Jobless claims above key 400,000 mark for second consecutive week
Washington, DC, United States (AHN) – Initial jobless claims rose to 429,000 during the week ending April 23, a 25,000 increase from the previous week and the highest rate in three months.
It also marked the second week in a row that first-time unemployment claims were above the 400,000 mark after dipping below that mark for a time and raising hopes the nation was entering a labor sector recovery to match the ongoing economic recovery in the financial services sector.
In more bad news, the less volatile four-week moving average also rose above the key 400,000 mark to 408,500. That was an increase of 9,250 from the previous week’s revised average of 399,250 initial claims, the Department of Labor said.
States with the largest increases in the number of first-time jobless claims for April 16, the latest week for which such data is available, were Florida (+2,753), New Mexico (+680), New Jersey (+490) and Colorado (+481).
The number of people claiming benefits in all unemployment compensation programs for the latest week such data is available was 8,187,232 for the week ending April 9, which marked a decrease of 112,578 from the previous week.
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FDA to regulate E-Cigarettes
Washington, DC, United States (AHN) – The U.S. Food & Drug Administration announced that it will begin regulating e-cigarattes in the same manner it does other tobacco product and not as a drug delivery service. The smokeless smokes have grown in popularity in recent years and had faced scrutiny for not being regulated.
Essentially the agency intends to propose rule changes to treat e-cigarettes the same traditional cigarettes.
In a letter to stakeholders, Dr. Lawrence Deyton, director of the FDA’s Center for Tobacco Products (CTP) CTP, said his organization would not be appealing the recent decision by the U.S. Court of Appeals for the D.C. Circuit in Sottera Inc. v. Food & Drug Administration.
“The court held that e-cigarettes and other products made or derived from tobacco can be regulated as ‘tobacco products’ under the [Family Smoking Prevention & Tobacco Control Act of 2009] and are not drugs/devices unless they are marketed for therapeutic purposes.”
If they were not regulated then they would be a drug-delivery device. However that could potentially change, the FDA says, if the e-cigarettes are “marketed for therapeutic purposes”—ie, smoking cessation.
E-cigarettes are plastic and metal devices that heat a liquid nicotine solution and produce vapor instead of smoke.
According to both users and distributors e-cigarettes address both nicotine addiction and the behavioral aspects of smoking without the chemicals found in cigarettes.
Business who sell the products are overwhelmingly pleased with the news. President of Blu Cigs’ Jason Healy said the FDA rules will aid in “weeding out the shady companies.” Currently, says Healy, “you can potentially sell snake oil.” No timeline for the rules has been set.
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Halliburton shareholders seek class action lawsuit for stock price losses
Washington, DC, United States (AHN) – The Supreme Court is set to hear arguments Monday in a case that could make it easier for corporations to get rid of lawsuits by shareholders angered when their stocks lose money.
The business community is intensely interested in the outcome, as evidenced by a large number of amicus, or friend-of-the-court, briefs filed in the case of Erica P. John Fund Inc. v. Halliburton Co.
It involves a lawsuit by shareholders of construction giant Halliburton. They accuse the company of securities fraud by misrepresenting its assets and liabilities in financial statements.
When the truth was disclosed later, Halliburton’s stock value dropped, making shareholders lose investment value.
Afterward, the shareholders got together to ask a federal court in the Northern District of Texas for class action status to sue Halliburton. Class action refers to a single lawsuit that represents the interests of many people.
They say Halliburton violated the Securities Exchange Act of 1934 and Securities Exchange Commission Rule 10-b5.
The shareholders reasoned it would be easier for them to prove they suffered damages in a joint lawsuit than as individuals.
The proof of damages has become the key issue in the lawsuit before the Supreme Court.
The Court must decide whether shareholders must prove misguided actions of the corporate directors caused their losses before they can sue in a class action.
Under current law, a jury decides at trial whether corporate bungling made shareholders lose money.
