Canada PM: Fear holding back global recovery
Canada PM: Fear holding back global recovery
"We can't get over the overhang" of the financial crisis that followed the collapse of US investment powerhouse house Lehman Brothers, the Canadian leader said in a speech inaugurating the Indian World Economic Forum in New Delhi.
Businesses worldwide are refraining from investing because they fear a "catastrophic event" that will "send everything into a tailspin", said Stephen Harper, adding that this "continues to restrain the global recovery".
He called such fears overblown and urged financial decision-makers to display more confidence in making investments and help repair the global economy.
"Don't worry about today's uncertainty — look at the opportunities over the medium term," said Harper, noting this was the strategy being pursued by Canada whose growth is the best among leading industrialized nations.
There are signs of rising global trade protectionism like that which hampered recovery from the Great Depression in the 1930s and which could still push the world into a prolonged recession, Harper conceded.
"But it (protectionism) is not an avalanche -- it is not yet something to panic about," Harper told business leaders who are discussing ways to boost India's faltering economic growth.
"Most leaders get it on the big picture" that protectionism will harm rather than help their economies, he said.
He added that a comprehensive deal in the Doha round of world trade talks is out of reach for now and Canada instead is negotiating multilateral and bilateral trade deals with countries such as India.
Canada expects to conclude a free trade pact with India next year.
Harper's speech came a day after the countries clinched an agreement opening the door to Canadian exports of nuclear supplies to the energy-hungry South Asian nation.
The pact ends almost four decades of awkward relations after India used Canadian nuclear technology to stage its first atomic test, and will allow Canadian uranium to be used to power Indian reactors.
Canada is aware it can no longer rely solely on traditional big commercial partners as the United States to be markets for its exports, Harper said.
"Our foreign investment negotiations have come much of the way but we have to be serious about getting them across the finish line," he said. He compared the countries to lovers depicted in India's Bollywood movies who must overcome obstacles to get together.
"There is a kind of parallel to Canada and India and the typical Bollywood plot," he said. "We have to work determinedly to get to the happy ending we want."
Iran sanctions shadow falls on smaller German banks
- Some German companies plan to press on with Iran dealings
- German exports to Iran rose 15.5 percent last year
Germany’s biggest lenders have shied away from business with Iran after past penalties for breaching US sanctions, but smaller banks have leapt on opportunities afforded by the nuclear deal rejected by Donald Trump.
There are just months to go until a November deadline issued by Washington after the US president abandoned a hard-fought agreement that loosened business restrictions on the Islamic Republic in exchange for Tehran giving up its pursuit of nuclear weapons.
But some firms plan to press on in their dealings with Iran despite the looming threat of penalties.
“We will continue to serve our clients,” for now, said Patrizia Melfi, a director at the “international competence center” (KCI) founded by six cooperative savings banks in the small town of Tuttlingen in southwest Germany.
The center, which supports companies operating in sensitive markets like Iran or Sudan, has seen demand “rising sharply in the last few years, from firms listed on the Dax (Germany’s index of blue-chip firms), from all over Germany and from Switzerland,” she added.
German exports to Iran have grown since the nuclear deal was signed in 2015, adding 15.5 percent last year to reach almost €2.6 billion ($3.0 billion) after 22-percent growth in 2016.
Such figures remain vanishingly small compared with Germany’s €111.5 billion in exports to the US — its top customer.
Nevertheless, the KCI will “wait and see what the sanctions look like” before turning away from Iran, Melfi said.
Already, firms dealing with Tehran must take great care not to fall foul of US restrictions.
Transactions are carried out in euros, and the KCI does not deal with businesses that have American citizens or green card resident holders on their boards.
What’s more, products sold to Iran cannot contain more than 10 percent of parts manufactured in the US.
One of the most important inputs for the business is “courage among our managers” given the high risks involved, Melfi said.
Germany’s two biggest banks, Deutsche Bank and Commerzbank, avoid Iran completely after being slapped with harsh fines in 2015 over their dealings there, with Deutsche alone paying $258 million in penalties.
DZ Bank, which operates as a central bank for more than 1,000 local co-op lenders, is withdrawing completely from payment services there, a spokesman told AFP.
That left KCI to seek out the German branch of Iranian state-owned bank Melli in Hamburg.
Even that linkage could break if Iran’s biggest business bank appears on a US list of barred businesses as it has before.
Meanwhile, among Germany’s roughly 390 Sparkasse savings banks, business with the regime is mostly limited to producing documents linked to export contracts.
“We will be looking even more closely at those” in the future, a person familiar with the trade told AFP.
Elsewhere in the German economy, the European-Iranian Trade Bank (EIH) founded in 1971 is another conduit to Tehran.
Also based in Hamburg, it for now remains “fully available to you with our products and services,” the bank assures clients on its website, although “business policy decisions by European banks may result in short term or medium term restrictions on payments.”
Neither does the Bundesbank (German central bank) believe that much has so far changed for business with Iran.
“Only the European Union’s sanctions regime will be decisive,” if and when it is changed, the institution told AFP.
Any payment involving an Iranian party would have to be approved by the Bundesbank if things return to their pre-January 2016 state.
German banking lobby group Kreditwirtschaft has called on Berlin and other EU nations to clarify their stance — and to make sure banks and their clients are “effectively protected against possible American sanctions.”
KCI’s Melfi said time is running out for EU governments to act.
“Many firms just want to stop anything with Iran, since they can’t calculate the risk of staying,” she noted.
On Friday for the first time since the Iran nuclear deal came into force in 2015, China, Russia, France, Britain and Germany gathered in Vienna — at Iran’s request — without the US, to discuss how to save the agreement.