'Currency wars' back on international agenda
'Currency wars' back on international agenda
The currency issue has been revived by Japan and is beginning to cause concern in some quarters in Europe.
France will raise the issue of the strengthening euro at a meeting of euro zone finance ministers on Monday. Then a meeting of G20 ministers is likely to focus on the big picture in Moscow on Friday and Saturday.
Euro zone finance ministers, meeting as the Eurogroup in Brussels today, hold their first session under their new president Jeroen Dijsselbloem of the Netherlands, against a background of calmer conditions for their debt crisis.
Dijsselbloem has taken over from Jean-Claude Juncker of Luxembourg who chaired the meetings throughout the global financial crisis and then the euro zone debt turmoil.
This meeting is not expected to take any decisions either on help to debt-stricken Cyprus in the run-up to next week's presidential election there; or on the creation of a banking union, still the subject of intense negotiations.
The main focus of discussion is likely to be the rise of the euro: French Finance Minister Pierre Moscovici called last week for a debate on the euro's exchange rate.
France is worried that the strengthening euro makes euro zone exports look more expensive and could undermine government efforts to improve the competitive position of French industry and services. The Socialist administration is already grappling with weak growth and a big trade deficit.
France wants the euro zone to arm itself with a policy for the foreign exchange rate. The external value of the euro should not be left to market forces of the moment, French President Francois Hollande has argued.
Germany and the European Central Bank however, are keen to nip the debate in the bud, arguing that the European currency is not over-valued.
The ECB has statutory independence in managing monetary policy and its main obligation is to ensure price stability.
While the exchange rate is one of many factors affecting inflationary pressures, any targeting of an exchange rate would potentially interfere with the money supply and therefore monetary policy.
ECB President Mario Draghi was nevertheless cautious on Thursday about the strength of economic recovery in the euro zone. Many analysts saw his remarks as an attempt to talk down the rise of the euro.
If so, he succeeded: The euro was being quoted at $ 1.33 at the end of the week having risen a few days earlier to the highest level for 14 months and above $ 1.37.
The subject is expected to be on the agenda at the end of the week in Moscow, where finance ministers and central bankers from the leading rich and emerging economies, the Group of Twenty (G20), meet with a Russian as president for the first time.
With the economic recovery is struggling to gain momentum globally, Russia has set as the main target in the run-up to a G20 summit in Saint Petersburg on Sept. 5 and 6, the search for new sources of growth.
Rich countries, forced to contain or reduce debt, are injecting huge amounts of money into their economies to support activity.
Leading central banks have used various levers to this end, notably the United States. The Japanese government has just convinced its central bank to go down this road in an attempt to arrest a deflationary spiral that has sapped its economy.
But this use of the monetary lever has had the effect of pushing down the yen. That may be a relief for Japanese industrialists, but it is a problem for countries such as Germany, one of the biggest exporting countries in the world.
For some analysts, the main is problem is a lack of coordinated decision-making, running against the spirit of the G20, which is intended to coordinate economic policies around the world.
The Japanese policy is also likely to worry South Korea: its currency, the won, has risen commensurately against the yen.
Tokyo's move will also be of concern to countries in South America which have frequently criticized US monetary policy for the same reason. It was Brazil that launched the latest use of the term "currency war" in 2010.
This so-called war now goes beyond the concerns of emerging economies, analysts at ING Investment Management said, commenting that in recent weeks it seems to have reached the developed world.
The ECB is reluctant to create money to support the euro zone economy, and there are concerns that the euro zone could end up being isolated and pay a price in terms of growth.
Draghi warned that if policies elsewhere in the world did not reflect the consensus view of the G20, this fact would have to be discussed. His remarks came after France had called for "serene" debate.
German Finance Minister Wolfgang Schaeuble also expressed "deep concern" about the change of direction in Japan.
And the president of the German central bank, Jens Weidmann, has said he is worried that there could now be a "race to devaluation".
Taxi drivers, Uber square up on Istanbul’s roads
- Uber has enjoyed soaring popularity in Istanbul, where users appreciate the cashless payment system, security and convenience of hailing a cab by phone
- This has stoked antagonism with official taxi drivers, who have brought legal cases in Istanbul in a bid to have the app blocked in Turkey
ISTANBUL: Istanbul’s bright yellow taxis, ubiquitous and perennially honking for custom, appear ingrained in the daily life of the Turkish metropolis.
But could the fast-growing ride sharing app Uber make them a thing of the past?
Uber has enjoyed soaring popularity in Istanbul, where users appreciate the cashless payment system, security and convenience of hailing a cab by phone.
