Saudi council to advise revaluing riyal

Saudi council to advise revaluing riyal

By James Drummond in Abu Dhabi

Published: July 15 2008 19:55 | Last updated: July 15 2008 19:55

A committee drawn from a council which advises the Saudi king will recommend revaluing the riyal, refuelling the speculation about the fate of the currency.

A committee in the shura council, which has an advisory role, will recommend to King Abdullah that the authorities revalue the riyal by up to 30 per cent, Waleed Arab Hachem, a shura council member, told news agencies on Tuesday. He said that the proposal would be put before the Saudi king as early as next week.

Last summer a wave of speculation that the riyal peg to the dollar, first adopted in 1986, would be dropped swept through financial markets. However, the chatter has diminished substantially since then, after the central bank ruled out any revaluation.

Brad Bourland, chief economist at Jadwa Investment in Riyadh, said that the council’s advice was also unlikely to lead to any adjustment.

This latest Saudi shura council committee recommendation follows a report from an advisory body in Abu Dhabi in the neighbouring United Arab Emirates which last week floated the idea of abandoning a dollar peg for the dirham for a basket. Both Saudi Arabia and Abu Dhabi are sizeable holders of US dollar assets. Any adjustment in their exchange rate policies is likely to impact severely on the value of the already battered US currency.

John Sfakianakis, chief economist at SABB in Riyadh, said on Tuesday that he thought that Mr Hachem’s recommendation was likely to have been stimulated by the impending summer holidays. Wealthy Saudis are likely to feel the weakness of the dollar and of their own currency as they travel abroad, he noted. “They do see and feel the difference,” Mr Sfakianakis said.

He said that a debate about the currency was only natural given inflationary pressures in Saudi Arabia particularly for those within the shura council who want to maintain a debate for political reasons. Mr Sfakianakis said the same council had studied the issue of allowing women to drive in Saudi Arabia but that its recommendations had been disregarded.

In the year to May inflation in Saudi Arabia was 10.4 per cent, while in April it was 10.5 per cent, according to the central bank figures. It is expected to be 9.3 per cent this year, according to SABB forecasts, as opposed to 4.1 per cent last year.

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Europe told to expect doubled gas price

By Ed Crooks in London

Published: July 15 2008 22:59 | Last updated: July 15 2008 22:59

The price of natural gas in continental Europe is to double in the space of a year as a result of the rise in oil prices, according to a leading consultancy.

Such an increase would put a further squeeze on hard-pressed European consumers and businesses, and add to the upward pressure on inflation in the eurozone, which has been estimated at 4 per cent in June.

It would also stoke concerns about the prevalence in continental Europe of long-term contracts for gas supply, which link the price to the cost of oil products such as heating oil.

European gas prices ­typically follow the price of oil with a lag of about nine months, so if the price of crude oil remains at record ­levels, the future price of gas can be calculated with a ­reasonable degree of ­confidence.

According to Cambridge Energy Research Associates (Cera), a US-based consultancy, the rise in the oil price from about $70 a barrel a year ago to about $145 today will result in the gas price rising from about $350 per thousand cubic metres at the start of the year to about $730 by April 2009.

Any rise in the price of gas would also push up the cost of electricity because gas is generally the marginal fuel for power generation.

Household energy bills, including for electricity, gas and heating oil, make up about 5 per cent of consumers’ expenditure in the eurozone. In Germany – the bloc’s biggest economy – the average is 7 per cent. Energy bills and food costs have been the main factor behind the rise in inflation this year across the European Union.

“As the eurozone’s exports slowed, people thought it would be compensated for by a consumer spending spree. But what’s happened has been a sharp rise in inflation that has hurt consumers’ spending power, hit their confidence and limited their spending,” said Howard Archer of Global Insight, another consultancy.

The higher gas price in continental Europe has driven up prices in the UK. Britain has a more liberalised gas market that is not formally linked to the oil price but it has become increasingly tied to the rest of Europe as North Sea gas production has declined.

Consumer groups argue that the link between gas and oil prices should be broken because it supports co-operation between large gas producers and utilities.

Jonathan Stern, of the Oxford Institute for Energy Studies, said that there was “no reason why gas prices should be so high”.

“When oil was at $25-$30 we could live with that. At $60 oil we started thinking the gas price was a bit high. At $140 oil this is craziness: there is no way anyone can argue this reflects the balance of supply and demand for gas,” he said.

Demand for gas in the EU fell in 2006 and again in 2007.

Prof Stern said the justification for the price linkage – that gas was a substitute for fuel oil in power stations and heating oil in homes – had weakened as the use of oil in power generation in Europe had waned.

However, Shankari Srinivasan, of Cera, suggested the price link to oil was likely to persist. “An oil-linked price is not necessarily a higher price, but it is more predictable and can show less volatility than a pure gas market price,” she said.

The growth in liquefied natural gas (LNG) shipped in tankers is expected to strengthen the links between regional gas markets and potentially bring supplies to the EU that are not linked to oil prices.

But the ability to deliver LNG to where suppliers achieve the best returns has, generally, seen it shipped to Asia rather than the US or Europe. Japanese demand has been particularly strong since nuclear reactors were shut down following an earthquake a year ago.

The volumes of LNG shipped from the Atlantic basin and from countries such as Egypt, Nigeria and Trinidad to Asia have risen from nothing in 2005 to 9bn cubic metres last year, according to Wood Mackenzie, another consultancy.

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Ethanol output faces sharp cuts

By Sheila McNulty

Published: June 15 2008 22:51 | Last updated: June 15 2008 22:51

Large numbers of small to mid-size ethanol producers could shut down over the coming months after flooding across the US midwest caused irreparable damage to the year’s corn crop and pushed corn prices up sharply, says a report by Citigroup.

At least five small to mid-size ethanol plants had shut down in recent days, said David Driscoll, Citigroup’s US food manufacturing analyst, in an equity research report.

