed in the movie. The American might have been the ultimate chess genius, but the Russian was the class act.

Director Edward Zwick does not shirk from showing the demons that plagued Fischer. He was justly concerned that the Russians would go to great lengths to prevent him from being champion, but ultimately rational concerns tipped into paranoia, and Fischer started to turn on his closest friends and confidants. He became anti-Semitic, despite being Jewish himself.

One suspects that in today’s online world, Fischer’s paranoia and personal flaws would have tripped him up long before he became champion. After Fischer became champion and simply stopped playing competitive chess, his mental illness became much worse. Though no one can condone Fischer’s virulent rants and dark thoughts in his later years (he died in 2008), it is sad to realise that someone of such towering creativity and genius, who inspired so many people through his chess, might have had his career ended at a much earlier stage today. We live in a different world. “Pawn Sacrifice” recalls the world in which Fischer’s feats were possible.

Kenneth Rogoff, a former chief economist of the IMF, is Professor of Economics and Public Policy at Harvard University. He holds the title of International Grandmaster of chess. © Project Syndicate, 2015 - www.project-syndicate.org

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