The Economist February 4th, 2012. issue 8770 PDF
Preview The Economist February 4th, 2012. issue 8770
The world this week Leaders Letters Briefing United States The Americas Asia China Middle East & Africa Europe Britain International Business Finance and economics Science and technology Books and arts Obituary Economic and financial indicators The world this week Politics this week Business this week KAL's cartoon Politics this week A leaked German proposal to appoint a euro-zone commissioner with the power to veto Greek budgets cast a shadow over a summit of European Union leaders in Brussels. Drama at the meeting itself was mercifully lacking, with the heads of government of all members bar Britain and the Czech Republic agreeing to sign up to a German-backed fiscal treaty. See article In a televised interview Nicolas Sarkozy, France’s president, suggested that France needed German-style labour reforms to restore its competitiveness. He pledged to reduce the cost of employment and give employers greater flexibility to negotiate working hours with their staff. See article In the latest in a series of newspaper articles, Vladimir Putin, Russia’s prime minister and probable next president, said the Russian economy must diversify away from its dependence on natural resources and towards high-tech products, but he insisted that the change should be led by state-run firms. Mr Putin said little about corruption, the biggest drag on Russian prosperity. A court in Bucharest handed Adrian Nastase, Romania’s prime minister from 2000 to 2004, a two-year prison sentence for corruption. Vowing to appeal, Mr Nastase said he was the victim of a politicised judiciary. See article Tried and tested Mitt Romney won the Republican presidential primary in Florida by a wide margin, taking 46% of the vote to Newt Gingrich’s 32%. The party establishment had rallied to Mr Romney’s campaign in the week before the vote to halt the Gingrich insurgency that arose in South Carolina. Mr Romney’s victory goes some way to restoring his status as the party’s “inevitable” candidate, but its populist wing may still try to trip up the Romney machine in the forthcoming primary contests. See article The day after Mr Romney’s victory Barack Obama unveiled a new proposal to help homeowners refinance their mortgages. Home foreclosures had been an issue in the Florida primary. The proposal is a sign that the campaign for November’s general election will soon get under way. The ugly game The Egyptian cabinet called an emergency meeting after 74 people were killed and hundreds more injured in clashes between spectators from rival teams at a football match in the Egyptian city of Port Said. There was also violence at a game in Cairo. The police came under sharp criticism for failing to stop the trouble. After a spike in violence, the Arab League suspended an observer mission to Syria that was meant to aid a peaceful end to a deepening ten-month conflict between the government and protesters. Iraq’s main Sunni party returned to parliament and will resume talks with Shia leaders, following a protest over an arrest warrant for the country’s Sunni vice- president. The Iranian parliament threatened to halt oil sales to Europe, in an attempt to pre-empt the implementation of new EU sanctions aimed at forcing Iran to open its nuclear programme to scrutiny. Playing it safe Dilma Rousseff, Brazil’s president, travelled to Cuba and met Raúl Castro, the Cuban president, and Fidel Castro, his brother and predecessor. Her visit focused on trade and investment, and she did not meet any dissidents. A judge in Haiti ruled that Jean-Claude Duvalier, a former dictator who returned to the country last year after 25 years in exile, should stand trial on corruption charges, but not for human-rights abuses. NGOs seeking justice for the dictatorship’s crimes sharply criticised the decision. Getting ready to depart Leon Panetta, America’s defence secretary, said NATO forces in Afghanistan would withdraw from combat missions soon after mid-2013, up to 18 months earlier than had been previously planned for Afghan troops to take full responsibility for the security of the country. See article Pakistan’s intelligence agencies are continuing to help the Taliban, according to a leaked NATO report. Based on interviews with 4,000 captured Taliban fighters, the document says that Pakistan knows where senior Taliban leaders are hiding. Pakistan’s foreign minister rubbished the report. Pakistan’s Supreme Court said it was preparing to charge Yousaf Raza Gilani, the prime minister, with contempt for refusing to reopen a corruption case against President Asif Ali Zardari. Mr Gilani insists the president has immunity. The International Atomic Energy Agency voiced support for Japan’s plan to restart some of the nuclear reactors that have been shut down since last year’s meltdown at Fukushima. Japan has been conducting stress tests to gauge the safety of the reactors, but public support for restarting them has been scant. Just three of Japan’s 54 reactors are operating at the moment. Indians started voting in state elections. Turnout was high in Manipur, Punjab and Uttarakhand; campaigning is well under way in two other states about to go to the polls, including Uttar Pradesh, India’s most populous state. The state elections are seen as a test of public opinion ahead of a general election, expected in 2014. Aboriginal protesters set fire to an Australian flag outside the national Parliament in Canberra. This came a day after a group of aborigines and their supporters blocked the