Archive for January 11, 2007

Politics this week: 6th – 12th January 2007

January 11, 2007 Leave a comment

Politics this week

Jan 11th 2007
From The Economist print edition


In a speech broadcast on American television, George Bush outlined a new military plan for Iraq, involving an increase of more than 20,000 troops, in an effort to stem the current sectarian bloodbath, especially in Baghdad. The Democrats grumbled, but it is unlikely they will use their congressional majority to try to scupper the plan. See article

Mr Bush also made some personnel changes and nominated Mike McConnell, a former head of the National Security Agency, as the director of national intelligence. Mr McConnell replaces John Negroponte, who is moving to the State Department as Condoleezza Rice’s deputy. See article

Also appointed was a new White House counsel to replace Harriet Miers. Fred Fielding was a deputy counsel during the Watergate scandal and was once, wrongly, thought to be “Deep Throat”.

Arnold Schwarzenegger proposed a radical shake-up of California‘s health-care system, presenting a $12 billion blueprint that requires Californians to have health insurance and provides help to those on low income to achieve that goal. The governor said his plan was intended to control some of the spiralling health-care costs that California, like most other states, is facing. See article

The Democratic-controlled House of Representatives passed legislation raising the minimum wage from $5.15 to $7.25 an hour. The bill must still be approved by the Senate and signed by the president.

America launched air strikes against Islamist fighters fleeing from the advance of government and Ethiopian troops in southern Somalia. Scores of Somali civilians were reported to have been killed. See article

Khaled Meshal, the overall leader of Hamas, the Islamist Palestinian movement which governs the West Bank and Gaza, hinted that he might recognise Israel at some point, should a Palestinian state be established on the 1967 ceasefire lines. “It is true that in reality there will be an entity or state called Israel on the rest of Palestinian land,” he said.

Nigeria‘s government said it lost $4.4 billion in oil revenues last year because of an increasing number of kidnappings and assaults on oil installations in the Niger Delta region. In the latest incident, nine South Koreans were seized from an energy facility; five Chinese, kidnapped last week, are still missing.


Sudan‘s government and rebel groups in Darfur agreed to a 60-day ceasefire leading up to a peace summit to be hosted by the African Union. The breakthrough came after talks between Sudan‘s president, Omar al-Bashir, and Bill Richardson, the governor of New Mexico who is a former American ambassador to the UN.

Belarus cancelled a transit tax on Russian oil. The tax, imposed after Russia doubled the price of gas supplies to Belarus, had prompted Russia to shut down a main oil pipeline to European Union countries, causing renewed alarm about Russia‘s reliability as an energy supplier. See article

In a step towards a common European energy policy, the European Commission unveiled a plan for EU members to cut greenhouse gases by 20% by 2020. The plan stresses renewable sources of energy, with all new power stations to be “carbon neutral”. See article

Stanislaw Wielgus, about to be installed as Roman Catholic archbishop of Warsaw, resigned after admitting collaborating with Poland‘s communist-era secret police. The dean of Cracow’s cathedral resigned for similar reasons, adding to the Vatican’s embarrassment. See article

Prosecutors in Sweden began an inquiry into share options given to Carl Bildt, the country’s foreign minister (and former prime minister), when he was on the board of a firm linked to Russia‘s Gazprom. Mr Bildt says the shares, which he sold for $690,000, were a legitimate reward.

Austria‘s two main parties formed a coalition government, three months after the election. The Social Democrat’s leader, Alfred Gusenbauer, becomes chancellor.

Venezuela‘s leftist president, Hugo Chávez, began a new six-year term in office by saying he would nationalise the telecoms and electricity industries and take other measures to accelerate his country’s transformation into a socialist state. The main telephone and electricity companies are controlled by American firms; officials indicated that they would receive compensation. See article

Daniel Ortega, the leader of the left-wing Sandinistas, was sworn in as president of Nicaragua. He pledged good relations with the United States, which in the 1980s backed guerrillas trying to oust Mr Ortega’s government, as well as with Venezuela and Cuba. See article

During a riot at an overcrowded prison in El Salvador 21 inmates were killed by members of a youth gang. More than 2,000 members of the security forces later regained control of the prison.

A former government minister in Colombia who was kidnapped by FARC guerrillas in 2000 managed to escape from his captors during a military operation.

A state of emergency was declared in Bangladesh, after weeks of violent protests. An alliance of political parties is calling for electoral reform or the postponement of the general election due on January 22nd. The alliance claims the election would be rigged.

