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MOSCOW — Investors in Russia reacted with panic Monday to the potentially disastrous economic consequences of Russian military intervention in Ukraine, with Moscow stock markets crashing up to 12 per cent and the ruble plunging to historic lows against the dollar and euro.

Russia’s central bank hiked its main interest rate in an emergency move to stem capital flight and the losses for the ruble, amid what risks becoming at least Russia’s worst economic crisis since 2009.

President Vladimir Putin on Saturday had won approval from Russia’s upper house for the sending of troops to Ukraine due to the stand-off in Crimea following the ousting of pro-Moscow president Viktor Yanukovych.

Economists warned the move risks creating a litany of further trouble for the Russian economy, which is already battling chronically slow growth.

Russia faces becoming an international economic pariah, with US Secretary of State John Kerry already warning Putin that Moscow faces losing the right to host the Group of 8 this year in Sochi and could even be expelled from the group of top nations itself.

Military intervention would drain further resources from a Russian budget already stretched by costs like the Sochi Olympics, alarm already nervous investors, limit Russia’s economic ties with the West and force Russian companies into huge write-offs in Ukraine.

“Sochi was already expensive. Military adventures and strained relations with the West can be much more expensive than that,” said economist Holger Schmieding at Berenberg Bank in London. “Russia cannot afford that in the long run.” 

Kerry himself gave a bleak assessment of the consequences for Russia, saying Putin may be hit by “asset freezes on Russian business, American business may pull back, there may be a further tumble of the ruble”.

Black Monday 

The MICEX stock market in Moscow was trading down 10.94 per cent while the RTS bourse had fallen by 12.03 per cent at around 1320 GMT.

It was also a Black Monday of carnage on the stock markets for some Russian blue chip shares.

Stocks in Russian gas giant Gazprom — which has a huge contract to export gas to Ukraine as well as banking interests in the country — fell 12.5 per cent. Russia’s biggest lender Sberbank was down 15.57 per cent.

The ruble has already been under major pressure in recent weeks due to investor nerves about emerging markets and Russia’s flimsy medium-term growth prospects.

But the Ukraine crisis Monday pushed it to levels not seen even in Russia’s 2009 financial crisis that followed the collapse of Lehman Brothers and the Georgia war.

The ruble plunged in value to trade at 50.22 rubles to the euro. On Friday it stood at 49.58.  

It was a similar story with the ruble/dollar trade, with one dollar worth 36.45 rubles. At close of play on Friday it was 36.28.

The Bank Rossii (Bank of Russia) raised its main interest rate to 7 per cent from 5.5 per cent in a clear bid to support the ruble and stem an already alarming capital flight amid the tensions between Russia and Ukraine.

“The decision is aimed at averting the appearance of risks for inflation and financial stability linked to the increased volatility on financial markets,” it said in a statement, adding the hike would take effect from 0700 GMT Monday.

Deputy Economy Minister Andrei Klepach admitted the decision was linked to the “hysterical situation” surrounding the pressure on the ruble.

The decision “is a clear attempt to stem outflows of capital from financial markets following the escalation of the crisis in Ukraine”, said Neil Shearing, chief emerging markets economist at Capital Economics. 

‘Worse than after
2008 war’ 

The economic consequences of intervention in Ukraine risk becoming a huge headache for Putin and have parallels with the 2008 war with Georgia over the region of South Ossetia, which fed into Russia’s 2009 financial crisis.

However the magnitude of the Ukraine situation means a Russian economic crisis in 2014 could be even more serious.

“Unlike the five-day war in South Ossetia, we are concerned that the tensions in Ukraine will very likely last considerably longer, having a prolonged negative effect on Russia’s economic environment,” economist Natalya Orlova at Alfa Bank said in a note to clients.

She added that not even the current depreciation of the ruble would support Russian gross domestic product while several Russian banks were hugely exposed to Ukraine.

Before 2009, Russia had enjoyed stellar average annual growth rates of 7 per cent under Putin’s rule. But with growth of just 1.3 per cent in 2013, economists now warn it risks being trapped in a cycle of low growth. 

Separately, the Russian central bank still has “lots of room” to raise interest rates and can further increase its involvement in the domestic foreign exchange market to stabilise the ruble, Central Bank First Deputy Governor Ksenia Yudayeva said on Monday.

“We still have lots of room to raise interest rates ... and we can further increase our presence in the currency market,” Yudayeva said in an interview on the Rossiya-24 news channel.

The central bank said on Monday it had raised the interventions allotment to be exhausted before it shifts the ruble’s trading corridor — to $1.5 billion from $350 million — and that it will decide daily on the currency’s trading policy.

