New York, NY, United States (AHN) – Oil prices were pushed higher Monday after Iran cut exports to Britain and France. The move raised worries that high gas prices are soon to follow.

On Sunday, Iran’s oil ministry said it would stop exporting oil to French and British companies. The announcement came just days after Iran threatened to cut supplies to some European countries in retaliation for sanctions put in place by the European Union and the United States.

U.S. crude for April delivery rose about 2 percent to $105.28 per barrel. The European benchmark, Brent crude, rose about 0.5 percent to $120.37 per barrel.

Prices for Brent crude have not been above $120 in more than a year. Prices at and above that level could prove troublesome for U.S. drivers since many U.S. refineries use imported oil to produce gas, especially on the East Coast.

According to AAA, the current national average price for a gallon is gas is $3.56, about 9 percent higher than the start of the year, and the 13th consecutive increase to date.

Gas will most certainly hit $4 a gallon by summer, industry analysts say, and $5 a gallon gas is a distinct possibility.

If gas prices do climb to such lofty levels, it would definitely put a damper on the economic recovery, as consumers will likely cut down on spending if they have to pay more at the pumps to fill up their cars.

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Washington, D.C., United States (AHN) – Employers added 243,000 jobs in January, an increase over the 203,000 jobs added in December, the U.S. Department of Labor reported on Friday.

Hiring was stronger than expected and many economists were surprised.

Private sector job growth was widespread with large employment gains in professional and business services, leisure and hospitality, and manufacturing. However, government employment did not change much during January.

At the same time, the jobless rate for January fell to 8.3 percent, marking the fifth consecutive month of declines and taking unemployment to its lowest rate since February 2009.

Manufacturing added 50,000 jobs in January.

Private sector businesses have consistently added jobs since March 2010, with manufacturing creating 14 percent of the jobs in the past 13 months.

However, government has lost jobs since the middle of 2010. Another 14,000 jobs were lost in January.

Despite the job creation, only 63.7 percent of working age Americans had a job in January. That included about 8.2 million people who were involuntarily working part time in January either because their employer cut their hours or because they were unable to find a full time job.

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Washington, D.C., United States (AHN) – Effective Jan. 22, it will cost you an extra penny to mail a first class letter in the United States.

The increase, announced in October, is the first change for first class mail stamps in more than two and a half years.

Prices also rise for other mail. The cost of sending a postcard rises 3 cents to 32 cents; a 5-cent increase to 85 cents for a 1-ounce letter to Canada or Mexico, and a 7-cent increase to $1.05 for letters to other international destinations.

Prices also increase for other mailing services, including standard mail, periodicals, and package and extra services.

Not affected are the costs for express and priority mail.

The cash-strapped U.S. Postal Service has been hurt by declining volume as more people use emails, texts, faxes, online bill pay and the internet. The latest increases are aimed at helping the agency from defaulting on debt and possible bankruptcy.

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Ramallah, Palestinian Territory (IRIN) – Izz Tawil draws a black circle on the flip-chart in his office in Ramallah, capital of the West Bank in the occupied Palestinian territory (oPt).

“The Palestinian economy is a closed cash-circle,” the general manager of the Palestinian microfinance network Sharakeh explains.

He goes on to draw several small arrows on the line, meant to indicate different elements of an isolated system: At the bottom, there is the construction worker, who gets his salary from a company contracted by the Palestinian Authority (PA), while the PA itself is kept alive through foreign aid.

“And this aid is the only fuel that keeps the circle running,” Tawil says, with a serious mien.

Humanitarian aid to oPt increased dramatically from US$863 million in 2008 to $1.3 billion in 2009. After Sudan, oPt was the second largest recipient of aid in the world in 2010. Economists and businessmen warn that the PA’s dependency on aid and vulnerability to external shocks could lead the entire West Bank economy to collapse, provoking a humanitarian crisis. Among the most vulnerable are the owners of small businesses and all those who depend on foreign aid channeled through the PA.

Tawil is among a number of people in the West Bank with suggestions for a better way forward.

Coping with aid cuts

Shortly after the 2006 elections which brought militant group Hamas to power in oPt’s Gaza Strip, donors cut off more than $1 billion in aid to the PA as a means of boycotting Hamas. Since then, the West Bank economy has trembled over and over – despite a resumption of aid transfers to the PA in December 2007.

