Business

SYDNEY — Australia faces a A$17 billion ($13.3 billion) exodus of investment from its windfarm industry because of a political deadlock, threatening to deal the country a major economic blow and kill hopes of meeting a self-imposed clean energy target.

Some 44 Australian windfarm projects, about half overseas funded, have been shelved since a new conservative government said it wanted to cut state support for the industry a year ago, with investors and operators saying they are considering either downscaling or leaving the country altogether if it succeeds.

Even Australian windfarm companies such as Infigen  and Pacific Hydro have effectively shelved their Australian operations, with Infigen saying it plans to pour all its financial muscle into the more amenable US market.

"It's a difficult time at the moment, and the policy uncertainty is the main cause of it," said Shaq Mohajerani, an Australian spokesman for wind farm company Union Fenosa, owned by Spanish energy giant Gas Natural.

"We're still considering all options on how to proceed. The parent company will provide us with the strategy," he added.

A Gas Natural spokesperson said the firm had an "attractive backlog" in Australia but "we are waiting for the whole development of the new framework for renewable energy and hope our presence... in the country can be maintained".

Wind power in Australia is not the only renewable energy sector to be affected by uncertainty over government subsidies or actual cuts. In Europe, Germany has scaled back support for solar power over the past few years, leading to a flood of insolvency filings by solar firms and a shrunken market.

Italy's plans to cut subsidies for solar power firms have prompted an investor exodus. Retroactive solar subsidy cuts have also happened in Spain, Greece, Bulgaria and the Czech Republic over the past couple of years, putting off new investors as governments try to rein in energy costs and cut debt.

Windfarms are Australia's No. 2 renewable energy source, behind hydropower but ahead of solar, providing a quarter of the country's clean energy and 4 per cent of its total energy demand. But while households can collect rebates for installing their own rooftop solar panels, windfarms rely on "certificates", or tradeable securities handed out by the government, to offset costs.

That support hit a roadblock a year ago when new conservative Prime Minister Tony Abbott ordered a review of the country's target for clean energy use by 2020, which ultimately recommended slashing it by a third, in line with falling overall energy demand. A lower target would mean a lower certificate price.

The centre-left Labour opposition, whose support the government needs to lower the target, refused to budge on the higher target it set when in power in 2009, resulting in an impasse that has effectively seen the industry grind to a halt.

A spokeswoman for US-owned GE Australia & New Zealand, which has stakes in several renewable energy projects, said further investment "will only occur once investor confidence in the policy environment is restored. For this to happen, bipartisan support regarding the future of the renewable energy target is essential."

The Australian arm of Spanish infrastructure group Acciona, the world's largest renewable energy firm, has frozen about A$750 million of windfarm projects because of the stalemate, said local managing director Andrew Thomson.

"When you're a subsidiary [of a global business], you're competing for capital, you're competing for your budget allocation next year," he said.

"If the parent company can't see that there's a stable environment it becomes really difficult to get traction. For us at the moment, it's a really difficult sell," he added.

If the renewable energy target is cut, "it's the type of jolt to industry that basically would create such an upheaval that you would have a mass exodus", said Alex Hewitt, managing director of Bulgarian-Polish-US-backed windfarm operator CWP Renewables, which has A$1.5 billion of projects on ice.

"I can't say whether we'd completely exit the country, but you would be looking at such a level of reduction in the level of investment into people in the company that it would be very significant," Hewitt added.

HAVANA — US agricultural exports to Cuba fell below $300 million last year for the first time since 2003 as the communist-led island's financial woes continued and it purchased food on credit elsewhere, a trade group said on Friday.

The United States created an exception to its trade embargo of Cuba in 2000 to allow food and medicine sales, but it still denies Cuba credit, forcing it to pay cash up front.

Although the United States and Cuba are seeking to restore diplomatic relations after more than five decades of confrontation, the embargo on Cuba remains largely in place.

With Cuba increasingly turning to suppliers who extend credit, American farmers have argued for normalising trade with Cuba so they can better compete.

US food sales of $291 million in 2014 were down from $349 million in 2013 and far from the $710 million peak in 2008, the New York-based US-Cuba Trade and Economic Council indicated in a report.

It attributed the decline to a cash shortage, Cuba purchasing on credit and from government entities, and a desire to pressure the United States to lift trade restrictions.

President Raul Castro, who took over from his ailing brother Fidel in 2008, has introduced austerity measures, including significant cuts in imports and a push for trade credits with payments due in 365 days or more.

A new private agricultural organisation backed by US Secretary of Agriculture Tom Vilsack is likely to seize on the report as an argument for ending US sanctions against Cuba.

The US Agriculture Coalition for Cuba was formed after the announcement December 17 that the United States and Cuba would restore diplomatic relations.

"Although agricultural exports to Cuba are legal, the financing and trade restrictions have hampered the ability of American farmers to compete with other countries, such as Argentina and Brazil, which do not face the same restrictions," the National Corn Growers Association said last month when it  joined the coalition of more than 30 US farm organisations and businesses.

"Corn exports to Cuba have decreased from nearly 800,000 tonnes in 2008 to 200,000 tonnes in 2013," it indicated.

Cuba imports between 60 per cent and 70 per cent of its food. It buys chicken, corn, soy, wheat, animal feed and other products from the United States but most purchases come from Asia, Europe and Latin America and are made on credit.

Cuba's food imports were $2 billion in 2014 and are expected to increase by $200 million this year, the government said.