“Due to increased volatility in the domestic foreign exchange market, the Bank of Russia moves to daily determinations of the parametres of each exchange rate policy, which will be based on an assessment of the current situation,” the central bank said in a statement.

“This measure was taken in order to prevent risks to financial stability by limiting exchange rate fluctuations,” it added.

The central bank keeps the rouble in a target exchange-rate corridor, which as of Friday extended from 35.40 to 42.50 rubles to the dollar-euro currency basket.

Under its managed float, the central bank increases its interventions as the ruble approaches the boundary of the corridor. Monday’s decision mean that it will automatically shift the corridor only after an intervention allotment of $1.5 billion is exhausted.

Traders said the central bank had spent at least $10 billion on Monday to prop up the ruble.

AMMAN — Jordanian Businessmen Association (JBA) President Hamdi Tabaa and the Iraqi Commercial Attaché in Amman Adeeb Fattah on Sunday discussed means to boost economic relations between the two countries and their private sectors, in particular. The two sides agreed that the Iraqi Commercial attaché office should inform and provide the JPA with public (government) tenders that are floated in Iraq in order to encourage Jordanian companies to apply for these tenders. Moreover, Fattah stressed the need to ensure the private sectors’ participation in implementing the fuel pipeline project and other joint ventures, including the railway project, whether directly or through taking part in related infrastructure companies. In 2013, Jordan’s exports to Iraq went up by 23 per cent, amounting to JD884 million while its imports from Iraq totalled JD269 million. 

LONDON — Extreme floods like those swamping parts of Britain in recent months could become more frequent in Europe by 2050, more than quadrupling financial losses, if climate change worsens and more people live in vulnerable areas, research showed on Sunday.

The study said instances of very extreme floods, which now occur about once every 50 years, could shorten to about every 30 years, while cases of extreme damage now occurring once every 16 years could shorten to once every 10 years.

With shorter cycles of extreme floods and damage, the European’s current average losses of 4.9 billion euros a year could reach 23.5 billion euros by 2050, a rise of almost 380 per cent, the study in the journal Nature Climate Change pointed out.

Scientists at several universities and research centres in Europe and Australia used climate change models, economic data and river discharge data to form their conclusions.

“Due to climate change and gross domestic product growth, by 2050 a one-in-fifty-years-flood might be one in 30 years so the frequency of such losses increases dramatically — almost doubling,” said co-author Brenden Jongman, researcher at the IVM Institute for Environmental Studies at VU University Amsterdam.

Extreme damage can more than double the average damage rate used in the study’s calculations. In June last year, extensive flooding resulted in 12 billion euros ($16 billion) of losses in nine countries across central and eastern Europe, according to reinsurance company Munich Re. 

Rising costs

According to the study, investment in flood protection measures could help reduce the magnitude of overall flood losses in the future.

By investing around 1.75 billion euros in such measures, Europe’s annual flood losses could be reduced by around 7 billion euros, or around 30 per cent, by 2050, it estimated.

Rising costs from flood damage are due to several factors such as changes in climate, land use, population and wealth.

The European Environment Agency said last year that costs from flooding were also rising in part because more housing was being built in flood-prone areas.

Better reporting of floods has also contributed to the rising overall cost of these inundations.

A UN panel of climate scientists has said the Earth is set for more heatwaves, floods, droughts and rising sea levels from melting ice sheets that could swamp coasts as greenhouse gases built up in the atmosphere.

Other bodies, such as the European Environment Agency, have said it is likely that rising temperatures in Europe will change rainfall patterns, leading to more frequent and heavy floods in many regions.

Britain is currently experiencing its wettest winter on record, resulting in the worst floods for the country in 50 years.

Accountancy firm Deloitte said on Friday there were nearly 200,000 insurance claims in Britain in the last three months of 2013 due to storms and floods — the highest number of such claims over a fourth-quarter financial period for 10 years.

It has also estimated that the cost of repairing the damage caused could reach £1 billion ($1.66 billion).  Insurance companies such as Aviva and Swiss Re have urged for more action and investment to manage flooding.

Separately, natural disasters including droughts, floods and earthquakes cost China 421 billion yuan ($69 billion) in 2013, official data showed, nearly double the total in the previous year.

China has always been prone to natural disasters but a changing climate is causing more extreme weather, which hits food production, threatens scarce water resources and damages energy security, according to the government.

Data released by the National Statistics Bureau showed flooding and mudslides cost China 188 billion yuan in 2013, 20 billion more than in the previous year.

Damage from droughts rose nearly fourfold to 90 billion yuan, while snowfall, freezes and ocean-related costs totalled more than 42 billion yuan.

Earthquakes, primarily one in Sichuan province in April that killed 186 people, added nearly 100 billion yuan to the costs.

