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Wednesday, February 20, 2013

Iran Economy Diverse Enough to Absorb Impact of Sanctions

Iran has coped rather well with the onslaught of sanctions imposed by the United Nations in hopes to halt its uranium-enrichment program. While its exports of gas and oil dropped last year, and are due to plunge even more as the U.S. makes payments even more difficult, the government of the Islamic nation has found ways to compensate for the loss. Creating measures to limit imports (by banning luxury goods, for example) and countering the decline of its currency, the rial, by limiting purchases of dollars, Iran’s state has managed to stave off a crisis in the balance of payments and slowed the decrease in foreign reserves. Even as the rial continues to drop, fueling inflation that reached 27.4 percent at the end of 2012, companies and households are finding ways around it that are boosting the economy: construction of new homes and consumption are benefiting, as are makers of goods, which are becoming more competitive because of the weak currency. The economy did shrink and will continue to do so, analysts say, but seemingly not enough to motivate a change in Iran’s attitude.

Fed Divided over Stimulus Plan

Senior officials of the U.S. Federal Reserve are split over whether to continue the asset-buying plan, minutes of the central bank’s last meeting showed. Voicing their concern about possible consequences of the $85 billion-a-month purchase program designed to stimulate the nation’s sluggish job market, “a number of participants” asked for closer analysis of its impact, suggesting it may have to be stopped before the Fed reaches its goal. “Several participants stressed the economic and social costs of high unemployment,” the minutes read. “However, many participants also expressed some concerns about potential costs and risks arising from further asset purchases.” While the Fed decided to maintain the program last month, the minutes show fresh worries over the possible risks of such a large injection of money. The news triggered a sell-off in the U.S. stock market. A similar split is taking place at the Bank of England as Governor Mervyn King voted to increase its asset-purchase plan, despite indications that inflation is accelerating.

Bulgarian Government Resigns Amid Anti-Austerity Protests

Bulgaria’s Prime Minister Boiko Borisov announced today the resignation of his government as people voiced their discontent against a 13 percent electricity price increase in protests that turned violent. Borisov initially fired his finance minister and vowed to lower prices again, but demonstrations continued and clashes with the police sent 25 people to the hospital late last night. “I will not participate in a government under which police are beating people,” Borisov said today. Bulgaria is the European Union’s (EU) poorest nation, and its citizens must contend with high energy prices brought on by power monopolies, as well as corruption and the region’s lowest wages. Borisov did not say whether elections due to be held in July would happen earlier, though his right-wing party will not participate in talks to form an interim government.

Greece on Strike over Austerity

More than 60,000 Greeks took to the streets today in Athens in a new general strike called to protest austerity measures that are contributing to shrinking the nation’s economy. They marched towards the parliament, chanting “Robbers! Robbers!” in yet another demonstration against a plan that resulted in closed schools and left hospitals staffed just enough to deal with emergencies. ”We are protesting about pensions, emergency taxes, the high cost of life,” retired factory worker Kyriakos Anastassiadis told the Associated Press. Anger has been boiling over and putting the government under pressure to soften its stance. On Monday, it announced it will not sack the 1,900 civil servants it promised Greece’s international lenders it would cut.

U.K. Government Sets Aside £6.5M to Provide Veterans with ‘Bionic Legs’

The U.K. government will set aside £6.5 million ($9.9 million) to provide amputated army veterans with state-of-the-art artificial limbs. The decision will grant about 160 Afghanistan and Iraq fighters with more mobility and a faster recovery from their injuries. “Our troops are heroes who have and continue to give absolutely everything for their country and it is only right that we do everything possible to help them, especially when they suffer injury,” said Chancellor of the Exchequer George Osborne, who unblocked the funds. The “bionic legs” are set to accelerate rehabilitation and increase independence for the wounded.

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