Japan downgrades view of economy after quake

The headquarters of the Bank of Japan in Tokyo. Japan cut its assessment of the economy for the first time in six months after the devastating March 11 earthquake and tsunami and the resulting nuclear crisis, it said Wednesday.

The logo of Japanese auto giant Toyota is seen at a car dealership in California. The firm last week said that production at its factories in Japan will restart from 18 April until 27 April at 50 percent of normal pace.

Pedestians cross a street in central Tokyo. Many see Japan sliding into a temporary recession as a result of the impact of the twin quake-tsunami disasters.

AFP - Japan cut its assessment of the economy for the first time in six months because of the devastating March 11 earthquake and tsunami and the resulting nuclear crisis, it said Wednesday.

The move came after the Bank of Japan last week downgraded its view of an economy ravaged by the quake and the monster wave it unleashed, which destroyed entire towns and left more than 28,000 dead or missing.

"The economy was picking up, but it has shown weak signs recently due to the impact of the Great East Japan Earthquake," the Cabinet Office said in its monthly report. "It remains in a severe condition."

The quake and tsunami devastated infrastructure and manufacturing facilities in northeastern Japan, plunging the nation into its worst crisis since World War II. An ongoing nuclear emergency had added to the uncertainty.

"The biggest risk, the most uncertain factor for the economy is the issue of power supply and the status of the power plant," fiscal policy minister Kaoru Yosano told reporters, referring to the stricken Fukushima Daiichi facility.

Wednesday's report warned exports may decline, production was stagnating and consumer sentiment eroding in the quake's aftermath.

The International Monetary Fund (IMF) on Monday cut its forecast for Japanese growth, while others were even more pessimistic.

"There will be such a sharp decline in GDP in the first half of the year that the economy will not be able to avoid a full year recession in 2011," Capital Economics said in a research note.

Key supply chains have been broken and power shortages have crippled production for Japan's biggest companies, such as Sony, Toyota and Honda.

Output overseas has also been compromised, with a shortage of Japanese components affecting global markets.

The Bank of Japan's Tankan survey last week showed Japanese business confidence in the outlook for the next three months had plunged.

On Wednesday the government said that once production was restored, the economy was likely to pick up, but highlighted ongoing electricity shortages as a key risk.

Many power plants were damaged and electricity supply in affected areas is expected to fall well short of demand, especially in the summer peak season.

"Downward risks still remain due to factors including power shortage, slow recovery of disrupted supply chains and soaring oil prices. Attention needs to be paid also to the deflationary trend and concerns over employment."

The government aims to compile a stimulus package this month that cabinet members have been reported as saying could be around four trillion yen ($47 billion).

Japan has said the cost of rebuilding could be as much as 25 trillion yen.

The estimate does not include the potential cost of contamination of the food and water supply from the crippled nuclear plant.

The monster wave knocked out reactor cooling systems at the plant north of Tokyo, causing explosions and the release of radiation.

Tens of thousands of people have been evacuated from a 20-kilometre (12-mile) radius around the plant amid a contamination scare that has led to restrictions on farm produce and overseas bans on the import of Japanese goods.

Japan upgraded its nuclear emergency to a maximum seven on an international scale of atomic crises on Tuesday, putting it on par with the Chernobyl disaster.

Officials have stressed however that far less radiation has been released and no one had died from contamination at the Fukushima site.

Unlike at Chernobyl 25 years ago, where the reactor vessel exploded and scores died from radiation exposure within weeks, Japanese crews have been able to work on site amid efforts to shut the plant down.

Chief Cabinet Secretary Yukio Edano warned on Wednesday however that economic fallout needed to be quickly minimised.

"The nuclear plant accident has affected agriculture and fisheries products not only near its neighbouring areas but in the Kanto region, which has placed an extra burden on local people," Edano told reporters.

"We have to make an effort to minimise the impact on the economy by settling down the issue as soon as possible."

Zapatero rules out new moves to cut Spain deficit

Spanish Prime Minister Jose Luis Rodriguez Zapatero, pictured, said Wednesday during a visit to China that he had no plans to take any new measures to reduce his country's public deficit.