“In recent years, China has seen a combination of floods and droughts simultaneously, with the rain belt moving north past the Yangtze River,” Zhu Congwen, a researcher with the China Academy of Meteorological Sciences told Reuters, speaking in a personal capacity.

Northern China is seeing more droughts while typhoons are arriving earlier, wetlands drying up and sea levels rising, the  government indicated in a report last year.

Some regions in China, such as the southern province of Yunnan, are in their third year of crippling droughts.

In August last year, an extended heatwave across six provinces in central China meant crops from 900,000 hectares of farmland failed and 13 million people had no easy access to drinking water.

In the same month, record rain — in some areas the most heavy in more than 100 years —  and storms killed more than 100 people and caused huge floods in the northeast and northwest.

Last year’s disasters were not as bad as 2010, when record flooding killed more than 1,000 people and led to 15 million being forced from their homes.

But the trend is for an increasing impact from wild weather.

In December, the government said it was poorly prepared to tackle the impact of climate change and released a plan identifying main areas for improvement in a bid to limit damage.  

Infrastructure, agriculture, water resources, coastal zones, forests and human health were listed as priorities.

China is the world’s biggest emitter of greenhouse gases, which scientists say cause climate change, but has pledged to cut its emissions to 40-45 per cent per unit of gross domestic product by 2020 compared with 2005 levels.

PARIS — The Geneva Motor Show will kick off this week on an optimistic note as the long-suffering European car market appears to finally have swerved out of the slow lane.

Luxurious sports cars, high-end SUVs and city cars will be bumper-to-bumper at the show — one of the auto industry’s biggest and most diverse events — as it cruises out from under the long shadow of industry crisis.

Carmakers and analysts alike say the worst of the difficulties are now in the rear-view mirror.

“The worst of the crisis is over, so the mood should be good,” said Juergen Pieper, a car industry analyst with German bank Metzler.

New car registrations in the European Union slipped just 1.7 per cent last year, to 11.8 million cars sold, after five years of far more brutal falls.

But sales are finally expected to pick up this year, according to German car industry analyst Stefan Bratzel.

By how much remains to be seen: the most cautious observers expect sales to remain flat while the most optimistic are gearing up for 3 per cent market growth.

“The markets fell really low, so obviously they will have to start picking up at some point,” EY analyst Jean-Francois Belorgey said, adding that northern Europe was doing better than the south of the continent.

France remained a dark spot on the European map, seeing car sales in 2013 fall to their lowest level in 15 years with little prospect of growth this year, while Italy also touched rock-bottom, selling just 1.3 million cars.

“The economic fundamentals in France and Italy remain fragile,” Belorgey acknowledged.

And despite the expected upturn this year, Europe’s car industry remains plagued by overcapacity and profitability issues for mid-range carmakers, according to credit insurance and analysis group Euler Hermes, pointing to several recent factory closings, at PSA, Opel and Ford.

Range of new models

German carmakers, who sell heavily in North America and Asia where sales — especially at the high end — are up, are meanwhile doing quite well.

Their international presence allows them to counter still sluggish sales in Europe and keep their factories running at full-tilt.

Volkswagen raked in a net profit of 9.1 billion euros ($12.6 billion) last year, while Daimler, which owns Mercedes-Benz and Smart among others, posted a record net profit of 8.7 billion euros.

And the German manufacturers are aiming for even better traction with a range of new products, including the Volkswagen’s third generation Audi TT and a new BMW compact. 

France’s Renault and Italy’s Fiat have seen far more modest profits, while PSA Peugeot Citroen suffered a 2.3 billion-euro loss last year, although it hopes a cash injection from the French state and China’s Dongfeng will put it on the road to recovery.

Despite their continued hardship, French carmakers should play a more central role at this year’s Geneva Motor Show, where smaller city cars are expected to get more attention than previously.

“They are presenting a number of important new products,” Pieper said, listing for instance Renault’s launch of a new Twingo, which will face off against the Citroen C1 and Peugeot 108.

Such small, punchy city vehicles will as always have to battle for attention with exceptional, luxury cars at the 84th edition of the Geneva car show.

While the show will not feature last year’s overwhelming display of extravagant machines priced over the million dollar mark, there will still be plenty to see for car enthusiasts.

Ferrari’s new version of its California T sport car and Lamborghini’s new Huracan, both priced at round 200,000 euros, will likely draw crowds.

But perhaps the most popular attraction at this year’s show, set to open to the public from March 6-16, will be something in between: super trendy SUVs and crossovers.

Porsche, once known only as a sport car maker, will for instance speed into the mid-size SUV range with its new Macan, in the hope it will prove as popular as its big sister Cayenne, which accounts for more than half of the carmakers sales.

American carmaker Ford is meanwhile revving up to unveil a third installment of its hugely popular compact Focus — the world’s most sold model. 

