Archive for December 14, 2006

Politics this week: 9th – 14th December 2006

December 14, 2006 Leave a comment

Politics this week

Dec 13th 2006
From The Economist print edition


A stalemate continued between the Lebanese government and the opposition, whose supporters, more than 1m-strong, thronged the streets of central Beirut, demanding the removal of the prime minister, Fouad Siniora, and the creation of a national unity government in which Hizbullah, the main Shia party, would have a veto. See article

Leading Iraqi politicians criticised the report published last week by the Iraq Study Group co-chaired by James Baker, a former secretary of state. Iraq‘s president, Jalal Talabani, a Kurd, said it undermined Iraq‘s sovereignty. The White House said George Bush would not unveil his new strategy until sometime in January. Sectarian violence continued with one lorry bomb in Baghdad killing at least 70 Shia labourers on December 12th. See article

Iran held a long-heralded conference questioning whether the Holocaust ever happened. One of the guests was David Duke, a former grand wizard of America’s Ku Klux Klan. The Iranian president, Mahmoud Ahmadinejad, addressed the meeting and repeated his statement that the “Zionist regime” would soon disappear. See article

Fears grew that the Palestinians’ volatile mix of political and clan feuds could ignite an internecine conflict in Gaza. Gunmen shot dead a judge affiliated to Hamas, the ruling Islamist movement, two days after the killing of three young sons of a senior official of Fatah, the rival secular group.

Prince Turki al-Faisal, a long-time former head of the Saudi intelligence service, resigned abruptly as ambassador to the United States, prompting speculation that, among other possibilities, he might replace his ailing brother, Prince Saud al-Faisal, as foreign minister.

Islamist leaders who control Somalia‘s capital, Mogadishu, and most of the southern and central parts of the country, said they would soon launch a “major attack” against Ethiopian soldiers who have been massing in the west.

A court in Ethiopia decided that Mengistu Haile Mariam, a Marxist dictator who ruled ruthlessly for 17 years until 1991, was guilty of genocide. Over 70 people were convicted with him, in a trial lasting 12 years. He was tried in absentia.


General Augusto Pinochet, who ruled Chile from 1973-90 and who came to personify an era of brutal military dictatorship in South America, died of complications from a heart attack. His funeral took place at a military academy; there was no official mourning. See article

The outgoing United States Congress offered a crumb of comfort to four Andean countries on trade, renewing existing preferences for six months. Before ratifying free-trade agreements with Peru and Colombia, leaders of the new Democratic-controlled Congress have said they want extra labour-rights provisions attached to them.

Canada’s Parliament rejected by 175 votes to 123 a motion by the Conservative minority government that would have allowed legislation to ban gay marriage.

The Arctic could see the complete disappearance of all-year-round ice in a few decades, American scientists have said. Data presented to the American Geophysical Union showed that ice was recovering poorly from the summer melt.

The ethics committee of America’s House of Representatives issued its findings on the Mark Foley scandal. The report criticised Republicans in the chamber for failing to “exercise appropriate diligence”, but did not single out any individual for disciplinary action. Mr Foley’s resignation, over his lurid contacts with teenage pages in Congress, was no help to the Republicans during the recent mid-term elections.

The Democrats completed their rout of the Republicans in the mid-term elections by defeating a seven-term congressman in a run-off election in a Texas district. Meanwhile, William Jefferson, a congressman who is being investigated for bribery, won his run-off election in New Orleans.

Ahead of a European Union summit, EU foreign ministers agreed to suspend a large part of Turkey‘s membership negotiations. This is punishment for Turkey‘s failure to fulfil its obligation to open its ports and airports to (Greek) Cyprus. The Turks fumed about injustice, noting that the Europeans had not fulfilled on their promise to lift a trade embargo on northern Cyprus. See article

Investigations into the Litvinenko affair continued to broaden. British and Russian detectives interviewed two Russians who met Alexander Litvinenko on the day he died. Traces of polonium, the substance used to kill the former Russian agent, were found to have contaminated four people in Hamburg. See article

Voters in Nagorno-Karabakh, an Armenian enclave within Azerbaijan, opted overwhelmingly for a constitution declaring their own sovereignty. But Azerbaijan continues to reject any notion of independence.

Transdniestria, a breakaway part of Moldova that is backed by Russia, re-elected its “president” to a fourth term.

In mayoral elections in Taiwan‘s biggest cities, Kaohsiung and Taipei, voters failed to give the stinging rebuke many expected to the Democratic Progressive Party (DPP) of President Chen Shui-bian. Although the DPP‘s candidate lost the mayorship of Taipei to the opposition Kuomintang, the ruling party narrowly held on to Kaohsiung.


