Reuters News - Euro zone, IMF fail to strike Greek debt deal

1 of 6. Luxembourg's Prime Minister and Eurogroup chairman Jean-Claude Juncker (R) talks with Spain's Economy Minister Luis de Guindos (L) at a Eurogroup meeting in Brussels November 20, 2012.

Credit: Reuters/Yves Herman

By Jan Strupczewski, Annika Breidhardt and Maria Paravantes

BRUSSELS/ATHENS | Wed Nov 21, 2012 3:12am EST

(Reuters) - Greece's international lenders failed for the second week running to agree how to get the country's debt down to a sustainable level and will have a third go in six days' time.

After nearly 12 hours of talks through the night during which myriad options were discussed, euro zone finance ministers, the International Monetary Fund and the European Central Bank failed to reach a consensus, without which emergency aid cannot be disbursed to Athens.

The IMF has so far refused to give Athens an extra two years to meet its debt target, while European governments led by Germany refuse to write off loans, two options which might make the targets easier to reach.

"We are close to an agreement but technical verifications have to be undertaken, financial calculations have to be made and it's really for technical reasons that at this hour of the day it was not possible to do it in a proper way and so we are interrupting the meeting and reconvening next Monday," Eurogroup chairman Jean-Claude Juncker told reporters.

"There are no major political disagreements," he said.

Nonetheless, the euro extended its fall against the dollar in response, and German bond futureswere higher as investors were expected to rush into the safe haven.

Prime Minister Antonis Samaras said the lack of a debt deal between the country's lenders over technical reasons did not justify holding up aid needed to avert Greek bankruptcy. Greece's next big debt repayment is due in mid-December.

"Greece did what it had committed it would do. Our partners, together with the IMF, also have to do what they have taken on to do," Samaras said in a statement.

"It is not only the future of our country, but also the stability of the entire eurozone that depends on the successful completion of this effort in the following days," he added. "Any technical difficulties in finding a technical solution do not justify any negligence or delays."

Athens says it has enacted tough reforms but needs more time to reach fiscal targets agreed with its lenders because its economy has continued to shrink.

A document prepared for the meeting and seen by Reuters declared that Greece's debt cannot be cut to 120 percent of GDP, the level deemed sustainable by the IMF, unless either euro zonemember states write off a portion of their loans to Greece or the IMF agrees to extend its deadline by two years to 2022.

The 15-page document, circulated among ministers, set out in black-and-white how far off track Greece is in reducing its debt to the target from a level of around 170 percent of GDP now.

Germany and other EU states say writing down their loans to Greece would be illegal.

"A debt haircut may be the most comfortable and easy path for the affected country ... but our aim must be to fight the roots of the indebtedness," Norbert Barthle, budget spokesman for German Chancellor Angela Merkel's Christian Democrats said.

"It would cost money, it would be a fatal signal to Ireland, Portugal and possibly Spain, as they would immediately ask why they should accept difficult conditions and push through difficult measures...and it would have consequences under budget law," Barthle said in a radio interview.

The Eurogroup document said Greek debt could fall to 120 percent of GDP two years late - in 2022 - without having to impose any losses on euro zone member states or forcing through a buy-back of Greek debt from private-sector bondholders.

But International Monetary Fund chief Christine Lagarde rejected such an extension at similar talks last week.

Without any corrective measures the document said Greek debt would be 144 percent in 2020 and 133 percent in 2022, figures first reported exclusively by Reuters last week.

"To bring the debt ratio down further, one needs to take recourse to measures that would entail capital losses or budgetary implications for euro area member states," the document said.

"Capital losses do not appear to be politically feasible and would jeopardize, at least in a number of member states, the political and public support for providing financial assistance."

Juncker said at a meeting a week ago that he wanted to extend the target date to reduce Greek debt by two years to 2022, but Lagarde insists the 2020 goal should stand.