Separately, the China Association of Automobile Manufacturers (CAAM)  said that China’s auto sales smashed through the 20 million mark last year, growing nearly 14 per cent and extending its lead as the world’s biggest car market.

Sales in China, the world’s biggest auto market since 2009, surged 13.9 per cent to 21.98 million vehicles last year, the CAAM indicated, as a recovery in Japanese brands offset the impact of slowing economic growth.

Passenger vehicle sales jumped 15.7 per cent year-on-year to 17.93 million units, the group pointed out in a statement.

China’s huge auto market is critically important to foreign companies, which have looked to its vast potential to take up the slack from flagging sales in Europe, where French car sales hit a 15-year low in 2013 and German car sales also fell.

In the United States, total auto sales rose 7.6 per cent to 15.6 million vehicles in 2013, according to Autodata, their best annual performance in years.

In 2012, Chinese auto sales had risen just 4.3 per cent annually to 19.31 million vehicles, hurt by slowing domestic economic growth, limits on car numbers imposed by some cities to cut pollution and congestion, and a territorial row between Beijing and Tokyo that hit sales of Japanese-brand cars.

But Japanese brands have continued to recover from the downturn in 2012, when political tensions grew over disputed islands in the East China Sea, causing some consumers to shun their Asian neighbour’s products.

“Although the economic situation was bad in 2013, there were many catalysts for the car industry,” said Cui Dongshu, deputy secretary general of the China Passenger Car Association, another industry group.

“There was strong demand for replacing old vehicles with new ones. Japanese brands also rebounded after their downturn in 2012 as domestic consumers have high regard for them,” he told AFP.

In its figures, CAAM said sales of Japanese-brand passenger cars amounted to 2.93 million in 2013, but gave no percentage change.

In December alone, total vehicle sales in China — both passenger and commercial — rose 17.9 per cent year-on-year to 2.13 million units, CAAM added.

Some foreign companies have already announced record China sales in 2013.

US auto giant General Motors (GM) sold 3.16 million vehicles in the country last year, up 11.4 per cent from 2012.

“GM maintained good growth momentum in our company’s largest market, despite a modest slowdown in demand for commercial vehicles,” president of GM China, Matt Tsien, said in a statement.

Competitor Ford sold 935,813 vehicles in China last year, up 49 per cent from 2012, as the US company introduced more new vehicles to the market.

But analysts said auto sales could slow this year from 2013.

“Surging sales are expected to see a slowdown as government restrictions curbing new vehicle sales are enforced across cities in China, as the levels of pollution hit record highs,” IHS Automotive senior analyst Namrita Chow said in a recent report.

In January, the northern city of Tianjin became the latest to limit cars by capping the number of licence plates it issues annually.

IHS forecasts passenger vehicle sales will rise around 10.4 per cent this year.

Cui of the China Passenger Car Association forecasts vehicle sales will rise ten to 12 per cent this year, as the one-off boost from the improvement for Japanese brands eases.

AMMAN — Prime Minister Abdullah Ensour lauded the government’s  financial discipline on Thursday indicating that for the first time in more than 20 years,  there was no budget supplement in 2013. 

In a lecture he delivered at the King Hussein Club, he stressed diligent spending and expressed hope that the government will not ask for a budget supplement this year. 

The premier said foreign direct investments (FDIs) rose in 2013 by JD1.1 billion, reaching around JD18.7 billion at the end of last year.

In 2012, FDIs rose by JD867 million, he remarked, noting that the figures are in line with the government’s plan to increase FDIs growth rate by 10 per cent annually up to 2016. 

Ensour said the government has been able to strengthen relations between the public and private sectors through consultations during different stages of drawing up economic legislation.

Moreover, the government has been able to overcome a critical stage when in 2012 succeeded in boosting confidence in the local currency, he added.  

At the end of November 2013, foreign reserves at the Central Bank of Jordan rose by $5.4 billion or by 81.7 per cent, amounting to $12.1 billion, compared to the figure at the end of 2012, he pointed out. 

Theses reserves are enough to cover the Kingdom’s imports of goods and services for 3-6 months, the premier said. 

Moreover, national exports rose by 2.5 per cent whereas imports rose by 6.1 per cent during the first 11 months of 2013 compared to the same period of 2012, Ensour added, noting that this helped maintain the commercial deficit at reasonable levels. 

Estimated capital expenditures for 2014 rose to JD1,268 million compared to JD1,249 million in 2013, he continued, indicating that around 50.4 per cent of the capital expenditure would be covered by the Gulf grant.

WASHINGTON — President Barack Obama is making income inequality an issue in midterm elections, and proof of the gap between rich and poor is close at hand right outside the White House.