If the Supreme Court rules damages must be proved before shareholders get authorization for a class action, the number of lawsuits proceeding to trial is likely to plummet, according to securities lawyers.
Legal experts say fewer shareholders would try to sue if they know their chances of reaching trial are small.
Halliburton comes to the Supreme Court with a history of recent controversy.
Oil giant BP accuses Halliburton of shoddy work in construction of the Deepwater Horizon oil rig that exploded in the Gulf of Mexico last year, leaking millions of barrels of oil into the water.
Former Vice President Dick Cheney was the company’s president until 2000.
Suspicions followed him into the White House about whether he used his political influence to improperly steer defense contracts to the company. Halliburton has played a big support role for troops in Iraq and Afghanistan.
Shareholders are alleging similar behind-the-scenes moves in the financial statements that led to their lawsuit.
They say the company’s directors downplayed their liability for asbestos claims. They also say the directors misrepresented Halliburton’s likelihood of collecting revenue from construction contracts and exaggerated the benefits from a merger with Dresser Industries.
Later audits revealed what the shareholders say were misrepresentations. Wall Street responded immediately with a sharp drop in the company’s stock value.
Halliburton argues in its Supreme Court briefs there is no benefit to leaving decisions on evidence for a class action lawsuit to a jury.
Instead, a judge should resolve any class action authorization issues before trial, thereby eliminating costly, drawn-out and often frivolous lawsuits, Halliburton says.
The company’s brief also argued shareholders should not be granted a class action lawsuit because the evidence was too weak they lost money from the company’s incorrect financial statements, thereby “sever[ing] the link between Halliburton’s alleged misrepresentations and that market price.”
So far, Halliburton has won at the lower court level.
The Fifth Circuit U.S. Court of Appeals ruled that before the shareholders can sue for securities fraud, they must prove a stock price decline “resulted directly because of the correction to a prior misleading statement.”
The Erica P. John Fund has not proved Halliburton’s “misleading” statements made shareholders lose money, the court said.
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Disney Princess Plastic Trikes Recalled by Kiddieland Due to Laceration Hazard
Washington, DC, United States (AHN) – The U.S. Consumer Product Safety Commission and Health Canada, in cooperation with the firm named below, today announced a voluntary recall of the following consumer product. Consumers should stop using recalled products immediately unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.
Name of Product: Disney Princess Plastic Racing Trikes
Units: About 9,000 in the U.S. and 700 in Canada
Manufacturer: Kiddieland Toys Limited, of Scituate, Mass.
Hazard: The plastic castle display and the princess figures protruding from the top of the handle bar pose a laceration hazard if a child falls on it.
Incidents/Injuries: CPSC and Kiddieland have received three reports of children suffering facial lacerations.
Description: This recall involves the Disney Princess Plastic Racing Trikes. The trikes are pink and fuchsia with a purple seat and wheels. On top of the handlebar, there is a rotating castle display surrounded by three princess figures. “Disney Princess” is printed on the label in front of the trike just below the handlebar.
Sold at: Target, JCPenney, Meijer and H.E.B. stores nationwide and on the Web at www.target.com from January 2009 through April 2011 for about $50.
Manufactured in: China
Remedy: Consumers should immediately take the trikes away from children and contact Kiddieland for a free replacement handlebar with an enclosed rotating display.
Consumer Contact: For additional information, contact Kiddieland at (800) 430-5307 anytime, or visit the firm’s website at www.kiddieland.com.hk
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Palestinian Authority threatens international mail stoppage
Jerusalem, Israel David E. Miller – The Palestinian Authority (PA) will stop sending and receiving international mail beginning next month, a Palestinian minister has warned. He said that Israel was not respecting a 2008 joint declaration allowing direct postal exchange between the PA and the outside world.
