The demise of the dollar
In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading
By Robert Fisk
Tuesday, 6 October 2009
Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars.
Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars.
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
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The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."
This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.
The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states.
Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.
China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.
Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls. In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro.
Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America's trading partners have been left to cope with the impact of Washington's control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.
The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. "The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."
Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.
The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.
"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."
Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.
Sean O'Grady: China will overtake America, the only question is when
Tuesday, 6 October 2009
Few things would be more powerfully symbolic of the shift in the balance of global economic power than to have oil traded in the Chinese renminbi rather than the American dollar.
True, no one is going to price a barrel of West Texas Intermediate Crude in renminbi tomorrow. But you can see how that could change. Oil is traded in dollars for economic reasons – not sentimental ones. The oil business pretty much started in the US (vividly portrayed in the film There Will be Blood), the giant oil companies are still mostly American, and the US has long been the world's largest consumer, importer and one of the largest producers of oil. The presidency of George W Bush offered ample evidence of the intimate connections between politics and oil. And the dollar is easily the most traded currency in the world. As such, it makes sense to trade oil in dollars.
Yet the financial tectonic plates are shifting – fast. Yesterday the president of the World Bank, Robert Zoellick, articulated what must be weighing on the minds of many Western policy-makers. A legacy of the current crisis "may be a recognition of changed economic power relations". In other words, the recession has accelerated the rise of China. The brutal truth is that for most of the next decade China's economy will grow by more than 10 per cent a year; America's by less than 2 per cent. China will soon be the world's largest economy, and largest creditor nation, a position enjoyed by a pre-eminent America in the 1950s. China will also be the largest consumer of oil, which will help push trading in it and other commodities towards a "basket" of currencies.
Now America is the world's greatest debtor, she can no longer sustain her role as protector of the world's only reserve currency in the long term. The humbling of Wall Street was proof that the American system was not invincible. Suddenly, a G20 embracing China, India and the other emerging powers is the only forum that matters. China has helped bail out our banks. Spats with the Americans and Europeans are set to grow more bitter. Yesterday the head of the IMF, Dominique Strauss-Kahn and the president of the European Central Bank, Jean-Claude Trichet, resumed their attack on the value of the yuan. Next will come an increasing US resentment at the vast debts built up with China, and, in turn, Chinese nervousness about their long-term worth.
And that is the paradox. China holds approaching $3 trillion in dollar assets, so she cannot afford to see the dollar collapse. Longer term, China does want to become less reliant on the dollar as a place to keep its savings. America needs China to buy her Treasury bills; and China needs America to buy her exports. They are like two drunken giants leaning on each other. Yet a sobering reckoning of some sorts seems inevitable; and it is difficult to see how both can be winners.
Leading article: The end of the dollar spells the rise of a new order
This radical proposal is a reflection of a changing economic world
Tuesday, 6 October 2009
Last autumn's global financial crisis set off an economic earthquake. And we are still feeling the tremors. The latest sign of the ground shifting beneath our feet is our report today of plans by Gulf states, China, Russia, France and Japan to end their practice of conducting oil deals in US dollars, switching instead to a diverse basket of currencies.
It is not hard to see the motivation for oil exporters to move away from the dollar. The value of the US currency has fallen sharply since last year's meltdown. And fears are growing, in the light of a spiralling US government deficit, that a further depreciation is likely. They do not want to sell their wares in return for a currency with an uncertain future.
It is also easy to see why China would like a world trading system that is underpinned by other currencies as well as the dollar. For the past decade Beijing has been recycling the proceeds of its giant national trade surplus into purchases of US government bonds and other dollar-denominated assets. China too stands to make a significant loss if the value of the dollar falls. For China, however, the timing is much more sensitive. Beijing needs to reduce its dollar holdings, but if it does so too quickly it will bring about the very devaluation it fears. This explains why Chinese officials appear to want this transition to take place gradually over the next decade.
But the significance of this development goes much further. Since the end of the Second World War the dollar has been the bedrock of world trade. The pre-eminence of the American currency flowed naturally from the economic dominance of the US. Virtually everyone traded with America so it made sense to use their currency.
But the US is not the dominant power that it once was. The financial crisis has left it hobbled with significant government and household debts and sharply reduced prospects for growth. Developing nations such as China, Brazil and India, on the other hand, have weathered the economic storm significantly better. So while this latest proposal is born of financial calculation, it is also a reflection of a new economic world order.
We should not be sentimental for the dollar. It makes economic sense for world trade to be conducted in a variety of currencies. Relying on one only has the advantage of clarity, but it also creates instability if the economy that underpins it faces uncertain prospects.
Yet we need to understand that exchange rate volatility is a symptom, rather than a cause, of what truly ails the world economy. The biggest driver of global economic instability in recent years has been the determination of China to boost its export sector at all costs. Beijing's persistently large trade surpluses and manipulation to prevent its own currency from appreciating have effectively forced Western nations into running persistently large trade deficits. It was this pressure that blew up various asset bubbles that burst with such disastrous effect last year.
A gradual move away from the dollar makes sense. But without a commitment from world governments – both in the rich and developing world – to reduce these destabilising global trade imbalances we will enter an uncertain new era; and one that could yet make us pine for the days of the dominant greenback.
Tuesday, October 6, 2009
Monday, October 5, 2009
A wealthy, insular Syrian Jewish enclave in Brooklyn reels after rabbis' arrests
OCTOBER 3, 2009
A Community, Shaken
A wealthy, insular Syrian Jewish enclave in Brooklyn reels after rabbis' arrests
By LUCETTE LAGNADO
Brooklyn, N.Y.
When Morris Setton was a young man here, he and his brother Joshua went door to door selling bags of pita bread to the crush of Jewish immigrants from Syria and Egypt.
It proved to be an excellent business venture. The brothers, Jews of Syrian descent who emigrated from Cairo in the late 1950s with $5 in their pockets, found a community along the elegant Brooklyn boulevard of Ocean Parkway that disdained American white bread and was homesick for the tastes and scents of the Middle East—the spices, flaky pastries, black olives, rose water, cheeses and nuts the immigrants were used to savoring, and which were missing from their new lives.
Brooklyn's Syrian Jewish Community
Morris Setton, co-owner of Setton International Foods .
Fifty years later, Mr. Setton, 68, is America's King of Pistachios. He is the co-owner of a vast enterprise, Setton Farms, that has a large warehouse in Long Island and farms and processing plants in California. He can live anywhere, but has remained planted in the corner of Brooklyn where he started, at the heart of what he calls "The Community"—a little-known enclave of more than 75,000 Jews from Syria and other Arab lands, many of whom have prospered in America while sustaining strong ties to the cultural traditions of homelands that today are inhospitable to Jews.
That community has been reeling since the July arrests of three of its major rabbis on charges of money-laundering, following a sting using a federal government informant. Among those caught in the dragnet was Saul Kassin, the 88-year-old Chief Rabbi, a revered figure to Sephardic Jews for decades. Rabbi Kassin and two other rabbis—Eliahu Ben Haim and Edmund Nahum—are alleged to have laundered a total of more than $1.7 million, according to the U.S. Attorney's office for the district of New Jersey. The funds allegedly were laundered through charities and religious institutions they controlled in Brooklyn and Deal, N.J., the seaside resort where many Syrian Jews summer. Rabbi Kassin, through his lawyer, emphatically denied the allegations, as did Rabbi Nahum and his lawyer. Rabbi Ben Haim's lawyer, Lawrence Lustberg, said he was reviewing the evidence in the case and declined to comment further for this story.
The corruption case involved a government informant who purported, among other cover stories, to be dealing in fake Prada and Gucci handbags and wore a wire for the Federal Bureau of Investigation. He allegedly recorded the three rabbis agreeing to help him launder funds through their charities and take a percentage, according to a federal complaint. To the dismay and shock of the community, the informant was widely reported to be Solomon Dwek, one of their own, the son of another major local rabbi. Mr. Dwek's lawyer did not return repeated calls seeking comment.
Acting U.S. Attorney Ralph Marra Jr. compared the rabbis to "crime bosses" and accused them of using "entities set up to do good works" to launder millions. To defend the frail Chief Rabbi, his family reached out to Gerald Shargel, the prominent Manhattan criminal lawyer who represented the late Mafia don John Gotti and Sammy "the Bull" Gravano, as well as white-collar criminals such as Marc Dreier.
The arrests have shone a harsh light on a group that has resisted assimilation even as its members achieved wealth and success in America. A community that was always intensely private and closed now views outsiders with suspicion that borders on paranoia.
I grew up in The Community, albeit on the poor side—in Bensonhurst, the rather modest area where Sephardic Jews lived before they left for much swankier digs on Ocean Parkway and in Deal. My father was born in Aleppo, Syria; I was born in Cairo. Two years ago, I published a memoir about my father and the community. When I was a little girl new to America, my world revolved around my family and my small Sephardic temple. Rabbi Kassin was one of my Hebrew school teachers; another was Rabbi Baruch Ben Haim, the father of Rabbi Eliahu Ben Haim, Once, in class, I asked Rabbi Kassin why the Messiah couldn't be a woman. "Because he can't," he replied tersely.
The arrests spotlighted a world of tremendous wealth, one that had prospered since I left for college in the 1970s. A roster of some of the Syrian Jewish community's most successful members includes the Nakash brothers, who founded Jordache Enterprises, and the Gindi family, who started Century 21, the popular department-store chain in New York. Duane Reade, the drugstore chain, was founded by the Cohen brothers, who grew up in the Syrian community in Brooklyn. One of the community's top guns is Joseph Cayre, chairman of Midtown Equities, who is one of the leaseholders of the World Trade Center site and an owner of Barneys department store buildings in New York, Chicago and Los Angeles. Also from the community is Joe Sitt, chairman of Thor Equities, which owns the Palmer House Hilton in Chicago and several acres of Coney Island.
"I suspect there's more wealth on Ocean Parkway than there is in Beverly Hills," says Steve Solarz, the area's former congressman.
The community's ornate mansions aren't concealed behind hedgerows or gates as they are in the Hamptons—the wealth is on display for everyone to see. Along Ocean Parkway, houses are sometimes built right up to the lot lines. In Deal, there are Mediterranean-style villas with sweeping vistas of the ocean and stately Victorian homes with porches and Hollywood-style swimming pools.
Deal's social season is a swirl of engagement parties, bar mitzvahs, circumcision ceremonies and get-togethers at the Deal Casino, a club with a massive swimming pool and private beach. Weddings are elaborate affairs, some with 1,000 guests or more, held at Magen David of West Deal, the largest and most elegant synagogue.
Constant charity events are also a part of the social scene. Fund-raisers and raffles and auctions raise money for an array of causes: infertile couples, cancer-stricken children, impoverished adult cancer victims, religious schools, even brides too poor to afford a wedding trousseau. Tithing, or giving at least 10% of one's wealth to charity and your synagogue, is the practice.
There are also pockets of poverty. The community has been hit hard by the economic downturn, and many of its members in retail have seen business evaporate.
Rabbis were traditionally entrusted to see that money given for charity reached the needy. Wealthy community members who are fond of Rabbi Kassin say that he constantly approached people to help this needy person or that.
In the U.S. Attorney's complaint, Rabbi Kassin is alleged to have laundered more than $200,000 from the informant through his charity, while his nephew, Rabbi Ben Haim, is alleged to have laundered some $1.5 million; Rabbi Nahum is alleged to have laundered $185,000.
Mr. Shargel says the charges are baseless. "Rabbi Kassin did not launder money and never intended to violate any law—he was doing charitable work," he says, adding, "Rabbi Kassin didn't know from Prada and he didn't know from Gucci."
Any money collected "was for the people, and it was written down, and it was in the book, check by check," says Rabbi Nahum. He remains in his position at his synagogue. "At no time did Rabbi Nahum receive any personal gain related to these transactions and all monies received went to the charities," says his attorney, Justin Walder.
The community is home to several modern philanthropic institutions with lay boards, but a more antiquated system, where charitable funds are controlled by individual rabbis, has persisted. Rabbi Elie Abadie of the Edmond J. Safra synagogue in Manhattan says that the community also maintained "a mom and pop shop" style of philanthropy, not always subject to "oversight or checks and balances," which made its charities more vulnerable to allegations of improprieties. David G. Greenfield of the Sephardic Community Federation says there will now be a focus on "transparency," lay boards and "accountability."
Behind the scenes, there are deep divisions in this tightly knit community. Some are so shaken by the allegations that for the first time they say they are questioning their faith in the rabbis and calling for a thorough house-cleaning. Others—particularly more conservative, ultra-observant members of the community—are rallying around the rabbis and believe them to be innocent victims.
The division reflects a broader and more long-running split that's visible on the streets of Brooklyn and Deal. On Norwood Avenue, Deal's main shopping street, some Syrian-Jewish women wear wigs and long skirts—traditional religious garb that stands out in a community where many men and women pride themselves on dressing at the height of fashion.
Nostalgia for the Middle East suffuses the Sephardic community, and focuses on the ancient Syrian city of Aleppo. Aleppo produced legions of influential rabbinical scholars, and the community had strict customs about how to live, how to pray, how and when and whom to marry. It was also a city on a major trading route, which meant that Syrian Jews worked and interacted with Muslims and other groups, says Rabbi Abadie.
"On the one hand, the community was close-knit, and on the other it was worldly. They did not see a contradiction between their religion and close-knit family relationships with being cosmopolitan," he says.
That ability to function in the larger world served Syrian Jews wherever they settled. Many were adept, aggressive businessmen, their skills honed in at the Aleppo souk, and those talents have also been handed down through the generations.
The community has tried to hold onto to the traditions of Aleppo, or "Halab," as they call it, using its Arabic moniker. Even third- and fourth-generation Syrian Jews in Brooklyn pepper their conversations with Arabic expressions that hearken back to a country most never really knew. "Hazeet," they'll say of a man who has suffered a misfortune, "poor fellow." An inappropriate act is "eyb," or shameful.
From selling pita bread in the early 1960s, Mr. Setton and his brother by 1967 had earned enough to open the first Middle Eastern grocery on Kings Highway, a shopping strip located by Ocean Parkway. Setton Oriental Foods carried string cheese the brothers made by hand, dried fruit, spices and all kinds of nuts, from roasted hazelnuts and watermelon seeds to almonds and pistachios.
"When you had guests, you always gave them some pistachios, it was what you offered first," Mr. Setton recalls.
Now, Mr. Setton's lone shop has given way to multiple groceries that compete to sell Oriental specialties. Many of the shopkeepers speak Arabic, and old-fashioned bargaining is advisable.
Large families crowd restaurants like David's, a popular eatery that serves Middle Eastern cuisine—lentil soup pungent with cumin, skewers of ground beef called kufta kebab, bowls of savory okra stew—all prepared in keeping with strict Jewish dietary laws. A small bakery, Mansoura's, features trays of honey-drenched baklava.
"The Syrian food in Brooklyn is better than the Syrian food in Damascus," says Mr. Solarz, the ex-congressman, who has sampled both.
Nearby, on Ocean Parkway, synagogues are filled morning and evening with worshippers who pray and chant hymns in the ancient melodies and cadences of Syria and Egypt. Attendance is booming.
"You walk around and you will hear Arabic," Mr. Setton says on a tour of his old pita route. He can rattle off the names of who lives in every house—his old customers—though most are gone, the homes occupied by their children or young families. His own children live within a block or two of his home. His store, now called Chalouh International Foods, is today run by a Syrian Jew who emigrated from Damascus in the 1990s. A stone to guard against the evil eye, called a "shabah," is a brisk seller at $2.
On a Friday morning in August, long lines formed at the kosher food stores lining Deal's Norwood Avenue. Piled high on the tables of Kings Highway Glatt were packages of kibbe, the delicious little meatballs stewed in sour cherries or mushrooms that are the staple of Syrian cuisine and the centerpiece of the Friday-night sabbath meal. There was yebrak—grape leaves stuffed with rice and meat—and artichokes medias—artichoke hearts stuffed with ground meat and covered with sauce.
Older generations of Syrian women made these dishes from scratch, but these days, women line up to scoop up multiple ready-made packages of these delicacies. Some this summer were dressed for the beach, in pants or shorts and revealing halter tops. Others were in long skirts and long-sleeved blouses, their hair covered with a wig or a hat.
Come Friday, every woman in the community is busy making kibbe hamda, an aromatic dish that involves preparing a lemony broth, then adding garlic, mint and other spices, then throwing in vegetables and the meatballs.
"On Fridays you can drive down the streets of Deal or Brooklyn and know that every house has that kibbe hamda cooking," says Poopa Dweck (no relation to Solomon Dwek), a resident of Deal and author of the cookbook "Aromas of Aleppo." "You feel it—you smell it—the mint and the garlic and the kibbe that is boiling and everyone telling everyone not to be late."
Write to Lucette Lagnado at lucette.lagnado@wsj.com
A Community, Shaken
A wealthy, insular Syrian Jewish enclave in Brooklyn reels after rabbis' arrests
By LUCETTE LAGNADO
Brooklyn, N.Y.
When Morris Setton was a young man here, he and his brother Joshua went door to door selling bags of pita bread to the crush of Jewish immigrants from Syria and Egypt.
It proved to be an excellent business venture. The brothers, Jews of Syrian descent who emigrated from Cairo in the late 1950s with $5 in their pockets, found a community along the elegant Brooklyn boulevard of Ocean Parkway that disdained American white bread and was homesick for the tastes and scents of the Middle East—the spices, flaky pastries, black olives, rose water, cheeses and nuts the immigrants were used to savoring, and which were missing from their new lives.
Brooklyn's Syrian Jewish Community
Morris Setton, co-owner of Setton International Foods .
Fifty years later, Mr. Setton, 68, is America's King of Pistachios. He is the co-owner of a vast enterprise, Setton Farms, that has a large warehouse in Long Island and farms and processing plants in California. He can live anywhere, but has remained planted in the corner of Brooklyn where he started, at the heart of what he calls "The Community"—a little-known enclave of more than 75,000 Jews from Syria and other Arab lands, many of whom have prospered in America while sustaining strong ties to the cultural traditions of homelands that today are inhospitable to Jews.
That community has been reeling since the July arrests of three of its major rabbis on charges of money-laundering, following a sting using a federal government informant. Among those caught in the dragnet was Saul Kassin, the 88-year-old Chief Rabbi, a revered figure to Sephardic Jews for decades. Rabbi Kassin and two other rabbis—Eliahu Ben Haim and Edmund Nahum—are alleged to have laundered a total of more than $1.7 million, according to the U.S. Attorney's office for the district of New Jersey. The funds allegedly were laundered through charities and religious institutions they controlled in Brooklyn and Deal, N.J., the seaside resort where many Syrian Jews summer. Rabbi Kassin, through his lawyer, emphatically denied the allegations, as did Rabbi Nahum and his lawyer. Rabbi Ben Haim's lawyer, Lawrence Lustberg, said he was reviewing the evidence in the case and declined to comment further for this story.
The corruption case involved a government informant who purported, among other cover stories, to be dealing in fake Prada and Gucci handbags and wore a wire for the Federal Bureau of Investigation. He allegedly recorded the three rabbis agreeing to help him launder funds through their charities and take a percentage, according to a federal complaint. To the dismay and shock of the community, the informant was widely reported to be Solomon Dwek, one of their own, the son of another major local rabbi. Mr. Dwek's lawyer did not return repeated calls seeking comment.
Acting U.S. Attorney Ralph Marra Jr. compared the rabbis to "crime bosses" and accused them of using "entities set up to do good works" to launder millions. To defend the frail Chief Rabbi, his family reached out to Gerald Shargel, the prominent Manhattan criminal lawyer who represented the late Mafia don John Gotti and Sammy "the Bull" Gravano, as well as white-collar criminals such as Marc Dreier.
The arrests have shone a harsh light on a group that has resisted assimilation even as its members achieved wealth and success in America. A community that was always intensely private and closed now views outsiders with suspicion that borders on paranoia.
