Archive for March, 2007

Politics this week: 3rd – 9th March 2007

March 8, 2007 Leave a comment

Politics this week

Mar 8th 2007
From The Economist print edition


Lewis “Scooter” Libby, the former chief of staff to Vice-President Dick Cheney, was convicted on four out of five counts of lying to FBI agents and obstruction of justice. The charges had arisen from the leaking of the name of a CIA agent to the press, in an attempt to discredit an opponent of the invasion of Iraq. Mr Libby’s conviction added to the administration’s growing embarrassment about the war—and about Mr Cheney, one of its chief promoters. See article

Reports of dilapidated facilities and patient neglect at America’s foremost military hospital, the Walter Reed Army Medical Centre, where many casualties of the Iraq war are being treated, caused uproar in Congress. On March 1st the man in charge of the hospital, Major-General George Weightman, was fired, and the next day the army secretary, Francis Harvey, was forced to resign. President George Bush announced that he was setting up a bipartisan panel to look into the treatment of wounded soldiers. See article

Shinzo Abe, Japan’s prime minister, caused offence in neighbouring countries and elsewhere by suggesting there was no clear evidence that some 200,000 women who worked as prostitutes for the Japanese army in the 1930s and 1940s had been coerced. See article

China’s parliament, the National People’s Congress, opened its annual 12-day session. The budget was announced, including an unusual 18% increase in spending on defence. In his “work report”, Wen Jiabao, the prime minister, promised to reduce inequality. The NPC is expected to pass a controversial law enshrining private property rights. See article

A powerful earthquake struck the Indonesian island of Sumatra, near the city of Padang, killing more than 50 people. The next day, more than 20 died in a plane crash at Yogyakarta, on the neighbouring island of Java. See article

After last month’s agreement on steps towards ending its nuclear programme, North Korea started bilateral talks on normalising relations with both America and Japan. The talks with Japan ended abruptly on their second day, after a North Korean walkout, apparently in anger at Japan’s stance on North Korea’s abduction of Japanese citizens in the 1970s and 1980s.

Jordan’s King Abdullah gave an address to both houses of the American Congress, urging new diplomacy to solve the Palestinian conflict. Reports suggested that a quartet of Arab states—Egypt, Jordan, Saudi Arabia and the United Arab Emirates—could join Israel, the Palestinian president and the United States in talks.


After a slight drop in Iraq’s sectarian killings, two suicide-bombers, presumed to be Sunni insurgents, killed at least 117 Shia pilgrims on their way to a festival in the holy city of Karbala, where more than 1m had gathered; at least 40 others were also killed in attacks en route. See article

A former deputy defence minister of Iran, Ali Reza Asghari, a retired general, was reported to have disappeared last month in Turkey; a Saudi newspaper claimed he was being questioned “in a northern European country” before being flown to the United States. It was not clear whether he had defected or been kidnapped.

The first African Union peacekeeping troops, from Uganda, arrived in Somalia’s capital, Mogadishu, to replace Ethiopian troops who helped the country’s transitional government defeat the Islamist militias earlier this year. They were greeted at the airport by mortar fire from insurgents.

Three Britons, a British-Italian woman and a French woman disappeared in eastern Ethiopia; their vehicles were found, shot up. Rebels of the Afar tribe were suspected of kidnapping them. See article

Côte d’Ivoire’s president, Laurent Gbagbo, and the main rebel leader, Guillaume Soro, signed an agreement to end the divided country’s civil war. The accord sets out a timetable for disarmament, voter registration and fresh elections. See article

The Nigerian ruling party’s presidential candidate, Umaru Yar’Adua, who has a kidney illness, flew to Germany for a medical examination, casting more doubt on his suitability as the front-runner in next month’s election.

Before departing for a week-long trip to five Latin American countries, George Bush emphasised his commitment to helping the region with social justice, including health, education and housing.

Oscar Berger, the president of Guatemala, ordered a purge of the police. Four police officers, including the head of the organised-crime unit, were accused of the murder last month of three politicians from El Salvador; the police concerned were themselves murdered days later in jail.

An outbreak of dengue fever in central South America worsened. Ten people have died in Paraguay; Bolivia, Brazil and Argentina have also suffered outbreaks, prompted by heavy rains and flooding.

Getty Images
Getty Images

Britain’s House of Commons voted to create a fully elected House of Lords. Tony Blair, the prime minister, and Jack Straw, the Commons’ leader, had favoured a half-elected, half-appointed upper house. See article

European Union leaders held a summit in Brussels to discuss climate change, energy policy and the progress of economic reform.

Estonia’s centre-right prime minister, Andrus Ansip, is likely to remain in office after his party and its coalition partner took the most votes in the country’s parliamentary election. This is a rare case of a government being re-elected in eastern Europe.