Speaking to journalists in Ramallah on Tuesday, Communications Minister Mashhour Abu-Daqqa charged that Israel was deliberately disrupting Palestinian mail services, causing Palestinian postal services to incur losses of over $200,000 a month. In an interview with Palestinian daily Al-Hayat Al-Jadidah, Abu-Daqqa added that Israel’s failure to comply with tax deduction and clearing mechanisms has shaken the confidence of Palestinians in their postal services.
All mail to and from the Palestinian Authority currently passes through Israel, but in 2008 the PA demanded that Jordan receive its mail, not Israel. Mahmoud Diwan, director general of the Palestinian Communications Ministry, said that Israeli security checks made sending and receiving mail from abroad virtually impossible.
“We have no daily contact with the Israeli side,” Diwan told The Media Line. “We send a taxi at our expense to Jerusalem to pick up mail sacks, but we have no idea what we will receive. The mail arrives in Ramallah with no attached documents or certificates.”
Diwan said that Israeli and Palestinian postal authorities signed an agreement in Geneva in 2008 enabling direct mail exchange for the PA through Jordan but Israel refuses to implement the agreement. As a result, Israel collects the fees for mail sent from third countries, but the PA continues to bear the expenses for mail distribution.
“We feel like a burden on the Palestinian coffers,” Diwan said. “We have no resources to pay the taxi that collects our mail. Why should Israel keep the money if it is we who distribute the mail?”
According to the Protocol Concerning Civil Affairs of the Israeli-Palestinian Interim Agreement signed in Washington in 1995, both sides must ensure “the efficient transmission and delivery of postal items arriving from, or destined for foreign countries.” The Palestinian Authority has been issuing postage stamps since its creation in 1994.
But Diwan said that Israeli security checks affected the timely delivery of Palestinian mail to and from the Palestinian territories.
“We have nothing against security checks,” he said. “We suggested picking up the mail at the border crossing with Jordan, transferring it to the Israelis for a security check and picking it up, but they refused. They insist on complete freedom to check the mail as they wish, with no time constraints.”
He added that parcels often reach Palestinian clients open or torn. In other cases, citizens are requested to pick up their parcels in Jerusalem, which they have no way of physically reaching.
“When a citizen receives an empty parcel he blames Palestinian Mail, even though we have no control over it in the first place.”
Rhéal LeBlanc, communication program manager for the Universal Postal Union, a Swiss-based coordination body, said that a joint Israel-Palestine technical committee was dealing with the operational issues of mail distribution, and that the matter will be discussed during the upcoming session of the Postal Operations Council, which starts next week in Berne, Switzerland.
“Our Director General strongly encourages meetings between the Israeli and Palestinian postal authorities,” LeBlanc told The Media Line.
But Diwan said that a meeting between the sides last week in Tel Aviv led to nothing, leaving Minister Abu-Daqqa no choice but to announce the unilateral Palestinian step Tuesday.
“Last November we opened a post office in Nablus, attended by the American Consul General in Jerusalem,” Diwan said. “He sent a package to his family in the United States for Christmas, but I told him I was not responsible for its time of arrival.”
“As of last month, the package has still not arrived,” Diwan said.
Yehiel Shavi, a spokesman for the Israeli Ministry of Communications, said he was looking into the matter but was unable to comment due to the Passover holiday.
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Document: Obama’s Proposal On Deficit Reduction – Health Care Section
Washington, D.C., United States (KaiserHealth) – President Barack Obama on Wednesday shared his plans to cut the deficit by $4 trillion in 12 years, which, according to a fact sheet distributed by the White House, includes saving $480 billion in health care costs by 2023. Obama proposes holding Medicare cost growth down by strengthening the Independent Payment Advisory Board and making Medicaid more flexible without using block grants.
Here’s a look at the health care section of the fact sheet, as released by the White House:
DETAILS OF THE PRESIDENT’S FRAMEWORK FOR SHARED PROSPERITY AND SHARED FISCAL RESPONSIBILITY
4. Health Care
Medicare and Medicaid Savings of $480 Billion by 2023 and At Least an Additional $1 Trillion over the Subsequent Decade, Providing Better Care at Lower Costs:
Building on the Affordable Care Act, the President is proposing additional reforms to Medicare and Medicaid designed to strengthen these critical programs by reducing waste, increasing accountability, promoting efficiency, and improving the quality of care, without shifting the cost of care to our seniors or people with disabilities.