The document appeared designed in part to convince the IMF that Greek debt could be made sustainable just two years behind schedule if only Lagarde would soften her stance. She is believed to favor euro zone member states taking a writedown on loans to Greece in order to stick to the 2020 goal.

DEBT BUYBACK

Among the main measures under consideration to bring Greece's debt burden down as rapidly as possible is a debt buy-back under which Greece would offer to purchase bonds from private investors at a discount to their nominal value.

Several options are under consideration, officials have said and the document makes clear, including using about 10 billion euros to buy back bonds at between 30 and 35 cents in the euro.

There are also proposals to reduce the interest rate on loans already extended by euro zone countries to Greece, to impose a moratorium on interest payments and lengthen the maturities on loans, all of which would cut the debt burden.

Pressure for the euro zone to come up with a solution is high not just because Greece is running out of money and financial markets want a dependable solution, but because Athens has initiated virtually all the steps demanded of it to cut spending, raise taxes and overhaul its economy.

"Greece has delivered. Now it's up to us to deliver," Juncker said.

Because of the latest delay, the ministers were unable to give a go-ahead for the next tranche of up to 44 billion euros of emergency funds to be paid to Athens.

The payment would provide short-term relief, but it is long-term debt that is the core issue.

The European commissioner for economic affairs, Olli Rehn, said as he arrived for the meeting that the euro zone should be ready to do more for Greece in the coming years, an apparent nod to the idea of government-sector debt writedowns.

"It's essential now that we take a decision on a set of credible measures on debt sustainability and, at the same time, we need to be ready to take further decisions in the light of future developments," Rehn said.

(Additional reporting by Alexandra Hudson, Michelle Martin and Madeline Chambers in Berlin and Deepa Babington in Athens; Writing by Luke Baker, Mike Peacock and Peter Graff)

BBC News - Russia and Europe joint Mars bid agreement approved

By Jonathan AmosScience correspondent, BBC News, Naples

Europe and Russia are cementing their plans to explore Mars together.

The ExoMars project has suffered a number of delays and setbacks

European Space Agency member states have approved the agreement that would see Russia take significant roles in Red Planet missions in 2016 and 2018.

The former is a satellite that will look for methane and other trace gases in the atmosphere; the latter will be a surface rover.

Russian participation fills a void left by the Americans who pulled back from the projects earlier this year.

For a while, it looked as though the ventures, known as ExoMars, might have to be cancelled. But Russian desire to pick up many of the elements dropped by the US means ExoMars is now on a much surer footing.

Esa member states indicated their happiness with the cooperation text on Monday. All that remains is for the documentation to be signed by both parties.

This is likely to happen before the end of the year.

The ExoMars plan includes an orbiter as well as a surface rover

'Other opportunities'

Officials say they want the ExoMars partnership to be the catalyst for further planetary exploration ventures.

"We have other opportunities to consider cooperation - for Jupiter missions, for example," said Frederic Nordlund, the head of international relations at Esa.

"Esa has selected Juice, a large mission for Jupiter, and in Russia there is a plan for a Ganymede lander which is of interest to Europe.

"We are initiating discussions to see how we could co-operate on those missions. But this could extend to lunar robotics where we would like to see if we could join forces as well.

"Russia already has its Luna-Glob and Luna-Resurs missions, which are already being implemented, but we're considering other opportunities for this in other areas."

The planned agreement calls for Russia to provide the Proton rockets to send the two ExoMars missions on their way.

Russia would also get instrument space on the 2016 satellite and the 2018 rover. In addition, its researchers would join the science teams that exploit the missions' data.

One key contribution would be the landing system that places the rover on the surface of the Red Planet. With the exception of some key components, this would be built by Russian industry.

ExoMars was formally initiated in Europe by ministers in 2005, and Esa has so far spent in excess of 400m euros on technology development.

The final budget on the European side is projected to be about 1.2bn euros for the two missions.

So far, 850m of that total has been committed. But officials remain confident of closing the gap.