departure from a restaurant of the prime minister, Julia Gillard. Ms Gillard had to be shielded from the group as she was hurriedly escorted out of the building by security officers and bundled into a waiting car. Bedouin tribesmen released 25 Chinese workers they had kidnapped in Egypt’s Sinai region, after the Egyptian government agreed to retry relatives of the tribesmen who have been imprisoned for a bomb attack in 2004. Earlier, 29 Chinese workers were seized by a group in Sudan. As Chinese firms expand globally, the security of their employees is causing concern in China. Wukan, a coastal village in China’s Guangdong province, began the process of electing their own local leaders. The villagers had led huge protests against corruption and a death in custody. In a surprise decision, limited to Wukan only, the provincial government allowed residents to hold an election. Business this week Facebook at last began the process of launching its initial public offering, in the most eagerly awaited stockmarket flotation for years. The world’s biggest social- networking site is seeking to raise $5 billion in its IPO. That is about half the amount that analysts had speculated it would aim for, but the figure could rise. Facebook revealed some financial data for the first time in its filing: its revenue last year was $3.7 billion, up from $2 billion in 2010, and it made a profit of $1 billion, up from $606m. See article Faint-hearted tweets Users of Twitter expressed disappointment at its decision to censor content in countries where it breaks local laws. The microblogging site said it was doing this because as it continues to grow it will operate in countries “that have different ideas about the contours of freedom of expression”. Thailand was the first country publicly to welcome Twitter’s new policy. More than a year after his promotion was first mooted, Sony confirmed that Kazuo Hirai will become its new chief executive when Sir Howard Stringer steps down in April. Mr Hirai takes over the reins of an ailing company that has had four consecutive years of losses and a television division that loses $80 on each set it sells. See article America’s economy grew by a robust 2.8% in the final quarter of 2011, according to a first official estimate, the country’s quickest pace of growth since mid-2010. American consumers remain cautious, but they are spending more and businesses are responding by increasing their inventories. See article Xstrata received a takeover bid from Glencore, confirming that the long-mooted proposed mega-merger between the two mining giants is on again. A deal would drastically recast the mining industry. See article Starbucks rewards Starbucks said it would open its first outlets in India later this year in a joint venture with Tata, a giant conglomerate. Starbucks has coffee shops in almost all big countries, but had found India a tough market to break into. Underscoring that, it is entering into a 50-50 partnership with Tata despite the recent easing of India’s convoluted investment rules that now allow for 100% foreign ownership of stores that sell just a single brand of goods. India’s toxic telecoms scandal rumbled on, as the Supreme Court annulled 122 mobile licences issued in 2008 under a former telecoms minister, Andimuthu Raja, who is in prison and on trial for corruption. The move is likely to cause chaos for the host of smaller operators, some of them foreign owned, which entered the market after 2008, and could hurt the banks that have loaned them money. It should benefit the big established operators. Shares in Bharti Airtel rose after the announcement. American Airlines provided the first details of its restructuring plans since it entered bankruptcy protection in November. The airline wants to cut 13,000 jobs and will ground some aircraft. It also suggested ending its huge employee pension plans, which would cause the already stretched federal pensions- guarantee agency to cover the liabilities. Chrysler reported an annual net profit for the first time since it emerged from a bankruptcy restructuring process in 2009 that handed control of the car company to Italy’s Fiat. As expected the European Commission blocked a proposed merger between NYSE Euronext and Deutsche Börse, mostly over competition concerns given that the combined exchanges would control more than 90% of the market for exchange-traded derivatives in Europe. The pair announced their intention to merge almost a year ago. UniCredit successfully completed its capital-raising exercise, selling 99.8% of the shares in a €7.5 billion ($10 billion) rights issue. The Italian bank’s offering was seen as a crucial test of the markets’ willingness to invest in euro-zone banks. Santander, the euro zone’s biggest bank by market value, made only a tiny profit in the last three months of 2011, as it booked charges related to its property holdings in Spain. The bank also said that for the first time more than half its annual earnings came from its business in Latin America. Contract killers Business leaders in Britain voiced worries about political meddling in executive pay, after Stephen Hester, the chief executive of Royal Bank of Scotland, waived his bonus following a barrage of criticism. Mr Hester had been awarded £963,000 ($1.5m) in shares by RBS, which was bailed out in 2008 and is still majority-owned by the taxpayer. Days later the government targeted another banker, when it stripped Fred “the Shred” Goodwin, RBS’s former boss, of his knighthood. See article
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