India's communist parties will discuss on Tuesday whether to withdraw support for the government after Prime Minister Manmohan Singh said he would press ahead with a civilian nuclear deal with the United States "very soon".
Prime Minister Singh arrived in Japan on Monday for a G8 summit where he is expected to tell U.S. President George W. Bush -- the man who shook hands with Singh on the accord at the White House in 2005 -- that the delayed deal will go ahead.
The pact would be a major success for Singh, giving India access to U.S. nuclear fuel and technology and moving the Asian giant's trade and diplomatic relations closer to the West.
Leftist parties, which have given Singh a parliamentary majority over the last four years, threaten to withdraw if he moves the deal ahead with the International Atomic Energy Agency, the next step required for the accord to take effect.
A withdrawal would likely lead to a vote of confidence in the government, plunging India into more political uncertainty that has already hit markets. The government believes it will survive the vote, having won the backing of the regional Samajwadi Party.
Singh's comments on Monday about approaching the IAEA "soon" may have been the final straw for the left.
"By making this statement, the PM has put the entire democratic process in a ridiculous position," Communist Party of India (CPI) leader D. Raja was quoted in local media as saying.
"The left now has to act and withdraw," Raja added. The CPI is one of four leftist parties that prop up the ruling coalition in parliament.
Other left leaders said they may wait until Thursday to announce their formal withdrawal, when a meeting between the government and the communist parties is planned.
TOO LATE FOR THE DEAL?
IAEA diplomats said on Monday there was talk of a special July 28 board gathering to discuss the deal but any timetable for advancing it would be unclear until Singh authorised the IAEA to proceed.
"This meeting would be India-specific, but no date for it has been set yet. It would be premature at this point," said an IAEA official who, like the diplomats, asked for anonymity due to political sensitivities.
But some say it could already be too late for the deal to be passed before the end of Bush's term.
With time running out before the U.S. election in November, India needs to seek approval for the deal from the IAEA, then the 45-nation Nuclear Suppliers Group, where there is doubt about it since India is outside the Non-Proliferation Treaty, and finally ratification by the U.S. Congress.
The nuclear deal is potentially worth billions of dollars to U.S. and European nuclear supply companies and would give India more energy alternatives to drive its booming economy.
The support of the SP, which has a history of pragmatic alliances with governments, should ensure that Singh wins the vote and avoids an early election this year just as the government grapples with inflation at a 13-year high and signs of economic slowdown.
The Samajwadi Party has 39 seats in parliament, compared with 59 for the communist parties. The Congress-led ruling coalition needs the support of 44 lawmakers to reach a majority. It would try to win the other five seats from smaller parties.
India's political uncertainty has hit markets. Stocks fell 2.5 percent last week, pushed down not only by worries over the government's future but also by record oil prices and inflation.
On Monday, stocks rose 0.5 percent, partly on news that the government has secured the support of the Samajwadi Party.
Tuesday, July 08, 2008
MARKET PREDICTION
GLOBAL MARKETS ARE EXTREMELY NEGATIVE DUE TO MORE FINANCIAL DERIVATIVE LOSS EXPECTATION.
INDIAN MARKET WILL REMAIN VOLATILE DUE TO RESULT SESSION KNOCKING AT THE DOOR.
NIFTY WILL OPEN IN NEGATIVE NOTE.
TOTAL OI IS 66 K CR AND JULY SERIES IS 57 K CR .
PUT CALL RATIO IS INCHED UPTO 1.19%.
MARKET WOULD TRADE IN BROADER RANGE OF 3850-4050.
TODAY'S LEVELS 3850-3920-3950-4000-4050.
POSITIVE SECTOR IS IT DUE TO RUPEE DEPRECIATION AND NEGATIVE SECTOR IS OIL MARKETING SECTOR AND AVATION DUE TO CRUDE STABILITY AT HIGHER LEVEL.
HAVE A NICE TRADING DAY.
-MR SAM
INDIAN MARKET WILL REMAIN VOLATILE DUE TO RESULT SESSION KNOCKING AT THE DOOR.
NIFTY WILL OPEN IN NEGATIVE NOTE.
TOTAL OI IS 66 K CR AND JULY SERIES IS 57 K CR .
PUT CALL RATIO IS INCHED UPTO 1.19%.
MARKET WOULD TRADE IN BROADER RANGE OF 3850-4050.
TODAY'S LEVELS 3850-3920-3950-4000-4050.
POSITIVE SECTOR IS IT DUE TO RUPEE DEPRECIATION AND NEGATIVE SECTOR IS OIL MARKETING SECTOR AND AVATION DUE TO CRUDE STABILITY AT HIGHER LEVEL.
HAVE A NICE TRADING DAY.
-MR SAM
EU optimistic about climate change deal
The Group of Eight leaders are set on Tuesday to take an "important step" forward on fighting global warming, the stickiest issue at their summit, a European Union source said.
The European Union and Japan have been pressing for a G8 statement that goes beyond a summit pledge last year to "seriously consider" a goal of halving global carbon emissions by mid-century and refers to the need for interim targets as well.
Senior G8 officials met late into the night in Japan to thrash out wording that would allow President George W. Bush to put aside deep misgivings and sign on to a long-term global goal, the EU source said, asking not to be named.
The officials had reached a tentative agreement on the statement, according to both the EU source and a Japanese government source. Neither would give details of the pact.
Bush has insisted that Washington cannot agree to binding targets unless big polluters such as China and India commit to reining in their emissions of the greenhouse gases that cause global warming.
"The European Commission is confident and optimistic about the outcome and that this will mean an important step compared with Heiligendamm," the EU source told Reuters, referring to last year's G8 summit in Germany.
"You know what the (European Commission) president's idea of success was and when he was briefed this morning there was a smile on his face."