I grew up in The Community, albeit on the poor side—in Bensonhurst, the rather modest area where Sephardic Jews lived before they left for much swankier digs on Ocean Parkway and in Deal. My father was born in Aleppo, Syria; I was born in Cairo. Two years ago, I published a memoir about my father and the community. When I was a little girl new to America, my world revolved around my family and my small Sephardic temple. Rabbi Kassin was one of my Hebrew school teachers; another was Rabbi Baruch Ben Haim, the father of Rabbi Eliahu Ben Haim, Once, in class, I asked Rabbi Kassin why the Messiah couldn't be a woman. "Because he can't," he replied tersely.
The arrests spotlighted a world of tremendous wealth, one that had prospered since I left for college in the 1970s. A roster of some of the Syrian Jewish community's most successful members includes the Nakash brothers, who founded Jordache Enterprises, and the Gindi family, who started Century 21, the popular department-store chain in New York. Duane Reade, the drugstore chain, was founded by the Cohen brothers, who grew up in the Syrian community in Brooklyn. One of the community's top guns is Joseph Cayre, chairman of Midtown Equities, who is one of the leaseholders of the World Trade Center site and an owner of Barneys department store buildings in New York, Chicago and Los Angeles. Also from the community is Joe Sitt, chairman of Thor Equities, which owns the Palmer House Hilton in Chicago and several acres of Coney Island.
"I suspect there's more wealth on Ocean Parkway than there is in Beverly Hills," says Steve Solarz, the area's former congressman.
The community's ornate mansions aren't concealed behind hedgerows or gates as they are in the Hamptons—the wealth is on display for everyone to see. Along Ocean Parkway, houses are sometimes built right up to the lot lines. In Deal, there are Mediterranean-style villas with sweeping vistas of the ocean and stately Victorian homes with porches and Hollywood-style swimming pools.
Deal's social season is a swirl of engagement parties, bar mitzvahs, circumcision ceremonies and get-togethers at the Deal Casino, a club with a massive swimming pool and private beach. Weddings are elaborate affairs, some with 1,000 guests or more, held at Magen David of West Deal, the largest and most elegant synagogue.
Constant charity events are also a part of the social scene. Fund-raisers and raffles and auctions raise money for an array of causes: infertile couples, cancer-stricken children, impoverished adult cancer victims, religious schools, even brides too poor to afford a wedding trousseau. Tithing, or giving at least 10% of one's wealth to charity and your synagogue, is the practice.
There are also pockets of poverty. The community has been hit hard by the economic downturn, and many of its members in retail have seen business evaporate.
Rabbis were traditionally entrusted to see that money given for charity reached the needy. Wealthy community members who are fond of Rabbi Kassin say that he constantly approached people to help this needy person or that.
In the U.S. Attorney's complaint, Rabbi Kassin is alleged to have laundered more than $200,000 from the informant through his charity, while his nephew, Rabbi Ben Haim, is alleged to have laundered some $1.5 million; Rabbi Nahum is alleged to have laundered $185,000.
Mr. Shargel says the charges are baseless. "Rabbi Kassin did not launder money and never intended to violate any law—he was doing charitable work," he says, adding, "Rabbi Kassin didn't know from Prada and he didn't know from Gucci."
Any money collected "was for the people, and it was written down, and it was in the book, check by check," says Rabbi Nahum. He remains in his position at his synagogue. "At no time did Rabbi Nahum receive any personal gain related to these transactions and all monies received went to the charities," says his attorney, Justin Walder.
The community is home to several modern philanthropic institutions with lay boards, but a more antiquated system, where charitable funds are controlled by individual rabbis, has persisted. Rabbi Elie Abadie of the Edmond J. Safra synagogue in Manhattan says that the community also maintained "a mom and pop shop" style of philanthropy, not always subject to "oversight or checks and balances," which made its charities more vulnerable to allegations of improprieties. David G. Greenfield of the Sephardic Community Federation says there will now be a focus on "transparency," lay boards and "accountability."
Behind the scenes, there are deep divisions in this tightly knit community. Some are so shaken by the allegations that for the first time they say they are questioning their faith in the rabbis and calling for a thorough house-cleaning. Others—particularly more conservative, ultra-observant members of the community—are rallying around the rabbis and believe them to be innocent victims.
The division reflects a broader and more long-running split that's visible on the streets of Brooklyn and Deal. On Norwood Avenue, Deal's main shopping street, some Syrian-Jewish women wear wigs and long skirts—traditional religious garb that stands out in a community where many men and women pride themselves on dressing at the height of fashion.
Nostalgia for the Middle East suffuses the Sephardic community, and focuses on the ancient Syrian city of Aleppo. Aleppo produced legions of influential rabbinical scholars, and the community had strict customs about how to live, how to pray, how and when and whom to marry. It was also a city on a major trading route, which meant that Syrian Jews worked and interacted with Muslims and other groups, says Rabbi Abadie.
"On the one hand, the community was close-knit, and on the other it was worldly. They did not see a contradiction between their religion and close-knit family relationships with being cosmopolitan," he says.
That ability to function in the larger world served Syrian Jews wherever they settled. Many were adept, aggressive businessmen, their skills honed in at the Aleppo souk, and those talents have also been handed down through the generations.
The community has tried to hold onto to the traditions of Aleppo, or "Halab," as they call it, using its Arabic moniker. Even third- and fourth-generation Syrian Jews in Brooklyn pepper their conversations with Arabic expressions that hearken back to a country most never really knew. "Hazeet," they'll say of a man who has suffered a misfortune, "poor fellow." An inappropriate act is "eyb," or shameful.
From selling pita bread in the early 1960s, Mr. Setton and his brother by 1967 had earned enough to open the first Middle Eastern grocery on Kings Highway, a shopping strip located by Ocean Parkway. Setton Oriental Foods carried string cheese the brothers made by hand, dried fruit, spices and all kinds of nuts, from roasted hazelnuts and watermelon seeds to almonds and pistachios.
"When you had guests, you always gave them some pistachios, it was what you offered first," Mr. Setton recalls.
Now, Mr. Setton's lone shop has given way to multiple groceries that compete to sell Oriental specialties. Many of the shopkeepers speak Arabic, and old-fashioned bargaining is advisable.
Large families crowd restaurants like David's, a popular eatery that serves Middle Eastern cuisine—lentil soup pungent with cumin, skewers of ground beef called kufta kebab, bowls of savory okra stew—all prepared in keeping with strict Jewish dietary laws. A small bakery, Mansoura's, features trays of honey-drenched baklava.
"The Syrian food in Brooklyn is better than the Syrian food in Damascus," says Mr. Solarz, the ex-congressman, who has sampled both.
Nearby, on Ocean Parkway, synagogues are filled morning and evening with worshippers who pray and chant hymns in the ancient melodies and cadences of Syria and Egypt. Attendance is booming.
"You walk around and you will hear Arabic," Mr. Setton says on a tour of his old pita route. He can rattle off the names of who lives in every house—his old customers—though most are gone, the homes occupied by their children or young families. His own children live within a block or two of his home. His store, now called Chalouh International Foods, is today run by a Syrian Jew who emigrated from Damascus in the 1990s. A stone to guard against the evil eye, called a "shabah," is a brisk seller at $2.
On a Friday morning in August, long lines formed at the kosher food stores lining Deal's Norwood Avenue. Piled high on the tables of Kings Highway Glatt were packages of kibbe, the delicious little meatballs stewed in sour cherries or mushrooms that are the staple of Syrian cuisine and the centerpiece of the Friday-night sabbath meal. There was yebrak—grape leaves stuffed with rice and meat—and artichokes medias—artichoke hearts stuffed with ground meat and covered with sauce.
Older generations of Syrian women made these dishes from scratch, but these days, women line up to scoop up multiple ready-made packages of these delicacies. Some this summer were dressed for the beach, in pants or shorts and revealing halter tops. Others were in long skirts and long-sleeved blouses, their hair covered with a wig or a hat.
Come Friday, every woman in the community is busy making kibbe hamda, an aromatic dish that involves preparing a lemony broth, then adding garlic, mint and other spices, then throwing in vegetables and the meatballs.
"On Fridays you can drive down the streets of Deal or Brooklyn and know that every house has that kibbe hamda cooking," says Poopa Dweck (no relation to Solomon Dwek), a resident of Deal and author of the cookbook "Aromas of Aleppo." "You feel it—you smell it—the mint and the garlic and the kibbe that is boiling and everyone telling everyone not to be late."
Write to Lucette Lagnado at lucette.lagnado@wsj.com
Friday, June 19, 2009
F1 faces split as eight teams break away
F1 faces split as eight teams break away
By Roger Blitz
Published: June 19 2009 08:32 | Last updated: June 19 2009 09:43
Formula One was plunged into its worst crisis in its 60-year history on Friday after eight teams announced they would set up a rival championship, saying Max Mosley, the head of motorsport’s regulator, had ignored their demands over his controversial budget cap plans and had tried to drive a wedge between them.
The dramatic decision, announced in a lengthy statement from the Formula One Teams Association (Fota) came on the eve of practice for Sunday’s British Grand Prix and a deadline for entries for next year’s championship.
Mr Mosley, president of the Fédération Internationale de l’Automobile, demanded a £40m budget cap on teams to prevent what he called a ”financial arms race”. But the plan, which involved two sets of regulations for teams, depending on whether they spent above or below the budget cap, threatened the business models of leading teams such as Ferrari and McLaren.
Formula One money
In its statement, Fota said it had ”genuinely sought compromise” with the FIA and Bernie Ecclestone, F1’s commercial supremo, against a backdrop of a ”campaign to divide” the Fota members.
”It has become clear, however, the teams cannot continue to compromise on the fundamental values of the sport and have declined to alter their original conditional entries to the 2010 world championship,” Fota said.
Its rival championship would have ”transparent governance” and a single set of regulations, as well as offer ticket prices lower than those in F1.
Fota claimed its series would attract ”the major drivers, stars, brands, sponsors, promoters and companies historically associated with the highest level of motorsport”.
Though many in the sport have reservations about the ability of the teams to run a rival series, few would question how entrenched the positions of the two sides have become.
The negotiations have been plagued by a series of leaks of correspondence between Fota and the FIA and rows over whether or not the teams were already legally committed to next year’s championship.
Fota’s members are Brawn GP, Ferrari, McLaren, Renault, Toyota, BMW Sauber, Red Bull Racing and Toro Rosso. Williams and Force India were thrown out of Fota after they signed unconditional terms with the FIA.
Three new teams will join F1 next year, though several more will now look to fill the gaps left by the Fota members if they follow through with their breakaway plans.
FIA said the deadline for 2010 entries expired on Friday evening and the list for next season would be announced on Saturday.
”We are disappointed but not surprised by Fota’s inability to reach a compromise in the best interests of the sport,” the FIA said in response.
”It is clear that elements within Fota have sought this outcome throughout the prolonged period of negotiation and have not engaged in the discussions in good faith.
“The FIA cannot permit a financial arms race in the championship nor can the FIA allow Fota to dictate the rules of Formula One.”
--------------------------
Switzerland looks at cutting size of banks
By Jennifer Hughes and Patrick Jenkins in London and Tony Barber and George Parker in Brussels
Published: June 18 2009 13:31 | Last updated: June 19 2009 08:59
Switzerland upped the ante in a global regulatory assault on the banking industry on Thursday as its central bank warned that Zurich was examining the forced shrinkage of banking groups such as UBS and Credit Suisse to contain the risks posed by their size.
The central bank is looking at imposing constraints on the size of its biggest domestic banks unless global policymakers can come up with a new system to deal with large banks when they fail.
Philipp Hildebrand, vice-chairman of the Swiss National Bank, said: “There can be no more taboos, given our experiences of the last two years.”
“There are advantages to size . . . [but] in the case of the large international banks, the empirical evidence would seem to suggest that these institutions have long exceeded the size needed to make full use of these advantages,” Mr Hildebrand said as the central bank unveiled its stability report.
UBS and Credit Suisse prompted alarm among authorities about the risks their size posed to the Swiss economy when they reported heavy losses as a result of the financial crisis. Last year, their collective assets were equivalent to six times Swiss GDP.
The central bank envisaged “direct and indirect measures to limit [large banks’] size,” said Mr Hildebrand.
His comments on Thursday caused unease among Swiss banks, which said that the SNB did not have direct responsibility over banking regulation and therefore lacked powers to implement any such controls.
“This is strong language,” said one bank executive. “But the SNB doesn’t have a direct say in the regulation of the banks.” Another said Mr Hildebrand’s comments were “little more than sabre-rattling”.
However, the remarks will be scrutinised by policymakers and investors on both sides of the Atlantic. They come as central bankers and regulators around the world are ratcheting up language on banking reform.
Mr Hildebrand called for regulators to work together to develop an international process for the orderly wind-down of a broken bank. But he warned that, if that process could not be designed in a “reasonable” time frame, then more direct measures should be examined.
He did not spell out exactly how he wished to curb banks’ size. However, the ideas being looked at involve crude limits on the absolute size of balance sheets or discouraging growth into risky areas by raising capital requirements.
On Wednesday, the governor of the Bank of England Mervyn King fired a warning shot across the bows of the industry, pointing out that regulators could not tolerate a situation where numerous banks were deemed “too big to fail.” And the debate could intensify in Washington in the coming weeks, since politicians are due to start debating a series of reform measures that the Obama administration hopes to implement to clean up the banks.
In Brussels on Thursday, the European Union’s 27 member states were poised to approve plans to strengthen financial supervision in Europe amid British reservations about yielding certain national powers to EU authorities.
Gordon Brown, UK prime minister, on Thursday night secured a guarantee from EU leaders that the new supervisory system would not include powers to force national governments to bail out banks. Diplomats said the summit communiqué would say that any EU-level decision would “not impinge in any way on the fiscal responsibilities of the member states”.
-------------------------
Mafia blamed for $134bn fake Treasury bills
By FT reporters
Published: June 18 2009 19:52 | Last updated: June 18 2009 19:52
One summer afternoon, two “Japanese” men in their 50s on a slow train from Italy to Switzerland said they had nothing to declare at the frontier point of Chiasso.
But in a false bottom of one of their suitcases, Italian customs officers and ministry of finance police discovered a staggering $134bn (€97bn, £82bn) in US Treasury bills.
Whether the men are really Japanese, as their passports declare, is unclear but Italian and US secret services working together soon concluded that the bills and accompanying bank documents were most probably counterfeit, the latest handiwork of the Italian Mafia.
Few details have been revealed beyond a June 4 statement by the Italian finance police announcing the seizure of 249 US Treasury bills, each of $500m, and 10 “Kennedy” bonds, used as intergovernment payments, of $1bn each. The men were apparently tailed by the Italian authorities.
The mystery deepened on Thursday as an Italian blog quoted Colonel Rodolfo Mecarelli of the Como provincial finance police as saying the two men had been released. The colonel and police headquarters in Rome both declined to respond to questions from the Financial Times.
“They are all fraudulent, it’s obvious. We don’t even have paper securities outstanding for that value,’’ said Mckayla Braden, senior adviser for public affairs at the Bureau of Public Debt at the US Treasury department. “This type of scam has been going on for years.’’
The Treasury has not issued physical Treasury bonds since the 1980s – they are handled electronically – though they still issue savings bonds in paper format.
In Washington a US Secret Service official said the agency, which is working with the Italian authorities, believed the bonds were fake.
Officials in Tokyo were nonplussed. Takeshi Akamatsu, a Japanese foreign ministry press secretary, said Italian authorities had confirmed that two men carrying Japanese passports had been questioned in the bond case but Tokyo had not been informed of their names or whereabouts.
“We don’t know where they are now,” Mr Akamatsu said.
Italian officials, while pointing out that hauls of counterfeit money and Treasury bills were not unusual, were stunned by the amount involved. Investigators are looking into the origin and destination of the fakes.
Italian prosecutors revealed last month that they had cracked a $1bn bond scam run by the Sicilian Mafia, with the alleged aid of corrupt officials in Venezuela’s central bank. Twenty people were arrested in four countries.
The fake bonds were to have been used as collateral to open credit lines with banks, Reuters news agency reported. The Venezuelan central bank denied the accusations.
------------------------
Half Italian banks face ratings cut
By Vincent Boland
Published: June 19 2009 03:00 | Last updated: June 19 2009 03:00
The credit ratings of nearly half of Italy's banks and financial institutions could be cut as the country's steep recession bites into profits and companies find it harder to service their debts.
Moody's Investors Service said yesterday it could downgrade the financial strength ratings of 21 banks and financial institutions, though the impact would in most cases be limited to one "notch" in its tier of creditworthiness ratings.
----------------------
Ecuador default could set precedent
By Naomi Mapstone in Lima
Published: June 9 2009 18:24 | Last updated: June 9 2009 18:24
Ecuador is expected to announce this week that 95 per cent of the holders of $3.2bn of defaulted debt are willing to accept an offer of 35 cents on the dollar, in a move that could set a precedent for emerging market sovereign bond holders.
Analysts fear that the government’s deliberate default on two bonds – almost a third of its foreign debt – could prompt other countries to follow suit as they seek to navigate the financial crisis.
Though Ecuador has the capacity to pay its foreign debt obligations, its foreign exchange reserves have fallen and it has limited access to financial markets.
The government’s expected announcement on Friday will leave investors nursing big losses – or a 65 per cent haircut on the par value of 100 on the bonds.
It is also likely to reduce the chances of legal action against the default through the US courts as there will be very few so-called holdouts left to pursue the case.
“What’s really going to hurt is when a big country blows up and they’re going to have this as a template,” Hans Humes, chief executive of Greylock Capital, said.
Ecuador’s move was a “brilliantly run and managed process. They nailed the timing”.
The decision to default on the bonds by Rafael Correa, the country’s president, has been seen domestically as a triumph, winning him support among voters.
Mr Correa, a US-trained economist, insisted that the bonds were illegitimate because of the way they were negotiated after the country defaulted in 2000, accusing the hedge funds that mainly bought the debt of exploiting the financial system.
Mr Correa has been able to stand by his pledge to relieve the country of the “stultifying burden” of its foreign debt obligations.
In what appears to be a clever tactic, Mr Correa opted for an auction for holders of the defaulted bonds, which mature in 2012 and 2030, instead of forcing a price on them.
Investors could choose to accept the government’s buy-back price or ask for a higher price.
The full cost to the government of the default remains to be seen. Investors are likely to be deterred from buying Ecuadorian bonds.
Alberto Bernal, head of emerging market macro-economic strategy at Bulltick Capital Markets, said: “There is no market access and there will be no access as long as the current administration stays in power.”
Ecuador continues to receive funds from multilaterals such as the Andean Development Fund and the Inter-American Development Bank.
Ramiro Crespo, of Quito-based Analytica securities, said the only Ecuadorian government bond in issue, which matures in 2015, could eventually act as a bridge back to the markets.
Some analysts believe that Ecuador is prepared to service the debt of the 2015 bond because Venezuela, a close political ally, has exposure to these securities.
By Roger Blitz
Published: June 19 2009 08:32 | Last updated: June 19 2009 09:43
Formula One was plunged into its worst crisis in its 60-year history on Friday after eight teams announced they would set up a rival championship, saying Max Mosley, the head of motorsport’s regulator, had ignored their demands over his controversial budget cap plans and had tried to drive a wedge between them.
The dramatic decision, announced in a lengthy statement from the Formula One Teams Association (Fota) came on the eve of practice for Sunday’s British Grand Prix and a deadline for entries for next year’s championship.
Mr Mosley, president of the Fédération Internationale de l’Automobile, demanded a £40m budget cap on teams to prevent what he called a ”financial arms race”. But the plan, which involved two sets of regulations for teams, depending on whether they spent above or below the budget cap, threatened the business models of leading teams such as Ferrari and McLaren.
Formula One money
In its statement, Fota said it had ”genuinely sought compromise” with the FIA and Bernie Ecclestone, F1’s commercial supremo, against a backdrop of a ”campaign to divide” the Fota members.
”It has become clear, however, the teams cannot continue to compromise on the fundamental values of the sport and have declined to alter their original conditional entries to the 2010 world championship,” Fota said.