The framework will save $340 billion over ten years and $480 billion by 2023 (including the proposals already included in the President’s Budget). This framework includes the same aggregate savings that House Budget Committee Chairman Paul Ryan proposed in his November 2010 plan with Alice Rivlin and an amount sufficient to fully pay to reform the Medicare Sustainable Growth Rate (SGR) physician payment formula while still reducing the deficit.
Over the subsequent decade, the President’s proposal will save well over $1 trillion by further bending the cost curve, doubling the savings from the Affordable Care Act.
The President’s framework offers a stark contrast with the House Republican plan that would increase seniors’ health costs by $6,400 annually starting in 2022, raise health insurance premiums for middle-class Americans and small businesses, cut Federal Medicaid spending by one-third by the end of the decade, and increase the number of uninsured by 50 million.
The President’s framework proposes specific reforms to strengthen Medicare and Medicaid over the long term, including:
Addressing the long-term drivers of Medicare cost growth: The President’s framework would strengthen the Independent Payment Advisory Board (IPAB) created by the Affordable Care Act. The IPAB has been highlighted by economists and health policy experts as a critical contributor to Medicare’s solvency and sound operations. Under the Affordable Care Act, IPAB analyzes the drivers of excessive and unnecessary Medicare cost growth. When Medicare growth per beneficiary exceeds growth in nominal GDP per capita plus 1 percent, IPAB recommends to Congress policies to reduce the rate of growth to meet that target, while not harming beneficiaries’ access to needed services. Congress must consider IPAB’s recommendations or, if it disagrees, enact policies that achieve equivalent savings. If neither acts, then the Secretary of Health and Human Services would have to develop and implement a proposal to achieve the savings target.
The President’s framework will strengthen IPAB to act as a backstop to the other Medicare reforms by ensuring that Medicare spending growth does not outpace our ability to pay for it over the long run, while improving the program and keeping Medicare beneficiaries’ premium growth under control. Specifically, it would:
Set a new target of Medicare growth per beneficiary growing with GDP per capita plus 0.5 percent. This is consistent both with the reductions in projected Medicare spending since the Affordable Care Act was passed and the additional reforms the President is proposing.
Give IPAB additional tools to improve the quality of care while reducing costs, including allowing it to promote value-based benefit designs that promote proven services like prevention without shifting costs to seniors.
Give IPAB additional enforcement mechanisms such as an automatic sequester as a backstop for IPAB, Congress, and the Secretary of Health and Human Services.
Reforming the Federal-State partnerships to strengthen Medicaid and promote simplicity, efficiency, and accountability: Under current law, States face a patchwork of different Federal payment contributions for Medicaid and the Children’s Health Insurance Program (CHIP). The President’s framework would replace the current complicated Federal matching formulas with a single matching rate for all program spending that rewards States for efficiency and automatically increases if a recession forces enrollment and State costs to rise.
In addition, the President has called on the National Governors Association (NGA) to make recommendations for ways to reform and strengthen Medicaid, and the framework will consider the ideas that its Task Force produces. The President also supports reform of Medicaid to incentivize more efficient, higher quality, care for high-cost beneficiaries, including those who are eligible for both Medicaid and Medicare. These nine million beneficiaries comprise 15 percent of Medicaid enrollment but consume nearly 40 percent of total Medicaid spending.
Improving patient safety: Together with employers, States, hospitals, physicians and nurses, the Administration has launched a new public-private partnership called Partnership for Patients that will help improve the quality, safety and affordability of health care for all Americans. The two goals of this new Partnership are: preventing patients from getting injured or sicker while they are in the hospital and helping patients heal without complication. Achieving the initiative’s goal would mean more than 1.6 million patients will recover from illness without a preventable complication, reducing costs by up to $50 billion in Medicare and billions more in Medicaid over the next 10 years.
