Archive for February 8, 2007

Politics this week: 27th January – 2nd February 2007

February 8, 2007 Leave a comment

Politics this week

Feb 1st 2007
From The Economist print edition

Scores of Iraqi Shias were killed by Sunni insurgent bombs and mortars during the Shias’ main religious festival, Ashura, while tit-for-tat killings in Baghdad and elsewhere continued. Earlier, near the Shias’ holy city of Najaf, American and Iraqi troops fought an advancing force of a breakaway Shia sect, killing at least 260 of them. The newly appointed overall American commander of troops in Iraq said that “time was short” for turning things round. See article


In the first successful suicide-bombing for nine months inside Israel, a Palestinian from Gaza killed three people in a bakery located in a residential area in the Red Sea resort town of Eilat.

At the African Union’s annual summit in the Ethiopian capital, Addis Ababa, the president of Chad, Idriss Déby, denounced the president of Sudan, Omar al-Bashir, who failed in his attempt to win the organisation’s chair for the coming year; it went instead to Ghana’s president, John Kufuor. Mr Déby also assailed the AU itself for being “deaf and blind to ethnic cleansing” in Sudan’s western region, Darfur, where the killing has spilled over into Chad.

Also at the AU summit, Somalia’s interim president, Abdullahi Yusuf, agreed to hold a conference to try to reconcile his country’s many rival clans. But no agreement was reached on sending an AU peacekeeping force to take the place of the Ethiopian troops who recently invaded the country to sweep Islamist militias from power.

As a token of China’s growing interest in Africa, its president, Hu Jintao, began an eight-country, 12-day tour of the continent. Attention will be focused on his trip to Sudan where he will discuss international efforts to make peace in Darfur. See articleE+

Nicolas Sarkozy, the centre-right candidate for the French presidency, made an election-campaign visit to London, where there are thought to be some 300,000 French residents. A poll showed Mr Sarkozy pulling ahead of the Socialists’ candidate, Ségolène Royal. See article

Police in Britain arrested nine men suspected of planning to kidnap and murder a Muslim British soldier on leave from Afghanistan. See article

Germany ordered the arrest of 13 suspected CIA agents over the kidnapping, for five months, of a German national of Lebanese descent. Meanwhile, the foreign minister, Frank-Walter Steinmeier, was embarrassed by revelations that he had opposed the release of a German-born Turkish citizen held in Guantánamo Bay for four years. Investigators found no evidence of terrorist activity by the Turk, Murat Kurnaz. See article

Carla del Ponte, the United Nations war-crimes prosecutor at The Hague, urged the European Union not to resume talks with Serbia until it took steps to hand over Ratko Mladic, a Bosnian Serb general wanted for war crimes. The EU suspended talks last year in protest at Serbia’s failure to arrest Mr Mladic.

With threats of subpoenas hanging in the air, America’s attorney-general, Alberto Gonzales, agreed to hand over classified documents about the government’s (recently abandoned) domestic spying programme to a committee in Congress. Only selected legislators will be allowed to review the top-secret files.


Washington, DC, witnessed its biggest anti-war rally in a while. By some estimates around 100,000 people protested in the capital against George Bush’s plan to send extra troops to Iraq. Meanwhile, a Senate committee held a hearing to confirm Admiral William Fallon as Mr Bush’s top commander in the Middle East. The main topic of conversation was Iran.

The former White House press secretary, Ari Fleischer, testified for the prosecution (under an immunity deal) at the trial of Lewis “Scooter” Libby. Mr Libby, a former chief of staff to Dick Cheney, has pleaded not guilty to charges that he obstructed an investigation into the leaking of a CIA officer’s name to the press.

More bad news on AIDS. Trials of a vaginal microbicide called cellulose sulphate, which was intended to stop women becoming infected, were halted when it was found that those receiving the treatment were more susceptible to infection, rather than less so.

An official inquiry into hundreds of murders of opposition activists, priests and journalists in the Philippines concluded that the army killed most of them. But it rejected claims by human-rights groups that top military chiefs had sanctioned the murders.

Bangladesh’s High Court ordered that elections in the country could not be held for three months, when it expects an overhaul of the election process to be completed. The country’s election commissioners resigned as part of the reform process. An election scheduled for last month was postponed amid protests that the ballot would be rigged.

Six policemen and a civilian were killed by a roadside bomb in eastern Sri Lanka, the scene of recent fighting involving rebel Tamil groups.

Nepal’s prime minister, Girija Prasad Koirala, pledged that the country would be a federal state in the future. Eight people have died in protests by southern Nepalese demanding the change over the past couple of weeks.

