Business

German firms continue investing in the Russian economy despite facing barriers from economic sanctions, according to the chairman of the German-Russian Chamber of Commerce Matthias Schepp.

“German business extremely rarely invested in such volumes into Russia since the collapse of the USSR,” Schepp said in a statement seen by Interfax.

Citing Bundesbank statistics Schepp said that “net direct investments of German companies in 2017 amounted to more than €1.6 billion, and in the first three quarters of this year exceeded €2 billion.”

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German firms were interested in opening production in Russia due to the weak ruble exchange rate, according to Schepp.

“They (foreign entrepreneurs) use the great potential of the largest country in the world with a population of over 140 million people, and they are gradually getting oriented towards export.”

He noted that the chambers business is represented in Russia by 873 firms and that makes it “by far the largest foreign business association in Russia.”

READ MORE: Berlin and Paris rebuff fresh calls for tougher sanctions on Russia – report

Schepp also said that the total number of German firms registered in Russia decreased from 4,965 to 4,661, or by more than six percent.

“The quantitative decline, which began after the Ukrainian conflict and the introduction of mutual sanctions, is compensated by qualitative growth,” he explained.

Earlier, Schepp told RT that “the foundations of German and Russian economic relations are solid even in the time of sanctions.”

Sanctions against Moscow were introduced by Brussels in 2014 over Russias alleged involvement in the conflict in eastern Ukraine. The punitive measures targeted Russias financial, energy, and defense sectors; along with some government officials, businessmen, and public figures.

The Kremlin responded by imposing an embargo on agricultural produce, food, and raw materials from countries that joined the sanctions on Russia. Since then, both sides have been extending the measures.

Germanys business lobby has criticized EU sanctions against Russia, arguing that German companies will end up the losers, since Moscow cant be fully isolated.

For more stories on economy & finance visit RT's business section

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Finance

France and Germany will Tuesday propose a new advertising tax for tech giants like Facebook and Google in another desperate attempt to reach a compromise at EU level.

The new proposal — obtained by POLITICO — effectively ends the European Commissions proposed “digital services tax” (DST), which EU finance ministers were expected to vote down Tuesday in Brussels at this months ECOFIN meeting.

The new Franco-German draft levy would target tech companies at a rate of 3 percent “on a tax base referring to advertisement,” according to the proposal, which Paris and Berlin completed late on Monday night following talks at the G20 summit in Buenos Aires over the weekend.

The document makes no reference to taxing company revenues, which was a central concern to countries like Denmark with regard to the DST.

Frances Bruno Le Maire is set to unveil the new proposal to his peers together with Germanys Olaf Scholz and urge them to agree on it by March 2019 “at the latest.”

The levy would “enter into force on January 1, 2021, if no international solution has been agreed upon,” the proposal said. It would then “expire by 2025.”

EU tax initiatives require unanimity before they can become law, and its unclear whether the new proposal will satisfy Denmark, Finland, Ireland and Sweden, which rejected the DST for “political reasons.”

“We know some member states have reservations, these have been made clear in recent months,” an official said. “But we believe it is essential to find an agreement that is both fair and effective and responds to citizens concerns.”

Read this next: EU top judge: UK can unilaterally withdraw Article 50

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Finance

If Brexit doesnt capsize the British economy, itll be in no small part thanks to Mark Carney. The governor of the Bank of England has been one of the loudest voices warning about the dangers of the United Kingdom crashing out of the European Union without an agreement. Although he so far has shied away from any solid forecasts about the impact of a no-deal Brexit, he warned it is “quite an extreme” and “highly undesirable” scenario that would result in a hike in inflation worse than that caused by the post-referendum dive in sterling, thanks to the added impact of higher trading barriers and possible supply disruptions. All that would translate into a squeeze on real household incomes. “Parties should do all things to avoid it,” Carney said last summer.