Its rival championship would have ”transparent governance” and a single set of regulations, as well as offer ticket prices lower than those in F1.
Fota claimed its series would attract ”the major drivers, stars, brands, sponsors, promoters and companies historically associated with the highest level of motorsport”.
Though many in the sport have reservations about the ability of the teams to run a rival series, few would question how entrenched the positions of the two sides have become.
The negotiations have been plagued by a series of leaks of correspondence between Fota and the FIA and rows over whether or not the teams were already legally committed to next year’s championship.
Fota’s members are Brawn GP, Ferrari, McLaren, Renault, Toyota, BMW Sauber, Red Bull Racing and Toro Rosso. Williams and Force India were thrown out of Fota after they signed unconditional terms with the FIA.
Three new teams will join F1 next year, though several more will now look to fill the gaps left by the Fota members if they follow through with their breakaway plans.
FIA said the deadline for 2010 entries expired on Friday evening and the list for next season would be announced on Saturday.
”We are disappointed but not surprised by Fota’s inability to reach a compromise in the best interests of the sport,” the FIA said in response.
”It is clear that elements within Fota have sought this outcome throughout the prolonged period of negotiation and have not engaged in the discussions in good faith.
“The FIA cannot permit a financial arms race in the championship nor can the FIA allow Fota to dictate the rules of Formula One.”
--------------------------
Switzerland looks at cutting size of banks
By Jennifer Hughes and Patrick Jenkins in London and Tony Barber and George Parker in Brussels
Published: June 18 2009 13:31 | Last updated: June 19 2009 08:59
Switzerland upped the ante in a global regulatory assault on the banking industry on Thursday as its central bank warned that Zurich was examining the forced shrinkage of banking groups such as UBS and Credit Suisse to contain the risks posed by their size.
The central bank is looking at imposing constraints on the size of its biggest domestic banks unless global policymakers can come up with a new system to deal with large banks when they fail.
Philipp Hildebrand, vice-chairman of the Swiss National Bank, said: “There can be no more taboos, given our experiences of the last two years.”
“There are advantages to size . . . [but] in the case of the large international banks, the empirical evidence would seem to suggest that these institutions have long exceeded the size needed to make full use of these advantages,” Mr Hildebrand said as the central bank unveiled its stability report.
UBS and Credit Suisse prompted alarm among authorities about the risks their size posed to the Swiss economy when they reported heavy losses as a result of the financial crisis. Last year, their collective assets were equivalent to six times Swiss GDP.
The central bank envisaged “direct and indirect measures to limit [large banks’] size,” said Mr Hildebrand.
His comments on Thursday caused unease among Swiss banks, which said that the SNB did not have direct responsibility over banking regulation and therefore lacked powers to implement any such controls.
“This is strong language,” said one bank executive. “But the SNB doesn’t have a direct say in the regulation of the banks.” Another said Mr Hildebrand’s comments were “little more than sabre-rattling”.
However, the remarks will be scrutinised by policymakers and investors on both sides of the Atlantic. They come as central bankers and regulators around the world are ratcheting up language on banking reform.
Mr Hildebrand called for regulators to work together to develop an international process for the orderly wind-down of a broken bank. But he warned that, if that process could not be designed in a “reasonable” time frame, then more direct measures should be examined.
He did not spell out exactly how he wished to curb banks’ size. However, the ideas being looked at involve crude limits on the absolute size of balance sheets or discouraging growth into risky areas by raising capital requirements.
On Wednesday, the governor of the Bank of England Mervyn King fired a warning shot across the bows of the industry, pointing out that regulators could not tolerate a situation where numerous banks were deemed “too big to fail.” And the debate could intensify in Washington in the coming weeks, since politicians are due to start debating a series of reform measures that the Obama administration hopes to implement to clean up the banks.
In Brussels on Thursday, the European Union’s 27 member states were poised to approve plans to strengthen financial supervision in Europe amid British reservations about yielding certain national powers to EU authorities.
Gordon Brown, UK prime minister, on Thursday night secured a guarantee from EU leaders that the new supervisory system would not include powers to force national governments to bail out banks. Diplomats said the summit communiqué would say that any EU-level decision would “not impinge in any way on the fiscal responsibilities of the member states”.
-------------------------
Mafia blamed for $134bn fake Treasury bills
By FT reporters
Published: June 18 2009 19:52 | Last updated: June 18 2009 19:52
One summer afternoon, two “Japanese” men in their 50s on a slow train from Italy to Switzerland said they had nothing to declare at the frontier point of Chiasso.
But in a false bottom of one of their suitcases, Italian customs officers and ministry of finance police discovered a staggering $134bn (€97bn, £82bn) in US Treasury bills.
Whether the men are really Japanese, as their passports declare, is unclear but Italian and US secret services working together soon concluded that the bills and accompanying bank documents were most probably counterfeit, the latest handiwork of the Italian Mafia.
Few details have been revealed beyond a June 4 statement by the Italian finance police announcing the seizure of 249 US Treasury bills, each of $500m, and 10 “Kennedy” bonds, used as intergovernment payments, of $1bn each. The men were apparently tailed by the Italian authorities.
The mystery deepened on Thursday as an Italian blog quoted Colonel Rodolfo Mecarelli of the Como provincial finance police as saying the two men had been released. The colonel and police headquarters in Rome both declined to respond to questions from the Financial Times.
“They are all fraudulent, it’s obvious. We don’t even have paper securities outstanding for that value,’’ said Mckayla Braden, senior adviser for public affairs at the Bureau of Public Debt at the US Treasury department. “This type of scam has been going on for years.’’
The Treasury has not issued physical Treasury bonds since the 1980s – they are handled electronically – though they still issue savings bonds in paper format.
In Washington a US Secret Service official said the agency, which is working with the Italian authorities, believed the bonds were fake.
Officials in Tokyo were nonplussed. Takeshi Akamatsu, a Japanese foreign ministry press secretary, said Italian authorities had confirmed that two men carrying Japanese passports had been questioned in the bond case but Tokyo had not been informed of their names or whereabouts.
“We don’t know where they are now,” Mr Akamatsu said.
Italian officials, while pointing out that hauls of counterfeit money and Treasury bills were not unusual, were stunned by the amount involved. Investigators are looking into the origin and destination of the fakes.
Italian prosecutors revealed last month that they had cracked a $1bn bond scam run by the Sicilian Mafia, with the alleged aid of corrupt officials in Venezuela’s central bank. Twenty people were arrested in four countries.
The fake bonds were to have been used as collateral to open credit lines with banks, Reuters news agency reported. The Venezuelan central bank denied the accusations.
------------------------
Half Italian banks face ratings cut
By Vincent Boland
Published: June 19 2009 03:00 | Last updated: June 19 2009 03:00
The credit ratings of nearly half of Italy's banks and financial institutions could be cut as the country's steep recession bites into profits and companies find it harder to service their debts.
Moody's Investors Service said yesterday it could downgrade the financial strength ratings of 21 banks and financial institutions, though the impact would in most cases be limited to one "notch" in its tier of creditworthiness ratings.
----------------------
Ecuador default could set precedent
By Naomi Mapstone in Lima
Published: June 9 2009 18:24 | Last updated: June 9 2009 18:24
Ecuador is expected to announce this week that 95 per cent of the holders of $3.2bn of defaulted debt are willing to accept an offer of 35 cents on the dollar, in a move that could set a precedent for emerging market sovereign bond holders.
Analysts fear that the government’s deliberate default on two bonds – almost a third of its foreign debt – could prompt other countries to follow suit as they seek to navigate the financial crisis.
Though Ecuador has the capacity to pay its foreign debt obligations, its foreign exchange reserves have fallen and it has limited access to financial markets.
The government’s expected announcement on Friday will leave investors nursing big losses – or a 65 per cent haircut on the par value of 100 on the bonds.
It is also likely to reduce the chances of legal action against the default through the US courts as there will be very few so-called holdouts left to pursue the case.
“What’s really going to hurt is when a big country blows up and they’re going to have this as a template,” Hans Humes, chief executive of Greylock Capital, said.
Ecuador’s move was a “brilliantly run and managed process. They nailed the timing”.
The decision to default on the bonds by Rafael Correa, the country’s president, has been seen domestically as a triumph, winning him support among voters.
Mr Correa, a US-trained economist, insisted that the bonds were illegitimate because of the way they were negotiated after the country defaulted in 2000, accusing the hedge funds that mainly bought the debt of exploiting the financial system.
Mr Correa has been able to stand by his pledge to relieve the country of the “stultifying burden” of its foreign debt obligations.
In what appears to be a clever tactic, Mr Correa opted for an auction for holders of the defaulted bonds, which mature in 2012 and 2030, instead of forcing a price on them.
Investors could choose to accept the government’s buy-back price or ask for a higher price.
The full cost to the government of the default remains to be seen. Investors are likely to be deterred from buying Ecuadorian bonds.
Alberto Bernal, head of emerging market macro-economic strategy at Bulltick Capital Markets, said: “There is no market access and there will be no access as long as the current administration stays in power.”
Ecuador continues to receive funds from multilaterals such as the Andean Development Fund and the Inter-American Development Bank.
Ramiro Crespo, of Quito-based Analytica securities, said the only Ecuadorian government bond in issue, which matures in 2015, could eventually act as a bridge back to the markets.
Some analysts believe that Ecuador is prepared to service the debt of the 2015 bond because Venezuela, a close political ally, has exposure to these securities.
Thursday, June 18, 2009
Tax Co-Operation Agreements with Jersey
Tax Co-Operation Agreements with Jersey
Nick Sherry
The Assistant Treasurer, Senator Nick Sherry, today announced the signing of a tax information exchange agreement (TIEA) and an agreement for the allocation of taxing rights over certain income of individuals between Australia and Jersey.
Concluding TIEAs with offshore financial centres supports Australian Government initiatives to combat offshore tax avoidance and evasion.
"The Rudd Government wants to ensure the continued integrity of our tax system by ensuring all Australians pay their fair share of tax whilst also co-operating with international efforts to curb tax evasion."
"This TIEA will provide for bilateral exchange of information (EOI), on request, for civil and criminal tax matters, and demonstrates Australia's ongoing commitment to implementing standards of transparency and effective EOI for tax purposes, as developed by the OECD and endorsed by the G-20 and the United Nations," the Assistant Treasurer said.
"This is the sixth TIEA signed by Australia, and Australia welcomes Jersey's constructive engagement in this area."
"The agreements will also benefit Australians by removing some tax obstacles that exist between the two countries," the Assistant Treasurer said.
In particular, the agreement to allocate taxing rights over certain income of individuals and to establish a mutual agreement procedure for transfer pricing adjustments will eliminate double taxation of certain income and provide a mechanism to help resolve transfer pricing disputes.
The agreements come into force once both countries have completed domestic requirements. Legislation will shortly be introduced into the Australian Parliament.
In addition to these agreements, Australia will remove any governmental references to Jersey as a tax haven and, following entry into force of the TIEA, will move to list Jersey as an 'information exchange country' in the Taxation Administration Regulations 1976. This will provide Jersey residents with access to reduced withholding tax rates on distributions of certain income they may receive from Australian managed investment trusts.
-----------------------
Cayman close to being on OECD white list
2009-06-16
News
The Cayman Islands Monetary Authority (CIMA) has become a full member of the International Organisation Securities Commission (IOSCO). Membership for the regulator was confirmed at the IOSCO annual conference in Tel Aviv.
The Cayman Islands has agreed the IOSCO multilateral memorandum of understanding on consultation, co-operation and exchange of information (MMOU). This is a benchmark among security regulators. CIMA now has 15 bi-lateral memoranda of understanding with a number of major regulators, including the US Securities and Exchange Commission and the UK Financial Services Authority.
Membership of IOSCO should remove remaining barriers in some jurisdictions to the use of Cayman Islands entities where the regulatory regime permits only investors and/or counterparties to engage with vehicles that are regulated in an IOSCO member jurisdiction.
The deal should also pave the way for Cayman Islands funds to invest into many more jurisdictions.
IOSCO membership acknowledges that the Cayman Islands' regulatory system meets international standards, according to Charles Jennings at Maples and Calder in the Cayman Islands.
The Cayman Islands government is in detailed negotiations with a number of OECD members to conclude bilateral agreements before the end of July. This would then move Cayman onto the ‘white' list of countries and remove the accusation of the territory being a tax haven.
The OECD is currently reviewing what it calls the Cayman Islands's ‘innovative' unilateral mechanism for exchange of tax information. If this is approved it would initially add 10 jurisdictions to the list of countries with which the Cayman Islands has agreed to exchange information on tax matters.
--------------------------
Cayman signs UK tax deal
Posted on Mon, 06/15/2009 - 14:38 in Headline News
(CNS): Leader of Government Business McKeeva Bush has signed a double taxation agreement (DTA) with the UK on behalf of the Cayman Islands Government. The deal reportedly protects against the risk of individuals or corporate entities being taxed twice on the same earnings. Stephen Timms, MP, who signed on behalf of the UK, said that the agreement includes unprecedented provisions for tax information exchange. It was not stated, however, if a bi-lateral agrement will follow this deal.
In a statement from the Ministry of Financial Services, Tourism & Development Public Relations Unit, it was announced that the LoGB had signed the deal today (15 June) in a ceremony at the UK Treasury. The DTA, which is another type of bi-lateral tax agreement, is the first double treaty to be signed by the Cayman Islands. “We are very pleased to sign this agreement with the United Kingdom today as part of the Cayman Islands' continued commitment to high standards of international cooperation and transparency,” Bush said.
Speaking about the UK’s advantage, Timms said that information exchange is a vital tool in ensuring that governments receive the revenues they need to resource the essential public services on which we all depend. “I would like to congratulate the Cayman Islands Government for signing up to an arrangement which includes unprecedented provisions for tax information exchange that meet international standards of transparency,” he added.
The agreement (see details here) places Cayman another step closer to the OECD’s requirement for a minimum of twelve agreements, which the new government has said it is committed to achieving not least in an effort to remove Cayman from the post G20 'grey list'. Cayman now has nine agreements in place. UK Permanent Secretary for Tax, Dave Hartnett said the information exchange provisions in this arrangement meet OECD standards of tax transparency.
Negotiations with the UK had been ongoing for a bi-lateral agreemen for several years but these had stalled. The previous government had accused the UK of constantly moving the goal posts with regards to that agreement and said that they had been seeking some form of commercial advantage for Cayman’s offshore industry before signing.
Speaking at what was the regular weekly press briefing prior to the election, the former Minister Alden McLaughlin explained that, while the government had been criticised for not signing treaties, the PPM administration had in fact been engaged in negotiations since they took office, but that did not mean they were able to be successful, adding that the government had to be very careful not to put Cayman at a commercial disadvantage. “We don’t want to put Cayman in a position of competitive disadvantage. We want to be compliant with OECD tax exchange standards but we don’t want to give away things other countries haven’t and then lose business,” McLaughlin said in April.
That view, however, has been disputed by some in the offshore community who questioned the wisdom of holding out on exchange agreements. They say that there is probably very little commercial advantage that the government can negotiate as in most cases Cayman is already getting all the business it is likely to get from a given nation, but that not having tax agreements is currently more of a disadvantage than the risk of losing a competitive commercial edge.
Richard Murphy of Tax Research UK, a critic of TIEA as ineffective in terms of cracking down on tax haven abuse, has dubbed this DTA treaty as useless frm the UK's point of view. He said it was not a full blown DTA or a a full blown TIEA. "In fact the extraordinary thing is that the information exchange clause is far less onerous than a TIEA. So, for example, there is no reference to the need for the parties to be able to prove beneficial ownership of trusts, companies and other arrangements in their territories, which a TIEA should require," he wrote.
The tax watchdog said that the UK would have as many problems complying as Cayman and Murphy said it would do little to assist Gordon Brown in his camapign against tax havens.
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Cyprus under US pressure to share financial information
By Elias Hazou
UNDER PRESSURE from Washington, Cypriot authorities have been prompted into action to bring in changes allowing them to share information on stock exchange transactions and bank accounts with non-EU countries.
A draft bill prepared by the SEC in collaboration with the Attorney-general’s office is currently under review by the House Finance Committee, and could be tabled before the plenum next week so that it can be voted into law.
The move comes after repeated warnings from the US Securities and Exchange Commission that it would place Cyprus on a “black list” as a “non-cooperative jurisdiction.”
Cyprus’ SEC is a signatory to a multilateral memorandum of understanding (MoU) with the regulatory authorities of the European Union, and has signed a number of bilateral agreements with individual countries—but not with the United States. However it is currently not a signatory to the MoU of the International Organisation of Securities Commissions (IOSCO), an international body whose members regulate more than 90 percent of the world's securities markets.
Through IOSCO’s MoU, members pledge to provide each other with collecting information and witness statements in an enforcement investigation. Such information might include the nationality of the person, passport photocopies, bank statements, and in general any data showing the flow of funds.
As it stands, Cyprus’ SEC laws expressly prohibit the sharing of information with countries with which it does not have an MoU in place.
“In order to give out information to non-EU supervising authorities, we must have a direct stake in the matter, that is, there has to be at least an indication that Cypriot SEC laws have been violated,” said SEC chairman Giorgos Charalambous.
Because of this limitation in the law, he added, the Cypriot body cannot assist US authorities in money-laundering probes. This means that if any persons wanted or under investigation by US authorities have financial dealings in Cyprus, the paper trail would go cold on the island.
Through its Embassy in Nicosia, the United States has for months now been urging the SEC to get on board with the IOSCO agreement.
Charalambous said the US SEC had been “patient,” but that Cyprus could not drag on indefinitely.
“They have repeatedly contacted us, both in writing and verbally, making inquiries as to where the situation stands. Our response was that we are favorably disposed toward their request but first need to amend the relevant laws,” Charalambous told the Mail.
Though he refused to be drawn on what kind of information US authorities had sought from Cyprus, the SEC official said “two to three requests for assistance” had been made in the last few months.
After being bounced back and forth from parliament to the SEC, a draft bill is finally ready, and will be fast-tracked so that it can go to the plenum—perhaps as early as next week.
During a briefing of the House Finance Committee yesterday, Charalambous warned of the dangers of having Cyprus “blacklisted” by the United States.
“Obviously by not being a full member you cannot give or receive information, so it cuts both ways. Secondly, it gives Cyprus a bad name,” remarked Charalambous.
The SEC is one of a number of anti-money laundering regulators, along with the Central Bank, the Insurance Commissioner, the Council of the Cyprus Bar Association, and the Unit for Combating Money Laundering (MOKAS).
Though it has largely cleaned up its image, in the past Cyprus had to fend off persistent accusations of being a tax haven and money-laundering centre. In 2001, it was the focus of an investigation into billions of dollars that went missing from Yugoslavia under former president Slobodan Milosevic. Cypriot authorities denied any wrongdoing.
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Gibraltar’s 10% corporate tax rate still ‘go’ for next July
by Helen Burggraf
A 10% corporate tax rate for both domestic and international companies will take effect as planned next July in Gibraltar, even though the publication of a consultation document on the planned tax reform could be pushed back until September, a government source said today.
The flat 10% will replace a zero rate tax – which has been grandfathered but still is understood to affect some 3,400 businesses – as well as a 27% tax paid by those businesses that do not benefit from the null rate.
“The commencement date [of the new tax regime] is, for sure, the first of July 2010,” Gibraltar Finance Director James Tipping said.
“The government is intending to publish that legislation well ahead of that date, which may be this July or this September” in order to give businesses time to prepare for its implementation.
But whether the consultation document is published in July or September, “the commencement will be next July”, he added.
He said that the plans to scrap the zero-tax rate, which has been in the works for some time, had not resulted in any businesses leaving Gibraltar. But those that do not want to pay 10% “can go somewhere else” if they want to, he added. “Our philosophy is that we are a low tax not a no tax jurisdicition.”
Gib Chronicle report
News that the publication of the consultation document could be postponed until September emerged on Tuesday, according to the Gibraltar Chronicle, which cited remarks by the territory’s chief minister, Peter Caruana.