TUNIS — Tunisian Prime Minister Habib Essid promised quick reforms to stimulate growth as he took office on Friday at the head of a coalition government combining secular and Islamist parties.

Four years after toppling autocrat Zine El Abidine Ben Ali and inspiring Arab Spring uprisings in nations like Egypt, Libya and Syria, Tunisia is widely praised as a model for the region, having held free elections last year and adopted a new constitution.

But it faces pressure from its international lenders to curb high public spending, including by cutting politically sensitive subsidies on basic foods and fuel. 

Jobs, high living costs and economic opportunities are the main worry for most Tunisians.

"After the success of the democratic transition, now we must make a successful economic transition, stimulate growth, fight poverty and open new windows of hope to desperate youths," Essid said.

"We must immediately start structural reforms of the economy and new development schemes because temporary solutions are no longer appropriate," he added.

Essid, an independent, will lead a coalition between the secular Nidaa Tounes Party, which won the most seats in elections in October, its Islamist rival Ennahda and other smaller parties. 

It took a month to negotiate the line-up of the new cabinet, in which Ennahda will lead the employment ministry and hold three other junior ministerial posts.

The government sees economic growth accelerating to 3 per cent in 2015 from an estimated 2.5 per cent in 2014, while the budget deficit is expected to narrow to 5 per cent of the gross domestic product from 5.8 per cent.

The International Monetary Fund agreed in 2012 to support Tunisia  with a two-year credit programme worth $1.74 billion, of which Tunis is still waiting for the final installment. 

In exchange, it agreed to keep its deficit under control and make the foreign exchange market more flexible.

KIEV — Ukraine's hryvnia currency plunged about 30 per cent against the dollar on Thursday, traders said, after the central bank abandoned the foreign currency auctions that had effectively pegged the exchange rate.

The central bank scrapped the daily auctions, which had set an unofficial peg for banks to follow, and also raised its main interest rate to 19.5 per cent on Thursday as it sought to avert a Ukrainian financial collapse, brought ever closer by fighting in the country's east and a lack of foreign funding.

With the hryvnia declining even before Thursday's drop, and Ukraine's foreign exchange reserves falling to $6.4 billion, barely enough to cover five weeks of imports, the bank has a few ways to revive an economy on the brink of bankruptcy.

The scrapping of the auctions was aimed at closing the gap between the black market exchange rate and the official rate, which the central bank noted would eliminate market uncertainty.

But following the announcement, the hryvnia was trading at 24-25 against the dollar, down about 30 per cent from Wednesday's close, traders indicated.

According to Reuters data, the hryvnia was trading at 23.9  at about 1300 GMT.

"The market is increasingly active, but from the side of buyers [of foreign currency]. There are not many sellers. The true level now is 24 or 25. I cannot say if there are real deals, but they were the live quotes," said one trader.

"The official rate does not yet reflect the real picture, it's far from it," he added.

The central bank raised its key refinancing rate to 19.5 per cent from 14 per cent, to take effect on Friday, as it seeks to curb annual inflation which hit almost 25 per cent in December.

Announcing the measures, central bank governor Valeriia Gontareva told a news conference: "There is still panic on the market, connected with ongoing fighting."

The former Soviet republic desperately needs funds from donors to fill an estimated $15-billion funding gap to withstand the financial crisis, deepened by a surge in fighting in eastern regions where pro-Russian rebels have seized new ground.

But analysts say the renewed fighting, which has all but buried a September ceasefire, makes it more difficult for lenders such as the International Monetary Fund (IMF) to offer funds.

"If there is any worsening of the situation, the National Bank is ready with the tools needed to calm the foreign exchange market," Gontareva said.

She added that the bank was forecasting consumer price inflation this year of 17.2 per cent and warned that inflationary and currency devaluation risks would continue in the near term. 

IMF talks tough 

Gontareva, a former top executive at Western banks who was appointed soon after President Petro Poroshenko was elected last May, said the bank had agreed terms with the IMF to boost financial aid but gave no figures.

However the terms are unclear, and an IMF team is still in the capital Kiev after extending its mission beyond January 29, a move seen by some analysts as a sign that talks on boosting its financial support are tough.

Ukraine has already received $4.6 billion from the IMF as part of a $17 billion aid programme, but is seeking to extend that programme in terms of time and money.

Some analysts said that without a ceasefire, any foreign financing from the IMF and others would be difficult to secure.

Kiev has said it wants to restore the ceasefire agreed with the Moscow-backed rebels last September in the Belarussian capital Minsk and accuses Russia of sending new troops and arms to help the separatists take ground in eastern Ukraine.

Moscow denies arming the rebels and says it too wants the ceasefire to hold.

Tim Ash, head of emerging markets research at Standard Bank, said Russian President Vladimir Putin was betting that no amount of Western financing would work unless the conflict was halted.

"This is just finger-in-the-dyke stuff. The conflict has to be halted, period," he added in a note.

US Secretary of State John Kerry arrived in Kiev on Thursday for talks with Poroshenko and government leaders. A senior State Department official said Kerry would offer US support for efforts by Ukraine to negotiate a new ceasefire.

Kerry also intends to provide an additional $16.4 million in humanitarian aid to help civilians in eastern Ukraine, US officials said.

Analysts said continued fighting ensured any move by the central bank to secure the economy would fail.

