Politics this week: 2nd – 8th June 2007

Politics this week

Jun 7th 2007
From The Economist print edition

AP

Amid the usual noisy demonstrations from anti-globalisation protesters, the annual G8 summit met in Heiligendamm, northern Germany. Thanks to American opposition (and a new proposal for negotiations that George Bush unveiled last week), the summit looked unlikely to reach agreement on climate change, which its host Angela Merkel had put top of the agenda.

The pre-summit atmosphere was soured by Russia’s president, Vladimir Putin. He threatened to retaliate against the deployment of limited American missile defences in Poland and the Czech Republic by targeting Russia’s nuclear missiles on Europe again.

Rumours that Turkey had invaded northern Iraq in force were denied. But Turkish troops and armour continued to mass on the border. Senior figures in both the army and the government favour a cross-border operation in pursuit of Kurdish PKK fighters. See article

The Basque separatist group ETA formally ended the ceasefire that it had declared in March 2006. The announcement was a blow to the Spanish prime minister, José Luis Rodríguez Zapatero, who had stuck his neck out to negotiate with ETA. He faces a general election next March. See article

The European Union decided to recommence talks with Serbia on a stabilisation agreement, the usual prelude to membership talks, which had been suspended last year because of Serbia’s failure to hand over the Bosnian Serb wartime general, Ratko Mladic, to the war-crimes tribunal at The Hague. Some diplomats expect Serbia to catch Mr Mladic soon. See article

War weary

Israel held training exercises for a possible clash with Syria as Ehud Olmert, the prime minister, tried to dampen fears at home of a war this summer. But, in a change from previous statements, he said Israel would like to hold direct talks with Syria.

France argued for an aid corridor from Chad into Sudan’s war-torn Darfur region to help the relief operation there. France is the only Western country with troops already in Chad that could protect such a channel.

AFP

A joint report by two UN agencies, the Food and Agriculture Organisation and the World Food Programme, said that 2.1m Zimbabweans may be dangerously short of food by the third quarter of this year. That figure may rise to more than 4m (a third of all Zimbabweans) in the first three months of next year.

The trial of Liberia’s former president, Charles Taylor, began in The Hague. He has been indicted on 11 charges of war crimes and crimes against humanity for his alleged role in a civil war in Sierra Leone; the trial could last for up to 18 months.

Jail time

Lewis “Scooter” Libby, the former chief of staff to Dick Cheney, was sentenced to two-and-a-half years in prison for perjury and for obstructing an investigation into the naming of a CIA officer, whose husband had criticised the administration over Iraq. Mr Libby was convicted in March, but some conservative pundits and politicians are asking George Bush to use his powers to pardon him because, they say, he is just a scapegoat.

William Jefferson, a Democratic congressman from New Orleans, was indicted by federal authorities on 16 charges for allegedly accepting bribes. He resigned from his seat on the House of Representatives’ small-business committee, but Republicans said the Democrats were moving too slowly to eject him from Congress. See article

War-crimes charges against two detainees held at Guantánamo Bay were dismissed by military j
udges on the ground that the accused had not been designated as “unlawful” enemy combatants, as required for their trial before the new military commissions. It is the latest setback for the administration’s much-criticised system for dealing with suspected terrorists. See article

The Republican presidential candidates held their third debate. As well as Iraq (where Mr Bush was criticised on all sides), the deal on immigration legislation reached between the White House and key senators was to the fore. Several candidates also endorsed the possibility of using tactical nuclear weapons against Iran if it refused to end its nuclear programme. The Democratic candidates’ second debate was, by contrast, a tame affair. See article

Spoiling the plot

Ten people in America were arrested in connection with an alleged plot to topple the government of Laos. Vang Pao, an ethnic Hmong and a former military commander, and others were accused of trying to buy guns, missiles and explosives to prepare for an attempted coup. See article

In the midst of a domestic crisis, General Pervez Musharraf, Pakistan’s president, issued a decree giving regulators new powers to curb broadcasters. After widespread protests, the government promised not to implement the decree until it had been reviewed by a committee. See article

China produced its first national plan for tackling climate change, pledging to curb its greenhouse-gas emissions, but not at the expense of economic growth. In Australia, John Howard, the prime minister, announced a change of policy, committing the country to capping emissions regardless of China’s actions. See article

EPA

Zakia Zaki, the owner of a radio station in Afghanistan, was shot dead at her home. Ms Zaki’s murder followed that of a female newsreader. The journalists’ association said the killings showed how difficult the working climate had become for journalists, especially women.