The widespread flooding, on a scale the region has seen only twice in the last 25 years, had forced down ethanol margins over the past 10 days, leaving small and mid-sized ethanol producers running at substantial losses against cash costs, Mr Driscoll said.

“As a result of the rapid margin deterioration, we believe that many, if not all, of the small to mid-size producers will be forced to shut down over the next few months.” This could result in as much as 2bn-5bn gallons of ethanol going off-line in the next few months, he said.

Mr Driscoll said corn – now selling at more than $7 a bushel, compared with about $4 a year ago – meant extreme tightness in the corn market, suggesting the increased potential for political intervention in ethanol markets.

The intervention would be aimed at cutting ethanol output and bringing corn to the food market. Corn prices have risen by $1 in the last 10 days.

“Just the spectre of political intervention will likely cause the market to question the magnitude of future biofuel growth, adding further pressure on valuations across the ethanol industry,“ Mr Driscoll said.

This has led Citigroup to reduce its earnings-per-share estimates for ethanol companies and drop ratings to “sell” on those that are strictly into ethanol production, including VeraSun Energy and BioFuel Energy.

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US shifts policy to send envoy to Iran talks

WASHINGTON, July 15 – In a shift in policy, the United States will send an envoy to talks this weekend between Iran and major powers over Tehran’s nuclear program, a senior US official said on Tuesday.

US Under Secretary of State William Burns will join European Union foreign policy chief Javier Solana and envoys from China, Russia, France, Britain and Germany in a meeting with Iranian nuclear negotiator Saeed Jalili in Geneva on Saturday, the official said.

They will discuss Iran’s response to an offer made by world powers last month to give up sensitive nuclear work that the West believes is aimed at building an atomic bomb and Tehran says is for peaceful power-generation purposes.

The United States had said previously it would not be involved in any pre-negotiations with Tehran unless it gave up uranium enrichment.

The US official made clear the ground rules were that Burns would not act as a negotiator and not meet separately with Jalili but would put forward the White House position that Iran must give up enrichment for any real talks to start.

”Bill Burns will reiterate our terms for negotiation remain the same,” the official, who asked not to be named, told Reuters.

”This will be a one-time participation designed to show unity (among major powers) and the message will be very clear.”

The US presence at the meeting did not indicate a restoration of full-blown diplomatic ties, the official said.

Tehran and Washington cut diplomatic ties shortly after the Iranian revolution of 1979. But the United States has held several rounds of talks over the past year with Iran over what it sees as Tehran’s meddling in Iraq.

In June, Solana presented Tehran with a package of economic and other incentives proposed by world powers to coax Iran to halt sensitive nuclear work.

Iran, the world’s fourth largest oil producer, denies it wants to build nuclear weapons and says its nuclear program is designed to make electricity to increase its output of oil and natural gas.

Iran has repeatedly refused to suspend uranium enrichment, as demanded by the six powers before formal negotiations can begin on the offer.

Tension increased last week after Iran test-fired missiles in the Gulf and the United States reminded Tehran that it was ready to defend its allies. Fears of conflict helped to push oil prices to new record highs.

U.S. officials said Washington also decided to join the talks as it wanted to take advantage of what appeared to be ”debate” within Iran’s establishment over the nuclear offer and to show the United States wanted to resolve the impasse.

In addition, Washington believed that three rounds of U.N. sanctions against Iran, as well as bilateral sanctions by the United State and EU nations, were starting to bite and that now was the time to take advantage of that.

There has been opposition within the Bush administration over whether to deal directly with Iran. President George W. Bush has made clear all options remain on the table, including military action.

But the U.S. official said any military action was a ”last resort,” adding the goal was to exhaust all diplomatic measures and the meeting with Jalili was part of that approach.

While officials insist the talks are not part of a new diplomatic relationship with Tehran, there have been overtures toward Iran in recent weeks.

The United States is looking at opening up a US interests section in Tehran, which would allow for diplomatic contact, while falling short of diplomatic ties. Currently, Switzerland acts as a go-between between the United States and Iran.

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SEC to fight short selling of financials

By Joanna Chung in New York

Published: July 15 2008 21:31 | Last updated: July 15 2008 21:31

US regulators will take emergency action to stop abusive short-selling of stock in financial institutions such as mortgage financiers Fannie Mae and Freddie Mac and investment bank Lehman Brothers.

Christopher Cox, Securities and Exchange Commission chairman, told legislators on Tuesday that the agency would issue an emergency rule to stop so-called “naked” short-selling of shares in significant financial entities. The SEC will also consider new rules to extend those trading limits to the rest of the market.

Short sellers aim to profit from share declines – usually by borrowing a stock, selling it and buying it back in the market. But in a “naked” short the shares are sold without being borrowed first. The emergency rule, which would be in effect for up to 30 days, would require anyone making a short sale to borrow the security first.

It would apply to Fannie and Freddie – the government-sponsored entities that own or guarantee almost half of US mortgages – and all primary securities dealers including Lehman, whose shares have been battered by rumours the bank says are false.

The action comes amid intensifying efforts by authorities to crack down on rumour-mongering intended to manipulate securities prices. The SEC has been investigating whether false rumours and abusive short selling contributed to the collapse of Bear Stearns in March and the declines in Lehman’s shares.

It is now working with the Financial Industry Regulatory Authority and New York Stock Exchange Regulation to conduct industry-wide “sweep examinations” of market participants, including hedge fund advisors

“If we are successful in bringing future cases . . . I believe the penalties should be commensurate with the enormous amount of shareholder value that is destroyed by this kind of wantonness toward other people’s money,” Mr Cox said. The agency has used emergency rule-making powers in the past, for instance after the September 11 terrorist attacks, but this would be the first time it has issued an emergency rule on short selling.

Fannie Mae and Freddie Mac closed down 27.3 per cent and 26 per cent respectively.

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Fears rise over RBS’ US subsidiaries

By Bryce Elder and Neil Hume

Published: July 15 2008 23:15 | Last updated: July 15 2008 23:15

Royal Bank of Scotland led the London market into a decline on Tuesday as the crisis of confidence in America’s regional banking sector crossed the Atlantic.