But, as in several other European cities, this has stoked antagonism with official taxi drivers, who have brought legal cases in Istanbul in a bid to have the app blocked in Turkey.
Tensions have also spilt over into violence, with Uber drivers complaining of being verbally harassed, beaten up or even shot at.
Kemal Kuru, an Uber driver since last year, said he was cornered and beaten by a group as he set off for a concert hall in the Sisli district last month on a job.
“I went to pick up a customer around midnight but someone blocked the road and harassed me verbally,” he told AFP.
“I got out of the car and all of a sudden 10 people attacked me... My teeth were broken and my lip was split.”
Kuru said the assailants could not be immediately identified as they fled into the darkness. But he pointed the finger at taxi drivers.
“I believe our income is getting on their nerves and they think we are stealing their customers.”
In March, shots were fired at an Uber vehicle in Istanbul’s Kucukcekmece district. The driver escaped unhurt.
Uber drivers say they are easily targeted as the vans they generally drive are unusual in the city.
But representatives of official taxi companies condemn such accusations — widely publicized in the Turkish media — as a stunt to discredit their business.
Eyup Aksu, head of the main taxi drivers’ association in Istanbul, accused Uber of launching a “publicity campaign” in an attempt to influence the pending legal cases.
“Taxi drivers have never resorted to violence against Uber. This is a smear campaign to blacken the reputation of taxis,” he told AFP in his Istanbul office.
There are almost 17,400 official yellow taxis in Istanbul, providing an essential and relatively affordable service in a gigantic city where public transport often falls short.
But as new competitors like Uber have emerged, the official taxis have often failed to keep pace with changing times and society.
They have been slow to implement systems to pay by card, install panic buttons that help female passengers in particular feel more secure and are only now considering lights to indicate if the cab is occupied or free.
In a bid to trump Uber, Istanbul taxis are themselves now becoming part of a digital network called iTaksi that allows passengers to order them from their phone.
Aksu admitted some deficiencies in the taxi sector but said taxis were transforming to catch up with Uber’s standards.
“We are shifting to luxurious taxi transport. We now have VIP transport in some touristic places and airports,” he said.
Meanwhile horror taxi stories abound in Istanbul — not just from incredulous tourists but also exasperated locals — about being over-charged, driven a circuitous route to ramp up the meter or being given fake change.
In a well publicized case, an Istanbul court this month handed a taxi driver a suspended jail term for having taken a Saudi passenger on an epic city tour rather than to the airport as requested.
But Istanbul taxi drivers insist they are working hard to make an honest living from a tough business where margins were already tight and now squeezed further by Uber’s presence.
Taxi drivers rent their car from the owner of the license, whose cost of 1.5 million lira (300,000 euros, $370,000) is well beyond most drivers.
The number of license plates available for taxis has stayed stable as the city’s population boomed, driving up their price.
Taxi driver Burhan Yuksek, looking for passengers in the busy waterside Eminonu district, said his business is suffering “hugely” because of Uber.
“I work by a hotel. We used to receive 40-50 calls daily from the hotel and currently it has dropped to 15-20,” he said. “They are pirates. They are stealing our labor and bread.”
Taxi drivers feel they have political backing, with President Recep Tayyip Erdogan regularly pictured drinking tea with the taxi community.
In the bigger of two legal actions brought by taxi drivers’ associations against Uber, an Istanbul court is due to resume hearing the case on June 4.
The tension in Turkey is one of a number of headaches for Uber and its new chief executive Dara Khosrowshahi, who took over last August after founder Travis Kalanick was ousted following a series of scandals.
In London where its drivers number around 40,000, Uber lost its license over its approach to reporting serious criminal offenses and its criminal record checks for drivers.
But it is allowed to operate in the British capital pending an appeal set for later this year.
Uber also put a temporary halt to its self-driving car program in the United States after an accident involving one of its cars near Phoenix killed a pedestrian.
In service for three years in Turkey, Uber has 5,000 vehicles and 8,000 drivers in Istanbul.
Vedat Kaya, of the Tourism and Development Platform, said Uber represented a “revolt against the taxi monopoly,” adding that some 4,500 taxi drivers had already switched to work with Uber.
Former taxi driver Yavuz Sarac, who joined Uber last summer, says he did it after realizing he would not own his own business “no matter if I work for 150 years.”
“Uber has presented new opportunities. I’ve owned my business,” he said, complaining that taxi drivers were exploited by the plate owners, while the Uber license was much less costly.
“I earn a living for my family. To me, it is a kind of escape from slavery to freedom.”