The booming District of Columbia features the wealthiest high-income strata among big US cities and more poor people than the national average, leading analysts to call it a microcosm of the larger US economy.

Middle-class jobs hollowed out by the 2007-2009 recession have failed to come back. A flood of mostly young, educated newcomers has helped revitalise once-blighted neighbourhoods, but is wiping out low-cost housing within sight of the Capitol.

The red-lettered “Come Unto Me” sign on the former Central Union Mission still overlooks 14th Street, less than 3.2 kilometres north of the White House.

But construction workers have gutted the onetime shelter for homeless men to convert it into tony shops and boutique condos, part of the makeover of 14th Street in recent years from a rundown retail strip to an urban playground of upscale restaurants, bars and apartments.

“We’re a city that has very healthy upper-income residents, and then a very healthy lower-income population, and not a good in-between,” said Phil Mendelson, chairman of the city council.

Ed Lazere, executive director of the DC Fiscal Policy Institute, a think tank, said wages were stagnant or falling for the bottom of Washington’s workforce and rising for highly educated top earners. That mirrors the US pattern, he remarked.

“For people who don’t have an advanced degree, just the chances of participating in DC’s economy are really grim and have only gotten worse over the last 20 years,” Lazere added.

Washington had the third-widest gap between wealthy and poor among the 50 biggest US cities, trailing Boston and Atlanta, according to a 2012 Fiscal Policy Institute analysis.

The top 5 per cent of households had average incomes of $473,000, highest among the biggest 50 US cities, while the  poorest fifth averaged less than $10,000, the analysis pointed out.

At 18.2 per cent, the District of Columbia’s poverty rate is more than 2 percentage points above the US average, 2012 Census Bureau figures show.

Bike lanes, wine bars

Rising federal spending, bicycle lanes and public transport and a US revival in city living have helped draw 1,000 new residents a month to the capital since 2008, bringing its population to almost 650,000.

At Kafe Bohem, a coffee house in northwest Washington where wine bars and condos are replacing auto repair shops and cheap housing, General Manager Lenora Yerkes said the city was becoming whiter, richer and harder to afford.

“There is less and less room for people who work in a support capacity,” she added as patrons huddled over computer screens or admired a photo display of neighbourhood buildings being torn down or rebuilt as part of gentrification.

Even as whites move into neighbourhoods that have long been mostly black, such as the Seventh Street corridor, the fault lines are forming over income, not race.

A Washington Post poll in January showed that 52 per cent of District residents felt the city was mainly divided by income. Just 12 per cent cited race.

“It’s not a black or white thing. It’s a money thing. Either you can afford it or you can’t,” Keith Larry, 40, a barber at Seventh Street’s Ordinary People barbershop, who is black, said of the gap between rich and poor.

The impact of new money is clear in housing, where rent increases have outpaced inflation by 50 per cent since 2000, according to another 2012 Fiscal Policy Institute study.

The number of low-rent apartments costing $750 a month or less halved from 2000 to 2012, while the stock of those renting for $1,500 or more tripled, the report indicated.

The result is that poor people are forced to move out of neighbourhoods where rents are rising, or leave the city.

“It’s the wheel of the haves and the have-nots,” said labourer Tyrone Queen, 43. “There is a kind of underlying movement to get them out.”

Mind the gap 

To mitigate the wealth gap, Mayor Vincent Gray has pledged to create or preserve 10,000 affordable housing units by 2020.

The district is gradually raising the minimum wage to $11.50 an hour, well above the federal minimum of $7.25. City officials also are seeking tax adjustments, such as making the real estate tax more progressive, to help poorer residents.

Obama has called income disparity “the defining challenge of our time”. Democrats are making it a major campaign issue in the run-up to House and Senate elections in November.

Some of Obama’s key policy objectives are to push for Congress to raise the minimum wage, strengthen US manufacturing and improve education and job training.

Outlining US inequality, the non-partisan Congressional Budget Office pointed out in December that the top fifth of households saw their share of pretax income rise to more than 50 per cent in 2010 from 43 per cent in 1979.

Most of the gain went to the top 1 per cent, whose share increased from 9 per cent to 15 per cent. Households in the bottom 40 per cent saw their share of income drop.

WASHINGTON — Income inequality can lead to slower or less sustainable economic growth, while redistribution of income, when measured, does not hurt and can even help an economy, according to a research study by International Monetary Fund (IMF) staff.

Although the study by IMF economists does not reflect the fund’s official position, it is another sign of a shift in its thinking about income disparity.

“It would still be a mistake to focus on growth and let inequality take care of itself, not only because inequality may be ethically undesirable but also because the resulting growth may be low and unsustainable,” the study said.