The implosion of IndyMac Bancorp on Friday has intensified concerns about US regional lenders and their exposure to mortgage financing in the wake of the Freddie Mac and Fannie Mae rescue.

That focused attention on Citizens, RBS’s Rhode Island-headquartered subsidiary. RBS’s US operations, which also include the investment bank Greenwich NatWest, have historically provided about 15 per cent of group pre-tax profit.

The Wall Street-led panic compounded fears that RBS’s capital position may not be as secure as previously thought, as a disposal programme seems unlikely to raise the £4bn buffer management targeted. In addition to lukewarm interest for its insurance division, there were doubts about the potential valuation on its personal finance venture with Tesco, up 2.9 per cent to 364.7p.

RBS, which reports interim results early next month, fell 7.1 per cent to a 10-year low of 167.3p. In April, the group said in its rights issue prospectus that Citizens’ credit portfolio was performing “satisfactorily,” with the exception of a single part of its home equity book.

Among the other lenders, HBOS sank 4.4 per cent to 260p ahead of its 275p rights issue closing on Friday; the nil-paids were changing hands for less than ½p. Barclays, whose 282p open offer closes on Thursday, fell 3.4 per cent to 260½p.

The wider market reflected those moves, with the FTSE 100 closing down 128.5 points at 5,171.9, its lowest level since October 2005.

Natural resources stocks failed to provide a foundation as oil prices spiked lower. That coincided with US Federal Reserve chairman Ben Bernanke saying high oil prices threatened the economy, although there was also talk of a hedge fund liquidating its oil positions.

Vedanta Resources lost 5.8 per cent to £18.93 and Antofagasta tumbled 6.4 per cent to 547p.

Kazakhmys lost 5.4 per cent to £14.34 after denying that its merger talks with Russia’s Metalloinvest would constitute a reverse takeover. Traders noted that, under stock exchange rules, reverse takeover talks would mean the shares would have to be suspended.

Carphone Warehouse dived 6.6 per cent to 185½p after BT Group announced a plan to invest £1.5bn in fibre-based broadband.

“The viability of the business models of the UK’s alternative broadband providers beyond 2010, particularly for high-end customers, will be uncertain until Ofcom indicates how it intends to regulate wholesaling of the new network,” said Cazenove.

BT, which suspended its share buyback programme to cover the cost, fell 4.8 per cent to 192.3p.

Retailers were sold off after the British Retail Consortium said like-for-like sales fell 0.4 per cent in June, much worse than expected. Debenhams was among the hardest hit, down 5.8 per cent to 32¼p.

A profit warning from photographic chain Jessops further pressured DSG International, off 5.8 per cent to 32¼p.

Peer Kesa fell 3.4 per cent to 141¾p even after Goldman Sachs removed the electronics retailer from its “conviction sell” list to reflect the potential for a takeover approach. The broker nevertheless kept “sell” advice based on expectations that French consumer spending will weaken.

Analysts at UBS recently suggested it would be “logical” for DSG and Kesa to merge as they look to compete with Best Buy’s joint venture with Carphone.

J Sainsbury beat the trend, up 1.3 per cent to 271p on about seven times the usual daily turnover. Traders said Robert Tchenguiz had switched his derivative position in the supermarket between brokers, causing the volume spike.

There was vague talk that the Qatari sovereign wealth fund may have been looking to reduce its 15 per cent holding in London Stock Exchange, up 0.4 per cent to 708½p.

British Energy rose 1.4 per cent to 715½p on vague talk of a new bid approach, with Suez among the companies being mooted. The nuclear group was also supported by Morgan Stanley advising clients to switch out of Drax, down 2.2 per cent to 749p.

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Goodbye capitalism

By Joshua Rosner

Published: July 15 2008 13:31 | Last updated: July 15 2008 13:31

In a capitalist economy, losers are expected to take losses and winners to gain. Private enterprise is best able to allocate capital efficiently and, where it fails to do so, markets make adjustments and capital is reallocated to efficient users. This basic tenet supports good and productive assets moving from the hands of weak players to stronger. Where this is not possible, the US system gives the government a hand in fostering that move through an efficient process called bankruptcy or reorganisation. This rule of markets and of law has always been the basis of our national supremacy in innovation and the reason ours was the world’s clear choice of a reserve currency. That was the world we lived in previously.

Our elected officials have repeatedly demonstrated that even equity holders, who are supposed to have the most subordinated claims on assets, cannot be allowed to take losses and instead believe we should all communally share in losses that result from poor allocation and risk management decisions. We have nationalised the losses from Bear Stearns through a transfer of risk on to the federal government’s balance sheet and have now nationalised the losses generated by Fannie’s and Freddie’s poor management and functionally taken $5,000bn in obligations on to the government’s balance sheet. This has been done even though every equity or debt offering of Fannie and Freddie explicitly states that these “are not guaranteed by the US and do not constitute an obligation of the US or any agency or instrumentality thereof other than” of Fannie or Freddie.

By the time we are finished with this tragic period in US economic history, the government is likely to have to choose whether to do the same for at least one more large bank, investment bank, bond insurer, mortgage insurer, multiple large regional bank, airline or car manufacturer. Given the choices we have seen from officials, who obviously have little faith in the ability of capital markets or our system of law, we will see the continued nationalisation of bad assets, placing the burden on the shoulders of the already overburdened American taxpayer.

This commitment by misguided officials to print more money, to stoke the embers of inflation and to debase further our already hobbled currency invites foreign investors to pick through our assets and buy our remaining strong businesses (Anheuser Busch) on the cheap. As the strength of our remaining industries is further weakened, along with taxpayers’ buying power, it will become increasingly necessary, as a matter of survival, for American workers to demand increases in their wages.

While some might applaud the government’s policy action, it will prevent the rational and orderly repricing of over inflated assets, ensure they remain overvalued, uneconomic and unaffordable to a populous that will see an increasing percentage of their wages allocated for the support of our national debt. We have done this without forcing the disgorgement of undeserved gains by managements and without replacing managements who are now controlling government “owned” businesses.

