Highlights of the main political and business news. Source: The Economist (11/12/2009)
POLITICS
Divisions between rich and poor countries emerged swiftly as the Copenhagen conference on climate change got under way, with the leaking of a document drafted by Denmark, the host country. Developing countries think that developed countries need to make bigger cuts in their emissions and offer more cash than hitherto envisaged. Barack Obama delayed his trip to the summit to coincide with other world leaders, who will attend the talks next week. See article
With good timing, America’s Environmental Protection Agency declared that six greenhouse gases, including carbon dioxide, “threaten the health and welfare of the American people”. The decision could open the way for the Obama administration to impose its own curbs on emissions, although Congress may want the final say.
After a recount, Kasim Reed was declared the winner in an election for Atlanta’s mayor, beating Mary Norwood, who would have become the first white mayor since 1973 in the predominantly black city.
Romania’s presidential election was narrowly won by the incumbent, Traian Basescu. His challenger, Mircea Geoana, cried fraud. See article
France invited 21 fellow European Union countries to a debate on the EU’s common agricultural policy. The French said non-invitees such as the British and Dutch would be welcome so long as they supported a “strong” CAP.
Russia’s prime minister, Vladimir Putin, attacked local officials for safety lapses that may have contributed to a fire in a nightclub in Perm that killed almost 120 people.
Two days of rioting broke out in Athens on the first anniversary of the killing by police of a 15-year-old schoolboy. The shooting incident ignited two weeks of rioting last year.
Pakistan continued to suffer terrorist attacks. At least 49 people were killed by bomb blasts in a crowded market in Lahore. That followed an attack on a mosque in Rawalpindi, where the army has its headquarters, in which 35 people died. There were also attacks outside a courthouse in Peshawar and on an office of the country’s main intelligence agency in Multan, each killing a dozen people.
American prosecutors in Chicago charged a man with involvement in the attacks on Mumbai in November 2008. David Headley, who used to be known as Daood Gilani, was accused of identifying targets for the attacks, in which 174 people died.
The authorities in Bangladesh arrested and handed over to India Arabinda Rajkhowa, the chairman of the United Liberation Front of Asom, which has been fighting for a homeland independent from India for ethnic Assamese. See article
The government of the Philippines declared martial law in the southern province of Maguindanao, on the island of Mindanao, giving warning that a rebellion was looming. The move followed a recent massacre of 57 people in the region, blamed on a local mayor and members of his powerful clan. See article
The government meanwhile resumed talks with the Moro Islamic Liberation Front, which for four decades has been waging an insurgency on Mindanao. The talks, in Kuala Lumpur, are aimed at reaching an agreement by April next year.
America’s special representative to North Korea, Stephen Bosworth, visited Pyongyang. It was his first visit since being appointed by Barack Obama. He was to assess North Korea’s interest in returning to six-party talks on denuclearisation, but officials said he would offer no fresh incentives for it to do so.
A string of bombs killed at least 120 people in or near government buildings in Baghdad, including a courthouse. An al-Qaeda or Baathist group was suspected of trying to destabilise Iraq in the run-up to a general election expected in early March. A long-awaited election law had been ratified two days before the bombings. November’s official violent-death toll of 88 was the lowest since the American invasion in 2003. See article
Three leading members of the opposition Sudan People’s Liberation Movement were arrested in Khartoum after a demonstration demanding reform of the election laws ahead of next year’s general election, the first since 1986.
Hifikepunye Pohamba, head of the South West Africa People’s Organisation, better known as SWAPO, was easily re-elected Namibia’s president, with 75% of votes cast.
Bolivia’s president, Evo Morales, appeared to win a second term by a landslide, with exit polls giving him 61% of the vote and his Movement to Socialism party a two-thirds majority in Congress. The result will allow him to implement a new constitution granting new rights to indigenous peoples and to strengthen state control over the economy. See article
Venezuela’s government closed seven small banks and accused several of their owners of fraud. Some of those involved had close ties to leading figures in President Hugo Chávez’s regime. See article
Mexico’s president, Felipe Calderón, designated his finance minister, Agustín Carstens, as the next governor of the Bank of Mexico, the central bank. Ernesto Cordero, the social-development minister and a former aide to Mr Carstens, will be the new finance minister.
A court in Chile charged three people connected to the dictatorship of General Augusto Pinochet with poisoning Eduardo Frei Montalva, a former president, in 1982. Frei led the moderate opposition to the dictatorship. His son, the presidential candidate of the ruling Concertación coalition, faces a difficult election on December 13th.