"It's more about economic failings and the war situation at this stage. Interest rates won't make any difference, just as they are not [making a difference] in Russia," said Simon Quijano-Evans head of emerging market research at Commerzbank in London.

ATHENS — Greek Prime Minister Alexis Tsipras tore into his European Union (EU) allies on Thursday, pledging to "put an end once and for all" to the EU's austerity policies.

In a defiant first speech to his left-wing parliamentary group after returning empty-handed from a European tour, Tsipras said Athens was no longer open to being told what to do.

"Greece won't take orders any more, especially orders through emails," he stressed. "Greece is no longer the miserable partner who listens to lectures to do its homework. Greece has its own voice."

In an apparent reference to the tough stance taken by the European Central Bank (ECB) and others, Tspiras said: "Greece cannot be blackmailed because democracy in Europe cannot be blackmailed."

Tsipras and his Finance Minister, Yanis Varoufakis, have been crisscrossing Europe to win support from partners for their plan to win debt relief and end austerity policies but have so far received little other than warnings to avoid reneging on commitments under the country's existing bailout programme.

But they have received little if any concrete support.

"We did not even agree to disagree", Varoufakis said on Thursday after a meeting with German Finance Minister Wolfgang Schaeuble, actually contradicting his host.

Tsipras, however, said he did not return from the trip without anything to show for it.

"In only a week, we won allies that we haven't won in the last five years of the crisis," he said.

The maiden meeting between Greece's iconoclastic new finance minister from the Marxist left and his 72-year-old conservative German nemesis was never going to be easy. It turned out even worse than expected.

Varoufakis, notoriously casual in his dress, wore a dark shirt and jacket but no tie to meet the veteran Schaeuble. Not only did they look awkward together, they could not even agree on how much they had disagreed.

The German minister glared stony-faced through their joint news conference. Outside, a few dozen unionists and supporters of Germany's Left party, which backs Tsipras' far-left Syriza, held banners saying: "Mr Schaeuble, stop strangling Greece!"

Schaeuble, whose passion for European integration is second only to his zeal for balanced budgets, said they had agreed to disagree. He was promptly contradicted by his younger visitor, who spoke in English.

"We didn't reach an agreement. It was never on the cards that we would. We didn't even agree to disagree, from where I am standing," said Varoufakis, a 53-year-old economist and blogger.

Schaeuble looked particularly uncomfortable when Varoufakis referred to Germany's Nazi past, which some Greek anti-austerity protesters have recalled by lampooning Merkel in a Nazi uniform.

Germany should understand Greece because its own depression in the early 20th century gave rise to the Nazis and now "Nazism is rearing its ugly head in Greece", said Varoufakis, apparently referring to the far-right Greek political party Golden Dawn.

Newspaper cartoonists have depicted the clash of ideologies as an unstoppable force, Tsipras and his Syriza party, meeting an immovable object, in the form of Chancellor Angela Merkel's austere conservatives.

The two ministers did not discuss details of Greece's debt repayment schedule or the possibility of a debt "haircut", which Merkel and Schaeuble emphatically rule out. Varoufakis presented proposals for a "bridging programme" until May.

He tried to convince Germany, whose taxpayers are weary of  funding bailouts for what they see as spendthrift southerners, the new Greek government would be a reliable partner, saying Berlin could expect "a frenzy of reasonableness" from Athens.

But he also made an emotional plea for Greece's partners to respect the outcome of its election, saying treaties must be upheld "without crushing the fragile flower of democracy with a sledgehammer", referring to criticism from German politicians.

"Schaeuble Brushes Off Greek Minister," was the verdict of Germany's top-selling daily Bild, which has been critical of Greece throughout the eurozone debt crisis.   

Separately, the head of Germany's powerful Bundesbank warned Greece against using emergency funding to prop up its banks long-term and said countries must bear the impact of their decisions, further isolating Athens after it all but ditched a reform-for-aid deal.

Jens Weidmann's remarks follow the ECB's statement that it would no longer accept Greek government bonds as collateral for funding, shifting the burden onto Athens' central bank to finance its lenders.

The ECB's move means the Greek central bank will have to provide its banks with tens of billions of euros of additional emergency liquidity in the coming weeks.

However, Weidmann's remarks call into question Athens' freedom to use this emergency liquidity assistance (ELA). The ECB governing council can restrict such funding if a two-thirds majority agrees.

"ELA should only be awarded for the short term and to solvent banks," Weidmann, who also sits on the ECB's Governing Council of decision makers, told business daily Boersen Zeitung.

"As the banks and the state are closely bound in Greece, the economic and fiscal policy course that the Greek government follows plays an important role in this assessment," he said.

"Governments and parliaments must take decisions about whether and how to keep banks afloat, or wind them up," Weidmann added.

Speaking later in Venice, Weidmann upped the ante, demanding that countries bear the consequences of their own fiscal decisions and warning that any move to bail out a eurozone peer could lead to the spread of solvency doubts.

Singling out Greece's refusal to cooperate with the troika of inspectors from international lenders, he said there could be no sharing of fiscal responsibility without first ceding sovereignty.

"Member states remain fully responsible for the consequences of their own autonomous fiscal decisions," Weidmann said in Venice.

"If market participants tend to see the monetary union as a system of mutual financial assistance in the event of serious trouble, doubts about a country's solvency could spread more quickly to the other member states," he added.

By taking a tough line on Greece, the ECB is sending a signal that while it has repeatedly charged to the eurozone's rescue in the past, it is no longer willing to do governments' work for them, analysts said Thursday.