Planned job cuts at Airbus became an issue in the French presidential election. As some 15,000 workers went on strike in Toulouse, both of the main candidates, Nicolas Sarkozy and Ségolène Royal, promised to pump more public money into Airbus’s parent company if need be to protect jobs in France.

Ramush Haradinaj, a former prime minister of Kosovo who was a leader of the Kosovo Liberation Army in the 1998-99 war, went on trial before the war-crimes tribunal in The Hague. The chief prosecutor, Carla del Ponte, gave warning that some witnesses against Mr Haradinaj were being intimidated.

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Business this week: 3rd – 9th March 2007

March 8, 2007 Leave a comment

Free articles from this week’s edition of The Economist
China’s property law | Producing ethanol from trees | Scary markets | Fall-out from Scooter Libby’s conviction | Japan’s floundering prime minister | Democracy for Britain’s upper house | Turkish nationalism on the march | Hugo Chávez’s Venezuela | Diplomacy over Israel and Palestine | Energy and nationalism | Aviation in India | Regulators clamp down on insider trading | That might be the Higgs boson | Oxford and the Cowley Road | Arthur Schlesinger junior, historian and liberal

Business this week

Mar 8th 2007
From The Economist print edition

America’s economy betrayed signs of slower growth. Labour costs rose and factory orders hit a six-year low, with orders for big-ticket items falling. Meanwhile, the government reported that productivity gains slowed, with an increase in the final quarter of 2006 of about half of what economists had previously expected.

Alan Greenspan, former chairman of the Federal Reserve, said there is a “one-third probability” of an American recession this year. He also predicted (before the latest economic data were released) that the current economic expansion will not last as long as the previous one. But Mr Greenspan, who has been particularly outspoken lately, stands in contrast with his successor, Ben Bernanke, who recently told Congress the Fed believes that the American economy will strengthen this year. See article

Meanwhile Mr Bernanke continued the Fed’s campaign to rein in the mortgage portfolios held by two government-sponsored enterprises, Fannie Mae and Freddie Mac. Mr Bernanke suggested that the companies’ sizes and structures posed a risk to financial markets. He called for stronger regulation and supervision of the institutions.

Oil prices jumped after the American government reported an unexpected drop in crude-oil stocks amid the lowest import levels since 2005. Analysts had been expecting an increase.

Investigations into trading in the shares of New Century Financial, a big lender in the subprime-mortgage market, highlighted ongoing problems in the industry. Several big lenders have suffered from a growing number of defaults and late payments. See article

New limits on tax relief offered on shareholder loans in highly leveraged deals will reportedly be reviewed by Britain. The proposed change could have an effect on booming—and controversial—private equity.

Eliot Spitzer, the former attorney-general of New York state, was criticised by a panel of retired judges. After a review, the group discounted his charges that Maurice Greenberg, the boss of American International Group, a big insurance company, had a conflict of interest that hurt his charitable foundation while benefiting AIG. Mr Spitzer is now New York’s governor.

Thousands of Airbus employees went on strike in France to protest against a radical company restructuring that has drawn criticism from candidates in France’s fiercely contested presidential race. The European aircraft-maker plans a total of 10,000 job cuts across the region in the next four years, including 4,300 in France. Politicians have made competing offers to save jobs.

Luc Vandevelde, the chairman of Carrefour, resigned in a feud with its controlling family. He was replaced by a member of that family. Meanwhile, a pair of activist investors, including Bernard Arnault, France’s richest man, bought a big stake in the French-based retail chain.

Britain faced heavy lobbying from the European Commission to accept an “open skies” agreement that it struck with America. About 40% of US-European air traffic goes through London’s airports. But Britain objects to the provisional air-travel accord, contending that America has failed to give European airlines sufficient access to its own market. See article

Citigroup announced a bid of ¥1,350 ($12) per share for Nikko Cordial, a Japanese brokerage firm. The deal values Nikko at up to ¥1.3 trillion. Citigroup was also reported to be in talks with the Bank of Overseas Chinese about buying a stake in the Taiwanese financial institution.

Research in Motion said Jim Balsillie was resigning as chairman of the technology company. The news came after the firm, which makes the BlackBerry, reported accounting errors on stock options of more than $250m. Mr Balsillie will stay on as a director and co-chief executive of the company.

Federal regulators charged that investors pocketed more than $5.3m in illegal profits from insider trading before TXU, an American utility, said it had agreed to be sold for $45 billion by a group led by big private-equity firms. The Securities and Exchange Commission, the market regulator, said the insider trading was undertaken through foreign brokers to conceal the investors’ identities. See article

The yen continued its volatile swings against the dollar. The Japanese currency had climbed rapidly against the dollar after falling slowly in January, but later gave up some of its gains.