Warnings like these have put the 53-year-old Canadian economist on the political front line — his assessments dismissed by his critics as scaremongering. The Tory Brexiteer Jacob Rees-Mogg has called Carney “the enemy of Brexit” and “the high priest of Project Fear.” The Bank of England was lambasted after the Brexit vote for gloomy forecasts predicting a recession that never happened. But Carneys defenders point out that it is likely the Bank of Englands forceful intervention into the economy that prevented the banks predictions from materializing.

Once the U.K. leaves, it will be again up to the Bank of England to smooth the journey to any sunny uplands of Brexit. Even if the U.K. benefits from the freedom to make new trade deals, there will inevitably be a period of adjustment as the economy reorients itself, which Carney has highlighted as a big job ahead. At the request of the government, he has extended his term to January 2020, having previously announced hed step down in June.

Bank of England Governor Mark Carney during a press conference in the City of London | Victoria Jones/AFP via Getty Images

And if the U.K. does leave the EU without a deal, it will be up to Carney to guide the economy through the choppy waters. In preparation for such a scenario, Carney has worked with European officials to make sure financial firms dont face a cliff edge and that contracts can continue to be serviced. He also required British banks to run stress tests to ensure theyre prepared for “severe, but plausible” financial turbulence. “The financial system will be ready for that undesirable and still unlikely possibility,” Carney said last summer.

Check out the full POLITICO 28 Class of 2019, and read the Letter from the Editors for an explanation of the thinking behind the ranking.

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Middle East

“The United States commends participants from the Yemen consultations in Sweden for making progress on key initiatives, including a cease-fire and withdrawal of forces in Hodeidah, prisoner exchanges, and opening humanitarian corridors to the city of Taiz,” according to a press statement on Thursday by Michael R. Pompeo, US Secretary of State.

“Although many details remain subject to further discussion, these consultations between the Republic of Yemen Government and the Houthis marked a pivotal first step,” it said.

SEE ALSO: How Sweden deal on Yemen will be implemented: Commitments and timeframe

“All parties have an opportunity to build upon this momentum and improve the lives of all Yemenis,” it commented.

Way forward

“Moving forward, all must continue to engage, de-escalate tensions, and cease ongoing hostilities. This is the best way to give these and future consultations a chance to succeed.

“The United States thanks UN Special Envoy Martin Griffiths for his leadership on these efforts, continued optimism, and ability to inspire reconciliation. We also thank the Government of Sweden for hosting, as well as the governments of Kuwait, Oman, Saudi Arabia, the United Arab Emirates, and the many others that helped facilitate and support the consultations.

“The work ahead will not be easy, but we have seen what many considered improbable begin to take shape. Peace is possible. The end of these consultations can be the beginning of a new chapter for Yemen.”

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Last Update: Friday, 14 December 2018 KSA 01:37 – GMT 22:37

Middle East

Author: ARAB NEWSID: 1544647592171245700Wed, 2018-12-12 23:46

JEDDAH: Saudi novelist Umaima Al-Khamis has received the Naguib Mahfouz Medal for Literature 2018 for her latest novel “Masra Al-Gharaniq fi Mudub Al-Aqiq” (Voyage of the Cranes in the Cities of Agate).
The American University in Cairo Press (AUC) made the announcement on Wednesday. The awards are announced annually on the birth anniversary of the Egyptian Nobel laureate. Al-Khamis, born in 1966 in Riyadh, studied Arabic literature at the King Saud University and was listed for the Arabic Booker Prize in 2010.
In her acceptance speech, Al-Khamis paid tribute to Naguib Mahfouz and described him as a great writer who taught the “magic and craft of” storytelling.

Main category: Saudi ArabiaArt & CultureTags: Naguib Mahfouz Medal for Literature 2018Saudi ArabiaEgypt Do not worry about being happy: Saudi novelistSaudi novelist long-listed for prestigious literary prize

Europe

(CNN) — Budapest is fast becoming one of Europe's leading travel destinations, especially in winter when Hungary's capital city truly comes to life.

Offering a cozy winter atmosphere with romantic architectural creations, Budapest delivers a scene reminiscent of a classic Christmas movie.