It said the chief minister had been responding to questions from an opposition MP who had been urging the government to move ahead with the reform "as soon as possible" because it is "vital to the success of [Gibraltar's] financial services sector.”
Gibraltar’s planned move to a 10% flat corporate tax rate comes after a ruling by the European Court of Justice in Luxembourg last year, which determined that Gibraltar was able to set its own tax rates despite its status as a UK territory. The null tax rate, which dates back to 1967, has contributed to the image of Gibraltar as a “tax haven” that it is now seeking to dispel.
Tipping also confirmed that Gibraltar has now completed negotiations on tax information exchange agreements (TIEAs) with several undisclosed countries, but declined to say which, pending a formal announcement. Additional talks continue, he said.
Gibraltar has only signed one so far, with the US, but is looking to meet the Organisation for Economic Cooperation & Development’s stated minimum goal of 12 such agreements by November, as it seeks to move off the OECD’s tax jurisdiction “grey” list.
Among the countries it is thought to be close to announcing agreements with are certain key G20 nations that have agreements with other offshore jurisdicitions, such as the UK and France.
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足利事件：「菅家さんを支える・基金」弁護団が設立
菅家さんの弁護団は１７日、菅家さんの裁判費用に充てるための基金を設立したことを明らかにした。「菅家さんを支える・基金」で口座は「みずほ銀行赤坂支店（普通）２０９７７４２」。裁判は弁護団の手弁当などで支えており「協力をお願いしたい」としている。
また弁護団は同日、２３日に再審請求即時抗告審の決定を出すとしている東京高裁（矢村宏裁判長）に対し、２３日に決定を出さず、審理を継続して当時のＤＮＡ鑑定について徹底検証するよう求める声明を出した。
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China extends $10bn credit line to central Asia
By By Isabel Gorst in Yekaterinberg and Jamil Anderlini in Beijing
Published: June 16 2009 10:15 | Last updated: June 16 2009 19:27
China has offered to lend $10bn to central Asian countries hit by the global economic crisis in a move that is likely to strengthen its influence in the resource-rich region.
Hu Jintao, the Chinese leader, on Tuesday told a summit of the Shanghai Co-operation Organisation in the Russian city of Yekaterinberg that Chinese credit support would help central Asian countries “make their own efforts to counter the shock of the international financial crisis”.
The loans are expected to smooth the way for China to win more energy deals in central Asia, where foreign powers, particularly Russia, are competing for natural resources.
Mr Hu did not elaborate on where the money would come from. In the past Beijing, has lent to allies on favourable terms via its state banks and has used some of its $2,000bn in foreign exchange reserves to support foreign policy objectives.
China has invested heavily in central Asian oil and gas fields to secure a source of energy on its doorstep and is building roads in the remote former Soviet region.
Sergey Ryabkov, Russia’s deputy foreign minister, said Moscow welcomed China’s growing interest in central Asia, but added that all credit extended to the former Soviet region should be “transparent”.
Sun Yongfu, director-general of the European affairs department at the Chinese ministry of commerce, said China’s focus in central Asia was on energy, transport and banking projects that could provide a forum for regional financing. Central Asian countries are facing a steep economic decline as the global financial crisis dries up foreign investment and remittances from workers employed in Russia.
Offers of financial aid have helped China and Russia further their interests in the region. Russia offered $2bn of assistance in February after Kyrgyzstan agreed to evict the US from a military base. China has secured future oil and gas supplies since the onset of the crisis in return for financial help.
Kazakhstan accepted a $10bn loan from China in March in exchange for future oil supplies and equity in a Kazakh oil company that Russia had tried to buy. China recently provided soft loans totalling $25bn to Russia in exchange for a 20-year energy supply contract.
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Australia’s unions urge cap on executive pay
By Lachlan Colquhoun in Sydney
Published: June 18 2009 02:09 | Last updated: June 18 2009 02:09
Australia’s union movement – weakened over the past decade by falling membership and changing economic fundamentals – is attempting to use the recession to turn back the clock in the labour market.
The unemployment rate bottomed at a 30-year low of 4.2 per cent in June 2007 and now sits at 5.4 per cent. According to Reserve Bank of Australia, it will peak at 8.5 per cent in 2010-11.
Workers in every sector of industry – from publishing to banking – are losing their jobs on a daily basis. Even the Salvation Army is cutting jobs, shedding 200 workers in May.
Executive remuneration is also under threat, with many executives taking pay cuts, while a steady stream of returning expatriates are adding to the job market pressure at senior levels.
The timing is advantageous for the Australian Council of Trade Unions (ACTU), the leading labour movement body, which represents just under 19 per cent of the workforce compared with about half in the 1980s.
The Labor government of Kevin Rudd was elected in November 2007 largely on a platform of winding back the previous government’s Work Choices package, which attempted to weaken union power through enshrining individual bargaining and scrapping unfair dismissal laws for smaller businesses.
The Rudd government’s response – the Fair Work Act – is currently before parliament in Canberra.
The ACTU held its triennial congress in Brisbane in early June and considered a series of policy measures aimed at shifting the Australian labour market in favour of unions.
It proposes the further downgrading of individual bargaining, the abolition of penalties for industrial action and regulations that enable the prosecution of employers who “deliberately mislead employees about their rights”.
Although the ACTU supports the thrust of the government’s Fair Work policy, it does not think it goes far enough and claims the government has failed to meet International Labour Organisation (ILO) standards in some areas.
One of the biggest pushes is over executive pay – a raw subject in Australia, after a series of scandals in which executives were seen to be rewarded for failure.
The national telco Telstra is not tainted with scandal but negative publicity over the recent departure of its US-born chief executive, who was paid A$30m ($24m) over four years, has made for a lively public debate.
In response, the Rudd government has asked the Productivity Commission to investigate executive pay.
The Australian Prudential Regulation Authority, the country’s financial sector regulator, has drawn up draft rules requiring company boards to take direct responsibility for remuneration, including golden parachutes and loans to executives to purchase shares.
Unsurprisingly, the ACTU wants to go further. The union body is urging a cap on executive salaries at 10 times the average wage of the company’s full-time workers.
Jeff Lawrence, an ACTU secretary, says “outrageous” executive salaries have encouraged excessive risk taking and short-term thinking.
The ACTU says that analysis of Australia’s top 500 public companies shows chief executives’ pay jumped 564 per cent between 1990 and 2005 to an average of A$3.4m. In 1990, chief executives from the top 50 earned 18 times average full-time wages but in 2005 they earned 63 times the average, which is A$63,000.
Australian Industry Group (AIG), the employers’ lobby organisation, has hit back: “They are trying to obtain publicity for their congress by putting out these policies that are so retro they will grab attention,” says Heather Ridout, AIG’s high-profile chief executive.
“To try to set these sorts of arbitrary rules and legislate for them – I don’t think it would work in the type of economy we have in Australia,” she says. Shareholders, she adds, are the natural controllers of executive pay and it is up to the corporate governance of individual organisations to ensure the appropriate balance between shareholder and executive power.
In the current environment, however, it could be the market making the decisions. There has been a spate of redundancies, and with many senior people looking for work, the laws of supply and demand are coming into play.
At professional services firm KPMG, for example, 200 jobs have gone. PwC has shed 170, while Ernst & Young laid off 100 staff in April.
The pecking order of the top Sydney law firms is also in flux, as revenues sag and staff numbers are reduced, a process which is seeing talent re-emerge at second-tier firms now aggressively pitching for business in a declining market.
Over at Telstra, the new homegrown chief David Thodey is understood to be on a fraction of what was paid to his predecessor Sol Trujillo.
If anything is likely to flatten wage structures in Australia, it will be the market, shareholders and corporate regulators, and not a resurgent union movement, despite what happens at the ACTU congress in June.
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Saudi bonds hope to add liquidity
By Abeer Allam in Riyadh
Published: June 17 2009 15:58 | Last updated: June 17 2009 15:58
Saudi Arabia unveiled the latest in a series of innovations to its capital markets earlier this week when it opened a regulated bond and sukuk (Islamic bond) market. The move comes at an opportune time.
Many Saudi banks are at the limits of their credit capacity, with loan-to- deposit ratios exceeding the limit imposed by the central bank. Bank loans extended in 2008 equalled the total of the previous two years, according to Mohammad al-Jasser, the central bank governor.
In February, Mr Jasser urged commercial banks and companies seeking financing to tap the debt markets.
Rajiv Shukla, regional head of debt markets at HSBC Saudi Arabia, says the Saudi Capital Market Authority is working to allow potential issuers to diversify sources of finance to ease pressure on banks and add another strand to the country’s capital markets.
“It is a very sensible approach to create deeper and wider financial markets. No market should depend on one pool of liquidity,” Mr Shukla says.
“The banking system has done well in supporting the financial need of companies, infrastructure projects and government needs. But the banks have different needs now and it’s hard to be the only provider of liquidity.’’
So far, only four bond issues are available. Petrochemical giant Saudi Basic Industries Corporation, Sabic, has listed three Islamic bonds worth SR16bn and Saudi Electricity Corporation has listed a sukuk worth SR5bn.
Although the Saudi government owns large portions of each company, it has indicated it will not interfere with the bonds, although many expect that state pension funds will purchase them.
The move is the latest of several by the CMA to improve the kingdom’s capital markets.
In April the CMA said it was conducting preliminary studies with a view to introducing “options, short-selling and futures” onto the Tadawul as well as exchange traded funds. It also reiterated demands for disclosure of any holders of more than 5 per cent of a company – a move aimed at improving transparency and ensuring that the 128 listed companies comply with corporate governance rules.
Last August, the CMA allowed foreign investors to purchase the benefits of shares through swap arrangements. Previously, only institutional and individual investors resident in Saudi Arabia with bank accounts had been allowed to buy equities.
But bankers say that while a listed bond market is a boon, more issues need to be listed – ideally Islamic bonds which many local investors and most banks would prefer.
Furthermore, bankers say more work still needs to be done in developing the equity capital market, which is dominated by speculators.
“I would like to see greater access to the market by foreign institutional investors,” one banker says.
“Flows of foreign investment only come when they can buy directly, so I would like to see them focus more on making the market more institutions-based.”
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Clinton clashes with Israelis over settlers
By Daniel Dombey in Washington
Published: June 18 2009 03:00 | Last updated: June 18 2009 03:00
Hillary Clinton, the US secretary of state, clashed face to face with her Israeli counterpart yesterday as the two countries remained at loggerheads over the expansion of settlements in occupied territory.
In what appeared one of the most tense encounters between the sides for several years, Mrs Clinton and Avigdor Lieberman, Israel's foreign minister, disagreed on both the US call for a complete freeze on settlement growth and Israel's contention that the administration of George W. Bush, the former president, had signalled that some expansion was permissible.
"We cannot accept this vision about absolutely, com-pletely freezing all settlements," Mr Lieberman said.
In response, Mrs Clinton underlined the US call for a "stop to the settlements", a move she described as "an important and essential part of pursuing the efforts leading to a comprehensive peace agreement".
The meeting at the state department in Washington confirmed that the countries remain at odds on settlements, in spite of the decision of Benjamin Netanyahu, Israel's prime minister, to endorse the goal of a Palestinian state. His declaration, which was subject to conditions, followed sustained US pressure.
Yesterday's encounter was all the more significant for Mr Lieberman's record as the leader of the far-right Yisrael Beiteinu party, who blasted the previous Israeli government's peace efforts. Mr Lieberman is not seen as a promising interlocutor by Barack Obama's administration, which has instead focused its demands on Mr Netanyahu.
"We must keep the natural growth," Mr Lieberman said yesterday, referring to the argument that settlements sometimes need to expand to keep pace with births and marriages.
The US argues that such references to "natural growth" have in fact enabled large-scale settlement growth in the past.
While Mr Lieberman suggested that Israel had reached "some understandings with the previous [Bush] administration" allowing natural growth, Mrs Clinton vigorously rejected such a claim.
"In looking at the history of the Bush administration, there were no informal or oral enforceable agreements," she said. "That has been verified by the official record of the administration and by the personnel in positions of responsibility."
In a recent article in the Washington Post cited by Mrs Clinton yesterday, Daniel Kurtzer, the US ambassador to Israel between 2001 and 2005, argued there had been no understanding to permit natural growth. He ack-now-ledged that drafts at one time under discussion suggested that construction in built-up parts of settlements could be allowed, but added that no agreement had ever been reached.
Another article by Elliot Abrams, Mr Bush's former adviser on the Middle East, argued that the Obama administration's emphasis on a settlement freeze would lead to "needless confrontation" with Israel.
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Assad calls for better ties between Syria and Armenia
Daily Star staff
Thursday, June 18, 2009
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BEIRUT: Syrian President Bashar Assad on Wednesday called for Syrian-Armenian relations to quickly move forward after he met with Armenian President Serzh Sargsyan, Syrian state news agency SANA reported. Syria has a large Armenian community, especially in the northern city of Aleppo.
Assad's talks with Sargsyan covered a range of other topics, including the prospects for Middle East peace.
During his talks with Sargsyan, Assad explained that he does not envision there being an Israeli partner for peace in the near future, SANA reported. However, Assad said that "this doesn't mean that we will stop talking or working for peace, and when that partner is ready, the peace plan will be ready and we will save time."
Assad also discussed the Palestinian situation with Sargsyan, SANA said.
Assad said that he listened to Sargsyan's views on the disputed Nogorno-Karabakh region during the two leaders' talks. The region is claimed by Azerbaijan but controlled by Armenia.
Assad expressed his hope that "this matter won't be a permanent crisis, because the critical problems, as we [are] taught in the Middle East, [only] become more complicated and more difficult."
He added that "I wanted to listen to President Sargsyan's viewpoint before my first visit to Azerbaijan to see how we could help resolve this problem." - The Daily Star
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EADS considers European company status
By Peggy Hollinger and Kevin Done
Published: June 16 2009 23:30 | Last updated: June 16 2009 23:30
EADS could take on European company status as Louis Gallois, chief executive, attempts to overcome internal resistance to greater integration at the highly political Franco-German aerospace and defence group.
Mr Gallois, speaking to the Financial Times from the Paris air show, said management had launched a feasibility study into the pros and cons of the corporate status created by the European Union.
Germany’s BASF and Allianz, France’s Scor and the Scandinavian bank Nordea have all joined the ranks of the Societas Europaea, or SE, as the European status is known. Launched in 2004, this allows companies operating in more than one EU member state to follow a single set of rules and reporting procedures, and so cut their international administrative and legal costs.
No decision had yet been taken, but Mr Gallois said the simplified structure for a company such as EADS with European operations split between its four founding states could mark “a significant step towards integration. It makes things clear and easier. It is a symbol, too”.
The symbolism is unlikely to pass unnoticed at EADS, which owns the European aircraft maker Airbus, and has since its foundation nine years ago been buffeted by personal and political rivalries between French and German camps. Mr Gallois, appointed two years ago as the group’s first sole chief executive when its dual management structure was abolished, has made integration of the various divisions under the EADS umbrella one of the priorities of his mandate.
Yet, this year his attempts to emulate rival Boeing by bringing together the defence and space divisions met both internal and political resistance, as it would have cut the number of divisional heads by one. The two businesses have now been asked to co-ordinate their actions in search of greater synergies, rather than integrate fully.
EADS has also angered its Spanish shareholder after demanding that the Spanish-based military transport activities report to the core Airbus business, located in Toulouse. This week the Spanish government failed to turn up for the ministerial discussions on repayable launch aid for the latest Airbus project – the A350 wide body aircraft – and its absence was widely interpreted as a sign of displeasure.
Mr Gallois said adopting the European company status could simplify the group’s structure even further. Currently operations in different countries required “lots of shadow companies . . . each with boards meeting and processes”.
However, the process of becoming an SE was “cumbersome”. There were complex tax and social questions that needed to be resolved before a decision could be taken.
Mr Gallois said the group was also looking at new ways to cut costs to respond to the current industry downturn. He expressed confidence that the group would meet cost cutting targets of €2.1bn by 2010.
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Italy lifts hope of Europe shift on Guantánamo
By Stanley Pignal in Brussels, Daniel Dombey in,Washington, Guy Dinmore and Giulia Segreti in Rome
Published: June 17 2009 03:00 | Last updated: June 17 2009 03:00
Italy has declared it would accept three inmates from Guantánamo Bay as the Obama administration steps up its efforts to persuade European partners to help it close the detention -centre.
Washington's push has been complicated by the reluctance of the US itself to take in detainees, as well as issues such as Europe's Schengen free-movement area. That allows passport-free travel between participating countries and means former detainees accepted by one state might be able to go to another.
The Italian decision to accept three Tunisian prisoners, announced by Silvio Berlusconi, the prime minister, in Washington on Monday night, came after European Union members reached a framework deal on sharing information on detainees resettled in the Schengen area.
The US hopes that the deal will smooth the way for more European count-ries to take in former det-ainees, with Barack Obama, the US president, describing himself as "very appreciative" of the agreement.
However, Washington still has to overcome many European countries' reluctance at a time when the political debate in the US is focused on the risk former detainees may pose.
Yesterday, David Miliband, Britain's foreign secretary, said the UK had "done its bit in terms of Guantánamo", while talks with Germany about Berlin accepting some of the Uighurs held at Guant-ánamo failed to produce a result.
Four of the Uighurs, who say they face torture if returned to their native China, have since been sent to Bermuda, in spite of the UK's objections, and the tiny Pacific nation of Palau has said it is ready to accept the remaining 13.
An Italian official told the Financial Times that Italy was ready, on a case-by- case basis, to accept more than the three Tunisians.
Franco Frattini, Italy's foreign minister, told reporters that the three Tunisians would be able to circulate freely in the Schengen area, provided they had no legal cases pending against them in Italy and that other governments did not object.
Mr Berlusconi's announ-ce-ment is already stirring dissent within Italy's centre-right government, with Roberto Maroni, the hardline interior minister, expressing his opposition.
While the US is seeking to relocate about 50 detainees who have been cleared for release, Anthony Dworkin, of the European Council on Foreign Relations, says "15 to 20" resettlements in the EU is more realistic.
Still, last week the US transferred more detainees from Guantánamo than at any time since Mr Obama took office vowing to close the facility by late January next year.
Yet while that total of nine detainees is the largest number of such transfers in over a year, it compares poorly with both the roughly 230 detainees still held and about 530 released or transferred during the Bush administration.
On Friday, when three Saudi nationals were sent home to take part in a "deradicalisation" programme, the Obama administration's hopes could be broadened to include some among almost 100 Yemeni detainees in Guantánamo - if Saudi Arabia and Yemen agree. Washington views Yemen itself as too insecure to keep track of former detainees.
Earlier in the week two prisoners - from Chad and Iraq - were also sent home, while another detainee was sent to New York to face trial.
Many in the EU now expect further arrivals from Guantánamo.
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Spain ready to take Guantánamo inmates
By James Matthews in Madrid
Published: June 17 2009 14:26 | Last updated: June 17 2009 14:26
Spain on Wednesday said it was ready to accept prisoners from the detention centre at Guantánamo Bay in Cuba in order to help US President Barack Obama’s administration close the controversial facility for suspected terrorists.
José Luis Rodríguez Zapatero, prime minister, approved the idea of accepting “a limited number” of prisoners. “We are favourably disposed and of course the number would be small in any case,” he said in a television interview. Italy has already agreed to take three inmates.
Spanish foreign, justice and interior ministry officials on Wednesday met Daniel Fried, a senior envoy of the US State Department and Hillary Clinton’s special representative for the closure of Guantánamo prison, to discuss the possibility of Spain taking in former detainees.
Miguel Angel Moratinos, foreign minister, had already expressed Spain’s willingness “in principle” to consider admitting former inmates, and the foreign ministry said on Wednesday that Spain was ready to “help with the closure of Guantánamo in every way possible”.
At a press conference after what Spain called a “technical meeting”, Mr Moratinos, who did not personally meet Mr Fried, confirmed the US had asked Spain to take four former inmates from Guantánamo prison. Mr Moratinos did not comment on their nationality, nor did he rule out the idea of the US approaching Spain with other cases in the future.