The 2016 orbiter will try to track down the sources of methane that have been observed at Mars. Its presence in the atmosphere is intriguing and could conceivably indicate biological activity on the planet. A key role for the satellite also will be to provide the communications relay for the 2018 rover.

The six-wheeled vehicle would look for signs of past or present life. It would have the ability to drill 2m into the ground.

Reuters News - Unhackable telecom networks come a step closer

By Chris Wickham

LONDON | Mon Nov 19, 2012 7:04pm EST

(Reuters) - Researchers have come up with a way of protecting telecoms networks using quantum cryptography without the need for expensive dedicated optical fiber links.

The technique, developed by Toshiba's European research laboratory in Britain and Cambridge University engineers, is a step towards perfect security for everything from credit card transactions to private health records.

Quantum cryptography relies on the rules of quantum theory to generate uncrackable codes that encrypt data in a way that reveals if it has been eavesdropped or tampered with.

Governments and the military are thought to be using the technology already, based on systems available from firms like ID Quantique in Switzerland and U.S. rival MagiQ.

But until now, the quantum keys to encode and decode the information had to be sent on single photons, or particles of light, across a dedicated optical fiber separate from the line carrying the data itself.

"The requirement of separate fibers has greatly restricted the applications of quantum cryptography in the past, as unused fibers are not always available for sending the single photons, and even when they are, can be prohibitively expensive," said Andrew Shields from Toshiba Research in Cambridge.

"Now we have shown that the single photon and data signals can be sent using different wavelengths on the same fiber."

The Toshiba system, outlined in research published in the journal Physical Review X, still requires an advanced detector that picks up the encryption key in a time window of just 100 millionths of a micro-second, at the expected arrival time of the single photons.

But the detector, which is able to filter out the 'noise' in the fiber caused by the data itself, avoids the cost of laying down dedicated optical fiber lines.

Previous work has managed to use quantum cryptography on shared optical fibers but only over very short distances, with low capacity rates, or with data moving only in one direction.

The researchers say their system can do it over 50 km with data moving back and forth and an encryption capacity 50,000 times the record over the same distance.

Zhiliang Yuan, who worked on the research, told Reuters the team plan to carry out field tests on the system but he predicted it could be rolled out commercially within a few years.

(Editing by David Cowell)

Reuters News - Petrified by the fiscal cliff? Relax, it's just a slope

By Edward Krudy

NEW YORK | Sun Nov 18, 2012 8:08am EST

(Reuters) - The "fiscal cliff" sounds like a scary place. Headlines about "taxmaggeddon" are flashing on TV screens, next to clocks ticking down to January 1.

The Dow Jones Industrial Average has skidded more than 7 percent over the last month, largely due to concerns about the standoff in Congress over how to stop a barrage of tax hikes and spending cuts.

But some major investors say the doomsayers are getting too much attention and cliff watchers should relax a bit.

These investors argue that the U.S. economy does not face immediate disaster if lawmakers can't reach a deal by the end of the year, and there will still be time for Washington to come up with a deal in early 2013 before major damage starts to be done.

"It is not impossible at all that they miss by a little and then come back and get it," said billionaire investor Ken Fisher, whose firm Fisher Investments oversees about $38 billion in equities. "There's a minor risk ... but getting it done 10 days later is not really a big deal."

Others say Washington has more time than that.

Billionaire investor Warren Buffett, long supportive of higher taxes for America's super-rich, told CNN this week that lawmakers could have as much as a couple of months next year to reach a deal.

"The fact that can't get along for the month of January is not going to torpedo the economy," he said.

Chief executives warn of the damaging effects of uncertainty on their investment and hiring decisions. Many investors have focused on the risk of a new recession if the cliff is not addressed. And tumbling stock prices can add to the sense of panic and hurt both business and consumer confidence.

The Congressional Budget Office estimates that the tax hikes and spending cuts would amount to $600 billion in 2013 and could cause the U.S. economy to contract by nearly 3 percent in the first half of the year.

But that does not mean the pain begins automatically at the start of January.

