Mercosur welcomes Venezuela, suspends Paraguay

Reuters, by Guido Nejamkis and Ana Flor, MENDOZA, Argentina, Sat Jun 30, 2012

Argentina's President Cristina Fernandez de Kirchner (C) addresses the

 audience during a meeting of the annual Mercosur trade bloc presidential

summit in Mendoza June 29, 2012. (Credit: Reuters/Enrique Marcarian)

(Reuters) - The Mercosur trade bloc - which includes regional heavyweights Brazil and Argentina - will make Venezuela a full member next month, uniting South America's biggest grains and energy exporters.

At a presidential summit on Friday, Mercosur's leftist leaders also decided to extend Paraguay's suspension over the ouster of President Fernando Lugo until democracy is restored via new elections, scheduled for April 2013.

No economic sanctions were adopted against Paraguay but its officials will be banned from participating in Mercosur meetings. The suspension opened the way for Venezuela to be incorporated into the bloc since opposition in Paraguay's Congress was the only remaining obstacle after a six-year wait.

Brazilian President Dilma Rousseff praised the joining of forces, saying "food and energy security are becoming more and more relevant" globally.

The Mercosur customs union - which groups Brazil, Argentina, Uruguay and Paraguay - also agreed to allow individual members to raise tariffs on imports from outside the bloc to up to 35 percent on 200 products to protect local industry.

This doubled the number agreed in December and reflected worries that dumping could increase as global growth drags.

Argentine President Cristina Fernandez called on South America to band together more broadly to better confront global economic woes, just after making the announcement on Venezuela's membership.

Venezuela has the world's biggest crude oil reserves and belongs to OPEC. Socialist firebrand Hugo Chavez has governed there since 1999 and he is running for re-election again this year, despite his battle with cancer.

The Andean nation will be fully incorporated into Mercosur on July 31 at a meeting in Rio de Janeiro.

"This is a historic day for ... integration," Chavez told Telesur television station by telephone. "This is win-win for everybody."

Alicia Barcena, head of the United Nations' Economic Commission for Latin America and the Caribbean, said she viewed the move positively.

"Mercosur has a third of the world's water reserves, a third of arable lands, more than 45 percent of soy production ... and now with Venezuela's incorporation there's an expectation that energy integration could increase," she said on the sidelines of the summit in the western Argentine city of Mendoza.

INFIGHTING, CHINA

Being a full member of Mercosur requires that countries end tariffs between member states and adopt a common tariff that ranges up to 20 percent, with some exceptions.

The bloc is rife with internal divisions, however. Brazil and Argentina, which are often at odds over trade, have limited each other's imports despite Mercosur accords that promote free trade among member countries.

Argentine officials said earlier this month that they had reached a deal with Brazil to ease the entry of Argentine goods including lemons, king prawns and medicines.

However, Brazilian Industry Minister Fernando Pimentel told Reuters: "There's still no agreement that would motivate a change on the (non-automatic import) licenses."

Chinese Premier Wen Jiabao proposed this week that his country and Mercosur evaluate a possible free-trade agreement.

Mercosur did not address this in its final declaration. But a separate, joint statement was later released, saying officials from China and Mercosur would meet to "explore mechanisms and actions aimed at increasing and facilitating trade."

Analysts say Brazil and Argentina would probably be wary of a deal with China as both nations take protectionist measures aimed at shielding local industry from imported goods.

PARAGUAY PUNISHED

Paraguay's suspension from Mercosur meetings came after its Senate dismissed Lugo from office a week ago in an impeachment trial that lasted a matter of hours.

Neighbouring governments wanted to send a stern warning about the consequences of removing a democratically elected leader, but they ruled out penalties that could hurt ordinary people in Paraguay - one of South America's poorest countries.

"We are not in any way applying economic sanctions because our aim is to improve our people's quality of life," Fernandez said. "(But we cannot) tolerate these 'gentle coups' or movements that - under a veneer of institutional correctness - shatter the constitutional order."