Spain’s foreign ministry said Spain would examine each transfer application in detail to ensure that the relocation of former prisoners conformed to both national and international law. It also stressed the need to guarantee “security and public order” within its borders.
While the prisoners do not have to establish a prior link with Spain, asylum regulations require that they do not have criminal records. Nevertheless, Mr Moratinos predicted a “surveillance system” similar to that imposed in 2002 on three Palestinian militants that Spain took in following the siege of Bethlehem’s Church of the Nativity.
On Monday, foreign policy representatives of the European Union agreed to cooperate with the US in its efforts to close Guantánamo. Dismantling the facility by January 2010 was one of US President Barack Obama’s first commitments in office.
However, the EU emphasised that the primary responsibility for finding safe harbour for released prisoners lay with the US. The deal also stipulated that the US must share all available intelligence, including that considered confidential, on all prisoners relocated to Europe. In addition, the US has promised to study the possibility of contributing to the costs.
The US plans to release detainees who do not face charges and cannot return to their country of origin for fear of reprisals. More than 230 inmates remain in Guantánamo and about 50 have already been cleared for release. Mr Obama has emphasised that some inmates will be transferred to prisons on the US mainland, although he faces stern opposition in Congress to this move.
On Tuesday, Italy became the first country to use the new EU-US agreement for taking in former terror suspects and has announced that it will accept three inmates of Tunisian origin.
Four Uighurs – Chinese Muslims – have already been admitted by Bermuda in an agreement that sparked a diplomatic row with the UK, which was not consulted despite retaining control over the island’s foreign policy. Thirteen others have been taken in provisionally by Palau, a group of islands in the Pacific.
Mr Fried will be in Madrid for five hours before continuing on a tour of European countries that have shown willingness to receive further Guantánamo detainees.
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Marc Hayek: Mystery man behind a Calvinist classic
By Haig Simonian
Published: June 12 2009 16:04 | Last updated: June 12 2009 16:04
Among Switzerland’s Hayeks, Marc is the mystery man. His grandfather, Nicolas, is revered as saviour of the mechanical watch industry.
His uncle Nick is chief executive of Swatch Group. And his mother Nayla has sat on the board since 1995 while, most recently, taking charge of a new watchmaking venture with Tiffany.
Marc, born in 1971, has always been the enigma. Brought up largely by his grandparents, many thought he was adopted, not knowing of his mother’s youthful pregnancy and the agreement of his father, soon divorced, that their son should bear the Hayek family name.
Reluctant daughter rises to her father’s challenge at Tiffany
He joined Swatch Group after leaving university in 1992, spending four years in public relations and marketing.
But in 1996, he felt the time had come to experiment on his own, opening a successful restaurant in Zurich. “I had to see what I could do for myself. I wanted to build something up,” he says.
It was with some regret five years later that he accepted an invitation from Jean-Claude Biver to take over as marketing head of Blancpain, one of Switzerland’s most famous watch brands.
Established in 1735, the company had flourished, but, like many others, struggled with the arrival of quartz. Bought by Mr Biver and a partner for a song in 1981 and significantly revived, it was sold to a predecessor of Swatch Group 11 years later.
Under Mr Biver, who later went on to revive Hublot, and his partner Jacques Piguet, Blancpain regained much of its former prestige.
While Mr Biver concentrated on sales and marketing, Mr Piguet looked after manufacturing, linking Blancpain’s component and movement operations with those of Frédéric Piguet, a bigger specialist that is now also part of Swatch Group.
But it was under Mr Hayek that growth really took off. Output has quadrupled to beween 12,000 and 13,000 units a year, turnover has climbed by about the same amount, while profits have surged about 30-fold. True to industry tradition, Mr Hayek declines to disclose Blancpain’s earnings. But analysts reckon the company made about SFr30m ($28m) in 2008, its record year.
Blancpain’s watches are produced in a neighbouring Valleé du Joux village to Breguet, Swatch Group’s other prestige brand. At a former farmhouse, 60 to 70 specialists work in small, friendly teams, concentrating intently on activities such as tourbillons and fine engraving. Underlining its position at the very top of the market, Blancpain is the second-biggest maker of tourbillon watches after Breguet, notes Mr Hayek.
Components come from Frédéric Piguet, the Swatch Group’s maker of movements for upmarket watches. Although the company also produces for other group brands and a limited number of third parties, Blancpain is by far its biggest customer.
But how has Mr Hayek managed to distinguish Blancpain from Breguet, its bigger and even more prestigious neighbour?
The two brands focus on classic men’s watches and are in roughly the same price bracket, although Blancpain’s tend to be a little cheaper because of the brand’s strength in sports watches, generally made from steel rather than gold.
“Breguet tends to be more French- influenced, while Blancpain is more Calvinist, more classic, even more understated,” he says. “They’re a bit like our elder brother.”
Sibling rivalry is not helped by the fact that Breguet is run energetically by none other than Nicolas, Mr Hayek’s grandfather.
“We have quite a lot of independence in terms of brand strategy, positioning and product development. Naturally, we co-ordinate a bit with Breguet. But the idea in Swatch Group is really to have an entrepreneur running each brand. Breguet is our benchmark. It’s very tough!”
One way in which Blancpain is distinguishing itself is by focusing on its tradition for performance watches. The Fifty Fathoms range was born after a commission from the French Navy in 1953 to develop a high-performance diver’s watch and has remained emblematic of the company ever since.
The series was refreshed three years ago, with bigger, chunkier and heavier watches based on a new movement, appealing to current tastes for watches with more of a presence. The change went down well, and the range now accounts for about one-third of Blancpain sales, with plenty of back orders – welcome in these troubled times.
Mr Hayek, himself a keen diver and sportsman, has turned to motor racing for his second way to broaden Blancpain’s appeal. “I wanted something that would suit our new line. We are growing, we needed something sporty, dynamic and touching a larger public,” he says.
The group has teamed up with Lamborghini, the Italian sports car maker, to sponsor a new single marque race series, the Lamborghini Blancpain Super Trofeo.
Six weekend challenges will be held on racetracks across Europe this year, with Mr Hayek one of the drivers behind the wheel. Appropriately, his own sleek black Lamborghini Gallardo sits outside the office.
But, arguably even more important for Swatch Group than the revival of Blancpain or Mr Hayek’s success on the track is another crucial fact.
As the only third-generation member of the family, and with no others likely, Mr Hayek reveals his wife is expecting their first child in September.
Soon, it seems, another Hayek will be emerging to continue the family watchmaking dynasty.
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Reluctant daughter rises to her father’s challenge at Tiffany
Complications, movements and haute horlogerie at the Baselworld Fair took a back seat to glamour this year, writes Carol Woolton.
A shining powder-blue temple of taste stood out like an elegant beacon among the serious, sober Swiss stand as people queued to view the debut collection of the new Tiffany Watch Company.
This is a partnership formed in 2008 between Tiffany & Co New York and the Swatch Group, combining the refinement of the New York brand with the distribution prowess of the world’s largest manufacturer.
The traditionally successful aspects of Tiffany watches, such as the Atlas and Tesoro collections, have had a most delicate design makeover, giving them a sleeker, modern look.
When searching for a safe pair of hands to tweak Tiffany watches into contemporary pieces that would appeal to markets around the world, Nicolas Hayek co-founder and chairman of the Swatch Group, decided to keep it in the family.
Who would understand the feminine brand of Tiffany and effect the necessary subtle changes better than Nayla, his only daughter, who has sat on the board of directors of the Swatch Group since 1995?
“I always tried not to enter the watch world,” admits Ms Hayek, a successful international Arabian horse breeder and judge. “But I have had strong views about our watch brands so my father said ‘if you’re always critical, then do something about it’.”
It must be difficult to avoid becoming immersed in watches when your family owns the world’s largest watch company. “As a family we look at watches all the time and talk about them,” she says. Even at Christmas lunch? “Yes, even then.”
At the fair, she is confident that accepting the challenge to become CEO of Tiffany Watch Co has been the right decision. “We’ve had tentative orders from the UK, Europe, the Middle East, Russia, China and Taiwan,” she says.
“I want to keep Tiffany as a feminine watch brand,” she says.“I wasn’t thinking about jewellery watches though because too many brands are doing that. The most important thing is to have a broad selection of designs.”
In Ms Hayek’s view, too many women’s watches are either jewelled pieces or smaller versions of a man’s watch. “This is the type of watch I search for as a woman,” she explains pulling out one of the newly-launched Atlas Lady pieces.
Ms Hayek owns about 30 watches including pieces by Rado, a couple of Longines including a diamond set L’Elegance evening watch, the Reine de Naples by Breguet and many by Blancpain. “It’s my favourite brand,” she says. “I love the understatement of Blancpain and the pure design. I will wear Tiffany but I’ve told them that I will still wear my Blancpain watches,” she laughs. “Well, I’ve got two arms.”
Fortunately for a brand famed for its high jewellery aesthetics, Ms Hayek loves diamonds so the 150-year heritage of classic diamond set vintage style evening watches a la Audrey Hepburn will flourish. “I like big stones and blue colours like aquamarines, topaz and turquoise.”
This explains the Tiffany piece de resistance at Baselworld, which is a full pave set cuff watch set with baguette diamonds with 5 Av set in the centre in scintillating blue diamonds.
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Rosatom agrees deal for stake in Uranium One
By Catherine Belton in Moscow
Published: June 15 2009 22:28 | Last updated: June 15 2009 22:28
Rosatom, the Russian state-owned nuclear group, has secured a 17 per cent stake in Uranium One, the Canadian miner, in a deal that gives it a greater presence in North America and could boost its plan for international expansion.
Atomredmetzoloto, or Armz, the uranium mining arm of Rosatom, is giving the uranium miner a 50 per cent stake in its Karatau mine in Kazakhstan. In return, it will receive 117m shares in the Canadian nuclear group worth $295m at Friday’s closing price, as well as $90m in cash.
The 50 per cent stake in Karatau will increase Uranium One’s output by 35 per cent, said Jean Nortier, chief executive of the Canadian group.
The deal is set to give a big boost to Rosatom’s attempts to increase supplies of uranium to Russia. The country’s domestic mining output has been falling even though Russia is still signing new deals to sell enriched uranium globally, analysts said. The country is also embarking on an ambitious plan to boost the share of nuclear generation in the country’s electricity output by building 26 nuclear power plants over the next 12 years. This year, Rosatom has signed significant co-operation agreements with Germany’s Siemens and Japan’s Toshiba.
The Uranium One deal includes an offtake agreement that gives Rosatom the option to purchase either up to 20 per cent of Uranium One’s global production, including that from Karatau, or more than 50 per cent of Karatau’s total output. Mikhail Stiskin, an analyst at Troika Dialog, said: “Essentially the mandate of Armz is to increase supplies of uranium to Russia. Until now it has been unsuccessful. This deal gives them the vehicle to do so.”
Vadim Zhivov, Armz’s chief executive, told the Financial Times that the deal was just the start of a strategic partnership in which the two companies would seek to make more acquisitions abroad.
“We have a plan for further expansion. We don’t expect this deal to be the last,” Mr Zhivov said. Mr Nortier told the FT the two companies would target Africa specifically for further expansion.
Rosatom has been seeking new and cheaper sources of uranium after it won additional enriched uranium supply contracts for the US and Japan this year. These included a landmark deal that will allow it to supply uranium directly to US companies for the first time in two decades.
But it has remained on the sidelines as global competition hotted up for uranium assets this year. Korea Electric Power Corp, for example, agreed to buy 20 per cent of Canada’s Denison Mines Corp in April.
“In a situation when rivalry for uranium assets has been growing more acute, Armz started pursuing a proactive mergers and acquisitions strategy,” Mr Zhivov said in a statement.
Armz has agreed not to increase its stake in Uranium One beyond 19.95 per cent for five years without the Canadian company’s consent.
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When China Rules the World
Review by David Pilling
Published: June 13 2009 02:11 | Last updated: June 13 2009 02:11
Cover of 'When China Rules the World' by Martin JacquesWhen China Rules the World: The Rise of the Middle Kingdom and the End of the Western World
By Martin Jacques
Allen Lane £30, 550 pages
FT Bookshop price £20
Books about China ruling the world used to be prefaced by “if”. Now, more often, they are preceded by the assumptive “when”. Such is the age we live in. Martin Jacques’ 550-pager on the ascent of China finds little space to consider the question of whether its rapid economic progress is unstoppable. It ignores almost entirely the other popular – and perfectly plausible – premise for books on the Middle Kingdom: “When China’s miracle goes phut”.
Jacques’ book is based on the extrapolation that, by 2050, China will be the biggest economy in the world, surpassing the US and India which, by then, will be third. By virtue of what Jacques calls the “merciless measure” of gross domestic product, China will be politically and militarily the most powerful country in the world.
We might argue about these two central premises, namely that China’s GDP will inevitably surpass that of the US, and that there is an almost mechanical relationship between economic output and power. These are legitimate points of debate for other books. Yet Jacques can be forgiven for making this leap of faith and asking what will happen to the world if, indeed, China becomes a dominant power.
Jacques’ thesis – argued clearly and logically, if somewhat laboriously – is that China’s rise will overturn “western” assumptions about what it is to be modern. To date, the world’s only successful economies of any size – with the exception of Japan – have been European or, in the case of the US, of European pedigree. The knee-jerk assumption of globalisation, he argues, is that as countries modernise they take on western characteristics. “We are so used to the world being western, even American, that we have little idea what it would be like if it was not,” he writes.
Jacques contends, not unreasonably, that China’s continental size, huge population, racial homogeneity and confidence in the centrality of its own civilisation make for a country capable of redefining what it is to be modern.
If Britain was a maritime hegemon and the US an airborne and economic one, then China will be a cultural one, he predicts. As Chinese confidence grows apace with its decisive emergence from two centuries of humiliation, its overriding attitude will not be one of catching up with the west, but rather of regaining its rightful place as the world’s pre-eminent civilisation. “As the dominant global power, China is likely to have a strongly hierarchical view of the world, based on a combination of racial and cultural attitudes,” he writes.
China will draw on its Confucian roots, a paternalistic ethos that, he argues, is not readily compatible with western democratic principles. He goes so far as to suggest that it would be best for China, indeed the world, if the “present regime continues” for some time, a verdict that this former editor of Marxism Today might not have advanced, say, about the Chile of Augusto Pinochet.
Much of the future Jacques foresees for China can be found in its past. He expects it to reassert elements of its ancient tributary relationship with neighbouring countries, leaving them alone so long as they pay cultural obeisance. China’s idea of itself as a living civilisation – what he calls a “civilization-state” as opposed to a nation-state – means it will never yield to assaults on its unity, particularly when it comes to Taiwan.
Jacques’ overriding point is that, in future, “the debate over values will be rooted in culture rather than ideology, since the underlying values of a society are primarily the outcome of distinctive histories and cultures”. His contention is that, since China’s culture and history are so formidable, it will not bend to western norms. If there is any bending to be done, it is the west that must yield.
That makes the book a useful corrective to those who assume that emerging superpowers, principal among them China, will recreate themselves in America’s image. Yet Jacques puts too much faith in culture as the ultimate arbiter of a nation’s destiny. He dismisses the argument of Chris Patten, the last British governor of Hong Kong, that the divide between east and west is more a question of time lag than intrinsic cultural difference. But in doing so, he goes too far the other way. He overemphasises Asia’s cultural predilections for community over individual, for social relationships over law, and for stability over freedom. In both south-east and north-east Asian culture, he writes, “the individual finds affirmation and recognition not in their own individual identity but in being part of a group”. These are sweeping statements that, at worst, sound like a Singaporean advertisement for Asian values.
Jacques’ writing on racism is revealing. Contrasting China with multicultural America, he presents it as an inherently racist culture more or less incapable of summoning a multicultural view of the world. “The fact that the Chinese regard themselves as superior to the rest of the human race, and that this belief has a racial component, will confront the rest of the world with a serious problem,” he writes. In what he describes as the “Middle Kingdom mentality”, he presents China as uniquely conflicted in its simultaneous feeling of superiority to other cultures and its inferiority to westerners who have overtaken it. These conflicted attitudes, for example, are common, and describe feelings of frustration and national inheritance denied (or at least postponed) in countries as far apart as Argentina and Japan.
In China’s rise, Jacques tends to see menace, albeit of a cultural rather than a militaristic nature. China’s view of itself as the centre of civilisation will, he says, lead to a “profound cultural and racial reordering of the world in the Chinese image”. But Jacques is more on the right lines when, elsewhere in the book, he talks about competing modernities. If, as he expects, China emerges as a world power to challenge the US, then modernisation is likely to be a two-way street, even a multi-lane highway, on which different versions circulate of what it means to be modern.
In the future, Americans may indeed watch more Chinese films and study Mandarin. But, by the same token, the Chinese will continue to learn from the west as its wholesale import of western capital, business practice and technology demonstrates. Just as Europeans and Americans may read more Confucius, so the Chinese will study more Shakespeare. It sounds like fun. The world is more likely to become multi-polar and culturally layered than recreated in China’s image. That is the whole point: China will not rule the world.