For example, there could be a long lag, possibly lasting several months, between January 2, when the budgets of government agencies would be cut, and the actual implementation of those cuts to programs ranging from research grants to court room security.

On the tax side, the Treasury Department and the Internal Revenue Service have flexibility as to when to implement new, higher taxes. And even if higher withholding rates do take effect in January, they could be retroactively reversed later in the year.

In short, what has been dubbed a cliff is more like a fiscal slope that gets steeper as time goes on. How far the U.S. economy slides down it will depend on how quickly lawmakers in Washington take to do a deal.

A lot will depend on whether talks between administration officials and Congressional leaders can remain cordial and appear to be making progress, even if that progress is slow. They got off to what seemed to be a good start on Friday when both Democratic and Republican Congressional leaders came out of a meeting with President Barack Obama talking about the need for a deal, giving a boost to U.S. stock prices.

But some are skeptical. J. Dan Denbow, a fund manager at USAA in San Antonio, Texas, has been watching the value of his precious metals funds tank as fears of a U.S. recession dent the asset class. He thinks Congress will end up going over the cliff and that markets are in for a lot more volatility.

"Everybody's playing nice in the same sandbox," said Denbow of the recent round of cross-party meetings at the White House. "But they don't tell you what kind of cat fights they had behind closed doors."

KNIVES POISED, NO ORDERS TO CUT YET

Stephen Fuller, an economist at George Mason University, said it could take until the end of March before spending cuts begin to be implemented.

The government's budget managers appear to be in no hurry to take out their scissors.

The Office of Budget Management, the executive branch tasked with overseeing the cuts, has issued a report detailing how they will affect 1,200 government agency accounts. But breaking this down to a program-by-program plan is proving "challenging," given the scale of the task, the OMB said.

By the end of October the OMB had not advised agencies how to prepare for the so-called sequesters, or automatic spending cuts, according to a government budget expert who had talked to staff at OMB as well as agency budget offices.

The expert, speaking on condition of anonymity, said the OMB was still waiting for lists of programs from the Defense Department.

The agencies "would see the reduction in the funds that they have in Treasury immediately but obviously it takes a while for all that spending to occur so that's why people are talking about the fiscal slope in terms of the sequestration cuts," the budget expert said.

TAXING ISSUES

A more immediate concern in terms of the economic impact is the expiration on January 1 of the Bush-era tax cuts and the lower payrolls tax cuts which were introduced in early 2011. If they lapse, American consumers could see an immediate bite out of their take-home pay as tax rates revert to higher levels.

However, government tax lawyers, speaking off the record because they were not authorized to talk publicly, said the U.S. tax code gives the Treasury and the IRS some flexibility when deciding withholding levels appropriate to tax law.

If legislation was in progress to restore all or some of the tax cuts early in 2013 they might be able to hold off on increasing withholdings from paychecks, they said.

There is also the option of cutting taxes retroactively after the new higher rates have been introduced. This could end up in rates lower than current level to make up for any temporary payment of higher tax rates, giving a boost the economy once applied, experts say.

There may be further room for maneuver by U.S. tax officials.

Americans typically give more to the tax man than they need with each paycheck and end up getting a rebate after the end of each tax year. That may allow tax officials to refrain from applying at least part of any higher rates in early 2013, if a deal to restore lower tax rates appears close.

"My understanding is the law gives a lot of flexibility," said Bob Williams, an economist at the liberal-leaning Urban Institute and previously a tax specialist at the CBO.

Two years ago, Congress was in a similar situation when a fight over whether to extend the Bush-era tax rates for the wealthy went down to the wire. A deal was not reached until mid-December.

"They (the Treasury) didn't know that for sure and they didn't issue (instructions to raise taxes) right away ... and that turned out OK," Williams said.

(Additional reporting by Steve Johnson and Kim Dixon; Editing by William Schomberg and Eric Walsh)

BBC News - Solar storm as desert plan to power Europe falters

By Matt McGrathScience reporter, BBC World Service

An ambitious plan to provide 15% of Europe's power needs from solar plants in North Africa has run into trouble.