Paraguay is a landlocked, soy-exporting nation of 6 million people, sandwiched between Brazil, Argentina and Bolivia. It has a long history of political instability and military rule.

The country's new president, Federico Franco, was Lugo's vice president and one of his fiercest critics. Franco has defended the constitutionality of the impeachment trial, which Paraguay's top court upheld.

Just after the Mercosur gathering, the UNASUR group of South American nations met in Mendoza to discuss Lugo's swift removal, which was sparked by clashes over a land eviction that killed 17 police and peasant farmers.

UNASUR also suspended Paraguay, saying democracy was best defended through regional unity.

Paraguay's new foreign minister said the decision to suspend his country from Mercosur and incorporate Venezuela was "illegal."

"The government deplores that other member states have sanctioned Paraguay and its government so as to incorporate a new member before the conclusion of a necessary approvals process," minister Jose Felix Fernandez Estigarribia said.

(Additional reporting by Daniela Desantis in Asuncion and Jeb Blount in Rio de Janeiro; writing by Hilary Burke and Helen Popper; editing by Mohammad Zargham)

US media hooked on eurozone crisis

Deutsche Welle, 28 June 2012

Examining US media reports on Europe’s economic crisis for DW's Transatlantic Voices column, Julian Jaursch argues that today's coverage has to be viewed in the context of the previous global economic downturn.

Julian Jaursch is a freelance journalist based in Berlin. He holds an MA in Political Science/TransAtlantic Studies from the University of North Carolina at Chapel Hill.

Why for Zeus' sake does the American media even care so much? It is Greece, after all: A country with an economy roughly the size of Washington's and about as diverse and interesting as Idaho's. A country with an economic output 50 times smaller than that of the US. A country that prior to the global economic crisis was virtually non-existent in American economic news.

Since then, papers and TV shows have been full of Greece. The New York Times ran articles on the country's financial situation as early as 2008, the Wall Street Journal has been covering every bailout since then, NPR tried to explain what happens if Greece defaults and CBS recently aired a piece on how the European debt crisis sent the Dow Jones plummeting. Even Stephen Colbert, the outspokenly patriotic and US-centered TV character whose international coverage is called "Un-American News," took on the Greek debt crisis. Discussing the dismal situation of Greece's economy in May 2010, he joked that the Greeks had laid off the oracle of Delphi and that she had never seen it coming.

Cause and effect

The examples give some of the reasons for the strong media interest. Precisely because of the global economic downturn, the news media cares. The crisis has shown quite plainly that the economies around the world are interconnected. What happens in one country has repercussions for citizens in many others, for instance via fluctuations on the stock markets or effects on the banking sector. Moreover, it is not just Greece that is making headlines today: Because Spain, Portugal and the rest of the eurozone are struggling as well, the effects are even bigger.

According to news value theories, events gain a certain news value if they have some intrinsic characteristics. Europe's economic woes did just that for the US: While the continent is geographically not very close to the US, it is still intimately connected to the US for historic, political and economic reasons (news factor proximity) and its troubles are bad news (negativity) that in some way affect the US economy (relevance). Add to that the already heightened sensitivity to economic topics due to the global financial crisis (established topic) and it becomes clear why US media and its recipients paid so much attention to Europe. Egotistical, yet genuine, concern about the US economy might have led to the increased coverage.

Playing the blame game

But is it really just that? Or could the coverage also try to mask the US' own economic weaknesses? After all, US reporting, especially some opinion pieces in print and television media, has been quite harsh. There was talk of European "grandiosity" and the "fiction" of the European economic model. European pension systems were closely scrutinized along with the continent's demographic problems. The very values and work ethic of Greeks, Spaniards or Portuguese were questioned. A "Eurosocialist" system that instituted a single currency, but no fiscal union was lamented. Generally, Europe's debt problems and the inherent issues of the euro system were pointed out, repeatedly and vigorously, along with some well-meant pieces of advice from afar. 

