Politics this week
Feb 10th 2011
From The Economist print edition
Tunisia’s interim president assumed the power to rule by decree, as the interior ministry suspended the former ruling party, the Constitutional Democratic Rally. Its officials will no longer be allowed to meet and its offices are to be closed down. See article
Kuwait’s interior minister resigned from the government following revelations about torture in prisons. The Kuwaiti emir accepted the resignation after critics called for political reforms in the wake of demonstrations in Egypt and Tunisia.
The head of the Sudanese government, Omar al-Bashir, accepted the result of the secessionist referendum in ten southern provinces that is expected to lead to the formation in July of an independent state, which will probably be called South Sudan. According to the final count, 98.8% of the almost 3.9m registered voters approved the split.
Gross injustice
Cuba charged Alan Gross, whom the United States describes as an aid worker, with plotting against the state, a crime that carries a 20-year prison sentence. Mr Gross was arrested in December 2009 while working for the Cuba Democracy Project, an American government programme aimed at promoting political change. Cuban officials said he was distributing satellite dishes, which are illegal on the island, to Jewish groups.
Haiti’s outgoing government issued a diplomatic passport to Jean-Bertrand Aristide, a former president who has lived in exile in South Africa since being ousted seven years ago. His American lawyer said that Mr Aristide, a popular but divisive figure, wants to return home “as soon as he can”.
Brazil’s new government announced cuts of 50 billion reais ($30 billion) in budgeted spending for 2011, as it seeks to cool an overheated economy. Inflation for January was 0.8%, taking the annual figure to 6%.
An historic dispute
Cambodia’s prime minister said that skirmishes with Thailand around a disputed site on their border had escalated into “a real war”. Both sides engaged in artillery and heavy-machinegun fire. The area under contention is tiny but surrounds an 11th-century Khmer temple complex designated as a World Heritage site. Cambodian troops apparently fortified the temple. See article
A Taliban suicide-bomber attacked an army recruiting camp in Mardan in north-west Pakistan, killing and injuring dozens of people.
The UN issued a special alert about the drought afflicting China this winter. China’s official media called it the worst drought in 60 years. The state media also claimed that Shandong province, the most important centre for wheat, has had its worst season in 200 years. China has been self-sufficient in grains, though demand is huge. If it starts to import wheat, world prices are likely to rocket.
Taiwan said it had arrested one of its generals as a spy for China. General Lo Hsien-che is thought to have been working for the mainland for at least five years. Relations between Taiwan and China have improved under Taiwan’s Kuomintang government.
North Korea and South Korea sent military delegations to meet in the demilitarised zone, their first such encounter since the North shelled the island of Yeonpyeong in November, killing three civilians. The South’s cheek-turning was for naught: the North Korean colonel and his attaché stormed out of the meeting, leaving the talks in a state of “collapse”—and perhaps angling for further concessions.
Indonesians were shocked by two attacks against religious minorities. Four members of the Ahmadi sect were beaten to death by a mob of orthodox Muslims in western Java while police stood by, doing little to protect the victims. In central Java, meanwhile, a mob burned down Christian churches.
Centrifugal forces
Two more moderate Democrats in Congress decided to call it a day. Jim Webb said he would not seek re-election as senator for Virginia next year, and Jane Harman said she was stepping down from her Los Angeles congressional seat to head a foreign-policy think-tank.
Congressional Republicans aligned to the tea-party movement helped to defeat a measure in the House that would extend provisions in the Patriot Act related to government surveillance and access to library records. The measure will be voted on again soon.
Florida’s governor unveiled a budget that proposes spending cuts of $4.6 billion in programmes such as Medicaid, but also lowers property and corporate taxes by $4 billion.
The mask starts to slip
Prosecutors in Italy asked a judge to put Silvio Berlusconi on a fast track to a trial on charges of paying for sex with an underage prostitute and abusing his office to cover it up. Mr Berlusconi called the charges “disgusting”. But the judge is expected to give her approval, and the trial could begin within months. See article
France’s president, Nicolas Sarkozy, told his cabinet to take their holidays at home. This came after scandals revealed that the prime minister, François Fillon, accepted free boat and plane trips from Egypt’s president, Hosni Mubarak, and the foreign minister, Michèle Alliot-Marie, had taken flights paid for by a friend of the former Tunisian president. See article
Doku Umarov, a notorious Chechen terrorist leader, said that he had ordered last month’s suicide-bombing at Moscow’s Domodedovo airport, which killed 36 people. The Russian police arrested the siblings of the man they claim was the suicide-bomber.