David Pilling is the managing editor of the FT’s Asia edition
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三井住友銀、ロシアで銀行免許取得 年内に業務開始
三井住友銀行は18日、子会社のロシア三井住友銀行が現地で銀行免許を取得したと発表した。日系企業向けに現地通貨ルーブルによる融資業務などを新たに展開できるようになる。40人程度の陣容で年内に業務を開始する。
同行は2005年に駐在員事務所を置き、日本円やユーロなどで融資や為替業務を展開してきた。成長市場での日本企業の活動を機動的に支えるにはルーブルを扱える現地法人が必要と判断した。
３メガバンクでは三菱東京ＵＦＪ銀行、みずほコーポレート銀行が現地法人を設立している。
ロシアは最近、株価も急回復している。今後、資源国としての恩恵を受ける可能性もあり、日系企業の投資意欲が旺盛であることを踏まえ、三井住友銀は現地法人化に踏み切った。(19:33)
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途上国の原発導入支援 産官学で組織旗揚げ
政府と産業界などは18日、原子力発電を新たに導入しようとする途上国などを支援するため、産官学連携組織「国際原子力協力協議会」を設立した。都内で第１回の会議を開き、途上国の人材育成や安全規制などで産官学が連携して協力することを決めた。これまで各省庁や民間での個別協力にとどまっていたが、一貫した受け入れ態勢をつくることで支援体制を強化する。(15:01)
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病気診断、遺伝子で10分 東レなど、ＤＮＡチップ実用化へ
微量の血液から病気の有無などを素早く診断できる「ＤＮＡ（デオキシリボ核酸）チップ」という次世代遺伝子検査技術の実用化に向けた動きが加速している。東レや東芝などが病院への普及を目指した検査法の標準規格をまとめたほか、三菱レイヨンなどは早ければ３年後の実用化を目指し厚生労働省に承認を申請する考えだ。実用化すれば遺伝子を手掛かりに個人の体質を簡単に調べられ、副作用が少ない治療が医療現場に広がると期待される。
ＤＮＡチップは手のひらサイズのガラス板などの上にＤＮＡを張り付けた検査器具。素材や半導体の技術を応用して作る。患者の血液などを上から落とすと、がんや感染症など病気の有無などが早ければ10分程度で分かる。(16:00)
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５月の粗鋼生産量、４カ月ぶり600万トン台 在庫調整が一段落
日本鉄鋼連盟が18日発表した５月の粗鋼生産量（速報値）は前年同月比38.5％減の648万8000トンだった。前年実績を下回るのは８カ月連続。ただ、減少率は２カ月連続で縮小し、前月との比較では13.1％増に転じた。
生産量が600万トン台を回復したのは2009年１月以来、４カ月ぶり。鉄鋼連盟は「自動車関連を中心に在庫調整が一段落した」のが原因としており、今後も「ゆるやかに回復していく」とみている。
炉別にみると、建材や自動車、電機など幅広い用途に使う転炉での生産は前年同月比37.9％減の484万1000トンだった。建材向けが多い電炉での生産は40.2％減の164万7000トンだった。(15:07)
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ライブドア側に賠償命令 東京地裁、虚偽記載認め6100万円
ライブドアによる有価証券報告書の虚偽記載で株価が急落し損害を受けたとして、大阪の建設機械製造会社など株主がＬＤＨ（旧ライブドア）や堀江貴文元社長（36）ら旧経営陣に計約１億5000万円の損害賠償を求めた訴訟の判決で、東京地裁（難波孝一裁判長）は18日、計約6100万円の支払いを命じた。
難波裁判長は判決理由で、有価証券報告書の虚偽記載があったと認定。そのうえで、虚偽記載が公表された場合、前後１カ月の平均株価の差額を損害額と推定する2004年の改正証券取引法（現金融商品取引法）の規定を適用した。
ライブドアによる虚偽記載の疑いが報道された06年１月18日を「公表日」として、公表日の前１カ月と後の１カ月の平均株価の差額１株585円を推定損害額と算出。ただ、株価の急落は堀江元社長の逮捕など虚偽記載以外の原因もあったとして、最終的に１株200円と損害額と判断した。(20:01)
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進む“銀証融合”米欧マネるメガバンク巨大化のワケ
「リスク管理技術を磨きつつ組織を維持できるのか」の声
三井住友や三菱ＵＦＪは「巨大化のワナ」から逃れられるだろうか（クリックで拡大）
三井住友や三菱ＵＦＪは「巨大化のワナ」から逃れられるだろうか（クリックで拡大）
規制が緩和され、国内の大手銀行と大手証券の距離がなし崩し的に狭まってきた。最近も、三井住友フィナンシャルグループが日興コーディアル証券などの買収を決めたばかり。大手行の主導で進む銀行と証券（銀証）の再編は、１９９０年代に米国で加速した銀証融合をほうふつさせる。が、その裏には「ワナ」も潜んでいる。
「銀証融合」の大先輩である米国も、もともとは法律（グラス・スティーガル法）で銀行による証券業務を禁じていた。それが８０年代後半以降、金融工学の発展に伴って「リスク管理技術が高度になれば、業務拡大は有益であり、財務体質も強化される」との見方が拡大。銀行と証券の兼業禁止は次第に緩められ、９９年には撤廃された。
一般に「銀行は預金を引き受け、所要自己資本を厳しく定められているため、証券会社に比べ資金調達力や資本力で優位に立ちやすい」（ＵＢＳ証券の大槻奈那氏）。
銀行と証券の間の高い垣根が外れると、シティなどの銀行グループが証券会社・投資銀行の買収を加速。対抗するようにゴールドマン・サックスなどの投資銀行も巨大化に突き進んだ。
そして、「銀証融合」で巨大化した米金融グループは、欧州の金融勢とともに金融派生商品、証券化商品の開発・取引を拡大。その結果どうなったかというと、米国で不動産バブルが弾けたのをきっかけに金融派生商品や証券化商品は壊滅的な状態に。昨年９月には米証券大手リーマン・ブラザーズが経営破綻し、リーマン・ショックに見舞われた米欧の巨大金融機関は公的資金注入に追い込まれた。
ここでクローズアップされたのは、銀証融合で巨大化した金融機関が陥った「巨大すぎて管理できない」という問題。
日本も９３年に、銀行、証券が子会社を通じて相互参入できるようになって以来、銀証間の垣根は低くなり続けてきた。国内金融の強化と国際競争力獲得に向け、金融庁が「ニューヨーク、ロンドンをイメージし、規制改革を進めてきた」（同庁幹部）結果だ。
規制緩和により「安定的に資金調達できる銀行主導で証券再編が進んできた」（大手証券幹部）のは事実で、その構図は米国と似ている。
米欧金融グループが失速した現在、日本の大手行グループは相対的に勢力を拡大。巨大化と多角化に突き進もうとしている。金融界からは「米欧の投資銀ノウハウを取り入れ、海外展開するチャンス」との声も上がる。
が、一方で「リスク管理技術を磨きつつ、その巨大化した組織を維持できるのか」とためらう声も。
日興コーディアル証券の買収に当初は意欲的だった三菱ＵＦＪグループが一転して“撤退”となったのは、傘下の三菱ＵＦＪ証券での顧客情報流失問題が影を落としたからだった。
「この問題で、三菱ＵＦＪのコンプライアンス（法令順守）とガバナンス（企業統治）が問われることになった。組織づくりを優先し、規模拡大を見送ることになった」（金融筋）という。
その三菱ＵＦＪは国内のモルガン・スタンレー証券と経営統合し、投資銀行業務などを充実させる計画だ。
巨大化とリスク管理のバランスをどうとっていくのか。大手行は巨大すぎて管理できないという「巨大化のワナ」に陥らないため、難しいかじ取りを迫られそうだ。
ZAKZAK 2009/06/18
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裁判員制度：宗教界から忌避の動き
日本カトリック司教協議会（岡田武夫会長）は１８日、司祭（神父）らの聖職者が裁判員に選ばれた際、辞退を促すとの見解を発表した。聖職者が裁判員として人を裁く立場になると、政教分離を定めたカトリック教会法に抵触しかねないというのが理由で、過料を払ってまでの不参加を勧めている。一方、真宗大谷派は死刑反対の立場から、制度見直しを決議した。
同協議会の見解は、司祭や修道者に裁判員候補者の通知が届いた場合、調査票・質問票に辞退を明記し、それでも選任された場合は、過料（１０万円以下）を払って参加しないよう勧める－－との内容。国内のカトリック信者は約４５万人で、辞退を促す対象は約７０００人という。
協議会によると、カトリック教会法は政教分離の理念から「聖職者の国家権力行使への参与」を禁じている。協議会がローマ法王庁に非公式に問い合わせたところ、聖職者が裁判員になるのは「教会法抵触のおそれがある」との回答だった。
参審制のイタリアやドイツなどでは、聖職者は参審員に選ばれない。日本の裁判員法には神父や僧侶を裁判員から除外する規定はない。ただ、裁判員になることで「精神上の重大な不利益」を受ける場合は辞退を認める規定があり、最終的には裁判所の判断となる。
一方、真宗大谷派（信者約５５０万人）は９、１０の両日、僧侶でつくる宗議会と門徒でつくる参議会が、裁判員制度の見直しを求める決議をした。同派は「殺してはならない。殺させてはならない」との仏教の教えを踏まえ、死刑廃止を主張している。決議は「死刑事件に裁判員としてかかわったとき、自らは死刑の判断をしなくとも、心の傷は一生自らを苦しめる」と指摘。「司法制度改革は、死刑を廃止することから始まらねばならない」と訴えている。
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著作権訴訟：５０年代邦画のＤＶＤ、著作権認め販売差し止め
１９５０年代に公開された邦画３作品の廉価版ＤＶＤを販売する「コスモ・コーディネート」（東京都中央区）に対し、著作権が存続しているとして映画製作会社「東宝」が販売差し止めや１３５０万円の賠償を求めた訴訟の判決で東京地裁は１７日、販売差し止めと１０８万円の支払いを命じた。清水節裁判長は「公開から７０年を経ておらず、著作権の保護期間内」などと判断した。３作品は「おかあさん」（成瀬巳喜男＜みきお＞監督）と「暁の脱走」（谷口千吉監督）、「また逢（あ）う日まで」（今井正監督）。判決などによるとコスモ社は３作品のＤＶＤ計３０００本を作製し１本１８００円で販売した。
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核融合実験：２６年までに開始で合意 ＩＴＥＲ機構
日本や欧州連合（ＥＵ）、中国など７カ国・機関で進めている国際熱核融合実験炉（ＩＴＥＲ）計画について、実施機関のＩＴＥＲ機構は１７、１８両日、水戸市で理事会を開き、重水素と三重水素を使った核融合実験を２０２６年までに開始することで合意した。核融合実験の目標が明示されたのは初めて。
ＩＴＥＲは、太陽で起こっている核融合反応を炉内で再現し、エネルギー源としての利用を目指す。実験炉の建設は、フランスのカダラッシュで昨年から始まった。これまでの計画では、核融合反応を閉じ込めるためのプラズマ発生を１８年までに実現することが合意されていたが、その後は未定だった。
また、理事会では主要施設だけを先に建設し、プラズマ発生を確認した後に全体の施設を完成させることも決めた。池田要・ＩＴＥＲ機構長は「リスクを減らし、確実に２６年までの核融合実現を目指すため」と説明した。
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Russia, China to Promote Ruble, Yuan Use in Trade (Update3)
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By Lyubov Pronina and Alex Nicholson
June 17 (Bloomberg) -- The leaders of Russia and China agreed to expand use of the ruble and yuan in bilateral trade to lessen dependence on the U.S. dollar a day after they took part in the first summit of the so-called BRIC countries.
“We agreed to take further steps in this direction, including, perhaps, by adjusting contracts and laws that already exist,” Russian President Dmitry Medvedev told reporters in the Kremlin today after talks with his Chinese counterpart Hu Jintao.
Russia, the world’s biggest energy supplier, wants to start selling oil to China in rubles, said Deputy Prime Minister Igor Sechin, who is also chairman of OAO Rosneft, Russia’s biggest oil company. Energy sales in rubles are a “strategic” issue for Russia, he said, adding that oil exports to China over the next 20 years will surpass $100 billion.
Brazil, Russia, India and China agreed yesterday to push for more clout in global financial institutions during what Medvedev called BRIC’s “historic” first summit in the Ural Mountains city of Yekaterinburg. China and Russia have called for a more diversified financial system to give emerging economies a bigger say in economic affairs, including the creation of alternatives to the U.S. dollar as a reserve currency. The four countries may also consider buying each other’s bonds, a notion that drew skepticism from some analysts.
‘Direction of Movement’
“This is not something for the immediate future, but rather a direction of movement,” said Stanislav Ponomarenko, a fixed-income analyst at ING Groep NV in Moscow. “I don’t think more than a few percent of reserves could be reinvested into BRIC bonds. What we’re seeing is a continuation of discussions to find an alternative to the dollar, yet nobody is going fundamentally to alter anything yet.”
China has the world’s biggest foreign-currency reserves, almost $2 trillion, while Russia is third with more than $400 billion.
Meantime, dollar bonds sold by the largest emerging-market countries are outperforming debt traded in reais, rubles and yuan. Bonds sold in dollars have beaten domestic debt in part because Russia and China manage the ruble and yuan. Those denominated in the U.S. currency can trade more freely, giving fund managers confidence they can sell the securities and get their money when they need it.
‘Market Decides’
“It’s not up to politicians to determine which currency will be the world reserve currency,” said Lutz Karpowitz, a currency strategist at Commerzbank AG in Frankfurt. “In the end the market decides it.”
The ruble weakened 0.1 percent to 31.2396 against the dollar in Moscow today after earlier strengthening as much as 0.4 percent. The yuan was little changed against the dollar on speculation China will prevent appreciation to avoid a prolonged slump in the nation’s exports.
Expanding the use of national currencies in trade and in mutual settlements “is a separate, important task,” Medvedev said today.
Even so, it will take “at least a couple of years” to start converting the first contracts into domestic currencies, said Elina Ribakova, Citigroup Inc.’s chief economist in Moscow.
‘Symbolic Value’
Today’s announcement has “important symbolic value,” she said. “If you take a 10- or 20-year perspective, trade between Russia and China will increase significantly.”
Total trade between the neighboring countries reached a record $56.8 billion last year, according to the Kremlin.
After today’s Moscow meeting, Russia and China signed an agreement worth $3 billion to cooperate in trade and investment in areas including light industries, high technology and energy.
The dollar’s status has come into question as leaders of the BRIC nations consider substituting other assets for their dollar holdings amid a ballooning budget deficit that keeps the U.S. dependent on foreign financing. China alone owns about $744 billion of U.S. Treasury bonds among its $2 trillion of foreign- exchange reserves.
Russian central bank First Deputy Chairman Alexei Ulyukayev’s comment on June 10 that Russia may sell some of its U.S. bonds to buy International Monetary Fund notes helped push 10-year yields on Treasuries to the highest level since October.
Brazilian President Luiz Inacio Lula da Silva today denied that BRIC leaders discussed buying each other’s bonds at the Yekaterinburg summit, after Medvedev’s top economic adviser said the matter might be discussed.
Dollar bonds sold by China earned 11.4 percent in the past year, more than double the 4.6 percent for debt in yuan, JPMorgan Chase & Co. indexes show. Brazil’s U.S. currency bonds returned 3.6 percent as real-based notes lost 4.9 percent, and Russia’s dollar bonds outperformed with a 1.9 percent loss compared with a 7 percent drop in ruble debt. India doesn’t have dollar-denominated debt.
Nick Sherry
The Assistant Treasurer, Senator Nick Sherry, today announced the signing of a tax information exchange agreement (TIEA) and an agreement for the allocation of taxing rights over certain income of individuals between Australia and Jersey.
Concluding TIEAs with offshore financial centres supports Australian Government initiatives to combat offshore tax avoidance and evasion.
"The Rudd Government wants to ensure the continued integrity of our tax system by ensuring all Australians pay their fair share of tax whilst also co-operating with international efforts to curb tax evasion."
"This TIEA will provide for bilateral exchange of information (EOI), on request, for civil and criminal tax matters, and demonstrates Australia's ongoing commitment to implementing standards of transparency and effective EOI for tax purposes, as developed by the OECD and endorsed by the G-20 and the United Nations," the Assistant Treasurer said.
"This is the sixth TIEA signed by Australia, and Australia welcomes Jersey's constructive engagement in this area."
"The agreements will also benefit Australians by removing some tax obstacles that exist between the two countries," the Assistant Treasurer said.
In particular, the agreement to allocate taxing rights over certain income of individuals and to establish a mutual agreement procedure for transfer pricing adjustments will eliminate double taxation of certain income and provide a mechanism to help resolve transfer pricing disputes.
The agreements come into force once both countries have completed domestic requirements. Legislation will shortly be introduced into the Australian Parliament.
In addition to these agreements, Australia will remove any governmental references to Jersey as a tax haven and, following entry into force of the TIEA, will move to list Jersey as an 'information exchange country' in the Taxation Administration Regulations 1976. This will provide Jersey residents with access to reduced withholding tax rates on distributions of certain income they may receive from Australian managed investment trusts.
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Cayman close to being on OECD white list
2009-06-16
News
The Cayman Islands Monetary Authority (CIMA) has become a full member of the International Organisation Securities Commission (IOSCO). Membership for the regulator was confirmed at the IOSCO annual conference in Tel Aviv.
The Cayman Islands has agreed the IOSCO multilateral memorandum of understanding on consultation, co-operation and exchange of information (MMOU). This is a benchmark among security regulators. CIMA now has 15 bi-lateral memoranda of understanding with a number of major regulators, including the US Securities and Exchange Commission and the UK Financial Services Authority.
Membership of IOSCO should remove remaining barriers in some jurisdictions to the use of Cayman Islands entities where the regulatory regime permits only investors and/or counterparties to engage with vehicles that are regulated in an IOSCO member jurisdiction.
The deal should also pave the way for Cayman Islands funds to invest into many more jurisdictions.
IOSCO membership acknowledges that the Cayman Islands' regulatory system meets international standards, according to Charles Jennings at Maples and Calder in the Cayman Islands.
The Cayman Islands government is in detailed negotiations with a number of OECD members to conclude bilateral agreements before the end of July. This would then move Cayman onto the ‘white' list of countries and remove the accusation of the territory being a tax haven.
The OECD is currently reviewing what it calls the Cayman Islands's ‘innovative' unilateral mechanism for exchange of tax information. If this is approved it would initially add 10 jurisdictions to the list of countries with which the Cayman Islands has agreed to exchange information on tax matters.
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Cayman signs UK tax deal
Posted on Mon, 06/15/2009 - 14:38 in Headline News
(CNS): Leader of Government Business McKeeva Bush has signed a double taxation agreement (DTA) with the UK on behalf of the Cayman Islands Government. The deal reportedly protects against the risk of individuals or corporate entities being taxed twice on the same earnings. Stephen Timms, MP, who signed on behalf of the UK, said that the agreement includes unprecedented provisions for tax information exchange. It was not stated, however, if a bi-lateral agrement will follow this deal.
In a statement from the Ministry of Financial Services, Tourism & Development Public Relations Unit, it was announced that the LoGB had signed the deal today (15 June) in a ceremony at the UK Treasury. The DTA, which is another type of bi-lateral tax agreement, is the first double treaty to be signed by the Cayman Islands. “We are very pleased to sign this agreement with the United Kingdom today as part of the Cayman Islands' continued commitment to high standards of international cooperation and transparency,” Bush said.
Speaking about the UK’s advantage, Timms said that information exchange is a vital tool in ensuring that governments receive the revenues they need to resource the essential public services on which we all depend. “I would like to congratulate the Cayman Islands Government for signing up to an arrangement which includes unprecedented provisions for tax information exchange that meet international standards of transparency,” he added.
The agreement (see details here) places Cayman another step closer to the OECD’s requirement for a minimum of twelve agreements, which the new government has said it is committed to achieving not least in an effort to remove Cayman from the post G20 'grey list'. Cayman now has nine agreements in place. UK Permanent Secretary for Tax, Dave Hartnett said the information exchange provisions in this arrangement meet OECD standards of tax transparency.
Negotiations with the UK had been ongoing for a bi-lateral agreemen for several years but these had stalled. The previous government had accused the UK of constantly moving the goal posts with regards to that agreement and said that they had been seeking some form of commercial advantage for Cayman’s offshore industry before signing.
Speaking at what was the regular weekly press briefing prior to the election, the former Minister Alden McLaughlin explained that, while the government had been criticised for not signing treaties, the PPM administration had in fact been engaged in negotiations since they took office, but that did not mean they were able to be successful, adding that the government had to be very careful not to put Cayman at a commercial disadvantage. “We don’t want to put Cayman in a position of competitive disadvantage. We want to be compliant with OECD tax exchange standards but we don’t want to give away things other countries haven’t and then lose business,” McLaughlin said in April.
That view, however, has been disputed by some in the offshore community who questioned the wisdom of holding out on exchange agreements. They say that there is probably very little commercial advantage that the government can negotiate as in most cases Cayman is already getting all the business it is likely to get from a given nation, but that not having tax agreements is currently more of a disadvantage than the risk of losing a competitive commercial edge.
Richard Murphy of Tax Research UK, a critic of TIEA as ineffective in terms of cracking down on tax haven abuse, has dubbed this DTA treaty as useless frm the UK's point of view. He said it was not a full blown DTA or a a full blown TIEA. "In fact the extraordinary thing is that the information exchange clause is far less onerous than a TIEA. So, for example, there is no reference to the need for the parties to be able to prove beneficial ownership of trusts, companies and other arrangements in their territories, which a TIEA should require," he wrote.
The tax watchdog said that the UK would have as many problems complying as Cayman and Murphy said it would do little to assist Gordon Brown in his camapign against tax havens.
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Cyprus under US pressure to share financial information
By Elias Hazou
UNDER PRESSURE from Washington, Cypriot authorities have been prompted into action to bring in changes allowing them to share information on stock exchange transactions and bank accounts with non-EU countries.
A draft bill prepared by the SEC in collaboration with the Attorney-general’s office is currently under review by the House Finance Committee, and could be tabled before the plenum next week so that it can be voted into law.
The move comes after repeated warnings from the US Securities and Exchange Commission that it would place Cyprus on a “black list” as a “non-cooperative jurisdiction.”
Cyprus’ SEC is a signatory to a multilateral memorandum of understanding (MoU) with the regulatory authorities of the European Union, and has signed a number of bilateral agreements with individual countries—but not with the United States. However it is currently not a signatory to the MoU of the International Organisation of Securities Commissions (IOSCO), an international body whose members regulate more than 90 percent of the world's securities markets.
Through IOSCO’s MoU, members pledge to provide each other with collecting information and witness statements in an enforcement investigation. Such information might include the nationality of the person, passport photocopies, bank statements, and in general any data showing the flow of funds.
As it stands, Cyprus’ SEC laws expressly prohibit the sharing of information with countries with which it does not have an MoU in place.
