Swiss left out of G20 meeting
ZURICH, SWITZERLAND – Switzerland and Germany’s foreign ministers Sunday confirmed media reports that an agreement will shortly be announced on a tax deal. The Swiss Foreign Affairs Department said in a statement that Swiss President and Foreign Minister Micheline Calmy-Rey and German Foreign Minister Guido Westerwelle “both praised the progress that has been achieved in the area of taxation, as well as the generally intensive relations between Switzerland and Germany.”
The two met Saturday 7 August in Locarno, on the sidelines of the Locarno international film festival.
Calmy-Rey “stated that she was pleased that the negotiations concerning an agreement on withholding tax will shortly be brought to a conclusion, and she went on to underscore the fact that ‘Switzerland’s banking sector has no interest in untaxed assets.’ She noted that withholding tax is a fair way of taxing German assets without an automatic exchange of information, and it also guarantees the confidential management of client data,” according to the statement.
Switzerland has not yet confirmed details of the deal, but financial media have been reporting a 26 percent withholding tax as likely, in future.
Swiss newspaper SonntagsZeitung reported at the start of the weekend that a deal is expected to be announced Wednesday 10 August, with Swiss banks agreeing to pay an upfront lump sum for Swiss accounts held by Germans who did not pay taxes in the past 10 years. The amount agreed to, possibly CHF2 billion, is reported, by what the newspaper calls a source close to the deal, to be a fraction of what Germany initially demanded.
G20 meeting in Cannes won’t include Switzerland
Switzerland’s disagreements with its neighbours over accounts held by their citizens in Swiss banks was dealt a new blow over the weekend, however, when the Seco, Switzerland’s economy ministry, confirmed to news agency ATS that French President Nicolas Sarkozy has invited Singapore, but not Switzerland, to participate in the next G20 meeting. Switzerland has been busy for several months building its influence to counteract the possibility it would not be invited to the G20 talks.
Switzerland, despite its role as the world’s top fortune management centre, is not a member of the Group of 20, the world’s largest economies, created in 1999 “to bring together systemically important industrialized and developing economies to discuss key issues in the global economy.” The high Swiss franc is currently viewed by a growing number of investors as one of a small group of “shadow currencies”, reports the Economist and other international media.
It was not invited to the last meeting of the group, in Seoul, but Sarkozy has told Switzerland it will be “integrated” into the G20 meeting, even if it is not directly participating. Switzerland fears a repeat of one of the Seoul meeting outcomes. TSR/ats reports that “the objective of this offensive is to prevent a repeat of what happened in 2009, when Switzerland, without any advance consulation, was put on a gray list of tax havens by the OECD, at the instigation of the G20.”
The next meeting will be held in Cannes in November 2011, under France’s presidency.
India studies stolen HSBC-Geneva account holders data
Meanwhile, India Express 7 August published a story saying that France has handed over to Indian authorities the names of 700 holders of HSBC bank accounts in Switzerland. France received stolen data from a former employee of the UK bank’s Geneva branch, in 2008 and the theft increased tensions between France and Switzerland over the issue of tax evasion and the use of stolen data.
The Indian Foreign Ministry says it already had most of the data from other sources, but will be checking the accounts.
China’s government is planning to have “frank discussions” with US authorities on the US Federal Reserve’s decision 4 November on a second round of quantitative easing. “For the U.S. to undertake a second round of quantitative easing at this time we feel is not recognizing the responsibility it should take as a reserve currency issuer, and not taking into account the effect of this excessive liquidity on emerging market economies,” said China’s Vice Minister of Finance, Zhu Guangyao, at a briefing in Beijing.
Both governments are trying to tone down their differences ahead of the G20 summit in Seoul 11 and 12 November.
The US central bank intends to buy up to $600 billion worth of US Treasuries in order to breathe life into a moribund US economy. The Chinese government is the world’s largest foreign holder of US Treasuries, and is afraid that the US action will lead to a debasing of the US currency.
Links to other sites: ABC News, Xinhua, Wall Street Journal
Protestors make their presence felt in Toronto in worst of a week’s clash with police
There won’t be a master plan that all G20 countries will follow to ensure economic recovery: the group of the world’s 20 largest economies met in Toronto over the weekend and agreed that a diversified set of solutions makes the most sense for global economic recovery. Overall, however, they agreed to halve European government’s deficits by 2013 and to push for higher capital requirements for banks.
Protestors clashed with police Sunday 27 June, the worst in a week-long series of marches and meetings against world leaders’ management of their economies. The Toronto Sun reports that what started out as a peaceful march by 4,000 people suddenly turned into a riot, with police cars set on fire and heavy destruction of buildings and other property.
Links to other sites: Bloomberg, Financial Times, Toronto Sun
Video, Reuters
A Toronto man has been arrested and his home is being searched by police, who have already pressed several charges, including possession of explosives, in an investigation linked to the upcoming G20 meeting in the city. The 37-year-old, who owns a company that advertises his services as an Internet security specialist and network security consultant. He is also a licensed private eye, according to The Globe & Mail.
Bern, Switzerland (GenevaLunch) – The Swiss Federal Council, concerned about changes to the G20 group of the world’s largest economies and calls for changes to other international financial bodies, has told the country’s finance ministry to take steps to strengthen Switzerland’s role in the IMF (International Monetary Fund) and the World Bank. Developing countries and emerging markets have been calling for reform of these two bodies, the two Bretton Woods international financial institutions, in recent months, suggesting that voting weights need to be reconsidered. Switzerland is keen to ensure that its seats on the Executive Councils of each group become permanent.
