Catalan crisis hurt Spain's economy

MADRID • Spain's economy minister claimed yesterday that the Catalan independence crisis had cost the country "a billion" euros as fallout from the turmoil continued to hamper growth in the wealthy region.

Mr Luis de Guindos said slowdown in growth in Catalonia, which accounts to about a fifth of Spain's gross domestic product, was hampering the euro zone's fourth-largest economy.

Spain was plunged into its deepest political crisis in decades when separatists in Catalonia's regional government declared independence in October, following a banned referendum on the topic.

AGENCE FRANCE-PRESSE

Trump may stop aid to Pakistan

WASHINGTON • President Donald Trump suggested yesterday that he would cut off foreign aid to Pakistan, accusing Islamabad of harbouring violent extremists and lying about it.

"The United States has foolishly given Pakistan more than US$33 billion in aid over the last 15 years, and they have given us nothing but lies & deceit, thinking of our leaders as fools," Mr Trump said in his first tweet of the year. "They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!"

Last week, The New York Times reported that the Trump administration was seriously weighing whether to withhold US$255 million (S$340 million) in already delayed aid to Islamabad over its failure to better crack down on terror groups.

AGENCE FRANCE-PRESSE

Merkel allies risk derailing coalition

BERLIN • Germany's Bavarian conservatives are pressing for corporate tax cuts and the abolition of a tax imposed after reunification to help poorer eastern states, which could complicate talks with the Social Democrats (SPD) on forming a new government.

Chancellor Angela Merkel hopes to secure a fourth term in office by persuading the centre-left SPD to extend the "grand coalition" that ruled Germany for the past four years.

Policy papers prepared by Bavaria's CSU, sister party to Dr Merkel's Christian Democrats, point to difficult negotiations ahead. In a paper leaked last week, the CSU said it wanted military spending to reach Nato's target of 2 per cent of national output, called for a hardline position on immigration, and rejected closer European integration. A draft economic policy paper prepared for a CSU party meeting this week also called for cuts in corporate tax rates.

On the other hand, SPD parliamentary group leader Andrea Nahles has called for increasing taxes on the wealthy. Her party is pressing for more spending on infrastructure, education, health care and other social priorities.

REUTERS