Julian Jaursch

Such foreign reporting comes at a time when America's own economy is not exactly doing well, either. Memories of bank and auto bail-outs are still fresh in people's minds, the unemployment rate is at roughly eight percent (eurozone: 11 percent), the economy is only growing moderately and, most importantly, the country's debt-to-GDP ratio is much higher than the EU's, according to Eurostat and the IMF. Still, President Barack Obama has not grown tired of referring to Europe's struggles when talking about the reasons for the slow recovery in the US.

Focusing on the eurozone's failures certainly leaves less time to discuss the US' own debt problems, social security systems or demographic development. It also leaves less time to investigate whether downgrades by American rating agencies - or mere threats thereof - were always justified. Moreover, the fact that an American bank helped obscure Greece's sovereign debt issues in the first place is but a footnote today.

Europe on their mind

Yet, despite American media's intense coverage of Europe's economic misery, there is no distraction campaign to conceal domestic economic problems. Surely, on a political level, Obama will continue to subtly blame the eurozone's struggles for some of America's own hardships. It might even be a standard item of his reelection campaign strategy - anything to take the wind out of the Republicans' sails who say that Obama alone messed up the economy.

Two circumstances lead to the conclusion, however, that coverage is driven by concern rather than by efforts to mask US problems: One regarding the quantity of reporting, the other regarding the quality.

If the American media reported from Europe as a distraction, this would require very little coverage of the US economy and its problems. This is not the case - quite the contrary. Reports about the jobless numbers, poverty rates, the debt ceiling, gas prices or the stock market abound not only in financial news outlets. Therefore, the fact alone that there is a lot of coverage on Europe's problems does not mean that the US media ignores domestic issues. Still, a closer look at America's own pension system or demographic development could not hurt, either.

Concerning the quality of reporting, those stereotypical and hyperbolic, sometimes even flat-out wrong, articles on the European economy are offset by a much larger number of rather dry economic coverage. For the most part, reports try to make sense of what is happening, explain economic jargon or introduce the American audience to those affected across the pond. It is remarkable here that economic journalism might become much more widely consumed because of the crisis. Similarly noteworthy is the fact that US media cannot get around including EU actors in their reporting anymore. Before the crisis, the Union was mostly shunned in US media due to its complex and seemingly distant and dull nature.

It's the economy, stupid

The global financial crisis, which began and played out largely in the US, has arguably intensified the American public's awareness of economic topics. From bailouts to financial reforms, people around the nation were affected by that downturn. So if the collapse of a single investment bank can be the start of a downward spiral for the US economy, what will happen if an entire currency area collapses? Such economic concerns rank highest among Americans' worries and what worries the people, worries the papers.

Editor: Rob Mudge

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Matthew message (Channelled by Suzanne Ward, Jan 19, 2012)

“…. The coffers of the United States, which is erroneously considered the most fiscally sound nation in the world, have been empty for some time. The national debt, in large part due to the skullduggery of the Illuminati-owned Federal Reserve System and its IRS collection agency, will become manageable when that System is dissolved.  The various currencies, especially dollars, have no foundation—daily transactions involving billions of dollars and other currencies are merely information passed from one computer to another and they far exceed the money to back them.  The “new” foundation for currencies will be a return to an old one, where precious metals was a set standard for exchange, and “old fashioned” bartering once again will be an excellent way for nations and communities to conduct some business. ….”


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China proposes $10bn loan for Latin America countries

BBC News, 27 June 2012

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China has been looking to increase
its investment in the Latin American
region

China has offered to set up a $10bn (£6.4bn) credit line for Latin American countries to support infrastructure projects in the region.

The proposal was made by China's Premier Wen Jiabao as he wrapped up his visit to the region.

He also proposed a free trade pact between China and South American trade bloc Mercosur, which includes Brazil, Argentina, Uruguay and Paraguay.