"The ECB has drawn a line. It is an attempt to remain independent," said Bert Van Roosebeke from the Centre for European Policy in Freiburg. 

During the long years of crisis, the ECB has never hesitated to take on the role of firefighter, cutting its key interest rates time after time and taking a series of controversial and increasingly bolder unconventional policy decisions to prop up the eurozone economy.

Nevertheless, all through such action, ECB chief Mario Draghi has consistently argued that in order to solve the crisis, governments must get their finances and economies in order and not hide behind the ECB. 

Hence, the ECB's announcement late Wednesday that it would no longer accept Greek government bonds, currently rated as junk, as collateral for loans would offer a taste of the ECB's bitter medicine, analysts said.

The ECB announcement came all the more as a surprise because it was issued just hours after Varoufakis had met Draghi in Frankfurt, talks which Varoufakis himself had described as "fruitful" and "encouraging".

But despite the immediate shock, analysts said there was no danger, at least for now, of Greek banks facing a liquidity crisis.

Greek debt has a junk credit rating and, under ECB rules, should not qualify as collateral for loans, anyway.

A special waiver to that rule, accorded to Greece as long as it was deemed to be in compliance with the terms of its 240-billion-euro ($270 billion) EU-International Monetary Fund (IMF) bailout, had been scheduled to expire on February 28. 

So the ECB, which argued that it was "currently not possible to assume a successful conclusion of the programme review", had therefore merely pulled the plug two weeks earlier.

But it insisted that Greek banks still had other means of financing at their disposal, such as the ELA facility. 

No liquidity crunch  

Analysts were therefore confident that Greek banks would still be able to finance themselves.

"It is not likely that Greek banks will face immediate liquidity problems. Greek government debt can still be used to access ELA," said Natixis economist Jesus Castillo.

Greek banks had significantly reduced their holdings of government bonds and did not heavily rely on them as a source for collateral to secure ECB funding, anyway, the analyst noted.

Nevertheless, "the risk is that the ECB's decision will undermine the confidence in the Greek banks, which have already suffered significant deposit withdrawals before and after the January election," Castillo warned.

Outside ECB's remit?  

Bruegel economist Silvia Merler was also concerned that "even if the liquidity consequences could be manageable, the political consequences could be less so”.

The move might "formally protect the ECB's independence, but it also forces the political game... well beyond the limit of a central bank's remit", she said.

Credit Agricole's Frederik Ducrozet saw the ECB decision as a "risky, albeit calculated political move (aimed at) pressuring the Greek government and eurozone policymakers to find an agreement within the next couple of weeks." 

Berenberg Bank economist Christian Schulz said the ECB was sending "a strong signal. Instead of the ECB, the Bank of Greece and thus the Greek taxpayer will now be the lender of last resort for banks." 

And the ECB decision had dealt a blow to Greece's negotiating position, Schulz said. 

"Greece can hope for some face-saving compromises and modest adjustments at best, but not for a wholesale renegotiation of the adjustment programme," he added.

DUBAI — Middle Eastern and North African states are expected to invest $755 billion in energy projects over the next five years despite the plunge in world oil prices, a key lender says.

The Arab Petroleum Investments Corporation (APICORP) said its projection for the 2015-19 period was only slightly down on the $760 billion that it forecast for 2014-18, although estimates for the coming period have been slightly inflated by an increase in project costs.

Oil is expected to account for 31 per cent of the investment spend and gas for 27 per cent, the lender indicated in its February report.

The other $316 billion is projected to be invested in power generation to meet soaring demand for electricity, which is heavily subsidised in most regional states, added APICORP, the development bank of the Organisation of Arab Petroleum Exporting Countries.

The region's top investor Saudi Arabia is expected to buck the trend with a reduction in capital spending after the completion of a series of mega-projects, APICORP said.

Saudi investments are projected to fall to $127 billion for 2015-2019 from more than $170 billion for 2014-18.

APICORP attributed the fall to the completion of major upstream oil projects and the diminished opportunities for further downstream mega-projects.

This is coupled with a drive by oil giant Saudi Aramco to reduce its capital spending by 20 per cent.

The United Arab Emirates comes in second place with investment projections of $116 billion, followed by Algeria with $84 billion. Iraq and Iran are forecast to invest around $80 billion and $70 billion, respectively.

Nearly all the region's oil and gas exporters have vowed to maintain the same level of investments despite being hit by a more than 50 per cent fall in prices since last June.

The price slump is expected to cost the six Gulf Arab states around $300 billion in lost revenues this year, the International Monetary Fund said last month.

Other Middle East and Central Asia oil and gas exporters will lose around $125 billion, it forecast.

APICORP projected that demand for electricity in the region would grow by 8.3 per cent a year, unless governments took steps to substantially cut subsidies to consumers.

It forecast that capacity output would be raised by 156 gigawatts to 450 gigawatts by 2019. 

FRANKFURT/BRUSSELS — Greece's new leftist government appealed to the European Central Bank (ECB) on Wednesday to keep its banks afloat as it seeks to negotiate debt relief with its eurozone partners, but Germany rejected any rollback of agreed austerity policies.

Finance Minister Yanis Varoufakis said after meeting ECB President Mario Draghi in Frankfurt he believed Athens could count on central bank support during the short period it would take to conclude talks with international lenders.