Demonstrators stage an anti-government protest in front of the Spanish Socialist party in Madrid on April 2. Spanish Prime Minister Jose Luis Rodriguez Zapatero has ruled out new budget cuts to help reduce his country's public deficit, after winning China's renewed support for buying Spanish debt.

Spain's Prime Minister Jose Luis Rodriguez Zapatero (left) speaks to his Chinese countepart Wen Jiabao (right) during their meeting at Zhongnanhai in Beijing on April 12. Zapatero has ruled out new budget cuts to help reduce his country's public deficit, after winning China's renewed support for buying Spanish debt.

AFP - Spanish Prime Minister Jose Luis Rodriguez Zapatero on Wednesday ruled out new budget cuts to help reduce his country's public deficit, after winning China's renewed support for buying Spanish debt.

Spanish and Chinese firms signed deals worth about one billion euros ($1.4 billion) during Zapatero's lightning visit to Beijing, aimed at securing fresh investment to shore up Madrid's embattled economy.

"There are no new plans on the horizon to have to take any new (deficit reduction) measures. None," Zapatero said.

"The government hopes to push through new stimulus measures," the prime minister said, insisting that his administration would see through those reforms already undertaken and would not "lower its guard".

Zapatero's socialist government has slashed spending and passed pension reforms in its effort to reassure markets worried that Spain's public deficit is unsustainably high.

It has also reformed the labour market in an attempt to revive the economy and fight an unemployment rate of just over 20 percent, the highest in the industrialised world.

The country's central bank estimated late last month that Spain's public deficit will be equal to 6.2 percent of gross domestic product this year before falling to 5.2 percent on 2012.

The government itself predicts the deficit will hit 6.0 percent in 2011 and 4.4 percent next year, a sharp improvement but still well above the European Union's 3.0 percent ceiling.

"The Spanish economy is still in a difficult situation requiring the pursuit of ambitious and demanding policies to correct the fiscal imbalances, while pressing ahead with structural reforms conducive to growth and with the restructuring and recapitalisation of the banking system," the bank said.

Chinese Premier Wen Jiabao said Tuesday in a meeting with Zapatero that Beijing was ready to buy more Spanish government debt and invest in the restructuring of the savings banks -- crucial support for Madrid's efforts.

Zapatero, who headed from Beijing to Singapore on Wednesday, is seeking new investments to shore up Spain's economy as it tries to avoid a crisis in refinancing and raising new debt.

He said China, the world's second-largest economy, now holds about 12 percent of Spain's public debt -- a major increase from the four percent it held at the start of the global financial crisis.

"This increase (in investment) in Spanish debt was a major factor boosting stability, solvency and confidence in the eyes of the markets," Zapatero said.

"China should be the priority of our economic diplomacy, which is a more and more important element" of Spain's foreign policy, he noted, adding he wanted the country to have an export-driven economy with a focus on emerging markets.

The European Union and the International Monetary Fund bailed out Ireland and Greece last year and have now offered to help Portugal. Spain's economy is as large as that of Ireland, Greece and Portugal combined.

Concerns that eurozone debt troubles could spread to Spain pushed bond rates sharply higher last year, adding to the costs of servicing the country's sovereign debt.

But such fears appear to have eased since then as Madrid strengthened bank balance sheets, cut spending and pursued economic reforms.

Among the deals in Beijing, Spain's Gamesa Corporacion Tecnologica SA signed agreements with both China Resources Power Holdings Co. and China Datang Corp Renewable Power Co. to provide a total of 300 turbines.

Each company will get 150 turbines with a total capacity of 300 megawatts from Gamesa, one of the world's top wind turbine groups, which also signed a strategic cooperation pact with China Longyuan Power Group Ltd.

Zapatero was due back in China on Thursday to participate in the annual Boao Forum for Asia, which will bring together past and present world leaders, businessmen and academics on the southern island of Hainan.