Desertec had ambitious plans to deliver electricity from renewable sources to Europe via undersea cables

The Desertec initiative hoped to deliver electricity from a network of renewable energy sources to Europe via cables under the sea.

But in recent weeks, two big industrial backers have pulled out.

And the Spanish government has baulked at signing an agreement to build solar power plants in Morocco.

Desertec was set up in 2009 with a projected budget of 400bn euros to tap the enormous potential of solar and other renewables in North Africa.

The hope was that by 2050, around 125 gigawatts of electric power could be generated. This would meet all the local needs and also allow huge amounts of power to be exported to Europe via high-voltage direct current cables under the Mediterranean sea.

But three years later, the project has little to show for its efforts. Two large industrial partners, Siemens and Bosch, have decided they will no longer be part of the initiative.

Cold feet

According to Dr Daniel Ayuk Mbi Egbe, a professor at the University of Linz in Austria and an expert on African solar resources, this is not good news.

"Siemens and Bosch are very big companies," he told BBC New, "if they don't want to support this initiative it is going to be difficult for Desertec."

It seems some governments share this reluctance to go forward.

One of the first concrete steps that Desertec announced was a plan to build three solar power plants in Morocco. A declaration of intent was due to be signed recently by a group of countries including Spain and Italy. But the Spanish government demurred, citing difficulties in finding the subsidies the project would need.

Hans-Josef Fell is a Green party MP in the German parliament who has sponsored renewable energy legislation. He's sometimes referred to as the father of the feed-in tariff that has helped wind and solar power succeed in Germany. He thinks the Desertec initiative is too reliant on public subsidies.

"The governments get cold feet for one reason, Desertec needs too much support in tax money - all the public budgets are over borrowed - and tax money is not easily available," Mr Fell said.

Desertec says that these are small problems and will not detract from the overall success of the project. Spokesman Klaus Schmidtke told BBC News the initiative is in good shape.

A solar power plant in Morocco uses mirrors to concentrate rays from the sun

In reference to the problems with Spain he said: "We are talking about a declaration of intent between some government so the Desertec initiative is not involved in these negotiations - these are done by the governments. There is no reason for us to fear any problems."

But others are not so sure. Prof Peter Droege is the head of Eurosolar, the European association for renewable energy.

"I think it is struggling to find a reason to continue - It is clear it's lost it's original purpose, it is looking for a new direction," he commented.

"One of the main attractions of renewable is to become energy independent," he said.

"If you have tied yourself to another external source you have to pay for, you are missing the entire point of the renewable energy transition we are in."

There have been worries that the unstable political situation in North Africa is also causing concerns for investors and for governments. But according to Daniel Ayuk Mbi Egbe, the problem is more fundamental.

"The fathers of Desertec say their aim was to exploit North African energy for the European market," he says, "but what about Africa itself?"

He added: "When you go to many African countries there are constant electricity cuts - if you want to help then you need to think not just about exporting to Europe but about supplying Africa as well."

One positive element for the project is that there have been suggestions that China might be willing to invest so that it can get access to technology. It is interested in learning how to use high-voltage direct current cables such as those proposed for bringing power across the Mediterranean.

Green MP Hans-Josef Fell says they could be just what Desertec needs.

"China's money could help, China wants the know how. Yes perhaps China could save the project, they are very potent," he told BBC News.

Reuters News - China's new leaders could have reform thrust upon them

Xi Jinping stands during a trade agreement ceremony between the China and Ireland at Dublin Castle in Dublin, in this February 19, 2012 file photograph.

Credit: Reuters/David Moir/Files

By Jason Subler and John Ruwitch

BEIJING | Thu Nov 15, 2012 4:05pm EST

(Reuters) - However ploddingly China's new leaders might like to reform the world's second-largesteconomy and the way they govern, pressures set to build over the next decade will likely force great change upon them.

