Global Economic News

Nuclear Debate Breaks Out in Italy

May 24 (EIRNS)—The statements by Italian Industry Minister Claudio Scajola on a return to nuclear energy, are stirring up a national debate. The opposition, through Shadow Minister for Industry Pier Luigi Bersani or the president of the Piemonte industrial region Mercedes Bresso, are making fools of themselves by rejecting the nuclear option. However, a prominent member of the opposition, Sen. Umberto Veronesi, said that nuclear power "is not an option, but an inevitable aim."

Prominent support also came from physicist Antonino Zichichi, president of World Federation of Scientists. Zichichi is among the 100 scientists who signed a letter to the UN Secretary General last December against the global warming fraud and the Intergovernmental Panel on Climate Change (IPCC). He also led the anti-IPCC faction at the Vatican conference on climate last year.

Zichichi said that nuclear power is the only instrument to save the world from the onrushing energy crisis, to allow poor countries to develop and to achieve independence from oil.

Confirming Zichichi's arguments, the national electric company ENEL announced it was ready to build new reactors (third-generation) in six to seven years, indicating bureaucracy was the main obstacle.

French Fishermen and Farmers Strike Over Oil Prices

May 27 (EIRNS)—The majority of the fishermen in ports in France, from Brittany to the Mediterranean Sea, renewed their strike May 26, over their inability to pay the 29% diesel price increase since December. The fishermen are demanding that fuel be no higher than Eu40 cents a liter, and not 75 cents as it is now. Under pressure, the French government decided to give Eu310 million in short-term aid, but must first negotiate with the Brussels EU Commission to make this aid "euro-compatible," i.e., make sure it is not ruled unfair competition with other European farmers. Agriculture Minister Michel Barnier has therefore reintroduced the aid in the category of "emergency aid" permitted, in the Commission's jargon, to people as "individualized social aid." At this point, Barnier is still negotiating with the Commission. This is just a short-term band-aid, which is why the fisherman have continued to strike.

As of May 26, the strike was restarted in the majority of the ports. In the English Channel and the Mediterranean area, and including La Rochelle—one of Europe's major fishing ports—more than ten ports have gone on a 48-hour strike. In Brittany, the strike spread like wildfire, with ports like Guilvinec, the first artisanal fishing port of France, and Saint Brieuc heading the action. Some of the tactics involve blocking highways and oil refineries. Fishermen and farmers blocked a four-lane highway yesterday between Rennes and Saint Brieux, and in the Normandy port of Le Havre, actions are underway to block the Total refinery and other oil depots in the area.

The strike has a desperate and dangerous character as well. In some areas, the fishermen are pouring fuel on the fish; in other areas of Brittany, fisherman have carried out raids against companies importing fish from the developing sector. Cite Marine and some of its subsidiaries, were targetted, with fishermen destroying tons of frozen fish.

Following a meeting over the weekend in Ancona, Italy, fishermen from four countries—Portugal, Italy, France, and Spain—decided to extend the strike to their countries, and are considering a demonstration in Brussels in the near future.

French Real Estate Market in Free-Fall

May 28 (EIRNS)—According to the French Ministry of Durable Development, transactions in new housing dropped during the first quarter by an annualized 29.7%. This "brutal" drop, says the French daily Les Echos, which reports it on the front page, is a general tendency in 18 out of the 22 regions of France; some—the Limousin, Lorraine, and Auvergne areas—being worse hit than others, with a drop reaching 60%! New construction permits for the period February-April dropped by 16.3%. Prices for apartments continue to increase, while those of single family homes and land are beginning to drop.

Famine Threat Stalks Iraq, Too

May 31 (EIRNS)—Adnan Pachachi, a veteran Iraqi politician and member of parliament, reported this week, in a speech at the Woodrow Wilson Center in Washington, that one of the main sources of discontent among the Iraqi population with the government of Prime Minister Nouri al-Maliki, is the government's inability to deal with the country's economic crisis, including the falloff in agricultural production. In response to a question from EIR on the food situation, Pachachi noted that Iraq was, at one time, a food-exporting country, but became a food importer through mismanagement and neglect of agriculture. He said that two weeks ago, a delegation from Baghdad visited Babil province (immediately south of Baghdad), and warned that there may be a famine in parts of the province, "which is something impossible to understand." He noted that Iraq has two great rivers and fertile land, "but now there is the danger of famine in some areas.... This shows mismanagement and ignorance in the way the state is being run," he said.

China's Central Bank: Fed Rate Cuts Spurred World Inflation

May 31 (EIRNS)—The deep interest-rate cuts made by the U.S. Federal Reserve have both increased liquidity and led to rising commodity prices, Zhou Xiaochuan, governor of the People's Bank of China, said May 30 at a conference in Beijing, the China Securities Journal reported. These rate cuts have affected the anti-inflation policies of emerging markets, Zhou said. "The U.S. Fed has significantly reduced interest rates, on the other hand, global commodity market prices have risen. A lot of developing countries are now suffering from rising inflation," Zhou said. He said that the world's central banks should cooperate more closely to tackle the inflation problem.

Zhou also said that reports of "hot money" flows into China may be exaggerated by experts. Hot money flows, which triggered the Asian financial crisis in 1997, are being carefully watched in China, which is being hit with a fast rise of its currency against the dollar, and high inflation. Zhou said that analysts should not just "look at trade surplus and FDI [foreign direct investment, to calculate speculative capital inflows], you have to make a comprehensive check of the overall international balance of payments."

China's huge forex reserves have risen by $154 billion in the first quarter alone this year, to $1.68 trillion. China's trade surplus was $41.4 billion, and incoming FDI $27.4 billion, leaving an $85 billion difference from the forex increase. China's reserves were up to $1.76 billion by end-April. Zhou said that some of this difference is due to services trade flows and other factors, and it should not all be considered "hot money" inflows.