“In order to give out information to non-EU supervising authorities, we must have a direct stake in the matter, that is, there has to be at least an indication that Cypriot SEC laws have been violated,” said SEC chairman Giorgos Charalambous.
Because of this limitation in the law, he added, the Cypriot body cannot assist US authorities in money-laundering probes. This means that if any persons wanted or under investigation by US authorities have financial dealings in Cyprus, the paper trail would go cold on the island.
Through its Embassy in Nicosia, the United States has for months now been urging the SEC to get on board with the IOSCO agreement.
Charalambous said the US SEC had been “patient,” but that Cyprus could not drag on indefinitely.
“They have repeatedly contacted us, both in writing and verbally, making inquiries as to where the situation stands. Our response was that we are favorably disposed toward their request but first need to amend the relevant laws,” Charalambous told the Mail.
Though he refused to be drawn on what kind of information US authorities had sought from Cyprus, the SEC official said “two to three requests for assistance” had been made in the last few months.
After being bounced back and forth from parliament to the SEC, a draft bill is finally ready, and will be fast-tracked so that it can go to the plenum—perhaps as early as next week.
During a briefing of the House Finance Committee yesterday, Charalambous warned of the dangers of having Cyprus “blacklisted” by the United States.
“Obviously by not being a full member you cannot give or receive information, so it cuts both ways. Secondly, it gives Cyprus a bad name,” remarked Charalambous.
The SEC is one of a number of anti-money laundering regulators, along with the Central Bank, the Insurance Commissioner, the Council of the Cyprus Bar Association, and the Unit for Combating Money Laundering (MOKAS).
Though it has largely cleaned up its image, in the past Cyprus had to fend off persistent accusations of being a tax haven and money-laundering centre. In 2001, it was the focus of an investigation into billions of dollars that went missing from Yugoslavia under former president Slobodan Milosevic. Cypriot authorities denied any wrongdoing.
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Gibraltar’s 10% corporate tax rate still ‘go’ for next July
by Helen Burggraf
A 10% corporate tax rate for both domestic and international companies will take effect as planned next July in Gibraltar, even though the publication of a consultation document on the planned tax reform could be pushed back until September, a government source said today.
The flat 10% will replace a zero rate tax – which has been grandfathered but still is understood to affect some 3,400 businesses – as well as a 27% tax paid by those businesses that do not benefit from the null rate.
“The commencement date [of the new tax regime] is, for sure, the first of July 2010,” Gibraltar Finance Director James Tipping said.
“The government is intending to publish that legislation well ahead of that date, which may be this July or this September” in order to give businesses time to prepare for its implementation.
But whether the consultation document is published in July or September, “the commencement will be next July”, he added.
He said that the plans to scrap the zero-tax rate, which has been in the works for some time, had not resulted in any businesses leaving Gibraltar. But those that do not want to pay 10% “can go somewhere else” if they want to, he added. “Our philosophy is that we are a low tax not a no tax jurisdicition.”
Gib Chronicle report
News that the publication of the consultation document could be postponed until September emerged on Tuesday, according to the Gibraltar Chronicle, which cited remarks by the territory’s chief minister, Peter Caruana.
It said the chief minister had been responding to questions from an opposition MP who had been urging the government to move ahead with the reform "as soon as possible" because it is "vital to the success of [Gibraltar's] financial services sector.”
Gibraltar’s planned move to a 10% flat corporate tax rate comes after a ruling by the European Court of Justice in Luxembourg last year, which determined that Gibraltar was able to set its own tax rates despite its status as a UK territory. The null tax rate, which dates back to 1967, has contributed to the image of Gibraltar as a “tax haven” that it is now seeking to dispel.
Tipping also confirmed that Gibraltar has now completed negotiations on tax information exchange agreements (TIEAs) with several undisclosed countries, but declined to say which, pending a formal announcement. Additional talks continue, he said.
Gibraltar has only signed one so far, with the US, but is looking to meet the Organisation for Economic Cooperation & Development’s stated minimum goal of 12 such agreements by November, as it seeks to move off the OECD’s tax jurisdiction “grey” list.
Among the countries it is thought to be close to announcing agreements with are certain key G20 nations that have agreements with other offshore jurisdicitions, such as the UK and France.
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足利事件：「菅家さんを支える・基金」弁護団が設立
菅家さんの弁護団は１７日、菅家さんの裁判費用に充てるための基金を設立したことを明らかにした。「菅家さんを支える・基金」で口座は「みずほ銀行赤坂支店（普通）２０９７７４２」。裁判は弁護団の手弁当などで支えており「協力をお願いしたい」としている。
また弁護団は同日、２３日に再審請求即時抗告審の決定を出すとしている東京高裁（矢村宏裁判長）に対し、２３日に決定を出さず、審理を継続して当時のＤＮＡ鑑定について徹底検証するよう求める声明を出した。
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China extends $10bn credit line to central Asia
By By Isabel Gorst in Yekaterinberg and Jamil Anderlini in Beijing
Published: June 16 2009 10:15 | Last updated: June 16 2009 19:27
China has offered to lend $10bn to central Asian countries hit by the global economic crisis in a move that is likely to strengthen its influence in the resource-rich region.
Hu Jintao, the Chinese leader, on Tuesday told a summit of the Shanghai Co-operation Organisation in the Russian city of Yekaterinberg that Chinese credit support would help central Asian countries “make their own efforts to counter the shock of the international financial crisis”.
The loans are expected to smooth the way for China to win more energy deals in central Asia, where foreign powers, particularly Russia, are competing for natural resources.
Mr Hu did not elaborate on where the money would come from. In the past Beijing, has lent to allies on favourable terms via its state banks and has used some of its $2,000bn in foreign exchange reserves to support foreign policy objectives.
China has invested heavily in central Asian oil and gas fields to secure a source of energy on its doorstep and is building roads in the remote former Soviet region.
Sergey Ryabkov, Russia’s deputy foreign minister, said Moscow welcomed China’s growing interest in central Asia, but added that all credit extended to the former Soviet region should be “transparent”.
Sun Yongfu, director-general of the European affairs department at the Chinese ministry of commerce, said China’s focus in central Asia was on energy, transport and banking projects that could provide a forum for regional financing. Central Asian countries are facing a steep economic decline as the global financial crisis dries up foreign investment and remittances from workers employed in Russia.
Offers of financial aid have helped China and Russia further their interests in the region. Russia offered $2bn of assistance in February after Kyrgyzstan agreed to evict the US from a military base. China has secured future oil and gas supplies since the onset of the crisis in return for financial help.
Kazakhstan accepted a $10bn loan from China in March in exchange for future oil supplies and equity in a Kazakh oil company that Russia had tried to buy. China recently provided soft loans totalling $25bn to Russia in exchange for a 20-year energy supply contract.
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Australia’s unions urge cap on executive pay
By Lachlan Colquhoun in Sydney
Published: June 18 2009 02:09 | Last updated: June 18 2009 02:09
Australia’s union movement – weakened over the past decade by falling membership and changing economic fundamentals – is attempting to use the recession to turn back the clock in the labour market.
The unemployment rate bottomed at a 30-year low of 4.2 per cent in June 2007 and now sits at 5.4 per cent. According to Reserve Bank of Australia, it will peak at 8.5 per cent in 2010-11.
Workers in every sector of industry – from publishing to banking – are losing their jobs on a daily basis. Even the Salvation Army is cutting jobs, shedding 200 workers in May.
Executive remuneration is also under threat, with many executives taking pay cuts, while a steady stream of returning expatriates are adding to the job market pressure at senior levels.
The timing is advantageous for the Australian Council of Trade Unions (ACTU), the leading labour movement body, which represents just under 19 per cent of the workforce compared with about half in the 1980s.
The Labor government of Kevin Rudd was elected in November 2007 largely on a platform of winding back the previous government’s Work Choices package, which attempted to weaken union power through enshrining individual bargaining and scrapping unfair dismissal laws for smaller businesses.
The Rudd government’s response – the Fair Work Act – is currently before parliament in Canberra.
The ACTU held its triennial congress in Brisbane in early June and considered a series of policy measures aimed at shifting the Australian labour market in favour of unions.
It proposes the further downgrading of individual bargaining, the abolition of penalties for industrial action and regulations that enable the prosecution of employers who “deliberately mislead employees about their rights”.
Although the ACTU supports the thrust of the government’s Fair Work policy, it does not think it goes far enough and claims the government has failed to meet International Labour Organisation (ILO) standards in some areas.
One of the biggest pushes is over executive pay – a raw subject in Australia, after a series of scandals in which executives were seen to be rewarded for failure.
The national telco Telstra is not tainted with scandal but negative publicity over the recent departure of its US-born chief executive, who was paid A$30m ($24m) over four years, has made for a lively public debate.
In response, the Rudd government has asked the Productivity Commission to investigate executive pay.
The Australian Prudential Regulation Authority, the country’s financial sector regulator, has drawn up draft rules requiring company boards to take direct responsibility for remuneration, including golden parachutes and loans to executives to purchase shares.
Unsurprisingly, the ACTU wants to go further. The union body is urging a cap on executive salaries at 10 times the average wage of the company’s full-time workers.
Jeff Lawrence, an ACTU secretary, says “outrageous” executive salaries have encouraged excessive risk taking and short-term thinking.
The ACTU says that analysis of Australia’s top 500 public companies shows chief executives’ pay jumped 564 per cent between 1990 and 2005 to an average of A$3.4m. In 1990, chief executives from the top 50 earned 18 times average full-time wages but in 2005 they earned 63 times the average, which is A$63,000.
Australian Industry Group (AIG), the employers’ lobby organisation, has hit back: “They are trying to obtain publicity for their congress by putting out these policies that are so retro they will grab attention,” says Heather Ridout, AIG’s high-profile chief executive.
“To try to set these sorts of arbitrary rules and legislate for them – I don’t think it would work in the type of economy we have in Australia,” she says. Shareholders, she adds, are the natural controllers of executive pay and it is up to the corporate governance of individual organisations to ensure the appropriate balance between shareholder and executive power.
In the current environment, however, it could be the market making the decisions. There has been a spate of redundancies, and with many senior people looking for work, the laws of supply and demand are coming into play.
At professional services firm KPMG, for example, 200 jobs have gone. PwC has shed 170, while Ernst & Young laid off 100 staff in April.
The pecking order of the top Sydney law firms is also in flux, as revenues sag and staff numbers are reduced, a process which is seeing talent re-emerge at second-tier firms now aggressively pitching for business in a declining market.
Over at Telstra, the new homegrown chief David Thodey is understood to be on a fraction of what was paid to his predecessor Sol Trujillo.
If anything is likely to flatten wage structures in Australia, it will be the market, shareholders and corporate regulators, and not a resurgent union movement, despite what happens at the ACTU congress in June.
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Saudi bonds hope to add liquidity
By Abeer Allam in Riyadh
Published: June 17 2009 15:58 | Last updated: June 17 2009 15:58
Saudi Arabia unveiled the latest in a series of innovations to its capital markets earlier this week when it opened a regulated bond and sukuk (Islamic bond) market. The move comes at an opportune time.
Many Saudi banks are at the limits of their credit capacity, with loan-to- deposit ratios exceeding the limit imposed by the central bank. Bank loans extended in 2008 equalled the total of the previous two years, according to Mohammad al-Jasser, the central bank governor.
In February, Mr Jasser urged commercial banks and companies seeking financing to tap the debt markets.
Rajiv Shukla, regional head of debt markets at HSBC Saudi Arabia, says the Saudi Capital Market Authority is working to allow potential issuers to diversify sources of finance to ease pressure on banks and add another strand to the country’s capital markets.
“It is a very sensible approach to create deeper and wider financial markets. No market should depend on one pool of liquidity,” Mr Shukla says.
“The banking system has done well in supporting the financial need of companies, infrastructure projects and government needs. But the banks have different needs now and it’s hard to be the only provider of liquidity.’’
So far, only four bond issues are available. Petrochemical giant Saudi Basic Industries Corporation, Sabic, has listed three Islamic bonds worth SR16bn and Saudi Electricity Corporation has listed a sukuk worth SR5bn.
Although the Saudi government owns large portions of each company, it has indicated it will not interfere with the bonds, although many expect that state pension funds will purchase them.
The move is the latest of several by the CMA to improve the kingdom’s capital markets.
In April the CMA said it was conducting preliminary studies with a view to introducing “options, short-selling and futures” onto the Tadawul as well as exchange traded funds. It also reiterated demands for disclosure of any holders of more than 5 per cent of a company – a move aimed at improving transparency and ensuring that the 128 listed companies comply with corporate governance rules.
Last August, the CMA allowed foreign investors to purchase the benefits of shares through swap arrangements. Previously, only institutional and individual investors resident in Saudi Arabia with bank accounts had been allowed to buy equities.
But bankers say that while a listed bond market is a boon, more issues need to be listed – ideally Islamic bonds which many local investors and most banks would prefer.
Furthermore, bankers say more work still needs to be done in developing the equity capital market, which is dominated by speculators.
“I would like to see greater access to the market by foreign institutional investors,” one banker says.
“Flows of foreign investment only come when they can buy directly, so I would like to see them focus more on making the market more institutions-based.”
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Clinton clashes with Israelis over settlers
By Daniel Dombey in Washington
Published: June 18 2009 03:00 | Last updated: June 18 2009 03:00
Hillary Clinton, the US secretary of state, clashed face to face with her Israeli counterpart yesterday as the two countries remained at loggerheads over the expansion of settlements in occupied territory.
In what appeared one of the most tense encounters between the sides for several years, Mrs Clinton and Avigdor Lieberman, Israel's foreign minister, disagreed on both the US call for a complete freeze on settlement growth and Israel's contention that the administration of George W. Bush, the former president, had signalled that some expansion was permissible.
"We cannot accept this vision about absolutely, com-pletely freezing all settlements," Mr Lieberman said.
In response, Mrs Clinton underlined the US call for a "stop to the settlements", a move she described as "an important and essential part of pursuing the efforts leading to a comprehensive peace agreement".
The meeting at the state department in Washington confirmed that the countries remain at odds on settlements, in spite of the decision of Benjamin Netanyahu, Israel's prime minister, to endorse the goal of a Palestinian state. His declaration, which was subject to conditions, followed sustained US pressure.
Yesterday's encounter was all the more significant for Mr Lieberman's record as the leader of the far-right Yisrael Beiteinu party, who blasted the previous Israeli government's peace efforts. Mr Lieberman is not seen as a promising interlocutor by Barack Obama's administration, which has instead focused its demands on Mr Netanyahu.
"We must keep the natural growth," Mr Lieberman said yesterday, referring to the argument that settlements sometimes need to expand to keep pace with births and marriages.
The US argues that such references to "natural growth" have in fact enabled large-scale settlement growth in the past.
While Mr Lieberman suggested that Israel had reached "some understandings with the previous [Bush] administration" allowing natural growth, Mrs Clinton vigorously rejected such a claim.
"In looking at the history of the Bush administration, there were no informal or oral enforceable agreements," she said. "That has been verified by the official record of the administration and by the personnel in positions of responsibility."
In a recent article in the Washington Post cited by Mrs Clinton yesterday, Daniel Kurtzer, the US ambassador to Israel between 2001 and 2005, argued there had been no understanding to permit natural growth. He ack-now-ledged that drafts at one time under discussion suggested that construction in built-up parts of settlements could be allowed, but added that no agreement had ever been reached.
Another article by Elliot Abrams, Mr Bush's former adviser on the Middle East, argued that the Obama administration's emphasis on a settlement freeze would lead to "needless confrontation" with Israel.
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Assad calls for better ties between Syria and Armenia
Daily Star staff
Thursday, June 18, 2009
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BEIRUT: Syrian President Bashar Assad on Wednesday called for Syrian-Armenian relations to quickly move forward after he met with Armenian President Serzh Sargsyan, Syrian state news agency SANA reported. Syria has a large Armenian community, especially in the northern city of Aleppo.
Assad's talks with Sargsyan covered a range of other topics, including the prospects for Middle East peace.
During his talks with Sargsyan, Assad explained that he does not envision there being an Israeli partner for peace in the near future, SANA reported. However, Assad said that "this doesn't mean that we will stop talking or working for peace, and when that partner is ready, the peace plan will be ready and we will save time."
Assad also discussed the Palestinian situation with Sargsyan, SANA said.
Assad said that he listened to Sargsyan's views on the disputed Nogorno-Karabakh region during the two leaders' talks. The region is claimed by Azerbaijan but controlled by Armenia.
Assad expressed his hope that "this matter won't be a permanent crisis, because the critical problems, as we [are] taught in the Middle East, [only] become more complicated and more difficult."
He added that "I wanted to listen to President Sargsyan's viewpoint before my first visit to Azerbaijan to see how we could help resolve this problem." - The Daily Star
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EADS considers European company status
By Peggy Hollinger and Kevin Done
Published: June 16 2009 23:30 | Last updated: June 16 2009 23:30
EADS could take on European company status as Louis Gallois, chief executive, attempts to overcome internal resistance to greater integration at the highly political Franco-German aerospace and defence group.
Mr Gallois, speaking to the Financial Times from the Paris air show, said management had launched a feasibility study into the pros and cons of the corporate status created by the European Union.
Germany’s BASF and Allianz, France’s Scor and the Scandinavian bank Nordea have all joined the ranks of the Societas Europaea, or SE, as the European status is known. Launched in 2004, this allows companies operating in more than one EU member state to follow a single set of rules and reporting procedures, and so cut their international administrative and legal costs.
No decision had yet been taken, but Mr Gallois said the simplified structure for a company such as EADS with European operations split between its four founding states could mark “a significant step towards integration. It makes things clear and easier. It is a symbol, too”.
The symbolism is unlikely to pass unnoticed at EADS, which owns the European aircraft maker Airbus, and has since its foundation nine years ago been buffeted by personal and political rivalries between French and German camps. Mr Gallois, appointed two years ago as the group’s first sole chief executive when its dual management structure was abolished, has made integration of the various divisions under the EADS umbrella one of the priorities of his mandate.
Yet, this year his attempts to emulate rival Boeing by bringing together the defence and space divisions met both internal and political resistance, as it would have cut the number of divisional heads by one. The two businesses have now been asked to co-ordinate their actions in search of greater synergies, rather than integrate fully.
EADS has also angered its Spanish shareholder after demanding that the Spanish-based military transport activities report to the core Airbus business, located in Toulouse. This week the Spanish government failed to turn up for the ministerial discussions on repayable launch aid for the latest Airbus project – the A350 wide body aircraft – and its absence was widely interpreted as a sign of displeasure.
Mr Gallois said adopting the European company status could simplify the group’s structure even further. Currently operations in different countries required “lots of shadow companies . . . each with boards meeting and processes”.
However, the process of becoming an SE was “cumbersome”. There were complex tax and social questions that needed to be resolved before a decision could be taken.
Mr Gallois said the group was also looking at new ways to cut costs to respond to the current industry downturn. He expressed confidence that the group would meet cost cutting targets of €2.1bn by 2010.
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Italy lifts hope of Europe shift on Guantánamo
By Stanley Pignal in Brussels, Daniel Dombey in,Washington, Guy Dinmore and Giulia Segreti in Rome
Published: June 17 2009 03:00 | Last updated: June 17 2009 03:00
Italy has declared it would accept three inmates from Guantánamo Bay as the Obama administration steps up its efforts to persuade European partners to help it close the detention -centre.
Washington's push has been complicated by the reluctance of the US itself to take in detainees, as well as issues such as Europe's Schengen free-movement area. That allows passport-free travel between participating countries and means former detainees accepted by one state might be able to go to another.
The Italian decision to accept three Tunisian prisoners, announced by Silvio Berlusconi, the prime minister, in Washington on Monday night, came after European Union members reached a framework deal on sharing information on detainees resettled in the Schengen area.
The US hopes that the deal will smooth the way for more European count-ries to take in former det-ainees, with Barack Obama, the US president, describing himself as "very appreciative" of the agreement.
However, Washington still has to overcome many European countries' reluctance at a time when the political debate in the US is focused on the risk former detainees may pose.