The same economists who have repeatedly argued efficient market theory have chosen this path. Instead of protecting those who made bad bets, we should use our rule of law to address the situation. That would mean we allow weak players either to fail or to reorganise through an orderly transfer of good assets from weak hands to strong hands. This would protect the once-mighty US dollar and affect the necessary and repricing of assets to sustainable equilibrium. Doing so would also decrease moral hazard and send a strong message of faith in our great system as the model for global financial advancement.

There is another option in relation to Freddie Mac and Fannie Mae. Rather than making the taxpayer liable for debts the debts of the government-sponsored enterprises, it would be more sensible to effect a smooth, prepackaged reorganisation plan. This could be done quite simply and would strengthen the GSEs’ ability to meet their congressionally mandated purpose of supporting liquidity in the secondary mortgage market.

The core of the GSEs’ mission is to purchase mortgages from mortgage originators, charge a guarantee fee to issuers to protect their ability to stand behind these loans, and securitise these mortgage-backed securities with assurances to MBS holders they would receive 100 per cent of their anticipated returns. To this end the GSEs have guaranteed $3,500bn in mortgage-backed securities These securities are backed by real housing assets and there is little question that, assuming they are well serviced, there will be relatively little loss over a longer period.

As part of a prepackaged reorganisation the government could explicitly assure MBS investors they will receive all of their guaranteed interest payments. Instead of giving ineffective management a line of credit, Treasury could provide the GSEs’ regulator with a line of credit used to assure timely payments on these obligations. This is the tool that Treasury provides the Federal Deposit Insurance Corporation with to sort out failed banks. Over time that line will be repaid by the running-off of the portfolios, active servicing of mortgages and through payment of claims by private mortgage insurers who guaranteed first losses on GSE mortgages. Because these debts are core to the GSEs’ social mission and real assets back these debts, this would be an appropriate resolution.

The next step would create approximately $150bn in new equity capital and enable to GSEs, without governmental support, to achieve more fully their chartered mission.

Over the past decade the GSEs have increasingly used their portfolios to speculate in aircraft leasing, manufactured housing, interest-only mortgages and other securities they are specifically prohibited from buying as part of their mission. In recent years, through these portfolios they funded nearly 50 per cent of the riskier private label Alt-A mortgage market, invested in aircraft lease securities, manufactured housing and other assets that leveraged them into trouble. To achieve this speculative, hedge fund-like growth they issued almost $1,500bn of senior corporate debt. By their investments, debt buyers supported speculation in non-mission-related activities and did so with a clear understanding they were funding non-mission-related activities. They also knew GSE debt was explicitly not an obligation of the US taxpayer and that was repeated constantly by the government and the companies.

In exchange for their current debt, these holders should receive 90 cents on the dollar of new, long-dated, senior debt in the companies and 10 cents of new subordinated debt. The companies would then have enough capital to support their core, chartered mission and could increase the social returns and financial returns of investors in their core mission. This approach would send a very strong signal, from the government, that investors fully consider the risks of bad asset allocation. It would almost certainly strengthen the dollar. Though it would cause pain for equity and subordinated debt investors, those investors received the majority of returns over the past several years and, in our great system, they are supposed to be subordinated.

The writer is managing director of research firm Graham Fisher

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US lawmakers ease pressure on Chevron in Myanmar
AFP
By P.ameswaran AFP - 1 hour 21 minutes ago

WASHINGTON (AFP) - US lawmakers have dropped plans to impose sanctions that would have pressured US energy giant Chevron to pull out from a gas project in military-ruled Myanmar, congressional aides said on Tuesday.
(Advertisement)

Sanctions that would end tax write-offs enjoyed by Chevron were part of a package of new US measures passed by the House of Representatives last year aimed at punishing the military junta for its deadly crackdown on pro-democracy protests.

But in a compromise this week, legislators from the House of Representatives and Senate removed the provision after Chevron argued that other firms from nations such as China and India could easily take over its stake if divested, congressional aides said.

"One of the things it does is it removes the part about tax incentives that affect US companies who might do business in Burma (Myanmar)," a congressional aide told AFP in describing the compromise resolution that was unanimously passed by the House of Representatives on Tuesday.

The new legislation, which is also expected to be cleared by the Senate, merely urged "investors" in the gas project "to consider voluntary divestment over time" if the junta did not embrace reforms.

The legislation's main focus was to block the import of Myanmar gems into the United States and to extend financial sanctions, moves that could take hundreds of millions of dollars out of the pockets of the regime each year.

Despite a longstanding ban on imports from Myanmar, gems from the country have entered the United States via third nations such as Thailand, China, Taiwan, Malaysia and Singapore, rights groups have said.

"The amendments to this bipartisan bill provided for in this resolution, which have been carefully negotiated with the Senate, promote a coordinated, multilateral approach to sanctions against Burma," said Howard Berman, the Democratic chairman of the House committee on foreign affairs.

The European Union has similarly banned the import of Myanmar gems, as have the Canadians, he said.

Under the previous plan, "no deduction or credit against tax shall be allowed" for Chevron on revenues from the Yadana gas project.

Chevron could also have been barred from making any payments to the junta from its joint venture with French oil giant Total, Thailand's PTT Exploration and Production, and Myanmar's Myanma Oil and Gas Enterprise operating the lucrative Yadana gas fields.

Chevron is one of biggest Western companies in Myanmar, holding a 28 percent minority share in the Yadana natural gas project following its acquisition of another US energy giant, Unocal, in 2005.

The United States has already imposed substantial trade, investment and diplomatic sanctions on Myanmar, but Chevron's operations predate an enhanced 2003 US trade embargo.

Under Myanmar law, if Chevron sold its stake, it might have to pay the military junta much of the company's capital gains on the project -- estimated to be around 500 million dollars.

Chevron's vice-chairman Peter Robertson defended Chevron's investment in Myanmar at a congressional hearing in May, saying the company had helped victims of a recent deadly cyclone that ravaged Myanmar.