China has been keen to increase its trade with the region's economies.

"The Chinese government... will continue to offer economic assistance to countries in the region that are interested," Premier Wen was quoted as saying by the Reuters news agency.

Many of the Latin American countries are still at a development stage and are building new infrastructure in a bid to boost growth in their economies.

Meanwhile, China, which has the world's largest foreign exchange reserves, has been looking to for new areas invest some of its cash.

At the same time, China's infrastructure development companies have been keen to tap into new markets to expand their business.

Analysts said that the offer of a credit line by China, may turn out to be a win-win situation for both sides.

They explained that Latin American nations could benefit from Beijing's expertise, while Chinese firms may play a big role in developments of these projects.

"China has the manpower and the technical skills required to undertake massive infrastructure projects and also the deep pockets to fund them," Charles Chaw of China Knowledge Consulting told the BBC.

"They have proven their ability with success in their own country."

Increased trade

Latin American countries are also rich in natural resources and China is one of the biggest consumers in the world of those resources.

Beijing imports various commodities, including iron ore, copper and corn from these countries. 

China is one the world's biggest
consumer of natural resources

Meanwhile, China, which is known for the manufacture of low-cost goods, has been looking to increase its exports to the region as it faces slowing demand from key markets such as the US and Europe.

Premier Wen said that China was keen to double its trade with the region to $400bn over the next five years.

However, he said that for that to happen, both sides will have to work towards easing trade barriers.

"We have to combat trade protectionism, broaden the mutual openness of our markets, optimize the trade structure and diversify cooperation in terms of customs and quality control," Premier Wen said.

Currency swaps

Along with increased trade, Premier Wen also pushed for currency swap agreements with the region's economies.

The agreements allow respective central banks to swap currencies and can be used by firms to settle trade in local currencies rather than in US dollars.

Beijing has been using these pacts as part of its push for a more global role for its currency, the yuan.

Last week, it announced a swap agreement with Brazil worth $30bn and Premier Wen said that Beijing was keen to making similar deals with other economies in the region.

"China is also considering the possibility of negotiating and signing agreements for local currency swap agreements... and increasing the reciprocal creation of bank branches," he said.

China has also signed similar agreements with other trading partners such as Japan, Australia and Hong Kong.

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Century-old Galapagos tortoise dies

Deutsche Welle, 25 June 2012

Lonesome George, the only remaining Pinta Island tortoise, has been found dead in the Galapagos National Park - leaving the world one subspecies poorer.

A conservation icon, Lonesome George the tortoise had become an ambassador for the Galapagos Islands. George lived at a tortoise breeding center on the island of Santa Cruz. He was found Sunday morning near the watering hole in his pen by his longtime keeper, Fausto Llerena, the park said in a statement.

"The death of Lonesome George has left our planet one subspecies poorer," said Volker Homes, head of wildlife conservation at WWF Germany.

"George was a symbol," Homes told DW. "It was clear, when this species dies, there's no bringing it back." The conservationist warned that the extinction of species is not good for human beings. "It leaves us fewer options," he said.

Fresh meat

Homes said the tortoise's extinction has been caused by human activity. Sailors, whalers and pirates used to take large numbers of live tortoises on their journeys because the creatures could survive for months without food and provided an invaluable source of meat.

The archipelago has 14 main islands

Later, settlers brought with them goats and other non-native animals that pushed the native species from their feeding sites and decimated the Galapagos' giant tortoise population even further.

A recovery program run by the park and the Charles Darwin Foundation increased the overall population from 3,000 in 1974 to 20,000 today. The archipelago has been a UNESCO World Heritage Site since 1978, recognized for the rich plant and animal life found both on its land and in the surrounding sea.

A haven for tortoises

Lonesome George's precise age was not known, but scientists believe he was about 100 years old.

The tortoise was discovered on Pinta Island in 1972 at a time when giant tortoises of his type, Chelonoidis nigra abingdoni, were already believed to be extinct. Various mates were provided for George in what proved to be unsuccessful attempts to keep his subspecies alive.