Venezuela’s National Assembly granted powers to President Hugo Chávez to legislate by decree for the next 18 months. See article


The first video images of Fidel Castro, Cuba’s ailing president, released since October showed him looking stronger though still frail, and chatting with Venezuela’s Mr Chávez. Mr Castro’s health is a “state secret”, but he is said to have suffered complications after intestinal surgery.

Canada’s government said it would pay C$11.5m ($9.8m) to Maher Arar, a Canadian software engineer who was detained by American officials and flown to Syria where he was tortured. An inquiry found that Canadian officials had falsely told their American counterparts that Mr Arar was a terrorist.

Ecuador slipped towards mob rule. Thousands of protesters, organised by the new president, Rafael Correa, stormed the Congress, where a majority of newly elected legislators are opposed to plans for a constituent assembly.

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Business this week: 27th January – 2nd February 2007

February 8, 2007 Leave a comment

Business this week

Feb 1st 2007
From The Economist print edition

The New York Stock Exchange and the Tokyo Stock Exchange announced an alliance. The partnership covers trading-systems technology, investor services and regulation and is the latest expansive move into foreign markets by the NYSE, which is acquiring Euronext and recently took a stake in India’s National Stock Exchange. For Japan’s biggest stockmarket, the pact should help boost market confidence, which has been dented by a series of technical mishaps in its trading operations. See article

Citigroup agreed to buy Egg, an online bank, from Prudential, a British insurer, for £575m ($1.1 billion). Egg’s sale price is much less than the £950m Prudential had said it was worth a year ago when Egg’s minority shareholders were bought out. The bank made a loss of £145m last year, but Citigroup hopes that combining it with its own British consumer operations will prove a boon. See article

Deutsche Bank had a record year; its annual net profit rose by 70% to euro6 billion ($7.8 billion) in 2006, partly on the back of a resurgence in its investment banking business.

With $6 billion in development costs and a delay of some two years behind it, Windows Vista finally went on sale to consumers. Microsoft’s latest operating system, its first since XP in 2001, has better security and new navigational designs. Bill Gates, the company’s chairman, promised PC users that “the wow starts now”; analysts said they would sooner wait for Vista’s sales figures.

Dell’s chairman, Michael Dell, returned to his old job of chief executive after Kevin Rollins was dismissed. The computer-maker is trying to reboot its business in response to sliding market share and slowing growth. Investors were heartened by the news. See article

Google’s fourth-quarter net income nearly tripled compared with a year earlier, to $1 billion (its annual profit for 2006 doubled to $3.1 billion). The company is prospering from website advertising revenue; the number of paid clicks rose by 61% in the quarter. However, Google’s share price came under pressure after analysts cautioned its future profits might be hurt if it over-extended its new business.

US Airways withdrew its hostile $9.8 billion offer for Delta Air Lines after Delta’s creditors threw their support behind the bankrupt carrier’s reorganisation plan. Delta and its pilots’ union insist the company has a future as an independent airline, but the bid has raised speculation about more attempts at consolidation in the industry.

India’s Tata Steel beat Brazil’s CSN in the bidding for Corus, an Anglo-Dutch steelmaker, so creating the world’s fifth-largest steel company. Formed in 1999 from the remnants of British Steel, Corus is India’s biggest foreign takeover. But Tata’s share price fell sharply amid concern that the price it is paying, £6.2 billion ($12.2 billion), is too high.

US Steel said its annual net profit last year rose by more than 50%, to $1.4 billion. The company’s European operations helped compensate for a rise in cheaper steel imports and falling demand from carmakers in America.

Altria made a long-awaited decision to spin off Kraft Foods. The idea was first mooted more than two years ago, but was delayed while Altria fought litigation about its Philip Morris tobacco business. Kraft’s sales have been languishing of late, partly because of the trend towards healthier foods; the decision to divest the company will put an additional 1.5 billion of its shares in the market.

Ford reported an annual loss of $12.7 billion, its biggest ever, on January 25th. The carmaker is suffering from a persistent decline in sales and is busily restructuring itself. Meanwhile, General Motors said it would delay announcing its results because of accounting errors.

Manchester won the competition to host Britain’s first Las Vegas-style “super-casino”. The city was chosen by the independent Casino Advisory Panel over more high-profile bids, including one led by Philip Anschutz, an investor, for a casino at London’s Millennium Dome.

Hank Paulson, America’s treasury secretary, told the Senate Banking Committee that he would like eventually to see a “fully market-determined, floating Chinese currency”. The new Congress has made no secret of its irritation at China’s stance on trade and exchange rates.