In a speech in Munich, David Cameron claimed that “state multiculturalism” had failed and had led many Britons to live segregated lives. The British prime minister wants to foster a stronger sense of national identity. He made his speech on the day that the English Defence League, a far-right group, marched through Luton, a town with a large Muslim population. See article
Business this week
Feb 10th 2011
From The Economist print edition
NYSE Euronext and Deutsche Börse announced they were in advanced merger talks. The deal would see shareholders in the German exchange hold a majority stake in the new company. The two have a history: in 2006 Deutsche Börse launched a takeover bid for Euronext, which operates the Paris and Amsterdam exchanges among others, but lost out to the New York Stock Exchange. Earlier, the London Stock Exchange and TMX, which runs the Toronto bourse, said they would merge their businesses. Both exchanges are popular listing venues for mining and commodities firms. See article
The scale of profits reaped by big mining companies last year on the back of booming mineral prices exceeded most expectations. Rio Tinto’s net earnings almost tripled in 2010, while net profit at Xstrata rose by 86%.
Malicious intent
NASDAQ confirmed that it had found malware files on a web-based service it offers to companies to store and distribute financial data. NASDAQ’s stockmarket trading platforms were unaffected. There was no evidence that hackers had accessed any company documents, but news of the attack, coming soon after electronic permits were stolen in Europe’s carbon markets, raised further questions about cybersecurity at electronic exchanges.
In one of the biggest investments to date by a Chinese company in North America, PetroChina said it would pay $5.4 billion for a 50% stake in unconventional-gas assets held by Encana, which operates in western Canada.
Battered by Ireland’s housing crash, Anglo Irish Bank said it lost €17.6 billion ($24 billion) in 2010, including losses from loans it gave to property developers. The government has put many of these loans in a “bad bank”. Meanwhile, the courts began the process of winding down Anglo Irish and Irish Nationwide, another distressed lender, to comply with the terms of Ireland’s bail-out by the European Union.
Markets were awash with speculation that Axel Weber was no longer interested in succeeding Jean-Claude Trichet as president of the European Central Bank. Mr Weber, who heads Germany’s Bundesbank, has hitherto been considered the front-runner for the job. He has opposed the ECB’s purchases of the bonds of euro-zone governments.
Wizard stuff
The long-awaited details of Project Merlin, a truce between the British government and banks, were unveiled by George Osborne, the chancellor. Under the deal British banks promised to reduce bankers’ bonuses and be more open about how their most senior executives are paid. They also pledged to increase their lending to businesses. Earlier, Mr Osborne unexpectedly brought forward an increase in a levy on banks, to 0.075% of their debt, reaping an additional £800m ($1.3 billion) for the Treasury. See article
American regulators proposed changes to the way bankers are rewarded. Larger banks would be legally required to defer 50% of executive bonuses for three years or more and link the payments to performance (some banks have already introduced similar changes). They would also have to determine which of their employees trade in areas that could inflict substantial damage to the bank, and ensure that their compensation schemes discourage excessive risk-taking.
AOL agreed to buy the Huffington Post, an online newspaper and news aggregator, for $315m. The HuffPo was founded by Arianna Huffington, a wealthy pundit, as a liberal voice on the internet. Some of the unpaid bloggers that contribute to the site wondered if it would remain distinctive. Ms Huffington will be in charge of a new unit at AOL that integrates its news, entertainment and social-media content. See article
Ahead of Nokia’s announcement of a new business strategy, a memo written by Stephen Elop, its chief executive, was leaked. In it Mr Elop compared the Finnish mobile-phone company to a man on a “burning platform” deciding whether to jump into “icy waters”. He also admitted that Nokia was “years behind” in the market for smartphones. See article
China’s central bank raised its benchmark interest rate by 25 basis points to 6.06%, its third increase since October as it tries to tackle rising inflation.
Driver error
An investigation by American road-safety officials concluded that the problem of sudden acceleration that led to a huge recall of Toyota cars was not caused by the carmaker’s electronic systems, as claimed in hundreds of lawsuits. Sticking foot-pedals and floor mats accounted for some of the mishaps, but most were caused by “pedal misapplication”, or motorists mistaking the accelerator for the brake.
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