The year 2011 was an especially troublesome year for the PA’s budget, which was hit by delayed payments from Arab countries, temporary aid cuts of $200 million by the U.S. Congress, and a temporary freeze on Israel’s monthly transfer of $100 million in tax funds to the PA. Though both Israel and the US later resumed payments, Israeli officials made clear that they would freeze funds again should Fatah, the dominant political party in the West Bank, form a unity government with Hamas.

The threats raised fears of a crisis scenario similar to 2006, when the PA’s budget slid from $180 million to $55 million a month, amid running debts of $1.7 billion. The crisis left government employees, who have a relatively high spending power, without salaries. Banks imposed a more restrictive borrowing policy on businesses; and the unsafe environment made foreign investment appear risky and less attractive.

As withholding aid has become a way to punish the Palestinians for unwanted political maneuvering, the PA is now seeking more financial independence. 2013 is supposed to be the last year “in which the PA will need any external financing to help with recurrent expenditures,” Prime Minister Salam Fayyad announced in a 2011 interview with the Associated Press.

But it will not be easy, given such aid amounted to about $1.5 billion of the PA’s $3.7 billion budget in 2011. The remaining sources of income were about $105 million in monthly tax refunds from Israel, and much smaller domestic tax revenues.

The dangers of credit

At first glance, the Ramallah-centered West Bank economy seems solid. Many new neighborhoods are being built around the city and expensive cars are not uncommon. The West Bank economy grew by 7.6 percent (GDP) in 2010, according to the World Bank.

But much of what may have seemed like a boom in Ramallah is veneer.

The economy grew by only 4 percent in the first half of 2011, according to the Bank, and unemployment remained at about 16 percent. According to one employee at a Ramallah branch of the Arab Bank, everything is bought on credit – “even wedding dresses… $300 is enough for a loan of 10,000″.

With a total of $1.09 million in debts, the PA – including its public institutions and employees – is the biggest of all Palestinian debtors, representing 40 percent of what is owed to Palestinian banks, according to Shirin al-Ahmad, a division chief at the Palestinian Monetary Authority (PMA).

“A political shock like that of 2006,” al-Ahmad added, “would mean that these 40 percent become a risk factor for hundreds of thousands of Palestinians, because no money from the PA means no salaries, and no salaries means that people can’t pay back their loans, or need to take out new ones.”

Even more vulnerable than PA-employees are those with no regular income at all. Without steady work, they are not eligible for loans from any of the 18 banks that operate in the West Bank and the Gaza Strip. This is why 43,100 Palestinians need to borrow from one of Sharakeh’s 11 microfinance institutions, with a total credit portfolio of $74.6 million, of which $54.7 million can be attributed to clients in the West Bank.

Building an independent economy

“Most of our clients want to run a small business. They are the backbone of the West Bank economy,” said Tawil, the general manager of Sharakeh. “If the cash injections from foreign aid delay PA employees’ salaries, small businesses like groceries are the first that feel the results.”

Mazen Khayyat, owner of a clothing shop in the center of Ramallah, told IRIN his business was hard hit by the cuts in aid in 2006.

“My debts rose in 2006 from almost nothing to 27,000 New Israeli Shekel [NIS - $7,013]. At the end of 2011, my debts reached 39,500 NIS [$10,260]. In 2006 alone, my profit decreased by 17 percent compared to the year before. All this was because people generally look for cheaper products when the economy is weak. And because most of my clients are government employees or their families, the problem was especially severe in 2006. When their salary comes late, they buy only the most necessary.”

Tawil hopes that by lending to people with no steady income, micro-credit institutions can help build a more independent economy from the bottom up. He suggested the PA support these businesses by giving them tax exemptions. He also recommended university graduates be given more incentives to open a business.

“No one takes the risk involved in business in this unsafe environment,” he said, “because a regular income, financial safety and a loan have become core values for young people.”

His call for less aid is shared by leading Palestinian entrepreneurs, such as Bashar Masri, who is leading the construction of the new West Bank city of Rawabi for 40,000 future residents between Ramallah and Nablus.

Some foreign companies have refrained from investment in the West Bank because of the recurrent danger of violent conflict, the political unpredictability and the many restrictions on trade, mobility and access, imposed by Israel.