Banking sources told Reuters that two Greek banks have begun to tap emergency liquidity assistance from the Bank of Greece after an outflow of deposits accelerated after the victory of the hard left Syriza party in a general election on January 25.

The Greek government wants that funding to continue because if the ECB were to halt it, Greek banks could collapse, forcing the country out of the eurozone.

Promising to end five years of austerity, Prime Minister Alexis Tsipras and Varoufakis are meeting senior officials across Europe to seek support for a new debt agreement.

However a document prepared by Germany for a meeting of European Union (EU) finance officials on Thursday made clear Berlin wants Athens to go back on promises to raise the minimum wage, halt unpopular sales of national assets, rehire fired public sector workers and reinstate a Christmas bonus for poor pensioners.

"The Eurogroup needs a clear and front-loaded commitment by Greece to ensure full implementation of key reform measures necessary to keep the programme on track," the document, seen by Reuters, said in reference to eurozone finance ministers.

"The aim is the perpetuation of the agreed reform agenda [no rollback of measures], covering major areas as the revenue administration, taxation, public financial management, privatisation, public administration, healthcare, pensions, social welfare, education and the fight against corruption," it added.

A Greek official said the document showed Germany was entering into negotiations, but he added: "It is obvious that these suggestions will not be accepted by the Greek government. They are clashing with the recent mandate given by the Greek people and this do not help with the growth perspective of Europe."

The new Greek leaders have had a cautious reception so far, even in left-leaning countries such as France and Italy which Athens had hoped would support its case for debt relief.

French President Francois Hollande said the eurozone's rules applied to everyone. European Parliament President Martin Schulz, a Socialist, said Greece risked bankruptcy if the country didn't stick to its commitments to EU partners.

European Council President Donald Tusk said after meeting Tsipras in Brussels that any solution must be acceptable to all member states.

‘No doubt’

Tsipras, 40, said after talks with European Commission President Jean-Claude Juncker that Greece respected EU rules and would find a solution to its economic problems within the framework of EU law. There was no agreement yet, but talks were going in the right direction, he noted.

After meeting Draghi, Varoufakis told Reuters: "The ECB is the central bank of Greece ... The ECB will do whatever it takes to support the member states in the eurozone."

"I have no doubt that we can conclude our discussions with our European partners, as well as with the International Monetary Fund (IMF) and the ECB, in a very short space of time so that we can kick-start the Greek economy," he said.

Without the support of its creditors and the ECB, Greece would soon find itself back in an acute financial crisis. 

Unable to tap the markets because of sky-high borrowing costs, the government has enough cash to meet its funding needs for the next couple of months. But it faces around 10 billion euros ($11 billion) of debt repayments over the summer.

The ECB's policy making governing council is meeting to discuss whether to extend emergency funding for Greek banks, on what conditions and for how long.

"We outlined to him the main objectives of this government which is to reform Greece in a way that has never been tried before and with a determination that was always absent," Varoufakis said after his session with Draghi.

"We also stated categorically that the debt-deflationary cycle in which Greece finds itself is detrimental to all efforts to reform Greece. He was good enough to explain to us his own constraints," he added.

An ECB source said Draghi had clarified the ECB's institutional mandate and "urged the new government to engage constructively and speedily with the Eurogroup to ensure continued financial stability".

Under ECB rules, Athens needs to be in a bailout programme or actively negotiating a new one to qualify for emergency funding. The government's ability to issue short-term treasury bills to refinance itself is also limited by the bailout agreement.

With the Greek public determined to cast off the stigma of supervision by a troika of EU, International Monetary Fund (IMF) and ECB inspectors, and to regain economic sovereignty, the semantics of any new arrangement may be crucial.

A source familiar with the Greek position said after the talks with Draghi: "We are thinking of a bridging programme. You may not call it a 'programme' for political reasons but perhaps a contract."

The German document demanded that troika oversight continue.

ECB officials in the meeting talked about the rules on emergency funding and their desire that the Greeks reach an interim arrangement with the Eurogroup of eurozone finance ministers, which next meets on February 16, the source said.

Varoufakis has so far said Greece will not extend the bailout programme when it expires on February 28.

Tsipras won the election promising to negotiate a debt write-off, reverse some key reforms and end budget cuts.

Varoufakis has since struck a softer tone, saying Greece aims to swap its official loans for growth-indexed bonds and its ECB loans for perpetual interest-yielding bonds with no repayment date. 

Eurozone officials responded coolly, noting that the ideas amount to a partial write-off by other means.

Varoufakis said Athens needs up to six weeks to draft an economic recovery plan.

"We need a maximum of six weeks: that's the time we are seeking from our European partners to be able to finalise a coherent programme of alternative policies to austerity," Varoufakis told Italian newspaper Il Messaggero in an interview published on Wednesday.

In a separate interview with La Repubblica, he indicated that the proposal would see the debt divided up, with the funds owed to the ECB paid back in full on the deadline of July 20.

Those owed to national governments and the IMF however, could instead be swapped for growth-linked bonds, he said.

"We are proposing the other tranches, to the IMF and other countries, be substituted with new bonds at market interest, which is very low right now, with a clause: we will start the entire repayment once Greece's economy sees solid growth," he added.

Varoufakis noted that the idea had already been put to the IMF, adding that he did not see "why they should not accept an extension like they always do in these situations, at least until the end of the year".

Greece wants to be able to introduce "socially compatible reforms... that must above all aim to resolve the humanitarian crisis, as the Greek crisis is more than ever a European crisis", he told Il Messaggero.

