Spanish Budget Avoids Austerity Measures

MADRID — Confident that Spain is emerging from a prolonged recession, the government on Friday presented a budget for 2014 that was largely free of the unpopular austerity measures of recent years.

The budget is based on a forecast that the Spanish economy will grow 0.7 percent next year, up from the government’s previous forecast of 0.5 percent. Gross domestic product is expected to contract 1.3 percent this year.

Calling it a “budget of economic recovery,” Cristóbal Montoro, the budget minister, forecast that the proposal would “open the door to job creation in our country” since it lacked the tax increases and heavy spending cuts of recent years.

The government also forecast that the unemployment rate would fall to 25.9 percent in 2014, down from the record 27 percent that it reached in the first quarter of this year.

As part of its belt-tightening, the government has extended a salary freeze for civil servants for a fourth consecutive year. And on Friday, it approved changes to the pension system intended to save about 800 million euros ($1.08 billion) next year.

Having requested a bailout for its suffering banks in June of last year, the Spanish government has been under pressure to stick to its budgetary commitments, even as it faced frequent street protests against a series of spending cuts and tax increases.

Given the depth of Spain’s recession, the European Commission agreed last May to give Madrid more time to reach its budgetary targets. The Spanish deficit is expected to fall to 6.5 percent of gross domestic product this year. That would be down from a revised deficit of 6.8 percent of G.D.P. last year, which was 0.2 percentage points less than what Madrid had initially estimated. For 2014, the target is for a deficit of 5.8 percent of G.D.P.

One of the most significant turnarounds for Spain has been the recent fall in its borrowing costs as investors shifted the spotlight to Italy’s political fragility and the perceived risk that Italy poses for the euro zone. The interest rate premium demanded by investors for buying Spanish government bonds rather than Germany’s benchmark bonds fell this month below that of Italy for the first time since March of last year.

Thanks to that improvement, Mr. Montoro said, the cost of financing the country’s debt should fall 5.2 percent next year, to 36.6 billion euros.

While Spain is emerging from a two-year recession, Prime Minister Mariano Rajoy and his ministers have recently cautioned that the country still faced a significant economic challenge, with continued weakness in consumer spending and a reluctance by banks to provide credit.

The 2014 budget and the proposed changes to the way pension payments are calculated will now need to go to Parliament for a vote, but that is expected to be a formality as Mr. Rajoy’s Popular Party holds an absolute majority.

Under Pressure, China Measures Its Impact in Myanmar

China’s ambition of transporting energy through the Indian Ocean and across the mountains of Myanmar seems close to fulfillment. Natural gas is scheduled to start flowing in July from wells deep in the Bay of Bengal through a 500-mile pipeline. Oil will run in a parallel pipe at the end of the year.

But for China, the cost of the pipelines has been far greater than the several billion dollars that the China National Petroleum Corporation, China’s energy giant, has spent on construction. With its projects challenged more than ever by activists energized by Myanmar’s democratic opening, China has been trying to repair its tarnished reputation among residents here, and in the country at large.

Farmers and fishermen in this remote coastal region — who made little headway while objecting to lost lands and diminished catches under Myanmar’s repressive military junta — are winning some concessions. In central Myanmar, monks have joined with ancestral landholders to stop a Chinese-led conglomerate from leveling a fabled mountain embedded with copper.

And last week, in a new ominous sign for the Chinese, guerrillas of the Shan State Army attacked a compound belonging to the Myanmar Oil and Gas Enterprise, a partner with the Chinese oil company, not far from the pipeline and close to China’s border.

In response to the broad opposition, Beijing has ordered secretive state-owned Chinese companies to do something they have rarely done before: publicly embrace Western-style corporate social responsibility practices and act humbly toward the people who live near their vaunted projects.

The grass-roots protests against Chinese projects disturb Beijing because they come amid a scramble for influence in Myanmar between China and the United States.