Cutting unnecessary prescription drug spending: The framework would limit excessive payments for prescription drugs by leveraging Medicare’s purchasing power – similar to what was called for by the bipartisan Fiscal Commission. It would speed up the availability of generic biologics, and prohibit brand-name companies from entering into “pay for delay” agreements with generic companies. And, it would implement Medicaid management of high prescribers and users of prescription drugs.
Reducing abuse and increasing accountability in Medicaid and Medicare: The framework would clamp down on States’ use of provider taxes to lower their own spending while not providing additional health services through Medicaid; recover erroneous payments from Medicare Advantage; establish upper limits on Medicaid payments for durable medical equipment; and take other actions to improve program integrity.
A major contrast with the House Republican approach. The President’s framework rejects plans that would end Medicare as we know it or transform Medicaid into a dramatically underfunded block grant, putting at serious risk not only seniors but also the most vulnerable children and people with disabilities. Some of the major problems with the House Republican approach include:
The House Republican plan does nothing to reduce health costs. Instead it actually increases costs by doing nothing to reform the way health care is delivered in addition to putting a larger fraction of the burden on beneficiaries and States.
In the first year the Republican plan goes into effect, a typical 65-year-old who becomes eligible for Medicare would pay an extra $6,400 for health care, more than doubling what he or she would pay if the plan were not adopted.
States would get one-third less for Medicaid by 2021, potentially leaving 15 million people without coverage, including seniors in nursing homes, people with disabilities, children and pregnant women.
The House Republican plan would no longer guarantee the same level of benefits and choices that seniors have today in Medicare, because the proposal allows private health plans to determine benefits, raise cost sharing, and limit choice of doctors and hospitals.
– Provided by Kaiser Health News.
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Ryan Plan vIs ‘Pure Budget Solution, Not A Health Policy Solution’
Washington, D.C., United States (KaiserHealth) – Alec Vachon has his doubts about the workability of a GOP proposal – called premium support – to transform Medicare into a system of limited government help. Vachon, a health care consultant who worked for top Republicans on Capitol Hill for more than a decade, says the idea, put forth last week by House Budget Committee Chairman Paul Ryan of Wisconsin, would be a problem if federal contributions were insufficient to help seniors buy an insurance policy.
Premium support would be a monumental change from the current Medicare entitlement program. The government now pays whatever is necessary to care for seniors and disabled people.
Vachon worked for Republican Bob Dole when he was Senate majority leader and then for the Senate Finance Committee, which has jurisdiction over health care issues. Vachon left Capitol Hill in 2001 to start Hamilton PPB, where he advises investors. Marilyn Werber Serafini of Kaiser Health News recently spoke with Vachon, and edited excerpts of the interview follow.
Are Republicans moving in the right direction with proposals to reduce spending in Medicare?
House Budget Committee Chairman Paul Ryan’s signature Medicare idea – premium support, [giving individuals] an amount to buy private health insurance, although [annual] increases would be less than medical inflation, thus shifting more costs to beneficiaries – is a pure budget solution, not a health policy solution that would improve the budget. By contrast, a health policy solution would recognize drivers of health costs, especially those generated by government policy, such as tax treatment of health benefits.
Would a premium support approach work?
Ryan would limit the federal contribution for the private purchase of insurance. That works on paper – not sure it would work in the real world if seniors are unable to buy insurance with the available subsidy.
What else could Congress do?
Another approach is an annual global budget for Medicare spending. The next step then is a transparent process to decide what Medicare pays for and what seniors should pay for on their own. Of course, that evokes the charge of rationing by some Republicans. OK, if a private insurance plan does not cover or pay for medical care, even if death is the result, that’s not rationing. If Medicaid does not pay, that’s not rationing. If an individual chooses not to pay, that’s not rationing. Only when Medicare does not pay, that’s rationing.