The electorate in the Indonesian province of Aceh had its first chance to vote directly for a governor and other officials. It was a landmark in the effort to bring an end to 29 years of secessionist war. Polls suggested that former independence activists had done well. See article

In Bangladesh, the president, Iajuddin Ahmed, who is also head of a caretaker government, ordered the army on to the streets of Dhaka and other cities to keep order ahead of elections due next month. Four members of his administration resigned in protest.

America’s Congress passed legislation allowing nuclear co-operation with India. The governments in Delhi and Washington, DC, declared it a great day for bilateral relations. But India’s main opposition party continued to object, as did its Communists and some nuclear scientists. See article

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Business this week: 9th – 14th December 2006

December 14, 2006 Leave a comment

Business this week

Dec 13th 2006
From The Economist print edition

The chairman of Gazprom said that the Russian state gas monopoly planned to buy around 50% of Sakhalin II, confirmation that Royal Dutch Shell had bowed to pressure by ceding control of the energy project in Russia‘s far east. The decision had looked inevitable once Russian authorities began to challenge the LNG and oil project in September on environmental grounds. Many analysts saw that as a means to help Gazprom force its way into the venture, demonstrating how determined the Kremlin is to secure state control of energy investments in Russia. See article

DP World, a company that is backed by the Dubai government, sold the American port assets it had tentatively acquired through its takeover of P&O to AIG Global Investment, a unit of the world’s biggest insurer. Earlier this year the news that DP World was to manage operations in several big American ports sparked a political backlash over security—even though Dubai is an ally of the United States—and when the P&O deal was threatened, DP World volunteered to find an American buyer. The new owner has little experience of port operations.

The gloves came off in the bidding war for Corus, an Anglo-Dutch steelmaker. CSN, a steel company based in Brazil, made a formal bid of £4.9 billion ($9.6 billion), trumping a sweetened offer from India’s Tata Steel that had been made just hours earlier.

Freeport-McMoRan’s $26 billion proposed takeover of Phelps Dodge was dealt a blow when it emerged that SAC Capital, a hedge fund managed by billionaire investor Steven Cohen, had increased its stake in Phelps Dodge to more than 5% with the aim of blocking the deal. The combination of Freeport and Phelps would create the world’s biggest copper miner, but SAC claims it would not be good for shareholder value.

In the biggest-ever acquisition in the Philippines, Mirant, an American power company based in Atlanta, sold its assets in the South-East Asian country to Tokyo Electric Power, Asia’s biggest utility, and Marubeni, a Japanese conglomerate, for $3.4 billion.

Hewlett-Packard agreed to pay $14.5m to settle a civil case brought against it by California over the boardroom spying scandal that rocked the company in the autumn. Patricia Dunn, HP‘s former chairman, and four others have been indicted on charges stemming from the methods used to uncover the source of a boardroom leak and pleaded not guilty. Other federal agencies, including the Securities and Exchange Commission, are still probing.

Goldman Sachs kicked off what is expected to be another stellar earnings season on Wall Street. The investment firm’s net profit for the quarter ending November 24th rose by 93% compared with a year ago, to $3.15 billion, setting yet another Wall Street record.

NASDAQ formally launched its unsolicited £2.7 billion ($5.3 billion) bid for the London Stock Exchange and in the process lowered the level of the percentage of LSE shareholders that are required to agree to the offer. As it owns a stake of almost 29%, NASDAQ is now seeking the approval of just over a fifth of the LSE‘s other investors. They have until January 11th to decide.

A bid of A$10.9 billion ($8.6 billion) was formally made for Qantas Airways from a buy-out consortium. The Australian airline rejected the offer, but a deal is not off the table yet. The consortium has soothed Australians’ worries about the takeover of their iconic carrier by keeping within the foreign-ownership limits set by the government; Australia‘s Macquarie Bank is leading the bid. Separately, speculation mounted that United Airlines and Continental were discussing a merger, more proof that consolidation in the airline industry may be about to take off.

Sabre Holdings, the parent company of, a travel reservations website, agreed to a buy-out valued at some $5 billion from two private-equity firms.

Britain’s Office of Fair Trading referred BAA to regulators because its “current structure” prevents cost savings being passed on to customers. The British airports operator, owned by a Spanish construction firm, has been criticised for its plans for Heathrow and its landing-slot charges.

America’s trade deficit in goods dropped in October to $65.1 billion, its lowest level since August 2005, reflecting a sharp fall in the price of oil. However, the deficit with China continued to grow and hit $24.4 billion. The news came as a high-level delegation, led by Hank Paulson, the treasury secretary, and Ben Bernanke, chairman of the Federal Reserve, prepared to visit Beijing for talks on trade.

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