BUSINESS
Greece’s credit rating was downgraded to BBB+, with a negative outlook, by Fitch, the first time in a decade that the country has received a rating below A. The downgrade caused stockmarkets to fall amid fears of a potential wider fiscal crisis in the euro area. Investors were further perturbed when Moody’s cut its ratings for state-owned companies in Dubai, underlining the extent of the Gulf emirate’s debt woes. Worries were also raised about ballooning deficits in America and Britain, where governments have been urged to take action to get spending under control. See article
In his pre-budget report, Alistair Darling laid out plans to increase tax on middle-income earners and cap pay rises for public-sector workers in order to tackle Britain’s budget deficit, which is expected to reach £178 billion ($289 billion) this year. See article
The chancellor also imposed an immediate 50% tax (to last until April) on bank bonuses over £25,000 ($41,000). The tax will be paid by banks rather than individuals and covers employees of foreign banks working in Britain as well as British banks. City workers were not pleased; bank bosses warned of a brain drain. See article
Revised figures showed that Japan’s economy grew by 1.3% on an annualised basis between July and September, a much slower pace than the 4.8% estimated last month. Companies had not invested as much in new assets as had been previously thought. Meanwhile, the Japanese government agreed on the details of another round of stimulus spending of about ¥7.2 trillion ($82 billion).
Ireland’s finance minister unveiled huge public-sector pay cuts in a budget, which aims to reduce the government deficit from 11.7% of GDP this year to 2.9% in 2014. See article
Iceland’s economy continued to fare poorly, shrinking by 5.7% in the third quarter compared with the preceding three months.
Barack Obama said that opting either to reduce America’s deficit or invest in job creation was a “false choice”. The American president unveiled fresh proposals—a new stimulus package, some said—to boost employment. These include a tax incentive for companies that take on new workers, an idea that had been rejected because it could provide employers with a perverse incentive to sack staff and then re-employ them.
The Treasury Department extended the Troubled Asset Relief Programme until October 2010; it was due to expire this year. TARP was set up to bail out banks, but its remit has gradually widened, with Mr Obama now wanting it to provide loans to small businesses. A report from a congressional panel that monitors TARP said an effective assessment of the programme was hampered by the Treasury’s “failure to articulate clear goals or to provide specific measures of success”. Tim Geithner, the treasury secretary, told Congress that banks were returning the money they had obtained under the scheme.
New strategic alliances among carmakers highlighted the growing importance of the Asian market. Germany’s Volkswagen agreed to pay $2.5 billion for a 19.9% stake in Japan’s Suzuki, and General Motors announced a joint venture with SAIC, its Chinese partner, to produce small cars in India. Talks are continuing between PSA Peugeot Citroën and Mitsubishi, which could see the French carmaker take a stake of up to 50% in its Japanese counterpart. See article
It emerged that Rusal’s initial public offering in Hong Kong would be delayed until next year. The Russian aluminium company, which is controlled by Oleg Deripaska, was hoping to debut on Hong Kong’s stock exchange this month, becoming the first Russian company to list there. Despite Rusal’s recent debt-restructuring agreement with foreign creditors, stockmarket officials want more information about the loans the firm has attained from Russian banks.
The boss of TNT, a Dutch logistics company, said pressure from investors for it to split its well-performing express-delivery business from its mail division was “disruptive”. Two activist funds recently bought a 5% stake.
United Airlines placed its first order in 11 years for new jets: 25 Boeing 787 Dreamliners and 25 Airbus A350s. It is the first time United has bought wide-body long-range aircraft from the European group. The Dreamliner’s much-delayed maiden test-flight is due to take place by the end of the year.
Andy Harrison resigned as chief executive of easyJet, a pioneering low-cost airline in Europe, amid a boardroom battle over the company’s future strategy with Stelios Haji-Ioannou, its founder and biggest shareholder.
SOURCE: THE ECONOMIST
Spain assumes the rotating presidency of the European Union and Pécs (in Hungary), Essen (Germany) and Istanbul (Turkey) become European capitals of culture.
France celebrates the summer solstice with the Fête de la Musique: free music played outdoors, from Paris to the smallest village.
Beer-lovers end the Munich Oktoberfest, having downed enough gallons to keep it as the world’s biggest beer festival.
There had been a glimmer hope for Saab earlier this month, as supercar maker Spyker stepped in as a possible suitor after similarly small 
With good timing, America’s Environmental Protection Agency declared that six greenhouse gases, including carbon dioxide, “threaten the health and welfare of the American people”. The decision could open the way for the Obama administration to impose its own curbs on emissions, although Congress may want the final say.
Investors knew Abu Dhabi could not let its neighbour fail without damaging its own economic interests. They assumed that Abu Dhabi knew this too. Therefore when it let Dubai walk to the edge, it was deeply unsettling. Either Abu Dhabi’s policymakers did not know the damage this would do, or they did not care. The announcement on Monday suggests that Abu Dhabi did care. It just did not anticipate quite how badly creditors would react.