"Our plan is to stay in Burma ... If we sell our interest, we would pay a large capital gains tax to them (military junta)," he said.

"Any way of extracting us would be a benefit -- a windfall benefit to the Burmese government."

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Russia warships resume presence in Arctic areas

14.07.2008, 14.15

MOSCOW, July 14 (Itar-Tass) - The Russian Navy has resumed the presence of warships of its Northern Fleet in Arctic areas, including off coasts the Spitsbergen Island, the navy’s spokesman Captain Igor Dygalo told Itar-Tass on Monday.

“At present, the anti-submarine ship Severomorsk has come to the area and is fulfilling tasks, and the missile carrying cruiser Marshal Ustinov will stay in the area from July 17,” he said.

“Sorties of warships of the Northern Fleet will be made periodically with a necessary regularity. All actions of the Russian warships are fulfilled strictly in accordance with the international maritime law, including the UN Convention on the Law of the Sea of 1982,” Dygalo said.

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Kiev’s court says all films should be dubbed into Ukrainian.

15.07.2008, 15.26

KIEV, July 15 (Itar-Tass) - Ukraine’s high administrative court stated that all foreign films should be dubbed into the Ukrainian language, the press service of the prosecutor-general’s office said on Tuesday.

“All subjects of cinematographic activities should dub foreign films into the Ukrainian language to get a license for screening,” the court said in a statement.

In October 2006 Kiev’s court of appeal cancelled the Cabinet’s decree on obligatory dubbing of all foreign films into Ukrainian. President Viktor Yushchenko instructed the prosecutor-general to appeal the court’s decision.

In December 2007 Ukraine’s constitutional court said it is necessary to dub all foreign films into Ukrainian before screening.

On January 18, 2008, Ukraine’s Culture and Tourism Ministry banned the state cinematographic service to issue a license for screening undubbed films.

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Aeroflot signs contract on buying five Airbus A-321 commercial jetliners

15.07.2008, 21.09

MOSCOW, July 15 (Itar-Tass) -- Aeroflot – Russian Airlines and Airbus have signed a contract on the purchase of five Airbus A-321 commercial jetliners on the sidelines of the Farnborough Air Show, Prime Tass said.

Aeroflot will use the jetliners on European and domestic routes.

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Russia's Gazprom confirms plans to supply 55 bcm to Ukraine 2008

KIEV, Jul 15 (Prime-Tass) -- Russian natural gas giant Gazprom has confirmed its plans to supply 55 billion cubic meters of gas to Ukraine in 2008, Ukrainian oil and gas company Naftogaz Ukrainy reported Tuesday following talks with Gazprom.

At present, Gazprom Export, a subsidiary of Gazprom, supplies Central Asian gas to Gazprom affiliate RosUkrEnergo, which sells the gas to Naftogaz Ukrainy.

In March Gazprom and Naftogaz Ukrainy concluded an agreement to resolve a lengthy gas dispute, which saw Gazprom briefly slash gas supplies to Ukraine by 50% due to unpaid Ukrainian debt.

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Iran to build 100 Russian airliners under license

20:10 | 15/ 07/ 2008

FARNBOROUGH, July 15 (RIA Novosti) -- Russia is planning to agree on the licensed production of Tu-204SM medium-haul passenger airliners in Iran, the United Aircraft Building Corporation head said on Tuesday.

"In 2008, we intend to complete negotiations on manufacturing about 100 Tu-204 planes under license in the Islamic Republic," Alexei Fyodorov said at an international airshow.

Iran and Russia reached a preliminary agreement on the joint production of Russian Tu-204 and Tu-214 medium-haul passenger airliners in mid-June.

The two countries earlier said they are nearing the end of talks on the project to build 100 210-seat liners in the next 10 years for the Iranian fleet. They are also discussing the production of spare parts, flight tests, and the construction of a maintenance center in the country.

Russian and Iranian officials said previously the two countries planned to sign a $2.5 billion contract in 2009 for the delivery of 100 Tu-204 and Tu-214. Deliveries are to start in 2010.

The Islamic Republic currently uses Tu-204, Tu-154, An-72, Yak-42 and other Russian built airplanes.

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Russia, Italy to set up joint venture to assemble helicopters

17:40 | 15/ 07/ 2008

FARNBOROUGH, July 15 (RIA Novosti) - Russia's helicopter manufacturer and Italy's AgustaWestland signed a basic agreement at the Farnborough air show in England on Tuesday to set up a joint venture to assemble AW139 helicopters in Russia.

AgustaWestland CEO Giuseppe Orsi said the joint venture with Oboronprom to assemble AW139s would meet the growing demand for the helicopter and strengthen the company's foothold on the CIS market.

"Under the contract, Russian helicopter manufacturers will get access to new production technology and high-quality standards for helicopter servicing," Oboronprom director Andrei Reus said.

The Russian businessman added that Oboronprom, a subsidiary of Rosonboronexport, would seek to localize the production of the AW139 production in Russia.

The AW139 is a medium two-engine helicopter with a takeoff weight of 6.4 metric tons. It can seat up to 15 passengers and be used as a corporate or VIP helicopter as well as in offshore, emergency, rescue and firefighting operations.

AgustaWestland is one of the world's largest helicopter manufacturers with production sites in Italy, Britain and the United States. It is incorporated into the Finmeccanica Group.

The Farnborough International Airshow 2008, which opened Monday, marks the 60th anniversary of the aviation show and, according to the organizers, this year's event is the biggest in terms of exhibition space and exhibitor numbers.

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Russia completes flight tests of 4 MiG-27 warplanes for Serbia

17:30 | 15/ 07/ 2008

FARNBOROUGH (U.K.), July 15 (RIA Novosti) - Russian aircraft maker MiG said on Tuesday it had completed a flight test program on four MiG-27 Flogger ground-attack aircraft for Serbia's Air Force.

"We are announcing the news for the first time today," MiG CEO Vladimir Barkovsky said at the Farnborough world air show.