The austerity policies, imposed by the EU and IMF in exchange for the bailout loans, have seen the Greece economy contract by a quarter and unemployment shoot up to over 25 per cent, with one in two Greek youths now out of work.

Separately, German officials said on Wednesday that Greece's casually-attired finance minister can dress as he pleases when he visits Berlin this week, provided he offers a sharp account of his government's plans.

Varoufakis has attracted as much attention for his style as for his policies as he tours European capitals.

"The German government has never judged its interlocutors by whether they are wearing a tie, a leather jacket or a classic jacket," Chancellor Angela Merkel's spokesman Steffen Seibert said when asked by reporters about the "new style" in Athens.

"It makes no difference to us. What we expect from the new Greek government is to present us their economic and financial strategy," he added

A spokesman for Finance Minister Wolfgang Schaeuble, who is scheduled to meet Varoufakis on Thursday, said there was no dress code for visitors.

Varoufakis wore an open-necked shirt and a billowing black leather coat to visit the dapper, suited British Finance Minister George Osborne on Monday. His prime minister, Alexis Tsipras, also eschews a tie and received one as a gift from his Italian counterpart Matteo Renzi.

Athens — Greece's new government is proposing creative solutions as it treads a delicate path between its obligations to international creditors and campaign promises to end austerity and reduce the country's debt.

"If we need to use euphemisms and tools of financial mechanisms to get Greece out of its debt slavery, we will do it," Finance Minister Yanis Varoufakis said Tuesday.

He insisted the new government, led by the anti-austerity Syriza Party, "will not back down" in its efforts to lighten Greece's 315-billion-euro ($359 billion) debt burden, equivalent to 175 per cent of the gross domestic product.

According to an interview with the Financial Times (FT) published Tuesday, Varoufakis proposes to replace 25 billion euros in Greek bonds owned by the European Central Bank (ECB) with "perpetual bonds", which have no set maturity or expiration date.

The advantage for Greece is that it will continue paying interest on the bonds, but will no longer have a repayment deadline hanging over it like a sword of Damocles. Under the current system, Greece is due to pay back 7 billion euros to the ECB this summer.

Under the scheme, the central bank in Frankfurt would neither suffer losses on its Greek debt, nor have to declare Athens in default, avoiding dramatic market turbulence that would erupt if Greece were unable to honour matured bonds.

"A perpetual bond, which is never paid back, may be a little hard to accept. I imagine something closer to a compromise on a very long-term maturity, say, lasting 50 years," Frederik Ducrozet, an analyst at Credit Agricole, told AFP.

He called the proposal to delay Greek repayments for decades a "very good idea".

Varoufakis also suggested in the FT that rescue loans issued by the European Union be exchanged for bonds "indexed to nominal economic growth". Repayment of those would then be linked to the performance of the Greek economy.

The European Financial Stability Facility (EFSF), the European bailout fund, holds around 140 billion euros of Greek debt.

'Financial innovation' 

"It's a financial innovation, but we're not in entirely unchartered territory," said Ducrozet, noting that securities of that kind were issued to ease the losses of private banks when Greek debt was restructured in 2012.

Argentina, another country that has been plagued by debt problems, has benefited from something similar.

"The proposals made by Varoufakis form the basis of an entirely plausible negotiation," said Ducrozet, an opinion shared by many investors.

The Greek newspaper Kathimerini also reported that Greece wants to issue an increased number of short-term government bonds to cover the state's immediate funding needs.

Unable to access long-term lending markets because of prohibitive rates, Athens has been issuing bonds that mature after a few months. They are often bought by Greek banks.

Greece has reached its annual limit of 15 billion euros in short-term bonds, also known as treasury bills or t-bills, but reportedly wants to increase that to 25 billion euros.

Varoufakis will also be asking for the profits made by eurozone central banks from holding Greek debts, about 1.9 billion euros, to be transferred to Greece by the end of February, Kathimerini reported.

This money was due to be included in the next tranche of international loans, worth 7 billion euros. Athens says it does not want this, preferring to renegotiate the entire bailout programme.

To access these funds, and to raise the limit on its short-term bonds, Greece must first seek approval from the finance ministers in the eurozone, the so-called Eurogroup.

According to a diplomatic source, plans are being made for an extraordinary meeting of the group in the coming days.

TEL AVIV  — Israeli companies are increasingly turning to Asia to capture a boom in demand for their technology, as the government urges them to diversify export markets in response to Europe's rising anti-semitism and potential trade sanctions.

Citing attacks on Jews in Europe, including one in a kosher market in Paris last month, and amid fears that the European Union could take trade steps against Israel over its policy of settlement building on Palestinian land, Prime Minister Benjamin Netanyahu told his Cabinet last month: "We definitely want to reduce our dependence on certain markets in western Europe."

At the same time, the pro-Palestinian boycott, divestment and sanctions movement has started to make strides in some European countries, prompting several firms in Holland and Denmark to end dealings with some Israeli companies and raising the prospect of more trade problems in the region.

Israeli entrepreneurs, most of whom see Europe remaining as an important partner, downplay the effects of anti-Israel sentiment in Europe. 

More of a reason to expand to Asia, they say, is that Europe's economy is struggling, the euro has weakened and Asian countries are growing faster.

Either way, the shift to Asia is picking up pace. 