The park said the cause of his death would be investigated.

Author: Dagmar Breitenbach

Editor: Saroja Coelho

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Paraguay's President Lugo impeachment trial under way

BBC News, 22 June 2012

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Mr Lugo's supporters, many of them
 poor peasants, gathered to protest
against the trial

Lawyers representing Paraguay's left-wing President Fernando Lugo have begun his defence in impeachment proceedings.

Mr Lugo, who asked the Supreme Court to stop the trial, announced he was not going to defend himself in person.

Both houses of parliament voted on Thursday to begin impeachment proceedings over his handling of clashes between farmers and police in which at least 17 people died.

His 2008 election ended 61 years of rule by the right-wing Colorado party.

A vote is expected at 16:30 (20:30 GMT), with a two-thirds majority need to remove Mr Lugo from office.

The impeachment trial is being held in the upper house of parliament, the Senate.

The two main political parties, Colorado and Liberal, have put aside their differences and voted in favour of the motion to begin the impeachment trial.

The Liberals are part of Mr Lugo's ruling coalition.

The vote in the House of Deputies was passed with an overwhelming 76-1 majority. Reports suggest only five out of 45 senators support Mr Lugo, who has likened the impeachment bid to a coup.

In an appeal filed with Paraguay's Supreme Court on Friday, Mr Lugo's lawyers said the proceedings do not ensure due process, and that the president should be granted more time to prepare.

"The president has been given fewer guarantees and fewer rights to defend himself than someone with a traffic fine," one of Mr Lugo's lawyers, Adolfo Ferreiro, told the AP news agency.

The Senate's decision to schedule the trial for Friday gave Mr Lugo less than 24 hours to ready a defence.

A centre-right legislator, Carlos Maria, denied allegations of unconstitutionality. "There's nothing illegal here, there's no constitutional rupture, no coup," he told AP.

Supporters of Mr Lugo gathered amid tight security outside the National Congress building in the capital Asuncion before the trial was due to start.

If Mr Lugo is impeached, Vice-President Federico Franco would take over as president until the end of Mr Lugo's five-year term in 2013.

There are fears the vote could prompt violent street protests.

'Poor performance'

The impeachment motion accuses Mr Lugo of a "poor performance" during the forced land eviction last Friday, in which seven police officers and at least nine farmers were killed. 

Paraguayan President Fernando Lugo
says the impeachment move is
tantamount to a coup

Speaking on national television on Thursday, Mr Lugo said he would not resign, but "face the consequences" of the trial. He accused his opponents of carrying out an "express coup d'etat".

The Union of South American Nations has send an urgent mission of foreign ministers to Paraguay to "ensure the right to defend democracy".

Ecuador's President Rafael Correa warned that the regional bloc could invoke its "democracy clause" to sever ties with Paraguay and even close its borders if Mr Lugo is not tried according to "due process".

BBC regional analyst Leonardo Rocha says South American countries are worried that Mr Lugo, Paraguay's first left-wing president, is the victim of a political trial by the Colorado party and other right-wing groups.

Land clashes

During the clashes in eastern Canindeyu province that prompted the impeachment move, more than 300 police officers tried to evict 150 landless farmers from an estate owned by a wealthy businessman who is also a political opponent of Mr Lugo.

The eviction escalated into violence and the farmers opened fire on the police.

The farmers have argued the land was illegally taken during the 1954-1989 military rule of Gen Alfredo Stroessner and distributed among his allies.

Land disputes are not unusual in Paraguay, where a small fraction of the population owns about 80% of the land.

Mr Lugo - a former Catholic bishop who abandoned priesthood to enter politics - campaigned for the needs of the poor.

Before being elected in 2008, he promised land for some 87,000 landless families.

On Wednesday, in an attempt to calm tensions over the incident, Mr Lugo said he would open an investigation into what happened.