President-in-waiting Xi Jinping and the next premier, Li Keqiang, were anointed on Thursday as the top leaders of the Communist Party, only the second time the party has managed a peaceful transition since it took power in 1949.

Xi, a "princeling" whose father was a top official, and Li, a policy wonk with a law background, inherit a China that is richer and more confident, and a far greater force in diplomacy and the global economy than when their predecessors Hu Jintao and Wen Jiabao took the helm 10 years ago.

Yet they also confront immense social, economic and political challenges, which if not managed skillfully could shake the party to its core.

If the new leadership lacks vision, said David Shambaugh, director of the China Policy program at George Washington University in the United States, then "I'll be surprised if they have a 19th party congress," referring to the just ended 18th conclave where the next generation of leaders were announced.

That might be a stark view, but many China experts agree the new leadership will need to be bold in reform if they want to keep their iron grip on a fast changing country.

TREATED LIKE CHILDREN

Thanks to the party's success in overseeing rapid economic growth and lifting hundreds of millions out of poverty, Xi, Li and their deputies face a population more demanding and ready to rail against anything.

Ordinary Chinese have plenty to be upset about. Over 40 percent of the country's rivers are severely polluted, by many estimates; China ranks near the bottom of some corruption indexes; and around 150 million migrant workers are denied welfare benefits in the cities in which they work because they have no residency rights there.

Those statistics illustrate one of the challenges of China's rise. While growth has boosted incomes, the increased prosperity has led many people to be less willing to put up with the side-effects, and with what some see as a paternalistic approach by the leadership.

"Chinese people are really treated like children. You might listen to them a little bit but ultimately daddy knows best, what's in your interests, and I don't think that can hold much longer," said Tony Saich, professor at the Harvard Kennedy School of Government.

China is more prosperous than a decade ago when Hu and Wen took charge, but the pursuit of prosperity has dramatically widened the gap between rich and poor, to the fury of many average citizens.

The United Nations says 13 percent of China's 1.3 billion people still live on less than $1.25 a day. But the country also has 2.7 million U.S. dollar millionaires and 251 billionaires, according to the Hurun Report, a Shanghai-based luxury publishing house which compiles China's Rich List.

Ordinary Chinese are especially fed up with the wealth accumulated by many party members.

The issue has never been as sensitive as it is now, in the wake of the scandal surrounding former Chongqing party boss Bo Xilai, who has been accused of corruption and abuse of power. Foreign media reports detailing the wealth amassed by the families of Wen and Xi have also sparked an outcry online.

In a speech after being introduced as the new party secretary-general, Xi said the party must tackle corruption. In his final work report last week, outgoing President Hu called it a "life or death" issue for the party.

GROWTH NOT ENOUGH

Both urban and rural Chinese are restive. The number of protests continue to rise, while China's reintegration into the global economy over the last three decades has meant the country is getting swept along by - and indeed helping drive - technological revolution as it modernizes and invests half its national income every year in fixed assets, infrastructure and technology.

The ability of ordinary Chinese to send instant messages, write blog posts and take photographs of demonstrations over issues such as corruption and pollution puts further stress on a party determined to control the flow of information within China's borders.

The thread that connects the good and the bad - increased prosperity and increased inequality, a growing middle class and outrageous corruption - is China's relentless economic growth. Even that, in the view of many economists, is in question.

The need to restructure how China achieves its growth - by emphasizing consumption over investment and exports - would mean major policy changes such as loosening the dominance of state companies across many industries.

"At this juncture, if the (new leadership) doesn't move quickly, the consequences will be clear and immediate," said Daniel Rosen, an economist and head of the Rhodium Group, a New York-based consultancy.

"GDP growth will deteriorate within six to nine months, and that will have consequences. I don't think they get even a one-year honeymoon."

The party has earned its legitimacy with a broad swathe of the populace with rapid economic growth. However, growth has fallen for seven straight quarters, hitting 7.4 percent in the July-September period. Should growth falter further, discontent will rise.