Rich in culture and steeped in tradition, winter here not only feels like a fairytale, it looks like one, too.

An array of seasonal delights draw visitors from around the world to the "Pearl of the Danube," all chasing that magical travel experience.

Its Christmas markets and outdoor ice skating rinks help to create a perfect winter wonderland, while the local spas and thermal baths offer a twist on outdoor bathing.

But the pièce de résistance of the winter season has to be securing tickets for the latest performance at the renowned Hungarian State Opera House.

Here are 10 top things to do in Budapest during the winter:

1. Christmas markets

The Christmas market on St. Stephen's Square has the St. Stephen's Basilica as its backdop.

Courtesy Hungarian National Tourist Office

Central European Christmas markets are what dreams are made of, but Budapest's offerings are a cut above the rest. Mulled wine, Christmas strudel, traditional dishes and arts and crafts line the stalls at both the Vörösmarty Square and St. Stephen's Basilica Christmas markets.

Europe

(CNN) — Budapest is fast becoming one of Europe's leading travel destinations, especially in winter when Hungary's capital city truly comes to life.

Offering a cozy winter atmosphere with romantic architectural creations, Budapest delivers a scene reminiscent of a classic Christmas movie.

Rich in culture and steeped in tradition, winter here not only feels like a fairytale, it looks like one, too.

An array of seasonal delights draw visitors from around the world to the "Pearl of the Danube," all chasing that magical travel experience.

Its Christmas markets and outdoor ice skating rinks help to create a perfect winter wonderland, while the local spas and thermal baths offer a twist on outdoor bathing.

But the pièce de résistance of the winter season has to be securing tickets for the latest performance at the renowned Hungarian State Opera House.

Here are 10 top things to do in Budapest during the winter:

1. Christmas markets

The Christmas market on St. Stephen's Square has the St. Stephen's Basilica as its backdop.

Courtesy Hungarian National Tourist Office

Central European Christmas markets are what dreams are made of, but Budapest's offerings are a cut above the rest. Mulled wine, Christmas strudel, traditional dishes and arts and crafts line the stalls at both the Vörösmarty Square and St. Stephen's Basilica Christmas markets.

Finance

PARIS — Santa Claus came early for millions of French people on Monday.

But President Emmanuel Macrons efforts to buy off a nationwide protest movement with handouts for low-paid workers and retirees is likely to come at a cost — inflating the budget deficit, pushing the national debt over 100 percent of gross domestic product and reneging on EU commitments to fiscal discipline.

After a month of a sometimes violent revolt by Yellow Jacket protesters against fuel tax hikes and the cost of living, Macron announced an immediate €100 a month increase in the minimum wage without extra cost to employers, the removal of social charges and income tax on overtime payments, and the scrapping of a tax rise on poorer pensioners.

The young president admitted in a televised address to the nation that he had underestimated public anger, failed to grasp the distress of families and the elderly struggling to make ends meet, and offended people with arrogant or offhand remarks.

“I accept my share of responsibility. I may have given you the feeling that I didnt care, that I had other priorities,” a chastened Macron told prime-time viewers.

The political cost to Macrons authority and European standing are already high | Jeff J Mitchell/Getty Images

He gave no clue as to how he would finance the concessions, which together with last weeks scrapping of contentious planned tax hikes on gasoline and diesel could lead to at least €10 billion in lost revenue and an extra cost to the 2019 budget — roughly 0.5 percent of GDP.

The president refused to go back on his unpopular 2017 decision to scrap a wealth tax on the rich, which yielded €4 billion but was hated by investors who cited it as a barrier to creating jobs. But he said he would meet investors and business leaders in the coming days to see how they could contribute more to the economy.

Activists from the leaderless Yellow Jackets movement, which has spread like wildfire via social media, acknowledged first steps had been taken to meet their demands but many said Macrons response was inadequate and vowed to keep up their roadblocks.

However, the government is hoping a combination of targeted measures, protest fatigue, revulsion at violence and looting, and the onset of the Christmas holidays will snuff out the protests before the end of the month.