His term ends in August 2013 and the next presidential elections are due in April of that year.

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China and Brazil in $30bn currency swap agreement

BBC News, 22 June 2012

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Beijing has been trying to push the
 yuan as an alternative global
reserve currency

China and Brazil have agreed a currency swap deal in a bid to safeguard against any global financial crisis and strengthen their trade ties.

It will allow their respective central banks to exchange local currencies worth up to 60bn reals or 190bn yuan ($30bn; £19bn).

The amount can be used to shore up reserves in times of crisis, or towards boosting bilateral trade.

China is Brazil's biggest trading partner.

"As international credit remains scarce, we will have enough credit for our transactions," Brazil's Finance Minister, Guido Mantega, said.

A global yuan?

The agreement is the latest in a series of similar deals signed by China with its trading partners.

In March this year, it signed a swap deal with Australia worth up to A$30bn ($31bn; £20bn) to promote bi-lateral trade and investment.

It has also inked currency pacts with Hong Kong and Japan.

Analysts said that Beijing has been trying to push for trade to be settled in yuan, rather than in US dollars, as part of its plans to seek a more global role for its currency.

"The motivation is to be less reliant on the US dollar," Sean Callow, chief currency strategist at Westpac, told the BBC.

"We will see firms in the two countries settle their accounts in local currencies," he added.

Mr Callow added that with an increasing number of economies signing such agreements with China, its plans for a more global role for the yuan had received a major boost.

"It is a big positive for China on that account."

Closer cooperation

While trade between China and Brazil has surged, relations between the two economies have soured in recent times.

In Brazil, there have been concerns that increased imports of low-cost goods from China were hurting the local manufacturing industry.

Beijing, on the other hand, has accused Brazil of raising taxes on Chinese goods in a bid to protect the local industry, a move it says hurts its exports.

Brazil has also levied similar allegations against China.

Despite these tensions, the two countries have agreed to cooperate in various sectors to boost bi-lateral trade.

They said they will work closely in mining, industrial, aviation and infrastructure development.

The agreement also comes at a time when growth in China, the world's second largest economy, has been slowing.

China's economy grew at an annual rate of 8.1% in the first quarter, the slowest pace in almost three years. There are concerns that growth may slow further in the coming months.

However, Brazil's Finance Minister, Mr Mantega said "China will keep being the place where to do business".

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Brazilian Guarani tribe could get £53m in damages

BBC News, 20 June 2012

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A Brazilian prosecutor has requested that the government pay an indigenous tribe evicted from its ancestral lands 170 million reais ($83m;£53m) in damages.

Prosecutor Marco Antonio Delfino de Almeida argues that the Guyraroka community must be compensated for moral and material damages.

"I hope this suit will help governments to reconsider their actions," he said.

The Guyrarokas are part of the Guarani people in western Brazil.

According to the Public Prosecution Office in Brazil, the tribe began to be expelled from its ancestral lands, near the Paraguay border, in 1927.

The authorities demarcated their lands only in 2009.

Mr Delfino, a prosecutor for Mato Grosso do Sul state, said that the allowing them access to their land was not enough after so many years.

"When they go back, most of the land will have been cleared of its forests. The soil will be exhausted by decades of intensive agriculture." 

Prosecutor Marco Antonio Delfino says
 the government took too long to map
out Guyraroka's lands

He told Agencia Brasil, the Brazilian government official news agency, that "the Indians will need the financial resources they lack to make their land productive and their environment sustainable again."

The law suit against the Brazilian Federal Government and Funai - the national indigenous agency - was filed in April but only made public now.

Mr Delfino wants the compensation money to be used in policies that benefit Guarani communities in Mato Grosso do Sul.

The Guarani are Brazil's largest indigenous minority, with around 46,000 members living in seven states.

Many others live in neighbouring Paraguay, Bolivia and Argentina.