More than 60 Russian defense-industry companies are taking part in the Farnborough air show that opened on Monday at a site southwest of the British capital.

The 2008 Farnborough International Airshow is the biggest ever in the event's 60-year history in terms of exhibition space and exhibitor numbers, the organizers said on their website.

The total number of exhibitors is over 1,500, a 5% increase on last year. 39 countries will be represented, with 29 international and regional pavilions, while there are likely to be 140,000 business visitors attending the show from July 14-18.

Russia has been showcasing its civilian products at the show since 1984, and its military aircraft since 1988.

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Russia may export new Su-35 fighters to India, Malaysia, Algeria
17:19 | 15/ 07/ 2008

FARNBOROUGH, July 15 (RIA Novosti) - Russia is ready to export the new state-of-the-art Su-35 Flanker multirole air superiority/strike fighter to India, Malaysia and Algeria, Russia's state-run arms exporter Rosoboronexport said on Tuesday.

"Algeria, Malaysia and India are our partners and if they express an interest, we will offer them the Su-35 fighter while fulfilling our current obligations," Alexander Mikheyev, head of the air force department at Rosoboronexport, said in an exclusive interview with RIA Novosti at the Farnborough International Air Show in England.

In 2007, Sukhoi, which is part of Russia's United Aircraft Corporation, exported about 50 Su-30MK2, Su-30MKM and Su-30MKI aircraft under contracts with a number of countries, including Algeria, India, and Malaysia.

The company is planning to export at least 160 Su-35 fighters in the future, Sukhoi's deputy head Sergei Korotkov said at a news conference in Farnborough on Tuesday.

"The [Su-35] aircraft has attracted a lot of attention," Korotkov said. "As part of our business plan, we expect to sell about 160 planes."

The Su-35 fighter, powered by two 117S engines with thrust vectoring, combines high maneuverability and the capability to effectively engage several air targets simultaneously using both guided and unguided missiles and weapon systems.

The aircraft features the new Irbis-E radar with a phased antenna array, which allows the pilot to detect and track up to 30 air targets, while simultaneously engaging up to eight targets.

It is equipped with a 30-mm cannon with 150 rounds and can carry up to eight tons of combat payload on 12 eternal mounts.

Sukhoi earlier said it plans to start deliveries of the new aircraft, billed as "4++ generation using fifth-generation technology," to foreign clients in 2011 and produce Su-35s over a period of 10 years up to 2020.

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Bulgaria approves Russian nuclear plant project
15:44 | 15/ 07/ 2008

MOSCOW, July 15 (RIA Novosti) - Russian nuclear power plant builder Atomstroyexport said on Tuesday it has received approval from Bulgarian authorities for the construction of a plant in the north of the Balkan country.

The state-controlled nuclear power equipment and service export monopoly, which won a tender for the 3.99 billion euro ($6.3 billion) project in 2006, is to build two 1,000 MW reactors in Belene, with the first to be commissioned in late 2013 and the second in 2014.

The facility at Belene will be Bulgaria's second nuclear plant.

Atomstroyexport is currently building five nuclear power plants in China, India and Iran, under contracts worth a total of $4.5 billion.

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07:10 GMT, Wednesday, 16 July 2008 08:10 UK
Council workers walk out over pay
Rubbish collection

Thousands of council staff are striking over pay in their biggest campaign of industrial unrest for years, forcing schools to close and hitting services.

The Unison and Unite unions expect 600,000 workers in England, Wales and Northern Ireland to join the 48-hour action, which began at midnight.

PCS union members, who include driving test examiners and coastguards, are also striking in a separate row.

Council employers say they have reached the "limit of what is affordable".

Support predicted

The unions are protesting at pay deals which they say are below the rate of inflation and would mean an effective pay cut for their members.

Employers are hoping union members will ignore the strike calls but unions are predicting significant support.

The council action by the Unison and Unite unions comes after members rejected a 2.45% pay offer. The unions are asking for a rise of 6%, or 50p an hour.

"The pounds in local government workers' pockets are turning to pennies"
Dave Prentis
Unison

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The strike will close schools and libraries and disrupt rubbish collections and other town hall services.

Unison general secretary Dave Prentis said: "The pounds in local government workers' pockets are turning to pennies.

"The cost of everyday essentials like milk, bread, petrol, gas and electricity are going through the roof - our members cannot afford to take another cut in their pay."

Unite national officer Peter Allenson said its members were "living on the breadline".

Dave Evans, a Unison area steward, has been on a picket line at a rubbish dump in Castleford in west Yorkshire.

He said: "We can't afford to take 2.45% - it's a pay cut.

"I mean diesel and petrol have gone up by 22%. It's getting to the stage where we can't afford to even travel to work."

And Lucy Marr, who is a Unison member from Hampshire County Council, told the BBC: "Local government workers are the lowest paid in the public sector. We've had 10 years of below-inflation pay rises."

Biggest challenge

Jan Parkinson, managing director of the local government employers, said: "Our greatest asset is our staff but we have simply reached the limit of what is affordable.

"We remain willing to talk to the unions on a constructive basis about the future employment conditions of our workforce but this week's strikes will not change the fact that our last offer was our final offer."

The Local Government Association (LGA) said a survey of councils suggested less than a quarter of staff would take part.

"We have had to make some difficult decisions over the last year or two in relation to a wide range of public sector workers"
Gordon Brown
Prime Minister

In the PCS union dispute, driving test examiners will strike on Wednesday, and Valuation Office Agency staff on Wednesday and Thursday.

Home Office and Land Registry workers will strike for part of Friday, coastguards for 48 hours from Friday and the Identity and Passport Service for 72 hours from 23 July.

BBC News employment correspondent Martin Shankleman says the strikes are the biggest challenge yet to the government's tough line on public sector pay.

Prime Minister Gordon Brown sees the policy as essential in the fight against inflation.