Even though the economy appears to be picking up in the near term, analysts still expect growth to be closer to 5 percent than 10 percent by the end of this decade.

Some, both in and out of China, fear the government could then resort to nationalism and populism, already on display in Twitter-like microblog postings about territorial disputes in the East and South China Seas, to deflect attention.

TIPPING POINT

Ideally, to those pushing for political reform, the array of pressures will convince the party of the need for change, lest it become much harder later on.

Giving Chinese more of a voice could relieve some of their anger, even if they have little recourse to protect themselves from the arbitrary nature of unfettered political power.

The problem is that China's new leaders have never shown a hint of desire for political reform. Quite the opposite, China's leadership watched the Arab Spring and before that, the collapse of the Soviet Union, with alarm.

"Stability takes precedence over all else. Threats to stability will be nipped in the bud," said a source with ties to the leadership, requesting anonymity to avoid repercussions.

Given the obsession with stability and the inclination to move cautiously, it could take a serious crisis to push China's leaders to accelerate change.

In 1989, broad political and economic discontent combined with inspiration from dramatic change in the former Soviet Union and other parts of eastern Europe sparked student-led protests in Beijing that were crushed, but only after setting off heated debate at the top of the party about whether it should introduce serious political reform.

"They recognize the problems but to actually precipitate action something actually has to get to - if not the tipping point - then close to a tipping point," said Damien Ma, an analyst at Eurasia Group.

"I'm not saying that you need a repeat of 1989 to get them to do something but there's a critical mass of people who say they can buy some more time."

In the end, the party's survival instincts could end up leading to the changes needed to keep the country on course - and ensure the party remains in power.

That instinct and the need to adapt was summed up by Bo Yibo, father of the now disgraced Bo Xilai and one of a group of party officials who went from fighting as rebels during the country's civil war to holding considerable power during the 1980s and 1990s, according to a source close to the Bo family.

"When you are the leader of a country with 1.3 billion people, you always have to stay one step ahead of them. Because if you don't, you will be trampled, and you most certainly will never get back up," the elder Bo once told the source.

(Additional reporting by Benjamin Kang Lim; Editing by Dean Yates)

BBC News - Australia declares world's largest marine reserve

Australia has created the world's largest network of marine reserves, protecting oceans around its coast.

Mr Burke said Australia was responsible for more of the ocean than almost any other country

Over 2.3 million sq km (0.9 million sq miles) of sea, made up of five zones, have been formally protected by law from over-fishing and oil exploration.

Environment Minister Tony Burke called it a historic moment for ocean conservation.

However fishing lobby groups opposed the move, saying it will damage the multi-million dollar industry.

The network of reserves was announced by the Australian government in June, and became formally proclaimed under national environmental law on Friday.

The newly-declared reserves are an addition to existing protected zones around Australia, taking the overall size of the marine reserves network to 3.1 million sq km (1.2 million sq miles).

'World leader'

Mr Burke said the reserves represented a major achievement for the long-term conservation of Australia's oceans.

"Australia is home to some incredible marine environments including the Perth Canyon in the south-west and the stunning reefs of the Coral Sea, and this announcement cements Australia's position as a world leader on environmental protection," he said.

The sea around Australia is home to sharks and tuna, isolated tropical reefs and deep sea canyons.

Mr Burke also announced 100m Australian Dollars ($103m; £65m) set aside for compensating fishing businesses affected by the move. However, he said "this entire project has an impact of less than 1% of the total value of production for our wild catch fisheries."

Fishing groups have criticised the cap, saying that the allocation did not go far enough, and that people in the industry would be put out of business.

The Australian Marine Alliance said that 36,000 jobs would be lost and the cost of seafood imports would soar, news agency AFP reported.

Opposition leader Tony Abbott said that he supported environment protection, but was concerned that there had not been sufficient consultation, or strong scientific evidence for the reserve.

Conservation groups welcomed the new laws, but said that there was more work to be done to protect Australia's oceans.