Gesture politics

Álvaro Uribe, Colombia’s president, freed almost 200 imprisoned FARC guerrillas including Rodrigo Granda, one of its leaders, in an attempt to secure the release of some 60 guerrilla hostages, including Ingrid Betancourt, a Franco-Colombian politician. See article

In a closely watched decision that boosts competition policy in the country, Mexico’s Supreme Court struck down a provision in a law passed last year that would have allowed Mexico’s two television companies free use of the radio spectrum to offer telephone and internet services.

In his first television interview since stomach surgery last year, Cuba’s president, Fidel Castro, shed no light as to whether he would resume any official duties.

Business this week: 2nd – 8th June 2007

articles from this week’s edition of The Economist
Innovation lessons from Apple | India’s economy continues to overheat | After the end of ETA’s ceasefire | Saying goodbye to Tony Soprano | Tax breaks for private equity | The worsening war in Sri Lanka | Getting wind farms off the ground | Muslims in the Caribbean | Slum clearance in China | Turkey mulls an invasion of Iraq | Two internet firms team up | The promise of modern cancer therapy | Books about Hillary Clinton | Indar Jit Rikhye, an Indian peacekeeper

More free articles »

Business this week

Jun 7th 2007
From The Economist print edition

Private-equity firms came under the spotlight after Gordon Brown, Britain’s chancellor of the exchequer, promised to bring “justice and equity” to the industry’s tax regime. Mr Brown, who will become prime minister later this month when Tony Blair leaves office, was speaking at a union conference where there was much discussion about the recent criticism, from the chairman of a prominent fund, of how managers at such firms pay a lower rate of tax than their office cleaners do. Private-equity managers have faced similar criticisms in America, where Congress held hearings in May. See article

Two private-equity firms agreed to buy Avaya, which provides telecoms equipment and networks to businesses, for $8.2 billion, the latest in a series of big buy-outs of technology-oriented companies.

It emerged that Ron Burkle, a supermarket magnate from California, has been approached by the employees’ union at Dow Jones, the publisher of the Wall Street Journal, about the possibility of a rival bid to Rupert Murdoch’s offer for the company. Mr Murdoch is in negotiations with the Bancroft family, which controls Dow Jones. Mr Burkle failed recently in a bid, with another investor, to buy the Tribune media group.

Another Russian fall-out

Vladimir Putin criticised BP’s Russian joint venture, TNK-BP, over its failure to meet production targets at the Kovykta gas field in eastern Siberia, in which the firm owns a majority stake. Speaking three days after regulators delayed a decision on whether to revoke the licence to exploit the field, the Russian president dismissed TNK-BP‘s argument that the authorities and Gazprom, the state-owned gas giant, were to blame for Kovykta’s slow development. Analysts expect TNK-BP to lose the licence unless a last-minute deal can be reached to sell a stake in the $20 billion project to one of Russia’s state energy firms.

Colony Capital, a private investment firm based in Los Angeles, won the bidding for control of Tamoil, a Libyan state-owned company that operates oil refineries and petrol stations in Europe. Colony will pay euro4 billion ($5.4 billion) for 65% of Oilinvest, Tamoil’s parent company, and Libya, which initiated a privatisation programme in 2003, will retain the remaining 35%.

Elevation Partners, a private-equity firm that lists Bono, a rock singer, as a partner, agreed to take a 25% stake worth $325m in Palm. The maker of hand-held mobile devices has been struggling of late to compete with wildly popular products, like the BlackBerry. The agreement with Elevation will bring in a new management team, including Jon Rubinstein, who headed Apple’s iPod unit, as executive chairman.

Ryanair reported that net profit had risen by 33%, to euro401m ($515m), for the year ending March 31st. But Europe’s biggest low-cost airline said it expected profit to slow in this fiscal year because intense competition with other carriers would lead to heavy discounting of passenger fares.

Unable to harvest their Oats

The $565m takeover of Wild Oats Markets, America’s second-biggest natural- and organic-food retailer, by Whole Foods Market, its biggest, was thrown into doubt when the Federal Trade Commission said it would try to block the deal. The FTC is concerned about the effect on competition among specialist retailers in natural and organic groceries, but Whole Foods argues that the regulator has excluded the big supermarket chains, which are expanding their natural and organic lines, from its analysis.