The World Bank has identified these restrictions as the main obstacle to private sector growth in oPt. So-called Investment Guarantee Funds had provided insurance for some investors against risks resulting from war and conflict in the past, but their reach is limited. Businessmen argue independence from aid would make the arena more attractive.

“Although cutting aid might hurt in the beginning, more businesses also bring more tax revenues for the PA,” Masri said, adding that “sometimes it has to get worse, before it can get better.”

Despite the many obstacles, some private equity funds recently started investing in the West Bank, Masri explained, adding that one of them, a British fund called Blakeney, invested around $100 million in local projects. “Foreign funds [are showing] more and more interest,” he said.

“Private sector could collapse”

Rawabi’s budget of $800 million is entirely financed by a fund from Qatar, providing independence from the PA and from foreign aid – something most private sector projects in the West Bank lack.

Take for instance the 750 local construction companies represented by the Palestinian Contractors Union (PCU).

“Many projects contracted by the PA got their money far too late and had to take out expensive loans,” PCU-chairman Adel Odah explained. “This way at least 30 companies went bankrupt in the last two years. Much profit is lost by paying interest rates to banks. If the PA goes bankrupt, the entire private sector could collapse,” he warned.

Replacing aid

The PA is well aware of the risks: “The PA is teetering at the edge of collapse at any point of time,” Prime Minister Fayyad said at the beginning of December, and began curbing its dependency on aid three years ago, according to Ghassan Khatib, a senior PA official.

Between 2008 and 2011, the PA brought down the deficit covered by donors from $1.8 billion to about 1 billion, he said, adding that this trend would continue, “hopefully until the PA needs no more aid”.

Fayyad said the PA’s operational costs should become independent of aid by 2013.

The question is how.

“On the one hand, we will replace aid by raising taxes and collecting them more effectively. On the other, we will reduce expenditures,” Khatib explained. Some saving measures, such as restricting PA employees’ use of their government sponsored cars outside working hours, have already been taken.

Khatib said the need for external support would decrease this year, but noted the PA had no control over Israel’s behavior.

“But their withholding of our tax money will not keep us from pursuing national unity with Hamas,” he added.

ah/ha/cb

– Provided by Integrated Regional Information Networks.

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New York, NY, United States (AHN) – It’s the economy that keeps Americans up at night, on edge and worried, revealed a new CNN/ORC International poll released Friday.

Some 70 percent said that things are not going well in the United States, with just three out of 10 saying things are okay, putting the state of the economy as the top worry and the most pressing issue heading into the new year.

More than half of those surveyed, or 57 percent, said the economy is the most important issue facing the country at present, and half named unemployment as the most important issue facing the economy. The deficit came in a very distant second with 16 percent.

Even as the payroll tax extension bill looms, only 7 percent of Americans named taxes as the most important economic issue in the United States.

The CNN poll of 1.085 American adults was conducted by ORC International via phone between Dec. 16 and Dec. 18.

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Berlin, Germany (AHN) – German exports fell by a larger percentage than forecast for October because of lower demand from southern European markets affected by the economic crisis.

Exports fell by 3.6 percent in October compared to September. It was larger than the 1 percent drop expected and the largest decrease seen by Germany in six months. By contrast, exports only fell by 1 percent in September compared to August.

Germany is Europe’s largest economy and it has been the economic engine for the region during the ongoing economic crisis.

In addition, German imports fell by 1 percent, which was also more than expected.

Germany saw its trade surplus fall from $23 billion to $15.5 billion, which is about 5.5 percent of the nations’ gross domestic product. Moreover, the surplus in the current account fell to $13.8 billion from $21.4 billion a month earlier.

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Chicago, IL, United States (AHN) – Lawmakers in Illinois over the weekend presented a newly tweaked tax relief measure to entice the Chicago Mercantile Exchange, Sears and other companies not to leave the state.

The bill provides $100 million worth of tax breaks to CME, which owns the federally regulated exchanges Chicago Mercantile Exchange and the Chicago Board of Trade. It also restores research and development tax credits for Sears.

In addition, the measure extends a special property tax incentive given to Sears when the company moved its headquarters to Hoffman Estates two decades ago.

The General Assembly is expected to take up the bill, which would cost $250 million a year, when it convenes on Tuesday.

Rep. John Bradley, chair of the state House Revenue and Finance Committee, filed the bill with the legislature’s clerk late Sunday. He and Rep. David Harris, ranking GOP spokesman on the finance panel, crafted the bill after the original version stalled in the Assembly in the closing fall session day on Nov. 10.