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Business this week: 24th February – 2nd March 2007

March 1, 2007 Leave a comment

Business this week

Mar 1st 2007
From The Economist print edition

Stockmarkets around the world fell precipitously on February 27th, sparked by a drop of 8.8% in the Shanghai Composite Index, which was triggered by a threat of tighter regulation on trading—later withdrawn. As investors in Asia and Europe took fright, American markets also digested comments from Alan Greenspan, the former head of the Federal Reserve, concerning a possible recession, as well as some poor economic data. The Dow Jones Industrial Average had its worst day in almost four years. See article

Yet another record was set for the biggest leveraged buy-out when a private-equity consortium led by Kohlberg Kravis Roberts and Texas Pacific Group agreed to buy TXU, a Texan power company, for around $45 billion. The private-equity firms stressed the deal’s green credentials (bolstering support ahead of any potential regulatory scrutiny) by announcing that TXU would reduce the number of coal-fired power plants it was planning to build from 11 to 3. See article

Airbus unveiled a long-awaited restructuring plan, which had been held up by last-minute negotiations between France and Germany. Some 10,000 jobs are to go over four years, split between Airbus and its contractors. New “industrial partners” and buyers are being sought for six factories. In order to win backing for the plan in France (where outraged unions called for industrial action), final assembly of the A350 XWB jet will be exclusively based in Toulouse, but Germany is to win increased production of the bestselling A320 narrow-bodied aircraft. After last year’s woes, Airbus forecast that the plan would provide it with eventual annual savings of euro2.1 billion ($2.8 billion). See article

Italy’s government increased the size of the stake it is selling in Alitalia to 39.9% (from the 30.1% announced last December). New conditions were also attached to any potential sale, such as retaining the loss-making airline’s base in Italy.

Deutsche Telekom reported a surprise net loss of euro898m ($1.2 billion) for the fourth quarter. The company booked charges related to its effort to shed 32,000 jobs, but it is also suffering from the continued drain of customers away from its fixed-line business.

In a sign of the further strengthening of Ferdinand Piëch’s hand at Volkswagen, the carmaker raised its stake in MAN, a German lorry-maker, to nearly 30%. Mr Piëch, VW‘s chairman, has proposed a merger of its heavy-truck division with MAN and Scania, a Swedish lorry-maker in which VW also retains a large stake.

The European Bank for Reconstruction and Development barred a German engineering company from its contracts because of corruption in a project backed by the World Bank in Lesotho. It is the first time one development bank has barred a firm for mischief on another bank’s project (the World Bank has already blacklisted the company).

Citigroup named Gary Crittenden as its chief financial officer. Mr Crittenden, who has spent the past seven years at American Express, joins the world’s biggest bank amid criticism from shareholders that it has dampened profits by running up expenses. See article

Station Casinos agreed to an $8.8 billion buy-out from a group of investors led by Frank and Lorenzo Fertitta, respectively the company’s chief executive and president. Operating casinos away from the Strip that cater to locals, Station also owns large tracts of lucrative undeveloped land around Las Vegas.

Blockbuster reported a 28% drop in fourth-quarter net profit compared with a year ago, as the promotion costs for its online service soared. The film-rental company also said it was trying to “resolve a disagreement” with its chief executive over his bonus.

Wal-Mart made an expansive move in China by acquiring 35% of the operator of Trust-Mart hypermarkets. The deal throws down a challenge to Carrefour, China’s biggest foreign retailer. Trust-Mart’s stores are located in city areas where space is at a premium.

Following last year’s debacle over a Dubai company buying American port operations, the House of Representatives voted 423-0 to pass a bill, supported by the White House, that strengthens the government’s scrutiny of foreign deals in the United States.

There was good news and bad news for America’s housing market. Sales of existing homes rose to an annual rate of 6.46m in January, the highest level for seven months. But after increasing in December, the median price of an existing home fell by nearly 5%, to $210,600. Separate data for the smaller market in new homes showed that sales plunged in January by 16.6%, to an annual rate of 937,000—the biggest drop in 13 years.

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Politics this week: 24th February – 2nd March 2007

March 1, 2007 Leave a comment

articles from this week’s edition of The Economist
Markets and the world economy | Goodbye to the blues | A progress report on South Africa | Corporate R&D | Beijing’s Olympic-building boom | The Iraqi-American crackdown in Baghdad | Italy’s government wins its confidence vote | Hillary Clinton’s campaign falters | Incentivising invention | Controlling hospital spending in Britain | Private equity | DNA tracking | The French election | Mario Chanes de Armas, prisoner of Castro

Politics this week

Mar 1st 2007
From The Economist print edition

In a shift of policy the Bush administration said it would take part in a regional meeting this month organised by Iraq’s government, even though Iran and Syria would take part too. See article

The Iraqi government said its main factions had at last agreed to a draft law on how to regulate the oil industry and share out its revenue, though some final touches had still to be made.