Israelis have been slow to follow European and US firms into Asia because the region's languages and culture have presented more significant problems, particularly the requirement for patient diplomacy in many Asian countries, say Israeli businessmen, known for their often abrasive manner.

Nonetheless: "Those making the efforts are being amply rewarded," said Jon Medved, a veteran Israeli venture capitalist.

Ofer Sachs, chief executive of the Israel Export and International Cooperation Institute, noted: "When you look towards the future, the growth potential that exists in China, Vietnam and [the rest of] Asia is greater than in Europe."

Multiply tenfold

Europe is currently Israel's largest overall trading partner. Asia is its second-biggest partner but business, particularly to China and India, is much smaller: Israel's economy ministry estimates that of 3,000 Israeli exporters, about 1,000 trade with Asia.

While government data shows that Asia takes 25 per cent of all exports, just below the 27 per cent that goes to each of Europe and the United States, roughly half that is mainly from just two companies: Intel's Israel unit and potash producer Israel Chemicals.

Economy Minister Naftali Bennett said Israel wanted to multiply its commerce to Asia "tenfold”.

"Israel has made a strategic decision to diversify its commerce so we're moving to the East. I'm talking about China, Japan, India... and it's working, it's going very well," he told Reuters.

Avner Halperin, chief executive of medical device firm EarlySense whose sales to Asia currently comprise 15 per cent, initially looked to the United States and Europe to drive his high-tech company's sales. Now much of his focus is on Asian economies.

"That percentage to the Asian market will go to at least a third and may go to as much as half of our sales by 2016," Halperin indicated. "You can't ignore the East because there are huge opportunities with people very open and ready to work with us."

Investment potential

Asian companies and funds, particularly from China, are also seeing more investment potential in Israel.

China, Israel's third-largest trading partner by country, is looking at an expansion in bilateral trade, which reached nearly $9 billion last year.

"Israel leads the world in high-tech and high-tech is needed in China," Wu Bin, economic and commercial counsellor at China's embassy in Israel, told a recent conference in Tel Aviv. "Israeli technology can easily get industrialised in China."

On Monday, Chinese management consulting firm Shengjing, teamed up with Jerusalem Venture Partners, one of Israel's leading venture capital fund, in a competition to find global start-ups.

"In the next 10 years, Israeli high-tech will have a significant Chinese component... and China can become a significant player in the Israeli economy," said Nechemia Peres, co-founder of Pitango Venture Capital.

Korean giant Samsung has made two investments in Israel, including Halperin's EarlySense, so far in 2015 in addition to numerous investments last year. It also has two research and development centres in Israel.

New Israeli companies, industry executives say, have an edge over their American and European peers in expanding in Asia because they have a limited domestic market and must think internationally from the outset.

"When we do business, we have to take a flight, so it can be east or west," said Peres.

CARACAS — Venezuela has jailed the owners of an unnamed chain of shops accused of engineering queues to whip up anger with the socialist government, President Nicolas Maduro said on Sunday.

Chronic shortages of basic goods, including flour, chicken and diapers, have triggered massive lines that sometimes stretch around blocks and have become a nightmare to navigate for Venezuelans.

Most economists blame the scarcity on currency controls that restrict dollars for imports, as well as falling domestic production.

Maduro, however, accuses a rapacious business elite of waging an "economic war" to bring down his administration.

"Yesterday, we detected that a famous chain of stores was conspiring, irritating the people," Maduro told a crowd of red-clad supporters and soldiers.

"We came, we normalised sales, we summoned the owners, we arrested them and they're prisoners for having provoked the people," he said to cheers, adding that the state would take over the food stores.

The stores purposefully reduced the number of cashiers to create lines, Maduro said earlier on Sunday, likening the strategy to a "guerrilla tactic”.

Authorities are also pressing charges against Venezuelan pharmacy chain Farmatodo for not opening enough check-out counters. Its executives have been summoned for questioning.

The government has jailed businessmen in the past for raising prices, and has launched several campaigns designed to combat contraband of price-controlled goods flowing to neighbouring Colombia.

"Those who use their stores to hurt the people will pay with jail time," said Maduro, donning a tracksuit with his name sewn on and a camouflage hat.

Critics say cracking down on businesses risks aggravating shortages and further deters investment.

They have also lampooned Maduro for not pushing through major structural changes to combat the country's recession, over 60 per cent inflation, and shaky finances.

Maduro, who won an election to replace his mentor, the late Hugo Chavez, in 2013, added he secretly toured the capital Caracas for four hours on Saturday with his wife and close adviser Cilia Floresto to survey the situation at stores. 

Separately, a Reuters analysis shows that at least 40 major US companies have substantial exposure to Venezuela's deepening economic crisis, and could collectively be forced to take billions of dollars of write downs.

The companies, all members of the S&P 500, and including some of the biggest names in Corporate America such as autos giant General Motors (GM) and drugmaker Merck & Co. Inc., together carry at least $11 billion of monetary assets in the Venezuelan currency, the bolivar, on their books.

The official rate is at 6.3 bolivars to the dollar and there are two other rates in the government system, known as SICAD 1 and SICAD 2, at about 12 and 50. The black-market rate, though, was at about 190 bolivars to the dollar on Sunday, according to the website dolartoday.com.

The problem is that the dollar value of the assets as disclosed in many of the companies' accounts is based on either the rates at 6.3 or 12 and only a limited number of transactions are allowed at those rates. 