The Democrat-controlled legislature in January passed a law raising the corporate tax to 7 percent from 4.8 percent, part of efforts to close a record $11 billion budget deficit.

The law has increased CME’s taxes by $50 million so far. The company had made clear its opposition to the bill, saying it would “negatively impact jobs and stifle economic growth.” Early this month during a legislative hearing, chairman and chief executive Terry Duffy revealed that his company was seriously considering offers from other states to relocate.

Sears has also threatened to pull out of Illinois. The retail giant is facing an end to an incentive it has enjoyed since it transferred in 1992 to Hoffman Estates, a tax increment financing (TI) district.

School District 300 in Carpentersville opposes the new proposal to extend the tax break for Sears. The district does not want to continue losing tax revenues to what it calls poorly funded incentives for Sears.

If lawmakers pass the tax proposal this week, Hoffman Estates would get a $5 million administration fee, $1.7 million more revenue for the community than if the bill is not approved. Most of the surplus is from District 300 school property taxes.

The expiring tax agreement requires Hoffman Estates to pay Sears for costs of developing infrastructure in the community. An extension would also continue Hoffman Estates’ control over how to distribute left over property tax revenues, including making payments to a facility, the Sears Center Arena, that it bought in 2009.

“How can any public servant allow school property taxes to be used to make payments on a facility that hosts half-naked women for lingerie football?” District Superintendent Michael Bregy said in a statement. “If this legislation is passed, it will set a dangerous precedent for school districts all across the state who will be forced to subsidize entertainment facilities.”

Sears and CME are two of the latest companies to threaten to move out of the state. Caterpillar, the world’s largest manufacturer of construction and mining equipment, decided to remain in Illinois in April following a meeting with Gov. Pat Quinn. The following month, a $100 million incentive package from the governor convinced Motorola to stay in the state.

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Colombo, Sri Lanka (IRIN) – Cottage industries such as poultry farming, home gardening and bee-keeping are becoming increasingly popular among returnees in Sri Lanka’s former northern conflict zone as alternatives to regular jobs, officials say.

“We have seen a lot of applications for loans for poultry and home gardens,” Prem Kumar, area manager for the Bank of Ceylon, one of Sri Lanka’s two largest state-owned banks, told IRIN in northern Vavuniya District.

“When jobs become harder to find, people find it easier to start something on their own, especially so when they see there are opportunities to succeed.”

With job creation low , unemployment at about 20 percent and under-employment around 30 percent, cottage industries now play a vital role in generating income in the former war zone, say government officials.

“They have now become an important part of income-generation efforts,” Piencia Charles, the country’s top government official for Vavuniya District, explained.

High on the list is poultry farming. “The reason is because there is a ready-made market in the villages. You really don’t have to worry too much about transport,” Kanagasabapathi Udayakumar, the general manager of the Vavuniya North Multi-purpose Cooperative Society (MPC), noted.

A kilogramme of chicken sells for around Rs350 (US$3) and the MPC itself made a profit of around Rs80,000 ($730) when it recently sold a flock of 200 birds.

“This time we have around 500, targeting Christmas,” Udayakumar said.

In the village of Allankulam in Mullaitivu District, Selvakumar Arundha hopes to make a similar profit from her 100 birds. She started the farm with an initial investment of $270 pooled by six women in early 2010. Now each one earns about $2.50 per day from the farm.

“Most of us used the money we earned from taking part in cash-for-work programmes,” she said.

Another group of women has formed a similar venture involving a small vegetable plot.

“Next time, we hope to try tobacco. It will give us a better profit,” Thangarasa Sivakolandy, one of the members, said.

The International Labour Organization (ILO) is supporting 30 single female-headed households in the Vavuniya North region to set up home paddy parboiling operations by January 2012.

Under the scheme, each woman will be given a grant of Rs75,000 ($680) to buy the large pots needed for the parboiling and build a small storage area.

According to ILO officials, the women will be linked to five small mills near their villages, also supported by the organization, which will buy the paddy. A kilogramme of paddy will make them a profit of around Rs5 and the mills will buy the paddy for at least two years. ILO plans to fund 10 such mills and 60 households.

The MPC’s Udayakumar sees another advantage in popularizing parboiling and milling within the region. “We won’t fall prey to the price mafia,” he said.