Official visits give a glimpse of the diplomatic jockeying. President Thein Sein of Myanmar, who heads the quasi-civilian government, will visit the White House on Monday in what will be the first encounter in Washington between an American president and a leader of the country formerly known as Burma, since 1966.

A member of the military junta that China backed for decades, Mr. Thein Sein met President Obama in November during what was the first visit by a sitting American president to Myanmar. Mr. Thein Sein has visited China twice in the past six months. The leader of the opposition, Daw Aung San Suu Kyi, was at the White House earlier this year and is expected in Beijing soon.

“It is in China’s self interest to think about the impact of their investments,” said Thant Myint-U, a Myanmar historian and author of “Where China Meets India: Burma and the New Crossroads of Asia.” “In the long term, it is difficult to see a Myanmar where China is not important. But there is a chance that China will no longer be the dominant actor in Myanmar, and that is worrying for some people in China.”

That concern has prompted Chinese officials, worried about losing Myanmar to the Americans, to push back. When a veteran Chinese diplomat, Wang Yingfan, was appointed several months ago as special envoy to Myanmar, he immediately flew there and spoke about the social obligations of Chinese state-run corporations.

And Gao Mingbo, the head of the political section at the Chinese Embassy in Yangon, said: “The companies must retain the support of the local communities. That has been the consistent message of the embassy: to be open, to be engaged.”

He created the embassy’s Facebook page; although Facebook is blocked in China, it is a tool that Chinese officials in Yangon, Myanmar’s commercial capital and main city, are using to reach citizens.

“If you don’t walk the walk and just talk the talk, you won’t win the hearts and minds of the local people,” Mr. Gao said.

Whether China’s outreach efforts will quell anti-China protests is an open question.

Wai Moe contributed reporting.

Bits Blog: Tougher European Data Protection Measures Proposed by a Member of the European Parliament

In the end, all of those trans-Atlantic flights may not have paid off.

Over the last year, representatives of the United States government and American technology companies have repeatedly traveled to Brussels and Strasbourg in the hopes of containing an effort by the European Commission to strengthen data protection rules for citizens of the European Union.

But on Tuesday morning, Jan Philipp Albrecht, a representative of the European Parliament reviewing the draft regulation, made public a report in which he proposed even stronger measures.

Mr. Albrecht’s proposals represent his own opinions and may not be approved by his parliamentary colleagues. Even so, his recommendations indicate that American lobbying efforts are up against European momentum.

“I think they are trying to slow a moving train, which is difficult to do,” said Marc Rotenberg, the executive director of the Electronic Privacy Information Center, an advocacy group in Washington.

Last January, the European Commission introduced a draft proposal for new data protection rules. The proposed rule would supersede a data protection directive from 1995, which laid out principles for each member state to enact individually.

The draft regulation clarifies and elaborates on those original principles — such as the need for companies and institutions to obtain citizens’ consent before collecting information about them.

It would grant European Union citizens a fundamental new right: data portability or a citizen’s right to easily transfer his or her own personal posts, photos, and video from one online service site to another.

And it comes with a big stick: Companies that violated the rule would be liable to penalties of up to 2  percent of worldwide revenues.

Although the effort is intended to standardize and consolidate the enforcement of data protection regulation across the 27 European Union countries, some American regulators, industry groups and scholars have objected. They say the draft rule was overly broad and burdensome for technology companies to carry out.

Now Mr. Albrecht has proposed further strengthening the data protections by granting citizens additional control over information collected about them — like the right not to be subject to profiling. In his report, Mr. Albrecht, a member of the German Green Party who is the representative of the European Parliament committee reviewing the draft proposal, also said citizens must consent to data collection by opting in and not be asked to opt out by changing a preselected option like a already-checked box.

“The use of default options which the data subject is required to modify to object to the processing, such as preticked boxes, does not express free consent,” Mr. Albrecht wrote.

In a phone interview, Mr. Albrecht said the European Parliament was likely to strengthen parts of the proposed regulation. “There is a huge interest of European citizens in having strong data protection,” Mr. Albrecht said.