The assets would be worth a lot fewer dollars at the 50 rate in the government system and the dollar value would almost be wiped out at the black-market rate.

The currency system is also about to be shaken up following an announcement by Maduro on January 21, leading to fears of a further devaluation.

American companies will also have additional exposure to the bolivar that isn't disclosed because they don't see the size of that exposure as material to their results. 

The Reuters analysis also doesn't look at the thousands of publicly traded and private American companies that aren't in the S&P 500 and will in some cases have bolivar assets.

Black-market rate

Some leading American companies have already decided that the stronger exchange rates, the official rate at 6.3 and the SICAD 1 exchange market at 12, are not reflective of the currency conditions they face in the South American country.

Diaper and tissue maker Kimberly-Clark Corp. recently announced a charge of $462 million for its Venezuelan business, leading to a fourth-quarter loss for the company, after it concluded that the appropriate exchange rate was the SICAD 2 exchange rate at 50 rather than the 6.3 it had previously used.

Using the stronger exchange rates is unrealistic because of how hard it is to repatriate profits earned in Venezuela back to the United States at any rate, let alone those rates, securities analysts say. Citigroup Inc says it has not been able to buy US dollars from the Venezuelan government since 2008.

Companies can seek dollars at the official rate if they are using those dollars to import raw materials for production of priority goods such as food and medicine, and some can buy dollars at the SICAD 1 rate at around 12 bolivars to the dollar through auctions that are typically held several times per month but are only targeted at specific sectors. 

As tumbling oil prices have left Venezuela with fewer dollars, its currency board has steadily reduced approval for repatriation of dividends at the official rate, leaving companies with growing quantities of bolivars trapped by currency controls.

"It's a huge deal and companies will get hit big," said Ali Dibadji, an analyst at Sanford C. Bernstein & Co. Inc. "Take a look at what Kimberly-Clark did last week and what Clorox did a few months ago by getting out of Venezuela."

Cleaning and household products maker Clorox last year decided to exit Venezuela altogether. Its Chief Executive Officer Don Knauss said at the time: "We saw no hope that we could create a sustaining business in that country."

The currency issues are hurting many US companies much more than their sales might suggest. Many of the companies in the analysis have been getting between 1-3 per cent of their global revenue from Venezuela.

Ford Motor Co. and oil services company Schlumberger NV took big-ticket hits to their quarterly profits because of their Venezuelan operations. Ford took a fourth-quarter charge of $800 million and Schlumberger $472 million.

A Ford spokeswoman said that it still values its Venezuela assets at about 12 bolivars per US dollar. But for Ford, the currency system and other conditions are so tough in the South American country that it has made an accounting change that will allow it to ring fence its Venezuela business so that it doesn't have a direct impact on the company's operating results.

Schlumberger, which previously used the 6.3 rate, said it is now using the SICAD 2 rate of 50 as it "best represents the economics of Schlumberger's business activity in Venezuela".

Another S&P 500 company to switch to the 50 rate from 6.3 in recent weeks was industrial gases producer Praxair Inc., which took a fourth-quarter charge of $131 million as a result. It also said the switch will hurt its revenue and earnings in 2015.

Another devaluation?

Those changes don't reflect the prospect of another currency devaluation in Venezuela, as recently telegraphed by Maduro, who is struggling to keep a lid on consumer prices amid a 64 per cent inflation rate and a plunge in oil revenue. The official rate was last devalued by 32 per cent to the current 6.3 from 4.3 in February 2013, at that time the fifth devaluation in a decade.

Maduro said in the January 21 announcement he would merge the two existing SICAD rates (the ones at 12 and 50 per US dollar). He also would introduce another new rate to offer dollars via private brokers to vie with the black-market rate. There has yet to be a further announcement providing details of the new system and the rates.

Currency uncertainties aside, foreign companies face a myriad of other problems in Venezuela, from weak demand to shortages of many goods, difficulty in importing parts and products, and relying on the government to approve price increases to keep pace with hyperinflation.

Most of the S&P 500 bolivar exposure is concentrated among 10 companies that have disclosed about $7.3 billion in assets linked to the country's currency system, according to the Reuters analysis of their latest quarterly financial statements.

But if those companies used Venezuela's SICAD 2 currency rate, the one at about 50 bolivars to the dollar, their assets would decline by as much as $5.8 billion. All of these companies currently either use the rates at 6.3 and 12.

It would be far worse if they used Venezuela's black-market rate of about 190 for the currency. The companies' bolivar assets would be worth only a tiny fraction of their current estimated value if they used that rate.

GM, which ranked No. 1 out of the group analysed, with $1.5 billion in Venezuela exposure, said it is closely monitoring conditions there. "We have nothing to announce at this time," spokesman Tom Henderson said.

Some US companies, such as Merck, justify valuing their Venezuela assets at the most preferential rate because they are providing essential services and goods, like medicine, to the country. They report some success in translating bolivars into dollars at the 6.3 rate. Merck did not respond to a message seeking comment.

Still, some of these same companies have prepared their investors for a currency hit in their latest round of quarterly disclosures. PepsiCo Inc. said it would take an after-tax charge of up to $440 million if it revalued its Venezuela assets at the 50 rate. As of early September, the company disclosed $505 million in bolivar-denominated net monetary assets.

"I do think that more companies may consider exiting Venezuela if the inability to remove cash or take prices to offset devaluations persist," said Dibadji, the Sanford Bernstein analyst.