The agreement was expected to be unveiled later on Tuesday.
German Chancellor Angela Merkel said on Tuesday after a morning meeting with U.S. President George W. Bush that she was "very satisfied" with the G8's work on the issues of climate change as well as on soaring food and oil prices, also high on the agenda.
Bush did not mention those issues in his brief comments after the bilateral talks.
The statement on climate change is expected to highlight agreements to develop new technologies and provide funds to help poor countries limit greenhouse gas emissions.
But activists were wary of prospects for real progress until a new U.S. president takes office next year.
"It's a little bit of a kabuki play," said Alden Meyer, director of strategy and policy for the Union of Concerned Scientists. "Everyone is just waiting for the next president to see how that changes things."
SOARING FOOD AND FUEL PRICES
Global warming ties into other big themes at the three-day meeting at a plush mountain-top hotel on the northern Japanese island of Hokkaido, where 21,000 police have been mobilized.
U.N. Secretary-General Ban Ki-moon, who attended talks on Monday with African leaders, said the drive to reach eight Millennium Development Goals (MDGs) set by the U.N. General Assembly to reduce world poverty by 2015 was being directly hampered by global warming.
He urged the G8 to send a strong political signal by setting a long-term goal of halving greenhouse gas emissions by 2050, backed by intermediate targets that would set market forces in train to reduce energy consumption.
The G8 will set out its positions on climate change, aid to Africa, rising food prices and the global economy in a raft of statements due to be issued later on Tuesday.
Japan's Yomiuri newspaper said on Monday that the leaders' communique would highlight downside risks to the world economy and label rising food and oil prices a "serious threat".
The higher price of oil, which hit a record high of $145.85 a barrel last week, is taking a particularly heavy toll on the world's poor. A World Bank study issued last week said up to 105 million people could drop below the poverty line due to the leap in food prices, including 30 million in Africa.
"How we respond to this double jeopardy of soaring food and oil prices is a test of the global system's commitment to help the most vulnerable," World Bank President Robert Zoellick said on Monday.
"It is a test we cannot afford to fail," he told reporters.
To help cushion the blow, officials said the G8 would unveil a series of measures to help Africa, especially its farmers, and would affirm its commitment to double aid to give $50 billion extra in aid by 2010, with half to go to the world's poorest continent.
The summit wraps up on Wednesday with a Major Economies Meeting comprising the G8 and eight other big greenhouse gas-emitting countries, including India, China and Australia.
The European Union and Japan have been pressing for a G8 statement that goes beyond a summit pledge last year to "seriously consider" a goal of halving global carbon emissions by mid-century and refers to the need for interim targets as well.
Senior G8 officials met late into the night in Japan to thrash out wording that would allow President George W. Bush to put aside deep misgivings and sign on to a long-term global goal, the EU source said, asking not to be named.
The officials had reached a tentative agreement on the statement, according to both the EU source and a Japanese government source. Neither would give details of the pact.
Bush has insisted that Washington cannot agree to binding targets unless big polluters such as China and India commit to reining in their emissions of the greenhouse gases that cause global warming.
"The European Commission is confident and optimistic about the outcome and that this will mean an important step compared with Heiligendamm," the EU source told Reuters, referring to last year's G8 summit in Germany.
"You know what the (European Commission) president's idea of success was and when he was briefed this morning there was a smile on his face."
The agreement was expected to be unveiled later on Tuesday.
German Chancellor Angela Merkel said on Tuesday after a morning meeting with U.S. President George W. Bush that she was "very satisfied" with the G8's work on the issues of climate change as well as on soaring food and oil prices, also high on the agenda.
Bush did not mention those issues in his brief comments after the bilateral talks.
The statement on climate change is expected to highlight agreements to develop new technologies and provide funds to help poor countries limit greenhouse gas emissions.
But activists were wary of prospects for real progress until a new U.S. president takes office next year.
"It's a little bit of a kabuki play," said Alden Meyer, director of strategy and policy for the Union of Concerned Scientists. "Everyone is just waiting for the next president to see how that changes things."
SOARING FOOD AND FUEL PRICES
Global warming ties into other big themes at the three-day meeting at a plush mountain-top hotel on the northern Japanese island of Hokkaido, where 21,000 police have been mobilized.
U.N. Secretary-General Ban Ki-moon, who attended talks on Monday with African leaders, said the drive to reach eight Millennium Development Goals (MDGs) set by the U.N. General Assembly to reduce world poverty by 2015 was being directly hampered by global warming.
He urged the G8 to send a strong political signal by setting a long-term goal of halving greenhouse gas emissions by 2050, backed by intermediate targets that would set market forces in train to reduce energy consumption.
The G8 will set out its positions on climate change, aid to Africa, rising food prices and the global economy in a raft of statements due to be issued later on Tuesday.
Japan's Yomiuri newspaper said on Monday that the leaders' communique would highlight downside risks to the world economy and label rising food and oil prices a "serious threat".
The higher price of oil, which hit a record high of $145.85 a barrel last week, is taking a particularly heavy toll on the world's poor. A World Bank study issued last week said up to 105 million people could drop below the poverty line due to the leap in food prices, including 30 million in Africa.
"How we respond to this double jeopardy of soaring food and oil prices is a test of the global system's commitment to help the most vulnerable," World Bank President Robert Zoellick said on Monday.
"It is a test we cannot afford to fail," he told reporters.
To help cushion the blow, officials said the G8 would unveil a series of measures to help Africa, especially its farmers, and would affirm its commitment to double aid to give $50 billion extra in aid by 2010, with half to go to the world's poorest continent.
The summit wraps up on Wednesday with a Major Economies Meeting comprising the G8 and eight other big greenhouse gas-emitting countries, including India, China and Australia.
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