The IMF analyses the economies of each of its 188 member countries and offers advice on government budget and monetary policies. It is also a lender of last resort, tasked with supporting global financial stability.

It has traditionally advised countries to promote growth and reduce debt, but has not explicitly focused on income inequalities. In the past year, IMF Managing Director Christine Lagarde has said that creating economic stability is impossible without also addressing inequality.

Oxfam, the international development group, has long argued that organisations like the IMF need to address rising gaps between the rich and poor, and stop encouraging low public spending.

“In the bad old days, the IMF asked governments to cut public spending and taxes,” said Nicolas Mombrial, the head of Oxfam’s Washington office. “We hope this research and Christine Lagarde’s recent statements are a sign that they are changing their tune.”

Economists are still divided about the relationship between growth and income inequality, which has spiked around the world as economies struggle in the wake of the 2007-2009 financial crisis.

Some have also blamed rising income inequality for contributing to the crisis in the first place, by encouraging more borrowing by people who wanted to maintain their standards of living. 

Jonathan Ostry and Andrew Berg, two of the authors of the IMF paper, also researched the link between income inequality and growth in 2011.

At the time, Ostry said the response was that income redistribution rather than inequality was responsible for hurting growth: some argued that inequality prompted governments to transfer money to the poor, which reduced incentives to work.

Their follow-up paper on Wednesday showed redistribution was not to blame.

“We find that inequality is bad for growth... in and of itself,” Ostry told reporters on Wednesday. “And we can say that redistribution by itself doesn’t seem to be bad for growth, unless it’s very large.”

They said there was evidence that extremely high taxes or transfers to the poor, such as which occurs in some European countries, could hurt growth. But they found that redistribution also helped growth by reducing inequality.

The researchers cited the benefits of taxes on activities of the wealthy that could hurt an economy, like excessive financial speculation, and payments to the poor to support their children going to school.

Much of the thinking has been that, even if a large wealth gap is bad, that the cures of taxes and wealth transfers to correct the problem usually hamper growth.

“Many argue that redistribution undermines growth, and even that efforts to redistribute to address high inequality are the source of the correlation between inequality and low growth,” they said. “If this is right, then taxes and transfers may be precisely the wrong remedy: A cure that may be worse than the disease itself.”

But the authors said experience across a number of countries has provided “remarkably little evidence” for that conclusion.

Indeed, they said, “faster and more durable growth seems to have followed the associated reduction in inequality”.

“The average redistribution, and the associated reduction in inequality, seem to be robustly associated with higher and more durable growth,” the economists added.

The authors are cautious to avoid saying the effects of redistribution are positive in every case or situation, and note that extreme efforts can have a bad outcome.

But overall, they argue that redistribution programmes should not be excluded from policy out of fear they would hold back an economy.

“It would still be a mistake to focus on growth and let inequality take care of itself, if only because the resulting growth may be low and unsustainable. “Inequality and unsustainable growth may be two sides of the same coin.”

BARCELONA — Once the mobile world’s pioneers, Nokia, Motorola and BlackBerry are now the industry’s sorry laggards, searching for lost glory.

Analysts hold out little hope for them as they struggle to get back in a game now lorded over by Samsung and Apple.

“All those historic handset makers like Nokia, Motorola and BlackBerry completely missed the boat when the smartphone arrived,” said Bengt Nordstrom, head of the Swedish consultancy Northstream. “They missed the touch screen step.”

Finland’s Nokia, Canada’s BlackBerry and the United States’ Motorola; they all lost a lot of money in 2013.

Nokia’s handset business, in the process of being taken over by Microsoft, reported losses of 780 million euros ($1.07 billion) last year.

Motorola posted a loss of $1.03 billion in the same period.

This month, Motorola’s owner, Google, shed the business, selling it to rising Chinese smartphone manufacturer Lenovo for $2.91 million.

BlackBerry, in which Canada’s Fairfax Financial Holdings is a major investor, racked up a loss of $5.4 billion in just the nine months to November 30.

“We are definitely here to compete and to win back some lost ground before the end of the year,” BlackBerry’s recently appointed Chief Executive John Chen told reporters at the February 24-27 World Mobile Congress in Barcelona, Spain.

BlackBerry’s budget Z3 

BlackBerry showed off two devices — the Q20 with its trademark physical keyboard and the budget-priced Z3 with a touchscreen aimed at the Indonesian market — to help it try to claw back market share.

The two BlackBerry smartphones were the first to be produced under a five-year partnership with Foxconn, the Taiwanese manufacturer that is also a key supplier to a major rival, Apple.

BlackBerry aims to target corporate customers.

“Our turnaround strategy is to focus on enterprise,” Chen indicated. “We are always known as the number one in security.” 

Analysts were pessimistic about his chances.