Bombings and shootings in the north-eastern Indian state of Assam killed some 70 migrant workers from other Indian states. The attacks were blamed on the United Liberation Front of Asom, a separatist insurgency. See article

America presented a draft resolution to the UN Security Council calling for political reform in Myanmar. The draft argues that Myanmar poses serious risks to peace and security in the region.


Israel’s prime minister, Ehud Olmert, arrived in China for talks with his counterpart, Wen Jiabao. China has signalled it wants a greater role in the Middle East. Mr Olmert asked China to support tougher measures against Iran unless it halts work on its nuclear programme. See article

Chinese officials acknowledged that China is failing to meet its own targets for improving energy efficiency and reducing emissions. One called 2006 the grimmest year for China’s environment.

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Business this week: 6th – 12th January 2007

January 11, 2007 Leave a comment

Business this week

Jan 11th 2007
From The Economist print edition

George Bush and Susan Schwab, America’s trade chief, met José Manuel Barroso, the president of the European Commission, and Peter Mandelson, the European Union’s trade commissioner, at the White House in an effort to push forward the stalled Doha round of trade negotiations. No new offers overcame the sticking points of American farm subsidies or European agricultural tariffs, but trade officials promised to continue talking. See article

US Airways increased the value of its bid to buy Delta Air Lines by 20%, to $10.2 billion, putting pressure on Delta’s creditors to accept the offer. Delta’s management rejected US Airways’ initial advance last November, deciding to stick with a bankruptcy restructuring plan instead.

Apple held the annual jamboree designed to show off its new products. The highlight was the unveiling of the touch-screen iPhone, which Steve Jobs, the company’s chief executive, claimed would revolutionise the mobile-communications industry just as the iPod changed the music industry. The share prices of some of Apple’s putative competitors suffered. See article

Motorola’s share price slipped further following last week’s profit warning, which analysts blamed on the low profit margins to be had from the company’s bestselling range of RAZR ultra-thin mobile phones.

The battle for the market in high-definition DVDs moved to new ground when LG Electronics introduced the first machine capable of playing both Blu-ray and HD DVD discs. Consumer-electronics firms and film studios have had to choose between the two formats, making consumers uncertain which one will triumph and causing them to delay buying new players.

Eastman Kodak said it would sell its medical-imaging unit, which traces its roots back to 1896 (soon after the discovery of X-rays), to a division of Canada’s Onex conglomerate. The deal, worth up to almost $2.6 billion, is part of the photography company’s strategy to refocus its business. It has made eight consecutive quarterly losses.

Gap’s share price rose by more than 7% amid speculation that its review of “brand strategies” might lead to the sale or break-up of the company, which owns the Old Navy label. The review was disclosed last week by Gap’s boss when he reported poor sales leading up to Christmas.

Express Scripts filed a lawsuit with the intent of blocking Caremark’s acceptance of a merger with CVS. Express Scripts has offered $26 billion for Caremark (both companies manage pharmacy services for consumers and health-care firms), but Caremark says a lower bid from CVS, America’s biggest retail-drug chain, provides less risk. A merger with Caremark is attractive because of the extra weight it will bring to price negotiations with drugs firms.

China National Offshore Oil Corporation agreed to invest in a $5.5 billion Indonesian biofuels project, thought to be one of the world’s largest. The state-owned company is looking for energy sources that could one day ease China’s reliance on oil and coal. However, the news was not welcomed by environmentalists worried about the rainforest that will be cleared to make way for crops needed to produce the biofuels.

France’s stockmarket regulator gave François Pinault, a retail and luxury-goods tycoon, a deadline of February 2nd to make a firm offer for Suez, a French utility company which is in the midst of a messy merger with Gaz de France.

NYSE Group and three other foreign investors, including Goldman Sachs, acquired a combined stake of 20% (of 5% each) in India’s biggest stockmarket, the National Stock Exchange. The move by the operator of the New York Stock Exchange underscores the trend toward consolidation among bourses. Under new rules, the Indian government allows foreign investors to take combined stakes of up to 49% of the country’s stock exchanges.

In a decision that took markets by surprise, the Bank of England raised its key interest rate by one-quarter of a percentage point to 5.25%. Britain’s inflation rate has recently crept up to its highest level in a decade. See article

Bulging fuel inventories in America on the back of mild winter weather helped to dampen the price of oil, which fell below $53. See article

The price of copper continued to fall sharply (the metal’s price has dropped by some 10% since the start of the year). Copper almost doubled its value last year, but supplies have been steadily storing up as the demand from carmakers and housebuilders in America has tapered off.

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