Medicare is popular with seniors. Does it really need to change?
It’s insanity to have public programs like Medicare and Medicaid that have an unlimited draw on the federal Treasury. Simply put, at a minimum, Medicare and Medicaid shouldn’t be allowed to grow faster than revenues. Social Security and Medicare were meant to be pay-as-you-go programs, and they should become pay-as-you-go again.
How worried should the health care industry be about the big push in Washington to reduce the federal budget deficit?
The overarching investor risk for all health industry sectors is the push for deficit reduction – with potential cuts to Medicare, Medicaid and biomedical research. By investor, I include first companies looking to spend money to develop new products or services – and looking to [get a return on investment] as well as purchasers of stocks and bonds of health care companies. Regarding Medicare savings, Democrats and Republicans generally take different approaches – Democrats look for more ‘efficient’ care delivery and lower rates; Republicans shift more costs to beneficiaries. But both mean less spending.
You also advocate increasing spending in one area.
Missing from the debate over health care is the importance of biomedical science. For example, there is lots of talk about the costs of chronic disease as a key driver of health care spending. What is chronic disease but acute disease that is not cured, or often even effectively treated? Think diabetes, health disease and the rest. Since Pasteur, we have had a scientific basis for medicine, and although we do not know the result of any single experiment, the more experiments we do, the more knowledge we gain. Only research will cure disease – and more, have a medicine that improves human performance and even adds new functionality.
Will the health care overhaul law survive?
There are three risks to the Affordable Care Act. Congress could repeal or defund it. The courts could strike down provisions of the law. Or, state officials could refuse to implement it. Right now, the Republican Party is trying all three routes. Interestingly, at the state level, although no Republican officeholders appear to be vocal advocates of health reform, many are looking for ways to implement the law. That’s because state officials are much closer to the reality of citizen needs than Congress is.
Marilyn Werber Serafini is the Kaiser Family Foundation’s Robin Toner Distinguished Fellow based at Kaiser Health News. The fellowship honors the late Robin Toner, the New York Times long-time health and politics reporter whose work often framed the public debate on health issues. KHN is an editorially independent news service of the foundation.
– Provided by Kaiser Health News.
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David takes on Goliath in patent lawsuit against Microsoft
Washington, DC, United States (AHN) – The small technology company i4i Inc. is scheduled to take on Microsoft Corp. before the Supreme Court next week in a case with broad implications for the technology industry.
I4i claims Microsoft is using its XML software without permission.
Microsoft says i4i has not proven that it owns the patent on the software, which can be used to capture nearly any computer file as regular text.
“I4i’s argument rests on a distorted view of (the Patent and Trademark Office’s) examination and reexamination procedures,” Microsoft says in its Supreme Court filing.
The companies filed additional arguments Monday in their case.
The broader issue for the entire technology industry is the legal standard needed to prove who owns the patent rights to new inventions.
I4i is arguing for a strict standard of proof, called “clear and convincing evidence.”
In essence, it means anyone claiming patent rights must prove beyond any doubt that a competing patent is invalid before they can start producing and selling the new technology.
Otherwise, they can be fined and ordered by a court to stop selling the products.
A victory for i4i would shut down Microsoft’s production of XML software, costing the technology giant hundreds of millions of dollars.
Microsoft wants the Supreme Court to use the lower “preponderance of the evidence” standard to invalidate i4i’s patent.
It means companies producing a technology can continue to sell it if the evidence makes it likely someone else’s patent is invalid.
So far, i4i is winning before the U.S. Patent and Trademark Office and at the lower court level.
A 2009 federal court injunction ordered Microsoft to pay i4i $290 million in fines and to stop selling its software that contained XML.
Microsoft appealed to the U.S. Circuit Court of Appeals in Washington, DC, in late 2009, where it lost again.