“BlackBerry; that is a lost cause, I think,” said Nordstrom.

Lawrence Lundy, analyst at Frost & Sullivan, agreed.

“They have tried so many things in past years and nothing has worked. I can’t see BlackBerry maintaining a device presence much longer,” Lundy added. “They missed the touch input, they really believed in the keyboard even seeing the success of iPhone.”

Nokia remains the world’s second-largest handset manufacturer with 13.9 per cent of the market in 2013, but that share is dwindling and it relies largely on traditional mobiles. 

In the smartphone market, Nokia did not even rank among the top five last year.

At the industry fair this week, Nokia showed off a new range of Nokia X smartphones powered by a version of Google’s Android operating system.

It was a surprise move because Android competes directly with Windows Phone, owned by Microsoft, which is wrapping up its Nokia takeover during this quarter.

According to Nokia France Managing Director Thierry Amarger, the manufacturer used the cheaper Android operating system because it aims to sell the devices for less than 150 euros, targeting a fast-growing entry-level market for smartphones.

But Microsoft will determine the next move for Nokia’s handsets.

“Nokia are in a fairly good position with Microsoft as their backer,” said Nordstrom.

Microsoft rebranding 

“For Microsoft, there will be a rebranding exercise and they will spend a lot of money on it but there is no evidence they will catch up with Apple and Samsung,” he cautioned.

“When Nokia was a dominant player, it was twice as big as the third player. Today Samsung is 8-10 times bigger than the third player,” Nordstrom indicated

Nokia will be hampered, too, he remarked, by being tied to Microsoft’s Windows Phone system, which is dwarfed by Android and Apple’s iOS.

Motorola, however, may have a slightly brighter outlook after its takeover by China’s Lenovo, said Julian Jest, analyst at research group Informa.

“That will change the dynamics of how Motorola operates,” Jest noted.

However, Motorola could struggle to innovate, he said, because Google had retained most of its patents and creative staff. 

Motorola was the only one of the three strugglers not to launch a new product during the world’s largest mobile fair.

Motorola is “pretty strong” in Latin America and in North America, where it remains the number-three manufacturer, said its product management director, Rick Osterloh.

Lenovo’s scale and position in the PC business would give Motorola unprecedented access to technology, he added in Barcelona.

SINGAPORE — The apparent collapse of Tokyo-based bitcoin exchange Mt. Gox isn’t bothering Anthony Hope and others who have ditched steady careers in government and finance to build bitcoin companies — and who stand to lose money they have in Mt. Gox.

Hope, a former British Treasury official and now head of compliance at Hong Kong-based MatrixVision, says that while Mt. Gox’s fate is unclear, its troubles form part of a wider shift as more professional players move into the bitcoin mainstream. 

“It’s good for us as a business, not so good for us as consumers,” he said. “Over the longer term it will be good for bitcoin because over time the entire ecosystem will be made more robust.”

Steve Beauregard, chief executive officer and founder of Singapore-based GoCoin, is more blunt about Mt. Gox’s woes: “It’s important in the sense of sweeping away a lot of the early unsophisticated folk who got into this and made a name for themselves, but didn’t have the management horsepower to manage a company.”

Mt. Gox, at one time the biggest bitcoin exchange, abruptly stopped trading this week amid reports on the Internet that more than 744,000 bitcoins — worth around $380 million at prevailing rates — had been stolen. If accurate, that would mean around 6 per cent of the world’s 12.4 million bitcoins minted would be missing. The exchange’s Chief Executive Officer Mark Karpeles told Reuters in an e-mail that his company was “at a turning point” and would issue a statement “soon-ish”. His LinkedIn profile reads: “I have a long experience in company creation, and experienced almost any imaginable kind of trouble.”

On Wednesday, Japan said its authorities were looking into the Mt. Gox closure, and The Wall Street Journal reported that the virtual currency’s exchange had received a subpoena from federal prosecutors in New York. A spokesman for the US Attorney’s office in Manhattan did not respond to requests for comment.

Also, the European Banking Authority warned bitcoin users they were on their own when it comes to losses from using unregulated online currencies, noting there is no safety net as with mainstream bank deposits. 

“Currently, no specific regulatory protections exist in the EU that would protect consumers from financial losses if a platform that exchanges or holds virtual currencies fails or goes out of business,” it said in a statement.

Bitcoins rallied more than 10 per cent on Wednesday, trading at close to $580, according to coinorama.net, which tracks the rate on various exchanges. 

‘Finance has got boring’ 

While bitcoin’s public image remains one of a network of subversive, libertarian geeks, the past year or so has seen a change in the kind of people launching start-ups, say Hope, Beauregard and others in the fledgling industry.