The five permanent members of the UN Security Council plus Germany discussed ways of tightening UN sanctions against Iran, in the wake of its refusal to comply with previous UN resolutions ordering it to suspend its enrichment of uranium.

The African Union asked for extra cash to pay for its proposed peacekeeping mission to Somalia, where Ethiopian troops recently overthrew an Islamist government. Only Uganda has said it is ready to send troops, offering 1,500; Nigeria, Ghana, Burundi and Malawi may also chip in, bringing the number up to around 4,000, but the AU says 8,000 are needed.

The International Criminal Court at The Hague named its first two suspects to be summoned for alleged atrocities in the Sudanese region of Darfur: a former junior interior minister in Sudan’s government and now its minister for humanitarian affairs; and a leader of the janjaweed militias that have killed thousands of civilians. See article

Sierra Leone’s former defence minister, Sam Hinga Norman, who was being tried for war crimes at a UN-backed tribunal in Senegal, died before a verdict was due, apparently of a heart attack.

Senegal’s president, Abdoulaye Wade, was re-elected in a landslide, with opponents crying foul.

Italy’s centre-left government is back, after narrowly winning a vote of confidence in the Senate, where it lost a big foreign-policy vote last week. But few Italians expect the government to last for anything like its full term. See article


The International Court of Justice in The Hague ruled that Serbia was not directly responsible for genocide in Bosnia during the 1992-95 war. But it said that the massacre of some 8,000 Bosnian Muslims by Bosnian Serb troops at Srebrenica in 1995 did constitute genocide, and it denounced Serbia for failing to prevent it. See article

A surge of support for the centrist candidate for the French presidency, François Bayrou, unsettled the two front-runners. One opinion poll gave Mr Bayrou 19%, compared with 25.5% for the Socialist candidate, Ségolène Royal, and 29% for the centre-right’s Nicolas Sarkozy. See article

Two Picasso oil paintings with a combined valu
e put at euro50m ($66m) were stolen from his grand-daughter’s home in Paris.

Canada’s Supreme Court revoked a law allowing foreign terrorist suspects to be detained indefinitely without trial while waiting for deportation. Later, Parliament voted against renewing two other anti-terrorist measures allowing suspects to be held for three days without charge and compelling witnesses to testify in terrorist trials. See article

Fidel Castro, Cuba’s ailing president, spoke live on a radio programme for the first time since falling ill last July. The 80-year-old leader, who is said to be suffering from diverticulitis, a bowel disease, said he was “gaining ground”, but did not say when, or if, he would return to work.

America’s vice-president, Dick Cheney, visited Pakistan’s president, General Pervez Musharraf, and asked him to do more to tackle the Taliban and al-Qaeda fighters taking refuge in Pakistan’s tribal borderlands, before an expected spring offensive by Taliban fighters against NATO forces in Afghanistan. See article

Mr Cheney went on to Afghanistan, where a Taliban suicide-bomber attacked the military base at Bagram where he was staying. Mr Cheney survived. The bomber and 11 others did not. Meanwhile, Britain followed America in announcing an increase—of 1,400 soldiers—in its commitment of troops to Afghanistan.

Pridiyathorn Devakula, Thailand’s finance minister resigned, opening further cracks in the troubled military government that seized power in a coup last September. See article


India’s ruling Congress party suffered electoral setbacks in two northern states, Punjab and Uttarakhand. Its loss of power in both states was blamed in part on popular anger at rising prices. Curbing inflation was a central theme of the annual budget, unveiled in Parliament by the finance minister. See article

Sixteen Indian soldiers were killed in a grenade attack on a convoy of army trucks in the north-eastern state of Manipur. The attack was blamed on one of many insurgent groups fighting Indian rule there. See article

Timor-Leste’s prime minister, José Ramos Horta, said he would run for president in April’s election. As instability in the country persists, he asked Indonesia to close its border with Timor-Leste, to prevent the flight of a group of army mutineers. See article


John McCain confirmed on a talk show that he would run for president, but said he was saving a formal announcement until April. Earlier, Mr McCain received a fillip to his nascent campaign when he was endorsed by Senator John Warner, who is a strong critic of George Bush’s policy of extra troops for Iraq, a policy which Mr McCain supports.

Virginia’s legislature voted to express “profound regret” at the state’s historical role in slavery. Separately, it emerged that the ancestors of the Rev Al Sharpton, a prominent black activist, were slaves owned by ancestors of the late Senator Strom Thurmond, a prominent segregationist.

Arthur Schlesinger died at the age of 89. The prolific historian wrote about the New Deal, the cold war and the Kennedy administration, to which he was an adviser, but he is best known for his 1973 book, “The Imperial Presidency”, which has experienced a revival of late.

Richard Daley shrugged off his opponents’ accusations of corruption at City Hall and cruised to a sixth term as mayor of Chicago, winning more than 70% of the vote.

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