The Supreme Court agreed to hear the case last November.
The tiny Toronto company also has broad support from major corporations such as Procter & Gamble, General Electric and venture capital firms. Twenty-two amicus briefs have been filed to support i4i.
After the patent office affirmed i4i’s patent rights last May, Loudon Owen, i4i’s chairman, said, “This is a very material step in our litigation against Microsoft. Put simply: i4i’s patent is clearly and unequivocally valid.”
I4i won a patent to its “customized XML” software in 1998.
Microsoft started using its own version of XML in its Word 2003 software. The same software also is built into more recent Word programs.
XML is an important function for businesses. It gives users another way to save files. It also allowed Microsoft to develop accounting and other business software that can produce reports in Word format.
Amicus – or friend-of-the-court – briefs supporting i4i say all patents would lose value if Microsoft wins its Supreme Court appeal because patent owners would have difficulty enforcing their rights.
As a result, companies would have trouble finding investors. They also could expect less revenue from their patents, the amicus briefs say.
The Biotechnology Industry Organization’s brief says biotech companies would lose their incentive to develop drugs that cure terrible illnesses and save people’s lives.
Microsoft is winning support from computer and Internet companies such as Google, Apple, Intel, Facebook and Hewlett-Packard.
Their amicus briefs say a ruling for i4i would encourage other small companies to deluge large corporations with patent lawsuits. The lawsuits would slow new technologies from reaching market and raise costs for customers.
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Palestinian Economic Boom in Jeopardy, IMF Warns
Gaza, Palestinian Territory (TML) – The rapid economic growth in the Palestinian-ruled West Bank and Gaza Strip have enjoyed in the last few years is in jeopardy, unless Israeli restrictions on trade are eased and private sector investment is put to work to build businesses and create jobs, the International Monetary Fund (IMF) said in a report.
The West Bank saw its gross domestic product increase 8% last year while in Gaza it jumped 15%, but the two areas will have trouble matching that performance from now on, the Washington DC-based organization said in a report released on Wednesday. If Israel doesn’t take more steps to let people and goods move more freely, the IMF forecasted that GDP growth in the Palestinian areas could fall to 4% annually over the next four years.
“Gaza’s recovery represents mostly a ‘catch-up’ from a very low base,” the IMF said. “The West Bank’s growth … is also bound to wane, especially with the Palestinian Authority’s continued fiscal retrenchment and declining [foreign] aid, without a strong stimulus from a further easing of Israel restrictions.”
Building a modern, thriving economy is part of Palestinian Authority Prime Minster Salam Fayyad’s playbook, as the PA campaigns to win international acceptance of a Palestinian state. This autumn, the PA hopes to win the backing of the United Nations General Assembly for independence. Israel is fighting the efforts, saying unilateral moves by the Palestinians will undermine the peace process, which is now stalled.
The IMF praised the PA government for undertaking reforms aimed at cleaning up corruption and improving government services. It pointed to economic bodies, in particular, as having reached the standard expected of a “well-functioning Palestinian state.”
The IMF credited government reform with helping boost the West Bank economy. Foreign assistance probably played the biggest role, with donors giving the PA some $1.2 billion to fund it current expenditure. It said Israel had contributed last year, as well, by reducing the number of roadblocks and speeding the flow of people and vehicles moving through them. The roadblocks dotting the West Bank set up to prevent Palestinian terror attacks slow traffic and trade.
But Samir Abdullah, director-general of Palestine Economic Policy Research Institute, said easing the roadblocks regime wouldn’t be enough to spur economic growth because private investors remain wary about political risk, in particular the damage from any future conflict with Israel.
“The private sector isn’t leading economic growth because of the continued high political risks,” Abdullah told The Media Line. Referring to the Intifada and Israel’s 2008-2009 Gaza offensive, he said, “The unprecedented behavior of Israel in the West Bank and Gaza made it clear that it puts no limit on using its power against Palestinian infrastructure, factories and property.”