Italys populist leaders, who have openly defied Brussels with a rule-busting increased budget deficit for 2019, must be laughing.

The political cost to Macrons authority and European standing are already high.

The pro-European president pledged when he was elected in May 2017 to finally respect Frances EU commitments on budget discipline, saying this was vital both to restoring public finances and to rebuilding trust, notably in key partner Germany.

But while increased growth and tax measures brought the deficit below the EUs 3 percent ceiling last year for the first time in almost a decade, the centrist government has so far failed to cut public spending, which at 57 percent of GDP is among the highest in Europe.

The European Commission has already voiced concern about the feasibility of Paris plans to shave the deficit to 2.8 percent of GDP next year. That modest reduction now looks unattainable, not only because of Macrons latest giveaways but also because the economic disruption of a month of protests is set to reduce growth this year and make next years 1.7 percent growth target, on which the budget is based, hard to achieve.

Italys populist leaders, who have openly defied Brussels with a rule-busting increased budget deficit for 2019, must be laughing.

Yellow Jacket protestors take notes as they watch French President Emmanuel Macrons speech on December 10 | Guillaume Souvant/AFP via Getty Images

Although Rome, which is facing an EU excessive debt procedure, is a separate case and of greater concern to financial markets, Commission Vice President Valdis Dombrovskis said the Commission was watching Frances situation closely.

The Bank of France halved its growth forecast for the final quarter of 2018 on Monday to 0.2 percent from 0.4 percent. Retailers said supermarket sales were 15 percent to 20 percent below normal for the fourth straight Saturday due to the blockades and fears of violence.

While the president did not say how he planned to achieve the promised €100 increase in the minimum wage, which affects 1.6 million people directly and 11 million through knock-on effects, an increase in a state-funded income supplement known as the “activity premium” seems the most likely way to avoid extra cost for employers.

French presidents for the last 25 years have been forced to retreat from economic and education reforms by street protests. Macrons predecessors Jacques Chirac, Nicolas Sarkozy and François Hollande retreated into immobility after bruising outbursts of public anger.

Despite his determination to be different, and his youthful energy, Macron started down the same road on Monday. Whether he can restore his authority and revive his reform agenda looks far from certain.

Paul Taylor, contributing editor at POLITICO, writes the Europe At Large column.

Read this next: Trumps man in Brussels slams out of touch EU

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Finance

President Donald Trumps economic officials are reassuring investors about recent white-knuckle stock market volatility, while Trumps political advisers are increasingly alarmed that the economy could present a stiff 2020 campaign headwind.

Many of Trumps political allies acknowledge that his reelection prospects hinge in large part on how Americans judge their economic prospects at the time of the next election. But many independent analysts say that recent market turbulence is a warning sign that the U.S. economy will likely slow and maybe even tip into recession by 2020.

At the moment, that scenario could be the biggest threat to Trumps chances at winning a second term, according to interviews with eight current and former senior administration officials and close White House advisers.

The president knows this better than anyone, since he is highly attuned to fluctuations in the stock market and views it as a form of polling. At times, Trump has bragged about the markets performance on a near daily basis. A real estate mogul who has borrowed heavily, Trump is equally obsessed with interest rates, and has closely monitored the runup to a mid-December Federal Reserve meeting in which central bankers are expected to raise rates. Political advisers have urged Trump to build his economic message around more stable data points than the daily volatility of the stock market, such as the low unemployment rate.

“I am amazed at this mini-wave of recessionary pessimism that has swept the media” — Larry Kudlow, National Economic Council Director

Speaking publicly, Trump allies dismiss the worries of economic forecasters who call events like Tuesdays 700-point drop in the Dow Jones average — followed by another temporary dive on Thursday after markets were closed Wednesday — a sign of things to come.

“Any time you see the stock market fall by 1,400 points in two days, there is lots of nervousness,” said Stephen Moore, a distinguished visiting fellow at the Heritage Foundation and informal economic adviser to the 2016 Trump campaign. “But the economy is fundamentally strong in terms of construction, manufacturing, and corporate earnings. I dont think they are worried about a recession.”

