EU meets for fuel talks From CIARAN GILES of AP 21sep00

8.10am (AEDT) MADRID, Spain: European Union transport ministers met for emergency talks in Luxembourg today to try to stop fuel price protests that have blockaded fuel depots, disrupted ports and blocked roads across the continent.

The protests, now in their third week, showed signs of spreading to Canada where 1800 independent truckers warned they would go on strike at Friday night unless something was done to reduce fuel costs.

The 15 European Union ministers gathered in Luxembourg to try to find a way to end the demonstrations against the high price of fuel in Europe - where fuel taxes range from 51 to 73 per cent.

The ministers were considering appealing to the Organisation of Petroleum Exporting Countries to produce more oil. They were also considering making a call for a unified fuel tax.

Thousands of fishermen and farmers throughout Spain shut down ports, surrounded wholesale fish markets and blockaded fuel distribution centres in the sixth day of protests on the Iberian peninsula.

Almost 200 farmers on tractors and in trucks shut off fuel delivery to parts of southern and eastern Spain when they temporarily surrounded three fuel distribution centres.

On the Balearic Islands in the Mediterranean, about 60 fishing boats blockaded the ports of Palma de Mallorca and Alcudia, even blocking passenger ferries.

''We're at the edge of an economic abyss,'' said Pep Bonnin, spokesman for the Mallorcan Fisherman's Guild. Diesel fuel in Spain has gone up 55 per cent in the past year.

In Germany, some 300 taxis brought traffic to a near-standstill in the northern city of Kiel. The drivers threatened fare increases of 15 per cent if the Government didn't come to their aid to defray fuel costs.

But only some 30 trucks turned out for a go-slow protest in Frankfurt, far fewer than police expected.

Before the Luxembourg meeting, German Transport Minister Reinhard Klimmt criticised other countries for bringing in ''wild'' measures to try to resolve the crisis.

He was alluding to partial remedies introduced by some countries, such as Finland, which announced a cut in the road tax for truckers.

Last week, Germany pledged measures to help commuters pay for petrol and needy apartment dwellers pay for heating oil.

Klimmt backed the idea of credits for hard-pressed transport firms. Transport of goods by roads accounts for 85 per cent of all cargo traffic in the European Union.

The protests began in France on September 4. Although settled there by concessions, the actions spread across Europe.

http://news.com.au/common/story_page/0,4057,1225323%255E1702,00.html

-- Martin Thompson (mthom1927@aol.com), September 20, 2000

Answers

"...skyrocketing oil prices...."

Nando Times

IMF worried as euro sinks to new low

By HANS GREIMEL, Associated Press

PRAGUE, Czech Republic (September 20, 2000 1:03 p.m. EDT http://www.nandotimes.com) - Weak German economic figures pushed the euro to another all-time low Wednesday, despite encouragement from global finance chiefs for central banks to intervene in money markets and boost the currency.

"It is clear that interventions cannot be a taboo," said International Monetary Fund Managing Director Horst Koehler, speaking at a news conference as the joint IMF and World Bank annual meetings opened.

Just a day earlier, IMF chief economist Michael Mussa also signalled support for a European Central Bank buyback of its own currency to lift the exchange rate.

"If not now, when?" Mussa asked.

That message became more poignant Wednesday, when the euro slipped below 84.50 cents for the first time since it became the common currency of 11 European nations in January 1999. The euro is down about 27 percent since its launch.

Its latest decline was fueled by the release of poor economic statistics from Germany that cast doubt on whether Europe's economic engine would continue running at high gear.

The so-called Ifo index, which measures business sentiment in western Germany, deteriorated for the third straight month.

Skyrocketing oil prices, which stand at a 10-year high, are hurting western German businesses, which account for around 90 percent of the country's industrial output.

A stab at intervention would be a groundbreaking step for the Frankfurt-based European Central Bank, which manages monetary policy in the 11 countries using the euro.

Politicians and finance ministers throughout the region have made a habit of trying to prop up the euro with verbal support every time it drops.

Wednesday's fall was no different, with Bank of Portugal Governor Vitor Constancio chiming in to say the currency is "grossly undervalued."

But even Constancio did not broach the topic of intervention.

Koehler also said the euro was undervalued, given Europe's generally strong economic recovery. But he stressed that intervention "is part of the instruments that any central bank or government has available."

Still, Koehler warned that successful interventions must be coordinated with central banks in other countries, hinting that a unilateral buyback by the ECB would fail to have lasting effects on the euro's exchange rate.

At the same time, a top Goldman Sachs executive said euro countries were damaging the ECB's credibility by meddling in its monetary decisions.

"The problem is that the ECB is a central bank in name but doesn't have all the roles of a central bank," said Goldman Sachs managing director and chairman of international operations Peter Sutherland, speaking in Brussels.

"It doesn't have a single voice when finance ministers and even prime ministers are all talking around the euro."

-- Rachel Gibson (rgibson@hotmail.com), September 20, 2000.