Last week, a biofuels company set up in Brazil by Shell - Raizen - signed an agreement last week with the Brazilian authorities giving up plans to buy sugar cane sourced from indigenous lands, including those of the Guyrarokas.

The move was announced after months of pressure by the Brazilian government.

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Wikileaks' Julian Assange seeks asylum in Ecuador embassy

BBC News, 19 June 2012

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Wikileaks founder Julian Assange is seeking political asylum at Ecuador's London embassy, the country's foreign minister has said.

"Ecuador is studying and analysing the request," Foreign Minister Ricardo Patino told reporters in Quito.

On 14 June, Britain's Supreme Court dismissed Mr Assange's bid to reopen his appeal against extradition to Sweden over alleged sex crimes.

He has denied the allegations, saying they are politically motivated.

The Supreme Court has given him until 28 June before extradition proceedings can start.

Swedish prosecutors want to question him over allegations of rape and sexual assault made by two female former Wikileaks volunteers in mid-2010 but have not filed any charges.

Mr Assange, whose Wikileaks website has published a mass of leaked diplomatic cables that embarrassed several governments and international businesses, claims the sex was consensual.

'Minimum guarantees'

In a statement, Ecuador's embassy said he had arrived there on Tuesday afternoon to seek asylum.

"As a signatory to the United Nations Universal Declaration for Human Rights, with an obligation to review all applications for asylum, we have immediately passed his application on to the relevant department in Quito," it said.

"While the department assesses Mr Assange's application, Mr Assange will remain at the embassy, under the protection of the Ecuadorean government."

It said the decision to consider the bid for asylum "should in no way be interpreted as the government of Ecuador interfering in the judicial processes of either the United Kingdom or Sweden."

Ecuador's Foreign Minister Ricardo
 Patino said Mr Assange had claimed
he was being persecuted

Mr Assange issued a statement, saying he was "grateful to the Ecuadorean ambassador and the government of Ecuador for considering my application".

Associated Press quoted Mr Patino as telling reporters Mr Assange had written to Ecuadorean President Rafael Correa saying he was being persecuted.

Mr Patino said that the Australian had claimed "the authorities in his country will not defend his minimum guarantees in front of any government".

Mr Assange said he would not be protected from being extradited to "a foreign country that applies the death penalty for the crime of espionage and sedition," Mr Patino said.

The anti-secrecy campaigner fears extradition to Sweden may lead to him being sent to the US to face separate charges relating to Wikileaks, for which he could face the death penalty.

Swedish assurance

But Swedish authorities have said the European Court of Human Rights (ECHR) would intervene if Mr Assange was to face the prospect of "inhuman or degrading treatment or an unfair trial" in the US.

Mr Assange could still take his case against extradition to the ECHR and has until 28 June to make the move.

Vaughan Smith, a friend who put Mr Assange up at his Norfolk home until December 2011, told the BBC he understood why he was seeking asylum.

"There's been an organised campaign to undermine him in recent months in Britain," Mr Smith said. "And he believed he would not get justice in Sweden."

Wikileaks has posted an alert on its Twitter feed: "ALERT: Julian Assange has requested political asylum and is under the protection of the Ecuadorian embassy in London."

It said Ecuador had offered asylum as early as November 2010.

Ecuador's deputy foreign minister said in 2010 his country was offering Mr Assange residency because it wanted to give him the opportunity to freely present the information he had.

However, President Rafael Correa subsequently dismissed the idea, which he said neither he nor Mr Patino had approved.

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G20 summit: Barroso blames eurozone crisis on US banks

EC president says European leaders have not come to Mexico to receive lessons on how to handle the economy

guardian.co.uk, Patrick Wintour in Los Cabos, Ian Traynor in Brussels and Helena Smith in Athens, Monday 18 June 2012

José Manuel Barroso at the G20 summit. Photograph: Bertrand Langlois/AFP
/Getty Images

The opening day of the G20 summit was threatening to deteriorate into a fractious row between eurozone countries and other non-European members of the G20, notably the US, as EU commission president José Manuel Barroso insisted the origins of the eurozone crisis lay in the unorthodox policies of American capitalism.