That could pose challenges to technology companies.

Granting people the right to transfer the updates and photos they posted on Facebook to Google Plus, for example, may sound perfectly reasonable, said Yianni Lagos, a legal and policy fellow at Ohio State University and the co-author of a recent analysis of the European draft regulation published in the Maryland Law Review. But the proposed rule broadly requires that a company transfer a person’s data “without hindrance” and in a commonly used format.

“We’re not exactly sure what that means,” Mr. Lagos said.

“The largest challenge is the concept of interoperability,” Mr. Lagos said. “Translating from a coded format to a commonly used format, that is what will be difficult and costly to achieve.”

Unhindered transfer of a person’s entire record could also increase the breadth of identity theft, Mr. Lagos said: “One-time access by a hacker could turn into a lifetime data breach.”

Technology companies, he added, must now face the increased liability that could come with the proposed penalty for violators.

“The big difference is the fine,” Mr. Yianni said. “Now there’s a lot more reason to comply.”

Bank of England Divided on Continuing Stimulus Measures

LONDON — Policymakers at the Bank of England are divided over the future of their multibillion-pound program of bond purchases to stimulate the economy, according to minutes of their discussions released Wednesday, which suggests that prospects for an expansion of the program in the near term may be fading.

With the British economy likely to emerge from recession in the third quarter, but still facing extremely weak growth, many analysts had expected more stimulus in November.

But there is also growing sense that, with interest rates already at a record low, and the jury still out on the impact of the central bank’s asset purchases on the economy, monetary policy is becoming less effective as a means of stimulus.

Instead of central-bank stimulus measures, some economists favor a slowdown in the pace of large government spending cuts intended to cut the country’s budget deficit.

The bank’s policy makers also noted that consumer price inflation was still above the bank’s 2 percent annual target and probably would not decline this year, as had been hoped, because of rising energy and food costs. Economists note that inflation argues against an increase in stimulus, for fear of overheating the economy.

The release of the minutes coincided Wednesday with positive new data on jobs. Britain’s unemployment rate for June to August 2012 was 7.9 percent of the economically active population, down 0.2 percentage points from March to May 2012, according to the Office for National Statistics, an independent agency that prepares data for the government. There were 2.53 million unemployed people, down 50,000 from March to May 2012, the office said.

The record of the October meeting of the central bank’s Monetary Policy Committee showed that there was unanimous agreement to hold interest rates at a record low of 0.5 percent and not to expand the £375 billion, or $600 billion, purchasing plan, known as quantitative easing.

But the minutes also indicate that the debate on what to do at next month’s meeting will be finely balanced.

“There were some differences of view between members about the outlook and the likelihood that further easing in policy would be required,” the minutes said. “But there was agreement that there was little to be gained at this meeting in changing the current program of asset purchases.”

The bank minutes noted that consumer price inflation had fallen to 2.5 percent in August, from 2.6 percent in July, still slightly above the 2 percent target. “But higher oil prices and likely rises in domestic energy prices and some foodstuffs meant that inflation might remain broadly flat over the rest of the year, rather than gently falling as expected,” the minutes said.

Martin Weale, a member of the bank’s monetary policy committee, dampened expectations about more asset purchases last week when he said in an interview with the Daily Mail newspaper that it was “not self-evident” that “substantial extra support for the economy would be compatible with the inflation target.”

His comments, along with the labor report “provided some support for more hawkish members” of the central bank’s policy committee, Neville Hill, director of European economics at Credit Suisse, wrote in a note.

Rob Wood, chief U.K. economist for Berenberg Bank in London, said that the central bank’s position on continuing the stimulus would also depend on other signs of recovery in the economy.

“Productivity will be absolutely critical to the outcome of the committee’s November decision,” Mr. Wood said. “If productivity growth remains weak, there are limits to how much more monetary policy” can do “to boost growth without raising inflationary pressures.”