But, as the PA gets it economic house in order and reduces its deficit, donor assistance is declining, the IMF warned. Donor governments, for whom the report was prepared ahead of meeting in Brussels next week, haven’t met all their commitments in the past and will be contributing just $970 million in 2011, it said.
The IMF warned that without the boost to the economy from foreign assistance, the West Bank must attract more private investment. In its best-case scenario – assuming there are fewer roadblocks or a peace agreement with Israel – the report said growth could reach double digits for the Palestinian areas. Palestinian officials have echoed this.
Fayyad said at a conference this week that the PA hopes to have its budget balanced by 2013, enabling it to operate without aid. He also stressed the importance of private investment, welcoming the launch of the first-ever Palestinian venture capital fund, Sadara Ventures, which raised $29 million to fund high technology start-ups.
Unemployment, especially among young people, remains a persistent problem, the IMF report said. The jobless rate in the West Bank has declined in the past two years by about two percentage point, but it remained at a very high 17% in 2010. Among youth, more than a quarter of the workforce is unemployed, it added.
While Palestinian-ruled areas haven’t been swept up in the turmoil elsewhere in the Middle East, analysts have pointed to high youth unemployment across the region as a key contributing factor. The IMF predicted that if economic growth slowed to 4% annually, the jobless rate would begin climbing.
Most of the IMF’s good news, however, doesn’t apply to the Gaza Strip, which is controlled by Hamas movement after it broke with the PA and seized control of the enclave in 2007. Hamas hasn’t joined in the economic reforms being undertaken by the PA. In Gaza, the unemployment rate more than double the West Bank’s – with 38% of the workforce and more than half the young population jobless.
The IMF said economic growth in Gaza was due to Israel’s decision last year to ease its blockade of Gaza after commandos killed nine people aboard a Turkish ship trying to break to siege. Even after 2010′s double-digit economic growth, Gaza’s economy is still 20% smaller than it was in 2005, the IMF said.
Israel says the blockade, as well as its far-less onerous restrictions in the West Bank, were required to counter terrorism. Gaza militants have been firing rockets into Israel in the last weeks and have been seeking to upgrade the capabilities by smuggling in weapons and components. While the West Bank has been quieter, an Israeli settler family as killed and a Jerusalem bus was bombed during March.
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Commodity prices soar as investors seek hedge against global instability
Washington, DC, United States (AHN) – Global economic and political instability has made paper money less attractive to investors who are now driving up prices for commodities such as oil, precious metals and crops.
Sovereign debt risk in Europe and the U.S., coupled with Japan’s post-earthquake and ongoing nuclear crisis on top of political instability in the Middle East, is behind investor decisions to put their money into commodities.
That much liquidity in commodity markets is pushing commodity prices to high levels.
Wednesday morning trading in London saw gold reach a new record nominal high of $1,460.92 per ounce while silver hit a 31-year nominal high of $39.63 per ounce.
Oil settled at $108.34 per barrel, which pushed U.S. gasoline prices up to an average $3.685.
Cotton prices are around $2 per pound, which has many U.S. farmers scrambling to plant cotton this year instead of food crops such as corn, soybeans or peanuts.
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- June 20, 2011: Braves 2* vs. Blue Jays 0 (MLB)
- Debt Consolidation – Savior in Debt Crisis
- Government Check List for Starting a Business
- Rohingyas in Malaysia seek education, opportunities
- Eco friendly Business
- Save the energy and save yourself from debts
- Stella McCartney’s sunglasses are eco-friendly
- Climate-vulnerable countries to seek help from rich nations
- Bangladesh, India vulnerable to climate change
- Disease concerns as flash floods hit Kenyan coastal area
- Nalgae leaves 18 dead in the Philippines
- Rising sea level could wipe out California’s billion-dollar beaches
- Two million hit by floods in Sindh Province
- Drought – the view from the ground
- British Columbia sends more firefighters to Ontario