'Ten dead' in attack on Afghan elders

Map locating Afghanistan's Kunar province where ten people have been killed after a suicide bomber blew himself up at a gathering of tribal elders.

AFP - Ten people were killed Wednesday as a suicide bomber blew himself up at a gathering of tribal elders in eastern Afghanistan's Kunar province, interior ministry spokesman Zemarai Bashary said.

"A suicide attacker targeted a gathering of tribal elders in the Asmar district of Kunar today," Bashary told AFP. "Ten people have been martyred and seven others have been injured."

He said the dead included a key pro-government elder in the area.

Obama to lay out deficit plans

The US Capitol is seen in Washington, DC. US President Barack Obama is set to try and wrest control of Washington's fevered debate over the economy and bulging deficit, sure to be a dominant theme of his 2012 reelection bid.

An elderly patient watches Barack Obama speaking on television from her hospital bed. Obama will on Wednesday seek to wrest control of Washington's fevered debate over the economy and bulging deficit. Advance details of Obama's speech are at the capital's George Washington University are sketchy, but aides hint at some reform of costly health programs like Medicare for the elderly.

Protestors in Chicago call for an extension of unemployment benefits and continued funding of job programs during a protest in the city. Democrats have responded to Republican criticism of their financial policies by stating the last Democratic president Bill Clinton bequeathed budget surpluses to George W. Bush, who they say ran up debt with tax cuts for the rich and wars that were not paid for.

AFP - President Barack Obama will on Wednesday seek to wrest control of Washington's fevered debate over the economy and bulging deficit, sure to be a dominant theme of his 2012 reelection bid.

The White House says the president will lay out his vision for constraining the fiscal gap, as fresh political battles over spending escalate less than a week after the dramatic climax to a 2011 budget fight.

Advance details of Obama's speech are at the capital's George Washington University are sketchy.

But aides hint at some reform of costly health programs like Medicare for the elderly, tax hikes for the wealthy and a trimming of the trillions spent on the military -- all recipes for pitched political conflict.

Cuts will be with a "scalpel and not a machete," they say, seeking to safeguard Obama's core aspirations for education and energy reform, and portraying the slashing approach of conservative Republicans as extreme.

Republicans meanwhile are challenging the president with new boldness, after claiming what many commentators scored as a victory in securing $39 billion in new spending cuts in a last-gasp deal averting a government shutdown last week.

"The buzz continues to build about the president's much anticipated 'budget do-over' speech," said Eric Cantor, the number two Republican in the House of Representatives.

"He will outline his plan to hike taxes on families and business owners in order to get a grasp on our deficit and debt crisis."

Republicans frequently use painful US debt figures -- a projected annual deficit of 1.6 trillion dollars this year and a cumulative public debt of 14.27 trillion dollars as a political weapon.

But Democrats hit back that the last Democratic president Bill Clinton bequeathed budget surpluses to George W. Bush, who they say ran up debt with tax cuts for the rich and wars that were not paid for.

The president's political goals on Wednesday seem two-fold: to seek leverage in a short-term row in extending the US debt ceiling; and to define the coming campaign debate over spending.

The White House is already warning of a financial "Armageddon" should Congress fail to raise the US borrowing limit from $14.29 trillion dollars it is set to exceed in May.

Republican leaders, aware of the likely severe crisis of confidence and possible recessionary results of a failure to act say the ceiling will be raised -- but are seeking new budget cuts in return.

The White House says the issues of the debt ceiling and constraining the runaway deficit are separate, and that Republicans should not "play chicken" with the economy.

But Obama's decision to give a speech on deficit cutting is seen as an indirect acknowledgement of Republican demands.

In the long-term, Obama's speech will help define the dominant economy and jobs debate heading into his 2012 reelection battle, amid a palpable feeling among many Americans that the country needs to tighten its belt.

Republicans have swung their first punch with a plan by Congressman Paul Ryan to slash government spending by $6 trillion over the next decade.

The plan calls for reform and spending curbs on health and retirement programs for the poor and the elderly but would also cut tax rates faced by corporations and the wealthiest Americans in a bid to unleash growth.