Mr Brown's spokesman said: "We have had to make some difficult decisions over the last year or two in relation to a wide range of public sector workers in order keep inflation lower than it might otherwise have been, which has enabled the Bank of England to keep interest rates lower than they would otherwise have been.

"These are difficult economic times and a wide range of public sector workers are also having to accept lower settlements than anybody would have liked to have seen in an ideal world."

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不正採用取り消し、不合格者を救済へ　大分県教委

2008年7月16日12時27分

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写真会見する大分県教委の小矢文則教育長（左）ら＝１６日午前１１時１６分、大分市

　大分県の小学校教員の採用試験をめぐる汚職事件で、県教育委員会は１６日、点数改ざんの不正による採用が裏付けられた合格者の採用を取り消し、不正な操作による不合格者は救済する方針を臨時の委員会で決めた。採用試験の答案はすでに廃棄されているが、県教委は県警が押収した関係資料が返還され次第、改ざん前の試験結果を分析する。

　県教委の義務教育課参事、江藤勝由容疑者（５２）＝収賄容疑で再逮捕＝は上司の元教育審議監、二宮政人容疑者（６１）＝収賄容疑で逮捕＝らの指示を受け、０７、０８両年度の採用試験でそれぞれ合格者の半分に相当する約２０人ずつの得点を水増しし、不正に合格させたとされる。平均点が不自然に高くならないよう、合格ライン前後の受験者の得点を引き下げる操作もしたという。

　県教委は、得点水増しなどによる不正な合格者の採用を取り消して事実上解雇する一方、本来なら合格していた人については本人が希望すれば採用する。江藤参事が不正操作の際に使ったパソコンのデータなどから改ざん前の試験結果を把握する方針とみられるが、小矢（こ・や）文則教育長は不正の事実確認には時間がかかるとし、採用取り消しや救済は「８月中は難しい」と述べた。県教委に教育行政改革プロジェクトチームを設置し、採用試験や人事管理を抜本的に見直す考えも示した。

　今回の事件に絡んでは、同県佐伯市立小学校の校長や教頭３人が、昇任の謝礼などとして江藤参事に商品券を渡したと県警に申し出た。県教委は、不正により昇任したことが確認できた校長、教頭には懲戒処分や分限処分を行う方針を決めた。また、江藤参事と、義務教育課参事の矢野哲郎容疑者（５２）＝贈賄容疑で再逮捕＝の２人を１６日付で懲戒免職処分とすることも決めた。

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一斉休漁から一夜、東京・築地市場は大きな混乱なし
全国一斉休漁の大きな影響は見られない築地市場（東京・築地市場で）＝江口聡子撮影

　全国漁業協同組合連合会など１７の漁業団体による一斉休漁から一夜明けた１６日朝、東京・築地市場では、入荷量が前日に比べ約１５％減ったものの、全体的な価格などに大きな混乱は見られなかった。

　ただ、飲食店用のヒラメやタイなど近海物の高級魚で入荷量が約４割減ったほか、スルメイカはものによって１割ほど高値で取引されるなど、一部で影響が出た。

　市場関係者らによると、影響が小さかったのは卸売会社が事前に多めに仕入れて在庫を確保するなどしていたため。取扱量が多いアジは入荷量が１割しか減らなかったほか、水曜日は買い付けにくる業者が少ないこともあって、価格は逆に約８％下がったという。

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UAE to invest in Kazakh agriculture

By Andrew England in Abu Dhabi

Published: July 16 2008 02:24 | Last updated: July 16 2008 02:24

The United Arab Emirates is seeking to invest in agricultural projects in Kazakhstan as part of its efforts to secure food supplies.

Sheikh Khalifa bin Zayed al-Nahyan, the UAE’s president, who is on a three-day trip to the former Soviet state, said the UAE was looking to diversify its sources of food imports, according to the UAE’s news agency.

Skyrocketing food prices – particularly wheat and rice – have caused oil-rich Gulf countries, which import most of their food, to consider developing agricultural projects in other countries. Food costs have been an important driver behind double-digit inflation throughout the region.

The UAE imports about 85 per cent of its food.

Sultan bin Saeed al-Mansouri, the UAE’s economy minister, was quoted last week as saying that the nation was also looking to buy agricultural land in Vietnam, Cambodia, Africa and South America.

The Abu Dhabi Fund for Development is already working on developing 70,000 acres of agricultural land in Sudan to produce crops such as corn and alfalfa, a feed for livestock. The fund, which is based in Abu Dhabi, the UAE’s capital, was considering similar projects in countries such as Senegal and Uzbekistan, officials have said.

A UAE-based private equity firm, Abraaj Capital, has also said it is working with the government on strategic agribusiness investments in Pakistan.

Other Gulf states considering similar projects includes Saudi Arabia, which has been in talks with a number of countries, including Sudan, Ukraine, Pakistan, Turkey and Egypt, to develop massive projects to grow crops including corn, wheat and rice.

However, some countries, like the US, are also concerned that bilateral agricultural agreements that tie up produce could distort world food markets.

---------------------------------
Syria heads east to boost foreign investment

Published: July 6 2008 23:22 | Last updated: July 6 2008 23:22

Western isolation has forced Syria increasingly to look eastwards for its economic future. As the country pushes through much-needed reforms, Bashar al-Assad, the president, is focusing on links with rising economic powers such as India and China.”

Even as Syria is looking to restore ties with the west, reflected in improved diplomatic relations with France, a forthcoming Assad trip to Paris and renewed peace talks with Israel, Damascus has been careful to foster its relations with other powers.

Mr Assad travelled to India last month, the first time a Syrian leader has visited the country in 30 years.

Safi Shujaa, director of the Syrian Economic Centre, says that “Syria is going seriously to the east”, citing international political isolation from the west and economic advantages from the east as the main motivations for the shift.

This decision has taken place even as the country undergoes urgent economic reform in the face of a ­stagnant economy and dwindling oil revenues. In recent years Syria has liberalised foreign trade, dropping tariffs and import restrictions, and introduced a more favourable investment climate seeking greater foreign capital for the budding ­private sector.