“I am amazed at this mini-wave of recessionary pessimism that has swept the media,” National Economic Council Director Larry Kudlow said at a recent Wall Street Journal event. “The evidence is quite different than these speculations. We are humming.”

But many economic analysts also predict the recent economic boom will soon fizzle, with growth plunging below two percent by 2020, according to an analysis by S & P chief U.S. economist Beth Ann Bovino. Currently, the economy is growing at a rate of 3.5 percent. That squares with cyclical trends suggesting the U.S. is due for an economic downturn soon.

Compounding the worry is Trumps trade showdown with China, which poses a risk to the global economy. Over dinner at last weekends G-20 summit, Trump and Chinese President Xi Jinping agreed to pause their escalating trade fight for 90 days as they search for a long-term agreement. But since then, Trump has shaken markets with bellicose trade talk.

That means stress for Trump aides and allies planning a 2020 message they hope to build, in part, around economic growth and greater prosperity for Americans. Former presidents Ronald Reagan, Bill Clinton and, to a lesser degree, Barack Obama all vaulted to reelection with the help of a growing economy. The last one-term president, the late George H.W. Bush, is widely considered to have been doomed by a recession which struck midway through his tenure.

U.S. President Donald Trump (right) and Chinas President Xi Jinping (left), along with members of their delegations, hold a dinner meeting at the G20 Leaders Summit in Buenos Aires on December 1, 2018 | Saul Loeb/AFP via Getty Images

While top officials like Treasury Secretary Steven Mnuchin argue that gross domestic product and inflation are the most important metrics to track, and that those figures remain healthy, other advisers say voters are focused on more tangible indicators, including wages, unemployment, and the housing and stock markets.

“They know it could be a very dangerous situation if the market volatility is hurting workers in key battleground states through their pensions, investments, you name it,” said one Republican close to the White House. “The concern is probably at a DEFCON 3 at this point, but it will definitely spike in 2019 if theres no real solution [to the trade dispute with China] during this 90-day period.”

Part of the problem for a president obsessed with the stock market is that no one can pinpoint what exactly is causing the drops — uncertainty about trade deals, fear about rising debt, or slowing economic growth.

President Trump himself appears to be prepping for a slowdown by identifying scapegoats. Chief among them, for the moment, is Federal Reserve Chairman Jay Powell. Just last week, Trump blamed the independent Fed for the drop in the stock market as well as a recent plant-closing announcement by General Motors. Speaking to the Washington Post, Trump said he was “not even a little bit happy” with Powell, whom he nominated to run the Fed.

Trump “is more strategic about setting up the assignment of blame than people give him credit for,” said a second Republican close to the White House when asked about the attacks on Powell.

U.S. Treasury Secretary Steve Mnuchin | Mandel Ngan/AFP via Getty Images

Other advisers expect Trump to continue blaming Democrats for recent market weakness, as he and his aides did in the runup to last months midterm elections. One likely target is the presumed incoming House speaker, Nancy Pelosi, who is far better known than Powell to Americans beyond Washington.

Added to the scapegoat list will be any departing Cabinet or top White House officials, said a Republican close to the White House.

“Hes going to blame Wilbur Ross for some of these problems once Ross leaves,” said the Republican. “And if any of his advisers walk, hell blame them too.”

Some officials are desperately hoping for a trade deal with China so that tariffs do not loom over consumers and companies just as the Fed begins raises rates, as expected, and as economic growth begins to slow. But there are no guarantees that China hawks within the administration — who scoff at Wall Streets market-driven concerns about a trade fight — wont carry the day.

Officials are heartened, however, by the thought that a real estate developer-turned-politician like Trump takes the state of the economy personally.

“Its not just a talking point for reelection but one about his legacy,” said one former senior administration official. “The president wants to be able to say, “I handled the economy better than Obama.”

Gabby Orr contributed reporting.

Read this next: Brussels tells social media giants to delete Russian trolls

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