During the last paddy harvest, outside buyers drove down prices because of the lack of processing facilities in the region. “Farmers could not keep the harvest so they were buying at prices sometimes 40 percent below market rates.”

Bee-keeping potential

“With over 50,000 hectares of jungle in the Vavuniya North Division, there may be potential to develop a bee-keeping and honey-producing industry,” the ILO said in a recent project update.

One person could manage 10 hives easily, which would provide an income of about Rs72,000 ($650) during the two annual harvesting seasons, Kiruja Sivasubaramanium, an ILO official working on the project, explained.

Meanwhile, Udayakumar said that once the roads connecting remote villages such as Nedunkerni became more easily accessible, the importance of cottage industries would increase even more, at least in the short term.

“Now, because of transport difficulties, it is very hard to take fresh produce like vegetables to the south. Once the road is better everyone will want to grow vegetables, which fetch higher prices than paddy,” he said.

A few months earlier, eggplant became a particularly popular commercial vegetable in Nedunkerni and Olumadu but soon almost everyone stopped growing them.

“Because buyers from outside were making a killing, buying at Rs10 per kilo here and selling at between Rs30 to 40 [elsewhere],” Udayakumar said.

According to the UN , more than 380,000 war-displaced have returned to Sri Lanka’s former conflict zone, making the re-establishment of local livelihoods a key component to recovery efforts.

ap/ds/mw

– Provided by Integrated Regional Information Networks.

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New York, NY, United States (AHN) – Investors anxious about the global fiscal crisis and afraid losing their wealth in years to come will likely fuel gold futures to further soar in the coming months.

Gold prices have risen in skyrocketing proportions in recent years and reached record highs earlier this year. Friday the spot price for gold closed at $1,743.40 per ounce.

However, according to Financial Advisor magazine, much of gold’s “golden” history was unremarkable, as it only sold for around $20 an ounce from 1800 to 1933.

Gold prices began to increase after the Bretton Woods system, which fixed the world’s currency to the gold standard, was demolished and globalization began. Prices during the Great Depression only rose to $35 per ounce and stayed there until at least 1967. In the 1970s, the era of modern finance, high inflation rates and unfamiliar open market deregulation spurred gold prices to soar.

A reverse happened during the 1980s and 1990s when gold prices fell owing to more stable global economic growth and contained inflation.

Gold prices yet again soared in the 2000s triggered by the dot-com bubble crash, the real estate bubble, and a downturn in the economy in 2008 and 2009.

“The spikes in gold prices have always coincided with increased global economic uncertainty and turmoil. Traditionally, gold has shared the position of safe haven along with the U.S. dollar, the global reserve currency. Thus, in the past, whenever global economic uncertainty increased, both gold and the U.S. dollar increased in value. But gold prices in the past did not increase as much partly because of the alternative investment in U.S. dollars,” wrote Somnath Basu, a professor of finance at California Lutheran University and director of its California Institute of Finance.

“Gold is a mirror. Its price gauges global economic fear,” added Basu. “Fear of uncertainty, fear of losses and fear of poverty. As long as this fear remains in this world, the new gold standard will continue to reflect the fear standard. The index of fear!”

With the current global fiscal meltdown, it is possible that gold futures will continue to rise.

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Sao Paulo, Brazil (AHN) – Prices of iron ore, the main ingredient for making steel, could slide to as low as $140 per tonne in the coming months.

In September, spot iron ore prices grew above $181 per tonne, but on Monday fell deeply to $157.25.

Analysts and mines experts said developments in China over its monetary policy have been affecting demand for iron ore, noting the commodity’s weakening prices could extend into the early part of this quarter.

On Monday, reports circulated that Brazil’s Vale was selling iron ore for fourth-quarter contracts cheaply to the Chinese, an indication that iron ore miners were giving in to Chinese pressure.

Reports said iron ore miners were selling to Chinese steel mills at $175 a tonne. But the Chinese were not buying because the fourth-quarter contract rate was based on June-August average spot prices. Iron ore is currently less than $160 a tonne average.

But miners said prices will likely recover coming into the new year, as Chinese steel consumption is expected to grow 7.5 per cent this year.

The world’s second-largest economy, China is also the world’s biggest buyer of iron ore. It reported last Thursday iron ore imports in September registered just over 60 million tonnes, the second highest on record.

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