Hope’s colleagues, for example, include a serial entrepreneur, a former Morgan Stanley mergers and acquisitions specialist and a respected figure from the bitcoin community. Hope handled banking policy, taxation rules and freezing suspected terrorists’ assets for the UK government before he moved to Hong Kong. 

Antony Lewis, meanwhile, joined Singapore-based bitcoin exchange itBit from Credit Suisse last November. His colleagues include a former hedge fund analyst, a venture capitalist who invested in IT start-ups on behalf of the Singapore government and a former forex spot trader. 

“Finance has got boring in the past five years,” Lewis said. “It’s not fun, it’s very backward looking and all the innovation is in virtual currencies.”

Such companies are examples of a maturing — not just of the kinds of people attracted to bitcoin, but of the specialist roles companies play in the nascent bitcoin ecosystem.

MatrixVision, for example, helps bitcoin exchanges integrate with the traditional banking system by complying with local laws and regulations, while GoCoin acts as a “PayPal for bitcoin users”, allowing merchants and others to accept bitcoins without the problems of currency volatility and security risk. 

More discerning users 

For sure, the crisis surrounding Mt. Gox is the worst the young crypto-currency has faced, damaging trust and challenging all bitcoin-related companies to respond. 

“Other major players need to show they avoid the mistakes Mt. Gox made, which they are trying hard to do,” said Tomas Forgac, who founded Singapore-based Coin Of Sale, a service for merchants to accept bitcoins as payment.

That, adds Masa Nakatsu, a Japanese entrepreneur who this month founded his own bitcoin start-up, means bringing in more professional technology companies which are able to work with governments and central banks — a skill he says some of the early bitcoin players have not shown. 

“Players will change,” he says, “as the characteristics of the market change”.

This shake-out is already under way as users learn to be more discerning about where to put or exchange their money.

ItBiT’s Lewis says his exchange has seen a steady flow of funds and new accounts, with trading jumping to 10 times normal levels in just the past few days. “ItBit represents the next wave of exchanges where we care about customers and want to have a go at this,” he says. 

Lewis points to key questions that users need to ask of exchanges before entrusting money to them: How easy are they to hack? How well capitalised is the company? Are the deposits insured? 

ItBit, he says, ticks most of those boxes. Clients’ bitcoin funds are held on a computer that’s not connected to the Internet, and doesn’t even have a hard drive or network card. Only itBit’s funds are used for transactions. It has reached out to auditing firms to inspect its procedures and holds regular meetings with global regulators. Such things aren’t cheap, says Lewis, noting ItBit has raised $5.5 million “and we’ll need more as regulation gets tighter”. 

“The next generation of bitcoin companies will be run by people with previous experience of financial service companies and they will need to be capitalised like financial service companies,” he says.

Beauregard, who divides his time between his Singapore start-up and his California home, says financing this won’t be a problem. His GoCoin has raised $500,000 and is about to close out another round of funding. While the number of bitcoin companies raising six figure sums is limited, that will change, he said. 

“Every venture capital firm will have to have their bitcoin plays in 2014,” he added. “Otherwise they’ll be missing the single greatest asset class that’s emerging at the moment.” 

Hakim Mamoni, Hong Kong-based chief technology officer at bitcoin incubator Seedcoin, says a new raft of exchanges are set to appear in the months ahead. He declined to identify them, since most are operating in what the start-up world calls “stealth mode”. 

“That’s why the Mt. Gox event is not troubling me,” he said. “I know we’ll have a vibrant ecosystem in a few months.”

AMMAN — Royal Jordanian (RJ) announced in a press statement on Wednesday that it will suspend operations to Alexandria starting April and to Colombo and Milan the month after. 

“RJ constantly reviews its route network and studies the stations in order to assess the economic feasibility of each destination,” the airline said in the statement.

“At the forefront of the set criteria that determine route profitability are the traffic, the operating expenses and the required fleet operated on these routes,” it  added.

In addition, the market share plays a big role in such decision, in light of the fierce competition witnessed by the air transport industry on a regional and international level. This year, RJ increased the number of flights to several of its 60 non-stop destinations and reduced the frequency to others, based on last year’s operating results and the opportunities and challenges expected to affect air transportation in 2014.

Separately, RJ told the Jordan Securities Commission in a disclosure about its financial results that net operating income fell last year to JD38.1 million from JD79.2 million at the end of 2012.

“Net income turned into a JD39.9 million loss on December 31, 2013,” the company’s disclosure showed.

At the end of 2012, the airline posted a JD1.3 million profit.

RJ attributed the plunge to political conditions in the region, especially the crisis in Syria, and the high fuel costs.

It revealed that the number of passengers dropped by 123,626 travellers last year bringing down the seat factor to 70 per cent in 2013 from 73 per cent in the previous year.