Obama has made it known that he finds the plan unfair.

"It places all the burden on the middle class, on seniors, on the disabled, on people in nursing homes, through its rather drastic reform" of health programs for the poor and the elderly, his spokesman Jay Carney said.

Obama may indirectly respond to Ryan's gambit by going some way to embrace embracing a rival plan being formulated by a bi-partisan group of six senators with similar goals, but a less stark approach.

But his top Republican foe, House Speaker John Boehner, declared on Tuesday that Ryan "has set the bar" hinting at the intensity of the fight to come.

"If the president begins the discussion by saying we must increase taxes on the American people... my response will be clear: tax increases are unacceptable and are a nonstarter," he said.

"We don't have deficits because Americans are taxed too little. We have deficits because Washington spends too much."

Obama has solid political reasons for seeking to dominate the budget debate.

A Gallup poll taken in February put his approval rating for tackling the deficit at only 27 percent.

Even more importantly, among critical independents who rallied to his banner in 2008 but who deserted Democrats in 2010 mid-term elections, his rating on the issue was a lowly 19 percent.

But as he courts vital independent voters, Obama must at least keep one eye on his own core Democratic coalition, parts of which appear to believe he is already conceding too much to Republicans.

Five dead as police and army clash at checkpoint

Four policemen and an army officer who had joined anti-regime protesters were killed in an overnight clash at a checkpoint north of Yemen's capital, Sanaa.

By News Wires (text)

AFP - Four policemen and an officer in an army unit that has sided with anti-regime protesters were killed in an overnight clash at a checkpoint north of Yemen's capital, a military official said on Wednesday.

"Police attacked an army checkpoint in Amran province," 170 kilometres (105 miles) from Sanaa, "killing one officer and wounding two soldiers," the official told AFP.

Four policemen also died as security forces traded fire with automatic weapons and rocket-propelled grenades in the clash late on Tuesday, he said.

Gbagbo weapons stockpiles discovered near Abidjan

Amid tensions following the arrest of incumbent Ivorian leader Laurent Gbagbo, French and UN forces have uncovered large weapons and ammunition stockpiles in an affluent suburb of the country’s economic capital, Abidjan.

By FRANCE 24 (text)

Large weapons stockpiles destined to be used by forces loyal to Ivory Coast’s incumbent leader were uncovered by French and UN forces on Tuesday in the economic capital, Abidjan, after his arrest a day earlier.

The weapons − including mortars, cannons and boxes of small-arms ammunition − were handed over to UN soldiers in Ivory Coast.

The munitions, stored in villas in the affluent Cocody suburb, were to be used by supporters of incumbent president Laurent Gbagbo to continue resisting forces loyal to Alassane Ouattara, the internationally recognised winner of November’s presidential run-off.

Endgame in Abidjan - the fall of Laurent Gbagbo Gbagbo disputed the election results and refused to yield to his rival. After a protracted siege at Gbagbo’s presidential residence, French forces joined the fight that eventually led to Gbagbo’s arrest on Monday.

On the same day, five Gbagbo generals pledged their allegiance to Ouattara.

Meanwhile, Ouattara's government announced late on Tuesday that Gbagbo had been placed under house arrest, without specifying where he was being held.

"Pending the opening of a judicial inquiry, Mr. Laurent Gbagbo and some of his companions have been placed under house arrest," Justice Minister Jeannot Ahoussou-Kouadio said in a statement.

Gbagbo's arrest ended a four-month-long power struggle that had descended into an open conflict, with more than 1,000 killed and more than a million left homeless.

Atrocities and reprisals

Overnight on Tuesday, sporadic gunfire could be heard across Abidjan, while armed fighters patrolled the streets as Outtara called for calm.

However, human rights group Amnesty International said in a statement on Tuesday that, despite Ouattara's appeals, people thought to be Gbagbo supporters were at risk of violent reprisals.

"Today in Abidjan, armed men, some wearing military uniforms, have been conducting house-to-house searches in neighbourhoods where real or perceived supporters of Laurent Gbagbo are living, including Yopougon and Koumassi," the rights organisation said.