Liu Bo, a commercial attaché at the Chinese embassy in Damascus, says that these reforms have been directly responsible for the increased Chinese engagement. He says that exports to Syria increased by 37 per cent in 2007, while China has pumped $741.52m (€472.5m, £374m) of investment into the country.

At the same time, trade with India and Russia has increased by 78.9 per cent and 59 per cent respectively in 2007.

Syria’s northern neighbour, Turkey, has also strengthened its ties with Damascus following the 2007 signing of a trade-agreement. Bilateral trade doubled in the first third of 2008 compared to the same period in 2007 and Turkish companies are setting up textiles, chemical and foodstuffs factories in the country attracted by cheap materials and labour. Goods are shipped to Turkey or the rest of the Middle East through the customs-free Greater Arab Free Trade Area agreement.

Turkish investments in Syria are today valued at $400m and are expected to grow dramatically. According to Tayfun Kiliç, Turkey’s commercial attaché in Damascus, “our main competition is China”.

While Syria has long depended on investment from the Gulf, particularly from Saudi Arabia and Qatar, it is increasingly looking to diversify in order to meet its aim of $16bn of investment by 2010.

The total amount of foreign investment in Syria today is unclear, with estimates ranging from $1bn to $10bn reflecting the unreliabilty of official figures, which makes trade and investment accounting extremely difficult.

What is clear is that Syria is seeking to attract more business.

“Syria is now shifting from a centralised to a more liberalised economy and we are looking for foreign investment and technology for the country,” says Rima Qadri, director of international relations at the Syrian ministry of economy.

Greater ties with non-western countries seem to be coming at the expense of the Europe Union, in particular. While the bloc remains Syria’s largest trading partner, imports from the EU fell from 34 per cent of the total in 2003, to 22 per cent in 2006. “This decrease of the European share of Syrian trade can in part be explained by the high value of the euro and by the increased competition from, especially, Asian countries following the opening of the Syrian economy,” according to the EU.

Meanwhile, western investment in the country is limited as a result of Syria’s international isolation and US sanctions imposed in 2003, which have scared off many investors.

For Syria, the hope is that new business interest from the east can offset this loss and help revitalise its economy. Yet it continues to lag badly behind other regional countries in attracting ­foreign investment and ­analysts say that without further economic reform, the elimination of widespread corruption and an improvement of its political standing internationally, it will struggle to compete with its neighbours.

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Liechtenstein Launches Marketing Strategy For Foundations Law, by Ulrika Lomas, Tax-News.com, Brussels
Last updated 8 hours ago | Wednesday, July 16, 2008

The Liechtenstein government has announced that it will carry out a campaign in neighbouring countries to market the alpine jurisdiction's new foundations law, before it goes into effect on 1st January 2009.

"The goal of introducing a modern and practicable law governing foundations can only be achieved if the project is accompanied by flanking measures," observed Minister of Economic Affairs and Justice Klaus Tschütscher while commenting on the announcement.

The marketing campaign, which will be launched in the Autumn of 2008, will involve those financial industry participants who helped craft the new legislation and will initially be taken to Austria, Germany and Switzerland in a series of events on the theory and practice of foundation law.

A new professorship in foundation law will also be created at the Hochschule Liechtenstein (Liechtenstein University of Applied Sciences).

This marketing initiative is part of a wider strategy aimed principally at bolstering Liechtenstein's image as a reputable reform-willing financial centre and changing people's perception of the jurisdiction's as a secretive tax haven.

However, the Principality has acknowledged that it has much to do in order to turn around its image abroad.

"The government is aware that Liechtenstein's image abroad continues to be tainted by false information and prejudice, despite Liechtenstein's great efforts in this regard," the government stated in its announcement.

The marketing of the Liechtenstein as a business location is one of the goals of the 'Futuro' project, which the government launched to help promote Liechtenstein as both a quality financial and industrial centre.

The project for the future of the financial centre envisages a substantial expansion of communication on the achievements by the country and the financial centre over the last few years.

The government has also launched a separate marketing drive aimed at repairing the damage caused by the recent tax scandal in Germany, when many wealthy Germans - including the former boss of Deutsche Post - were accused of hiding assets in Liechtenstein foundations out of the reach of the German tax authorities.

According to the government, under the first phase of this initiative, "clichés concerning the Liechtenstein financial centre and false impressions of journalists will be corrected through matter-of-fact communication work."

The second step will launch an image campaign building on existing structures of the 'Image Liechtenstein Foundation' and the government communication bodies. It will also incorporate the promotional activities of Liechtenstein Tourism.

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More than 60 Spaniards suspected of tax evasion in Liechtenstein
Posted : Tue, 15 Jul 2008 12:54:02 GMT
Author : DPA

Madrid - Spanish police searched 19 addresses Tuesday for possible evidence of tax evasion and money-laundering in Liechtenstein, judicial sources said. More than 60 people are suspected of illicit financial transactions involving more than 200 million euros (320 million dollars).

Police searched investment agencies, tax consultancy offices, a private bank, company headquarters and homes in Madrid, Barcelona, Malaga and Zaragoza, but no detentions have been made so far.

Liechtenstein has pledged to boost cooperation with the European Union after a tax fraud scandal broke there earlier this year.

Spain has said it was investigating nearly 200 people for possible involvement in the scandal.

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UAE issues more than 5,500 offshore licences

Saifur Rahman, Business Editor
Published: July 15, 2008, 12:42

Ras Al Khaimah: More than 5,500 offshore licences have been issued by two offshore licensing authorities in the UAE, including 600 by RAK Offshore as international investors are increasingly channeling their money into the UAE’s real estate sector to make 'quick bucks', a top official said.

“A lot of European and international investors are opening up offshore companies in the UAE to invest in land and properties as the sector is booming and there are lots of opportunities and good return,” Peter Michael Schuster, general manager of RAK Offshore told Gulf News on Monday.

An offshore company is a company which does not conduct substantial business in its country of incorporation. They are sometimes known as non-resident companies.