America’s GDP grew at an annualised rate of 3.5% in the fourth quarter, which was stronger than expected (the economy grew by 3.4% for the whole of 2006). A surge in consumer spending, helped by falling energy prices, boosted the figure. See article

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Politics this week: 3rd – 9th February 2007

February 8, 2007 Leave a comment

Politics this week

Feb 8th 2007
From The Economist print edition


The Intergovernmental Panel on Climate Change, whose job it is to try to assess what is happening to the atmosphere, published its fourth scientific report on February 2nd. It concluded, in terms somewhat stronger than the third report, that things are indeed getting hotter, and that mankind is, indeed, to blame. What to do about it will be addressed in other reports to be published later this year. See article

The European Commission said carmakers should be forced to increase the fuel efficiency of new cars by 20% within five years. Car companies said the target was an arbitrary figure and would lead to job losses in the EU as production moved elsewhere. See article

Russian prosecutors charged Mikhail Khodorkovsky, the former boss of the Yukos oil company and a critic of President Vladimir Putin, with laundering over $20 billion. Mr Khodorkovsky, who is already serving an eight-year prison term for fraud, said the new charges were designed to prevent his early release.

Italy’s foreign minister, Massimo D’Alema, denounced as “unfortunate outside interference” a letter to an Italian newspaper from the ambassadors of America, Australia, Britain, Canada, the Netherlands and Romania. The envoys had called on Italy to give greater support to the NATO mission in Afghanistan. See article

Two French Muslim groups sued a satirical magazine for defaming the Prophet Muhammad by reprinting cartoons first published last year in Denmark. Nicolas Sarkozy, France’s centre-right presidential candidate, gave his support to the magazine.

Some 160,000 turkeys were gassed at a farm in Suffolk to stop Britain’s worst outbreak of bird flu from spreading. See article

Flooding in Jakarta killed dozens of people and forced 340,000 to flee their homes. Indonesia is already struggling with an outbreak of dengue fever and is still grappling with bird flu, which has killed five people since the beginning of the year.

Thailand’s military-backed government sacked the national police chief, ostensibly for failing to catch those who planted bombs in Bangkok on New Year’s Eve. Separately, the government decided to reopen Bangkok’s old airport, Don Muang, while it fixes the many faults found at the $4 billion Suvarnabhumi airport, opened only five months ago.

Vietnam’s government unveiled plans for a $33 billion rail link between the capital, Hanoi, and Ho Chi Minh City in the south.

The design for a 40km (25-mile) atom smasher that will cost $8.2 billion was unveiled at a meeting in Beijing. Physicists want to discern one overarching set of laws that govern the universe and say the machine will help them make the discovery. The International Linear Collider, as it is known, will not start up until 2019 at the earliest and could be built in America, Japan or Switzerland.

George Bush sent his budget to Congress. The $2.9 trillion request asks for more funding for the military and reduces spending on health care and other domestic programmes over five years. It also forecasts reduced federal deficits that eventually reach a surplus in 2012. Sceptics wondered how this could be twinned with Mr Bush’s request to extend his tax cuts. See article

Rudy Giuliani confirmed he was entering the presidential race. Although he did not make a formal declaration, the former mayor of New York filed the usual campaign papers and told a TV interviewer that “I’m in this to win”. See article

The Senate was embroiled in debate on Mr Bush’s policy on Iraq. Several resolutions ranging from support to outright condemnation of Mr Bush’s plans have been produced and the parties are negotiating over which can proceed. See article

An explosion killed 32 miners at a rudimentary coal mine in north-eastern Colombia. Days later, a second blast at another mine in the centre of the country killed eight.


In Bolivia, more than 20,000 miners marched through the capital, La Paz, in protest at plans by Evo Morales, the country’s socialist president, for a sharp rise in taxes on mining. The government backtracked, saying the tax rise would apply to large privately owned mines and not to small mining co-operatives.

Opponents accused Argentina’s government of fiddling the country’s in
flation figure after a senior statistician was sacked and her replacement changed the methodology of the consumer-price index. The government said inflation in January was 1.1%; economists said it was 1.5-2%.
See article

More than a dozen gunmen attacked two state law-enforcement offices in the Mexican resort of Acapulco, killing seven people while videotaping the assaults. President Felipe Calderón sent some 8,000 troops to the area last month to crack down on drug-trafficking and organised crime.

The killing in Iraq continued unabated, with at least 130 people, mostly Shias, dying in a single suicide-bombing in a Baghdad market. A “surge” of extra American troops into Baghdad was set to begin in an effort to quell the sectarian violence.