Keeping the peace is proving to be a significant challenge for Ouattara, whose support base is concentrated in the mainly Muslim north of the country.

In the offensive leading up to the attack on Abidjan, his forces were accused of massacring hundreds in the western town of Duekoue, although rights groups say both sides have been involved in atrocities in the ethnically divided country.

FRANCE 24's Mark Smith reports on the state of 'chaos' at former Gbagbo residence

To take advantage of all the features on FRANCE24.COM, please click here to download the latest version of Flash Player. By Marc Smith

Mubarak, two sons detained in corruption probe

Former Egyptian president Hosni Mubarak (centre) and his two sons have been detained for 15 days while allegations of corruption and abuse of authority are investigated.

By News Wires (text)

AFP - Egypt's ex-president Hosni Mubarak has been placed in detention for 15 days, prosecutors said Wednesday shortly after state media reported his two sons had also been detained.

In a statement on the public prosecutor's Facebook page, a spokesman said the prosecutor Abdel Maguid Mahmoud authorised the detentions "as part of an inquiry into the use of force against protesters during the unrest in January and February."

Ousted Egyptian President Hosni Mubarak lashes out at corruption charges By FRANCE 24

Mubarak was admitted to hospital on Tuesday in the Red Sea resort of Sharm el-Sheikh shortly after suffering a heart attack during questioning by prosecutors, state media said.

It was not immediately clear where his 15-day detention would take place.

Earlier, state television said Mubarak's two sons had also been detained.

"It has been decided to imprison Gamal and Alaa for 15 days for the needs of the inquiry," the report said.

They are accused of incitement to fire at demonstrators during a popular uprising that lasted from January 25 till February 11 when Mubarak reluctantly stepped down. Nearly 800 people died during the uprising.

A security source said the two brothers were heading for the Tora prison in Cairo from the Red Sea resort of Sharm el-Sheikh where they were interrogated.

On Sunday, public prosecutor Abdel Magid Mahmud ordered the inquiry, as part of a sweeping probe into corruption and abuse.

The Mubaraks were to be asked about allegations that they were "connected to the crimes of assault against protesters, leading to deaths and injuries", the official MENA news agency said.

Prosecutors had begun questioning Mubarak and his son Gamal earlier on Tuesday, Justice Minister Abdel Aziz al-Guindi said, adding that the questioning over acquiring wealth illegally had not yet started "as that will be handled by the department of illicit gains".

State television reported that Mubarak had refused to eat or drink since he received news on Tuesday morning that he was to be questioned.

He was admitted by his bodyguards to the VIP wing of the Sharm el-Sheikh International Hospital, the report said, adding that the hospital was not accepting any patients except for emergency cases.

Police cars and ambulances surrounded the hospital, as well as a heavy military police presence, the television said.

The former president was dressed in a black and white track suit, a witness said.

Asked if Mubarak was in good health, hospital director Mohammed Fathallah replied: "Somewhat."

The state-owned daily Al-Ahram, citing sources in Sharm el-Sheikh, said on its website that Mubarak had gone to hospital "under the pretext of being unwell in order to avoid facing questioning".

The former president was also to be quizzed about allegations of graft, MENA added.

The prosecutor's summons came after the broadcast of an audio tape in which Mubarak defended his reputation and after weeks of mounting protests calling for him to be put on trial.

In the audio message aired on the pan-Arab television network Al-Arabiya, Mubarak complained he was the victim of a smear campaign.

He pledged his assistance in a probe of his family's foreign assets, but his defiance in threatening lawsuits against the media angered Egyptians who have been pressing for his trial.

After he resigned, Mubarak and his family moved to a residence in Sharm el-Sheikh. Although he is subject to a travel ban, his relative freedom has been a thorn in the side of the military rulers.

Weekly protests demanding his trial have attracted tens of thousands and eventually led to a deadly clash with soldiers early Saturday after they tried to clear an overnight demonstration in Cairo's Tahrir Square.