Segro, a British property company, said it would sell its portfolio of science-research parks and properties in California to Health Care Property Investors for $2.9 billion. The portfolio includes the Genentech complex near San Francisco. Segro wants to concentrate on Europe’s market for office space.

Stockmarkets endured a rocky week. The Dow Jones Industrial Average had its biggest two-day drop since February as comments made by Ben Bernanke, chairman of the Federal Reserve, made markets think an interest-rate cut was much less likely. In China, the government tried to calm investors following last week’s losses, caused by an increase in a tax on share trading that was intended to cool the markets. In response to the official reassurances the Shanghai composite share index fell by 8.3% on June 4th.

More to come?

The European Central Bank raised its benchmark interest rate for the euro area by a quarter of a percentage point to 4%, its highest level since September 2001. Jean-Claude Trichet, the bank’s president, cautioned that inflation risks remained “on the upside”. Markets do not think the ECB had finished raising rates yet. See article

Rojo: StreetView Celebs; iPhone Fever; Bubble Denial

Top Stories for the Week of June 4 – June 8, 2007

Smile, you’re on StreetView! Google unleashed its highly addictive Street View feature, allowing everyone access to panoramic street-level photos of who’s lunching in Union Square or who’s passed out in Times Square (via MercuryCenter.com). Google Blogoscoped wonders when Mountain View will start inserting ads into the photos’ billboards, and proposes a note you could leave in your window to ward off Google shutterbugs. Boing Boing asks, would it be more evil if it was the CIA or NSA? Never mind that, more easter eggs!

Street View is making celebrities out of people who don’t want it, like that cat’s owner, and Mashable! raises other privacy issues – hey, Street View is perfect for casing the joint before you burglarize it! In any case, here comes David Brin’s transparent society, blogs Seeking Alpha. Inevitably, Drudge used the technology to look at Steve Jobs’s house, proving … what exactly, Matt?

No one cares about Jobs’s house; it’s his phone that’s got geeks in a lather as the iPhone’s Friday, June 29 release date approaches (via Engadget) Sure, there’s the $600 cost and the ugly, two-year service agreement, but even the teaser ads are gorgeous. 6/29 will be a light posting day says TechCrunch while Arrington & Co. get themselves some. Meanwhile, Apple’s stock is hitting all-time highs (via Blogging Stocks) and AT&T is restructuring its Edge service to accommodate expected jumps in bandwidth demand, writes The Unofficial Apple Weblog. Only Business 2.0 is the tiny voice asking whether the iPhone will ever accept third-party apps.

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BuzzMachinekeeps the live-interviews vs. phone-interviews meme alive, calling for transparency to the point where interviews would be performed in public. Brad Linder adds some caveats about why reporters prefer live to e-mail, while BusinessWeek Online‘s Stephen Baker snipes that if he’s limited to communicating with machines, he might as well just bag formal reporting and blog.

Following the money, Mark Evans weighs in on the Web 2.0 “bubble,” figuring Michael Arrington’s late-night blog entry kicked the current round of doomsaying into high gear. But many tech bloggers are denying there’s any bubble to burst: Paul Kedrosky, both on his own and in the NY Times, and one of the Web’s oldest names, Marc Andreessen, who puts the pessimism down to our ancestors’ need to assume something was about to eat them.

The real bubbles are elsewhere: housing, which Big Picture sees the air leaking out of, while Paul Kedrosky scans the aging Wall Street bull and wonders about an imminent downturn. So should you pull out of the market and pay down your mortgage? Get Rich Slowly collects some expert advice.

In politics, the Lewis Libby Pardon Clock began running Tuesday, when the former vice-presidential chief of staff was sentenced to 30 months in prison for lying to the FBI. Calls for that pardon came fast and furious from National Review, Power Line and Weekly Standard, even while the latter admitted that prosecutor Patrick Fitzgerald was a Bush appointee.

GOP candidates vying for the presidency debated again on Tuesday, and Captain’s Quarters thinks the audience asked better questions than Wolf Blitzer. Candidates’ answers on a Libby pardon were all over the map, blogs Suburban Guerilla, but the silence was deafening when Blitzer asked who thought gays should be allowed in the military (via Think Progress).

Finally, if you’ve cringed at the idea of sending an e-card instead of a Hallmark card, check out Gorilla Sushi‘s take on “greetings,” such as “Sorry my Web browser history scared you.” If that doesn’t make you laugh, try getting your cat to photoblog (courtesy MetaFilter).