As Europe's leaders came under intense pressure to act decisively to cure the euro's ills, and a campaign gathered pace to relax some of the austerity programmes laying waste to countries burdened with unsustainable debt levels, Barroso insisted that Europe had not come to the G20 summit in Mexico to receive lessons on how to handle the economy.

When asked by a Canadian journalist "why should North Americans risk their assets to help Europe?" he replied: "Frankly, we are not here to receive lessons in terms of democracy or in terms of how to handle the economy.

"By the way this crisis was not originated in Europe … seeing as you mention North America, this crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market."

After the Greek election at the weekend, which may have shifted the terms of the debate over how to shore up the euro, world leaders meeting in Mexico focused on the European crisis amid strong signs of big trouble brewing in Spain.

Madrid's 10-year cost of borrowing went through the 7% barrier on the bond markets for the first time in the single currency era, the level at which borrowing becomes unaffordable. The Spanish government demanded intervention from the European Central Bank.

Spain's prime minister, Mariano Rajoy, is expected to ask for up to €100bn in eurozone bailout funds for Spain's stricken banks at a meeting of eurozone finance ministers in Luxembourg on Thursday, senior Eurogroup sources said. Voicing exasperation with the European response to the debt crisis, Robert Zoellick, the outgoing American head of the World Bank, warned the G20 summit in Mexico of a growing rift between the Europeans in charge of the bailouts and the IMF.

"The world's waiting for the Europeans to say what they want to do," said Zoellick. He predicted a showdown between the IMF and Europe by the end of the summer in the absence of any decisive action.

Barack Obama was expected to press Germany's chancellor, Angela Merkel, in Mexico on Monday night on the issue of eurobonds – the pooling of liability for single currency countries' debt. But there is no chance of Merkel agreeing to underwrite the debt of other European countries for the foreseeable future.

Fresh from his victory in the Greek election, the centre-right leader, Antonis Samaras, promptly tabled demands for a softening of the draconian austerity programme that Greece has to implement for the eurozone bailout.

Samaras, the prime minister-designate pledged to stick broadly to the Greek bailout terms but added: "We will simultaneously have to make some necessary amendments to the bailout agreement, in order to relieve the people of crippling unemployment and huge hardships."

Politicians and officials in Brussels and Germany appeared to suggest that the new Greek leader's demands could be at least partly satisfied by extending the repayment schedule on the bailout loans or lengthening the target deadlines for cutting the budget deficit.

There were also reports that the terms underpinning Ireland's bailout could also be relaxed, giving Dublin a much longer repayment schedule on the loans. The talk of rescheduling the Greek bailout terms surfaced quickly on Sunday night, with the German foreign minister, Guido Westerwelle, suggesting the Europeans could alter the timings. That triggered a row in Germany among the political class over the pros and cons of going easier on Greece.

In Brussels, the respected Bruegel thinktank said: "It is now increasingly clear that the [Greek] programme is severely off track. The [Samaras] victory doesn't change this fact and it has become unavoidable to open a discussion about the shape and form of a new Greek programme. This is a fact now broadly acknowledged by policymakers and in particular by German officials who have openly discussed the possibility of stretching fiscal targets."

Martin Schulz, the German social democrat who presides over the European parliament, added: "The new Greek government will be able to count on our constructive cooperation in possible fine-tuning of its reform strategy and economic targets. If Greece sticks to its commitments, the EU can examine what could be done further to solve the crisis."

From Mexico, however, Merkel appeared to dismiss any easing of the Greek conditions. "The new Greek government has to implement the commitments entered into by the country. The programme framework has to be kept."

The eurogroup source said that Samaras was expected to show up in Luxembourg on Thursday for the meeting of eurozone finance ministers which will grapple with Spain and how to respond to the Greek election results.

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