The Palestinian president, Mahmoud Abbas, head of the Fatah party, and his Islamist rivals from Hamas, represented by their leader-in-exile Khaled Meshal, started talks in Mecca to end weeks of factional fighting in the Palestinian territories.

Egypt’s president, Hosni Mubarak, ordered a band of Muslim Brothers, including the group’s number three, to be tried in a military court. Lawyers said that 165 members of the Brotherhood, the country’s most popular opposition group, have been detained since December.

In Mogadishu, the capital of Somalia, sporadic night-time mortars and rockets were launched at the presidential palace, hotels and the port, presumably by remnants of the Islamist fighters, most of whom were routed a month ago by Ethiopian troops. An African Union peacekeeping force has yet to be assembled. See article


At the end of an eight-country tour of Africa, China’s president, Hu Jintao, said he would try to cut his country’s $3 billion trade surplus with the continent.

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Business this week: 3rd – 9th February 2007

February 8, 2007 Leave a comment

Business this week

Feb 8th 2007
From The Economist print edition

Vornado Realty Trust withdrew its bid for Equity Office Properties, leaving the way clear for shareholders in America’s largest real-estate investment trust to accept Blackstone Group’s offer of $38.9 billion. The transaction sets a new record for a leveraged buy-out, underscoring the relentless takeover of public companies by private-equity firms. See article

Blackstone Group was one of four private-equity firms making up a consortium that expressed a keen interest in acquiring J. Sainsbury. The British supermarket chain has a market value of around £9 billion ($18 billion); if successful, the leveraged buy-out would be Europe’s biggest. See article

London’s latest landmark, the Gherkin, was sold for £600m ($1.2 billion), a record for the capital’s booming commercial-property market. The seller, Swiss Re, will remain in the building as its main tenant until at least 2031.

Steve Jobs called for an end to digital-rights management technology that protects music sold over the internet. DRM was insisted upon by big record labels, but Mr Jobs thinks it is inhibiting the growth of the online-music market. Some observers reckoned that Apple’s chief executive was trying to deflect criticism aimed at iTunes’ own FairPlay system from regulators in Europe. See articleE+

Meanwhile, a settlement was reached in a trademark dispute between Apple and Apple Corps, the Beatles’ music company. The agreement gives Apple ownership of all the “Apple” logo trademarks, but the computer-maker will license some trademarks back to Apple Corps. The two sides have been arguing since the early 1980s; fans now hope they can come together and make the Beatles’ songs available on iTunes.

There was more bother for YouTube over copyright infringement. Viacom, the owner of MTV, asked that all of its content be removed from YouTube’s website after the two sides failed to reach a distribution deal. Meanwhile, Jeff Zucker chose his first day as boss of NBC Universal to chastise YouTube for failing to address media copyright on video clips.

Eastman Kodak unveiled its line of desktop printers and low-cost ink cartridges. Troubled Kodak is hoping its new products will encroach on Hewlett-Packard and others by addressing consumers’ gripes about the cost of replacement cartridges for their printers (by weight, the ink within them costs more than caviar).

A three-man panel of a federal appeals court in San Francisco ruled that the biggest sex-discrimination case in American history could proceed against Wal-Mart as a class-action lawsuit. The suit was brought on behalf of past and present female employees, who claim the retailer is biased towards men in pay and promotion. An estimated 2m women could join it. Wal-Mart fulminated against the legal basis of the case and said it would fight all the way to the Supreme Court if it had to.

The long-running takeover battle for Endesa moved closer towards completion when the board of the Spanish energy company recommended E.ON‘s latest €41 billion ($53 billion) offer to shareholders.

HSBC said that high rates of bankruptcy in America’s subprime mortgage market meant it would take a much higher charge than expected (estimated to be around $10.5 billion) on bad debts for 2006.

With the threat of huge lawsuits against cigarette-makers seemingly receding in the United States, Britain’s Imperial Tobacco decided to enter the market, agreeing to buy America’s Commonwealth Brands for $1.9 billion.

Chung Mong-koo, the chairman of Hyundai Motor, received a three-year prison sentence for embezzling company funds. The jail term surprised those used to the comparatively light sentences handed down in South Korean corporate cases. However, the court decided not to send the head of the country’s biggest carmaker to his cell straightaway, citing the need to protect the national economy during his appeal. Investors have been pushing for more transparency in the country’s chaebol.

The Shanghai stockmarket recovered somewhat after losing 11% of the value of its domestically traded shares in five days. The index surged last year, as improved earnings at Chinese companies spurred investor confidence. With one senior Chinese politician now warning that the market was overheated (and that most of the index’s companies should be delisted), some pondered if this was the inevitable end to a Chinese bubble. Cooler heads said it was just a market correction. See article

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