The cabinet (Federal Council) has also instructed the finance ministry to work closely with the Swiss National Bank and the Swiss financial market supervisory authority Finma to strengthen its role in the Financial Stability Board (FSB).
Australia’s central bank announced Tuesday 6 October that it is raising its key interest rate from 3.00 to 3.25 percent, and analysts say more increases are on the way. The Reserve Bank cited improved economic conditions and a stronger Australian economy. The country thus becomes the first in the group of 20 major economies, the G20 countries, to raise rates after the cuts seen worldwide in the past 12 months. The Age reports that if banks pass along the rate hike to clients it will mean Aus$40 a month more on a home loan of Aus$300,000.
Links to other sites: ABC News, Australia, The Age, Financial Times
© Chappatte, distributed by Globe Cartoon. More cartoons on Chappatte’s web site. Geneva-based Patrick Chappatte works for the International Herald Tribune, for Geneva newspaper Le Temps, and for NZZ am Sonntag. All cartoons reproduced with permission.
Bern, Switzerland / New York, NY, USA (GenevaLunch) – Swiss President Hans-Rudolf Merz capped off a busy political week for Switzerland with an address to the United Nations General Assembly where he argued that because “the G-20 lacks legitimacy” exchanges between the UN and the G20 group of nations “must be strengthened. The G-20 has taken over a role in discussing important global issues. This development must not take place at the expense of other nations or global institutions such as the UN.” Libya and Switzerland’s removal from the OECD gray list also made headlines in Switzerland and elsewhere.
G20 needs to create level playing field: Merz
Merz told world leaders Thursday 24 September at the assembly that “basic considerations of due process are absent in the sanctions procedures. The members of the G-20 themselves are not subject to the same scrutiny. Switzerland advocates a level playing field and a much better consultation among non-members of the G-20.”
The G20 group of the world’s largest economies has a large menu to work through when it meets Thursday and Friday in Pittsburgh, Pennsylvania in the US, with changes to the banking world heading the list. The debate over limiting bankers’ bonuses continues from their last meeting earlier this year: the group will, according to the Wall Street Journal, decide ” how draconian the restrictions on banker compensation should be.” Brazil will be suggesting that bank regulation should be tightened and that recent changes to bank capitalization should be extended to include derivatives markets, referring to the Basel II agreement that have recently gone into effect, which are designed to help avoid the kind of global banking meltdown seen in 2008. US President Barack Obama faces a second major international test in less than a week, after the UN General Assembly, convincing G20 leaders that the buzz words “sustainable” and “balanced” are the keys to getting the world economy back on track, according to AP/NPR. Financial Times (subscription), Forbes/Reuters, MSNBC news roundup
China has begun supplying oil to Iran in the past month and already accounts for one-third of the country’s fuel imports, the Financial Times reports. Oil imports are not part of a United Nations sanction and the supplies are legal, but the move comes as G20 world leaders, meeting in New York Wednesday 23 September, discuss enforcing sanctions against Iran to discourage it from further developing its nuclear programme. Iran insists the nuclear programme is for peaceful purposes, as a source of energy, and that it is not building bombs. The country is one of the world’s largest oil producers, but its aging system is inefficient and it imports 120,000 barrels a day, according to the FT. China agreed in 2004 to purchase oil from Iran and to invest in its system. The $100 billion deal in 2006 prompted concern in the US, with observers saying that China appeared to be rushing to sign the deal ahead of sanctions. In the latest twist to the story China’s oil replaces that from companies such as BP which have stopped supplying Iran. Washington Post, 2006, Brookings Institution editorial, July 2009
The policeman who appears in a video to have hit Ian Tomlinson with his club shortly before the man died of a heart attack during G20 protests in London, has come forward, along with other police in the video. He has not been charged. Tomlinson was not one of the demonstrators. Guardian, UK
Bern, Switzerland and Washington, DC, USA (GenevaLunch) – US Treasury Secretary Timothy Geithner Monday said that Switzerland and the US would begin 28 April to renegotiate their 1996 tax treaty. The announcement was made as part of a list of US actions that will follow the G20 summit in London in early April. Switzerland, for its part, is making it clear that a new treaty with the US is a top priority. Pre-negotiation talks have apparently been underway since the end of March, as part of Switzerland’s move to begin renegotiating treaties with several countries.
Updated 4 April 17:15 US and Russian presidents Barack Obama and Dmitry Medvedev met in London Wednesday 1 April to discuss easing political tensions between their countries. They announced their intention to cooperate on a number of issues beginning with negotiations on a new arms control treaty, as hinted at in a meeting in Geneva last month between the two countries’ foreign affairs leaders. The two leaders also promised to work together on the war in Afghanistan and Iran’s nuclear programme. International Herald Tribune, Novosti, Times, UK
The leaders of the G-20 nations, the world’s most powerful economies, meet in London, England 1 April and all media eyes are focused on the summit of the countries responsible for 80 percent of world trade, given that the global economic crisis is the worst since the 1930s. Reuters carries an overview, noting that US President Barack Obama is “under perhaps more pressure than anyone to show that the country where the crisis began can lead the way out.” Meanwhile, London bankers are “dressing down” to appear less conspicuous as the City, the square mile financial centre at the heart of London, prepares for an onslaught of protestors. Financial Times
Bern, Switzerland (TSR, Fre) – The Swiss government has asked Washington, DC, host to the G20 meeting of the world’s largest economies that took place over the weekend, to include all main financial centres in talks on the reforming the global financial system. Switzerland, as the world’s 21st largest economy, did not participate in the weekend meeting, but Switzerland as a financial centre is a key player.