Yesterday, David Miliband, Britain's foreign secretary, said the UK had "done its bit in terms of Guantánamo", while talks with Germany about Berlin accepting some of the Uighurs held at Guant-ánamo failed to produce a result.
Four of the Uighurs, who say they face torture if returned to their native China, have since been sent to Bermuda, in spite of the UK's objections, and the tiny Pacific nation of Palau has said it is ready to accept the remaining 13.
An Italian official told the Financial Times that Italy was ready, on a case-by- case basis, to accept more than the three Tunisians.
Franco Frattini, Italy's foreign minister, told reporters that the three Tunisians would be able to circulate freely in the Schengen area, provided they had no legal cases pending against them in Italy and that other governments did not object.
Mr Berlusconi's announ-ce-ment is already stirring dissent within Italy's centre-right government, with Roberto Maroni, the hardline interior minister, expressing his opposition.
While the US is seeking to relocate about 50 detainees who have been cleared for release, Anthony Dworkin, of the European Council on Foreign Relations, says "15 to 20" resettlements in the EU is more realistic.
Still, last week the US transferred more detainees from Guantánamo than at any time since Mr Obama took office vowing to close the facility by late January next year.
Yet while that total of nine detainees is the largest number of such transfers in over a year, it compares poorly with both the roughly 230 detainees still held and about 530 released or transferred during the Bush administration.
On Friday, when three Saudi nationals were sent home to take part in a "deradicalisation" programme, the Obama administration's hopes could be broadened to include some among almost 100 Yemeni detainees in Guantánamo - if Saudi Arabia and Yemen agree. Washington views Yemen itself as too insecure to keep track of former detainees.
Earlier in the week two prisoners - from Chad and Iraq - were also sent home, while another detainee was sent to New York to face trial.
Many in the EU now expect further arrivals from Guantánamo.
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Spain ready to take Guantánamo inmates
By James Matthews in Madrid
Published: June 17 2009 14:26 | Last updated: June 17 2009 14:26
Spain on Wednesday said it was ready to accept prisoners from the detention centre at Guantánamo Bay in Cuba in order to help US President Barack Obama’s administration close the controversial facility for suspected terrorists.
José Luis Rodríguez Zapatero, prime minister, approved the idea of accepting “a limited number” of prisoners. “We are favourably disposed and of course the number would be small in any case,” he said in a television interview. Italy has already agreed to take three inmates.
Spanish foreign, justice and interior ministry officials on Wednesday met Daniel Fried, a senior envoy of the US State Department and Hillary Clinton’s special representative for the closure of Guantánamo prison, to discuss the possibility of Spain taking in former detainees.
Miguel Angel Moratinos, foreign minister, had already expressed Spain’s willingness “in principle” to consider admitting former inmates, and the foreign ministry said on Wednesday that Spain was ready to “help with the closure of Guantánamo in every way possible”.
At a press conference after what Spain called a “technical meeting”, Mr Moratinos, who did not personally meet Mr Fried, confirmed the US had asked Spain to take four former inmates from Guantánamo prison. Mr Moratinos did not comment on their nationality, nor did he rule out the idea of the US approaching Spain with other cases in the future.
Spain’s foreign ministry said Spain would examine each transfer application in detail to ensure that the relocation of former prisoners conformed to both national and international law. It also stressed the need to guarantee “security and public order” within its borders.
While the prisoners do not have to establish a prior link with Spain, asylum regulations require that they do not have criminal records. Nevertheless, Mr Moratinos predicted a “surveillance system” similar to that imposed in 2002 on three Palestinian militants that Spain took in following the siege of Bethlehem’s Church of the Nativity.
On Monday, foreign policy representatives of the European Union agreed to cooperate with the US in its efforts to close Guantánamo. Dismantling the facility by January 2010 was one of US President Barack Obama’s first commitments in office.
However, the EU emphasised that the primary responsibility for finding safe harbour for released prisoners lay with the US. The deal also stipulated that the US must share all available intelligence, including that considered confidential, on all prisoners relocated to Europe. In addition, the US has promised to study the possibility of contributing to the costs.
The US plans to release detainees who do not face charges and cannot return to their country of origin for fear of reprisals. More than 230 inmates remain in Guantánamo and about 50 have already been cleared for release. Mr Obama has emphasised that some inmates will be transferred to prisons on the US mainland, although he faces stern opposition in Congress to this move.
On Tuesday, Italy became the first country to use the new EU-US agreement for taking in former terror suspects and has announced that it will accept three inmates of Tunisian origin.
Four Uighurs – Chinese Muslims – have already been admitted by Bermuda in an agreement that sparked a diplomatic row with the UK, which was not consulted despite retaining control over the island’s foreign policy. Thirteen others have been taken in provisionally by Palau, a group of islands in the Pacific.
Mr Fried will be in Madrid for five hours before continuing on a tour of European countries that have shown willingness to receive further Guantánamo detainees.
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Marc Hayek: Mystery man behind a Calvinist classic
By Haig Simonian
Published: June 12 2009 16:04 | Last updated: June 12 2009 16:04
Among Switzerland’s Hayeks, Marc is the mystery man. His grandfather, Nicolas, is revered as saviour of the mechanical watch industry.
His uncle Nick is chief executive of Swatch Group. And his mother Nayla has sat on the board since 1995 while, most recently, taking charge of a new watchmaking venture with Tiffany.
Marc, born in 1971, has always been the enigma. Brought up largely by his grandparents, many thought he was adopted, not knowing of his mother’s youthful pregnancy and the agreement of his father, soon divorced, that their son should bear the Hayek family name.
Reluctant daughter rises to her father’s challenge at Tiffany
He joined Swatch Group after leaving university in 1992, spending four years in public relations and marketing.
But in 1996, he felt the time had come to experiment on his own, opening a successful restaurant in Zurich. “I had to see what I could do for myself. I wanted to build something up,” he says.
It was with some regret five years later that he accepted an invitation from Jean-Claude Biver to take over as marketing head of Blancpain, one of Switzerland’s most famous watch brands.
Established in 1735, the company had flourished, but, like many others, struggled with the arrival of quartz. Bought by Mr Biver and a partner for a song in 1981 and significantly revived, it was sold to a predecessor of Swatch Group 11 years later.
Under Mr Biver, who later went on to revive Hublot, and his partner Jacques Piguet, Blancpain regained much of its former prestige.
While Mr Biver concentrated on sales and marketing, Mr Piguet looked after manufacturing, linking Blancpain’s component and movement operations with those of Frédéric Piguet, a bigger specialist that is now also part of Swatch Group.
But it was under Mr Hayek that growth really took off. Output has quadrupled to beween 12,000 and 13,000 units a year, turnover has climbed by about the same amount, while profits have surged about 30-fold. True to industry tradition, Mr Hayek declines to disclose Blancpain’s earnings. But analysts reckon the company made about SFr30m ($28m) in 2008, its record year.
Blancpain’s watches are produced in a neighbouring Valleé du Joux village to Breguet, Swatch Group’s other prestige brand. At a former farmhouse, 60 to 70 specialists work in small, friendly teams, concentrating intently on activities such as tourbillons and fine engraving. Underlining its position at the very top of the market, Blancpain is the second-biggest maker of tourbillon watches after Breguet, notes Mr Hayek.
Components come from Frédéric Piguet, the Swatch Group’s maker of movements for upmarket watches. Although the company also produces for other group brands and a limited number of third parties, Blancpain is by far its biggest customer.
But how has Mr Hayek managed to distinguish Blancpain from Breguet, its bigger and even more prestigious neighbour?
The two brands focus on classic men’s watches and are in roughly the same price bracket, although Blancpain’s tend to be a little cheaper because of the brand’s strength in sports watches, generally made from steel rather than gold.
“Breguet tends to be more French- influenced, while Blancpain is more Calvinist, more classic, even more understated,” he says. “They’re a bit like our elder brother.”
Sibling rivalry is not helped by the fact that Breguet is run energetically by none other than Nicolas, Mr Hayek’s grandfather.
“We have quite a lot of independence in terms of brand strategy, positioning and product development. Naturally, we co-ordinate a bit with Breguet. But the idea in Swatch Group is really to have an entrepreneur running each brand. Breguet is our benchmark. It’s very tough!”
One way in which Blancpain is distinguishing itself is by focusing on its tradition for performance watches. The Fifty Fathoms range was born after a commission from the French Navy in 1953 to develop a high-performance diver’s watch and has remained emblematic of the company ever since.
The series was refreshed three years ago, with bigger, chunkier and heavier watches based on a new movement, appealing to current tastes for watches with more of a presence. The change went down well, and the range now accounts for about one-third of Blancpain sales, with plenty of back orders – welcome in these troubled times.
Mr Hayek, himself a keen diver and sportsman, has turned to motor racing for his second way to broaden Blancpain’s appeal. “I wanted something that would suit our new line. We are growing, we needed something sporty, dynamic and touching a larger public,” he says.
The group has teamed up with Lamborghini, the Italian sports car maker, to sponsor a new single marque race series, the Lamborghini Blancpain Super Trofeo.
Six weekend challenges will be held on racetracks across Europe this year, with Mr Hayek one of the drivers behind the wheel. Appropriately, his own sleek black Lamborghini Gallardo sits outside the office.
But, arguably even more important for Swatch Group than the revival of Blancpain or Mr Hayek’s success on the track is another crucial fact.
As the only third-generation member of the family, and with no others likely, Mr Hayek reveals his wife is expecting their first child in September.
Soon, it seems, another Hayek will be emerging to continue the family watchmaking dynasty.
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Reluctant daughter rises to her father’s challenge at Tiffany
Complications, movements and haute horlogerie at the Baselworld Fair took a back seat to glamour this year, writes Carol Woolton.
A shining powder-blue temple of taste stood out like an elegant beacon among the serious, sober Swiss stand as people queued to view the debut collection of the new Tiffany Watch Company.
This is a partnership formed in 2008 between Tiffany & Co New York and the Swatch Group, combining the refinement of the New York brand with the distribution prowess of the world’s largest manufacturer.
The traditionally successful aspects of Tiffany watches, such as the Atlas and Tesoro collections, have had a most delicate design makeover, giving them a sleeker, modern look.
When searching for a safe pair of hands to tweak Tiffany watches into contemporary pieces that would appeal to markets around the world, Nicolas Hayek co-founder and chairman of the Swatch Group, decided to keep it in the family.
Who would understand the feminine brand of Tiffany and effect the necessary subtle changes better than Nayla, his only daughter, who has sat on the board of directors of the Swatch Group since 1995?
“I always tried not to enter the watch world,” admits Ms Hayek, a successful international Arabian horse breeder and judge. “But I have had strong views about our watch brands so my father said ‘if you’re always critical, then do something about it’.”
It must be difficult to avoid becoming immersed in watches when your family owns the world’s largest watch company. “As a family we look at watches all the time and talk about them,” she says. Even at Christmas lunch? “Yes, even then.”
At the fair, she is confident that accepting the challenge to become CEO of Tiffany Watch Co has been the right decision. “We’ve had tentative orders from the UK, Europe, the Middle East, Russia, China and Taiwan,” she says.
“I want to keep Tiffany as a feminine watch brand,” she says.“I wasn’t thinking about jewellery watches though because too many brands are doing that. The most important thing is to have a broad selection of designs.”
In Ms Hayek’s view, too many women’s watches are either jewelled pieces or smaller versions of a man’s watch. “This is the type of watch I search for as a woman,” she explains pulling out one of the newly-launched Atlas Lady pieces.
Ms Hayek owns about 30 watches including pieces by Rado, a couple of Longines including a diamond set L’Elegance evening watch, the Reine de Naples by Breguet and many by Blancpain. “It’s my favourite brand,” she says. “I love the understatement of Blancpain and the pure design. I will wear Tiffany but I’ve told them that I will still wear my Blancpain watches,” she laughs. “Well, I’ve got two arms.”
Fortunately for a brand famed for its high jewellery aesthetics, Ms Hayek loves diamonds so the 150-year heritage of classic diamond set vintage style evening watches a la Audrey Hepburn will flourish. “I like big stones and blue colours like aquamarines, topaz and turquoise.”
This explains the Tiffany piece de resistance at Baselworld, which is a full pave set cuff watch set with baguette diamonds with 5 Av set in the centre in scintillating blue diamonds.
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Rosatom agrees deal for stake in Uranium One
By Catherine Belton in Moscow
Published: June 15 2009 22:28 | Last updated: June 15 2009 22:28
Rosatom, the Russian state-owned nuclear group, has secured a 17 per cent stake in Uranium One, the Canadian miner, in a deal that gives it a greater presence in North America and could boost its plan for international expansion.
Atomredmetzoloto, or Armz, the uranium mining arm of Rosatom, is giving the uranium miner a 50 per cent stake in its Karatau mine in Kazakhstan. In return, it will receive 117m shares in the Canadian nuclear group worth $295m at Friday’s closing price, as well as $90m in cash.
The 50 per cent stake in Karatau will increase Uranium One’s output by 35 per cent, said Jean Nortier, chief executive of the Canadian group.
The deal is set to give a big boost to Rosatom’s attempts to increase supplies of uranium to Russia. The country’s domestic mining output has been falling even though Russia is still signing new deals to sell enriched uranium globally, analysts said. The country is also embarking on an ambitious plan to boost the share of nuclear generation in the country’s electricity output by building 26 nuclear power plants over the next 12 years. This year, Rosatom has signed significant co-operation agreements with Germany’s Siemens and Japan’s Toshiba.
The Uranium One deal includes an offtake agreement that gives Rosatom the option to purchase either up to 20 per cent of Uranium One’s global production, including that from Karatau, or more than 50 per cent of Karatau’s total output. Mikhail Stiskin, an analyst at Troika Dialog, said: “Essentially the mandate of Armz is to increase supplies of uranium to Russia. Until now it has been unsuccessful. This deal gives them the vehicle to do so.”
Vadim Zhivov, Armz’s chief executive, told the Financial Times that the deal was just the start of a strategic partnership in which the two companies would seek to make more acquisitions abroad.
“We have a plan for further expansion. We don’t expect this deal to be the last,” Mr Zhivov said. Mr Nortier told the FT the two companies would target Africa specifically for further expansion.
Rosatom has been seeking new and cheaper sources of uranium after it won additional enriched uranium supply contracts for the US and Japan this year. These included a landmark deal that will allow it to supply uranium directly to US companies for the first time in two decades.
But it has remained on the sidelines as global competition hotted up for uranium assets this year. Korea Electric Power Corp, for example, agreed to buy 20 per cent of Canada’s Denison Mines Corp in April.
“In a situation when rivalry for uranium assets has been growing more acute, Armz started pursuing a proactive mergers and acquisitions strategy,” Mr Zhivov said in a statement.
Armz has agreed not to increase its stake in Uranium One beyond 19.95 per cent for five years without the Canadian company’s consent.
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When China Rules the World
Review by David Pilling
Published: June 13 2009 02:11 | Last updated: June 13 2009 02:11
Cover of 'When China Rules the World' by Martin JacquesWhen China Rules the World: The Rise of the Middle Kingdom and the End of the Western World
By Martin Jacques
Allen Lane £30, 550 pages
FT Bookshop price £20
Books about China ruling the world used to be prefaced by “if”. Now, more often, they are preceded by the assumptive “when”. Such is the age we live in. Martin Jacques’ 550-pager on the ascent of China finds little space to consider the question of whether its rapid economic progress is unstoppable. It ignores almost entirely the other popular – and perfectly plausible – premise for books on the Middle Kingdom: “When China’s miracle goes phut”.
Jacques’ book is based on the extrapolation that, by 2050, China will be the biggest economy in the world, surpassing the US and India which, by then, will be third. By virtue of what Jacques calls the “merciless measure” of gross domestic product, China will be politically and militarily the most powerful country in the world.
We might argue about these two central premises, namely that China’s GDP will inevitably surpass that of the US, and that there is an almost mechanical relationship between economic output and power. These are legitimate points of debate for other books. Yet Jacques can be forgiven for making this leap of faith and asking what will happen to the world if, indeed, China becomes a dominant power.
Jacques’ thesis – argued clearly and logically, if somewhat laboriously – is that China’s rise will overturn “western” assumptions about what it is to be modern. To date, the world’s only successful economies of any size – with the exception of Japan – have been European or, in the case of the US, of European pedigree. The knee-jerk assumption of globalisation, he argues, is that as countries modernise they take on western characteristics. “We are so used to the world being western, even American, that we have little idea what it would be like if it was not,” he writes.
Jacques contends, not unreasonably, that China’s continental size, huge population, racial homogeneity and confidence in the centrality of its own civilisation make for a country capable of redefining what it is to be modern.
If Britain was a maritime hegemon and the US an airborne and economic one, then China will be a cultural one, he predicts. As Chinese confidence grows apace with its decisive emergence from two centuries of humiliation, its overriding attitude will not be one of catching up with the west, but rather of regaining its rightful place as the world’s pre-eminent civilisation. “As the dominant global power, China is likely to have a strongly hierarchical view of the world, based on a combination of racial and cultural attitudes,” he writes.
China will draw on its Confucian roots, a paternalistic ethos that, he argues, is not readily compatible with western democratic principles. He goes so far as to suggest that it would be best for China, indeed the world, if the “present regime continues” for some time, a verdict that this former editor of Marxism Today might not have advanced, say, about the Chile of Augusto Pinochet.
Much of the future Jacques foresees for China can be found in its past. He expects it to reassert elements of its ancient tributary relationship with neighbouring countries, leaving them alone so long as they pay cultural obeisance. China’s idea of itself as a living civilisation – what he calls a “civilization-state” as opposed to a nation-state – means it will never yield to assaults on its unity, particularly when it comes to Taiwan.
Jacques’ overriding point is that, in future, “the debate over values will be rooted in culture rather than ideology, since the underlying values of a society are primarily the outcome of distinctive histories and cultures”. His contention is that, since China’s culture and history are so formidable, it will not bend to western norms. If there is any bending to be done, it is the west that must yield.
That makes the book a useful corrective to those who assume that emerging superpowers, principal among them China, will recreate themselves in America’s image. Yet Jacques puts too much faith in culture as the ultimate arbiter of a nation’s destiny. He dismisses the argument of Chris Patten, the last British governor of Hong Kong, that the divide between east and west is more a question of time lag than intrinsic cultural difference. But in doing so, he goes too far the other way. He overemphasises Asia’s cultural predilections for community over individual, for social relationships over law, and for stability over freedom. In both south-east and north-east Asian culture, he writes, “the individual finds affirmation and recognition not in their own individual identity but in being part of a group”. These are sweeping statements that, at worst, sound like a Singaporean advertisement for Asian values.
Jacques’ writing on racism is revealing. Contrasting China with multicultural America, he presents it as an inherently racist culture more or less incapable of summoning a multicultural view of the world. “The fact that the Chinese regard themselves as superior to the rest of the human race, and that this belief has a racial component, will confront the rest of the world with a serious problem,” he writes. In what he describes as the “Middle Kingdom mentality”, he presents China as uniquely conflicted in its simultaneous feeling of superiority to other cultures and its inferiority to westerners who have overtaken it. These conflicted attitudes, for example, are common, and describe feelings of frustration and national inheritance denied (or at least postponed) in countries as far apart as Argentina and Japan.
In China’s rise, Jacques tends to see menace, albeit of a cultural rather than a militaristic nature. China’s view of itself as the centre of civilisation will, he says, lead to a “profound cultural and racial reordering of the world in the Chinese image”. But Jacques is more on the right lines when, elsewhere in the book, he talks about competing modernities. If, as he expects, China emerges as a world power to challenge the US, then modernisation is likely to be a two-way street, even a multi-lane highway, on which different versions circulate of what it means to be modern.
In the future, Americans may indeed watch more Chinese films and study Mandarin. But, by the same token, the Chinese will continue to learn from the west as its wholesale import of western capital, business practice and technology demonstrates. Just as Europeans and Americans may read more Confucius, so the Chinese will study more Shakespeare. It sounds like fun. The world is more likely to become multi-polar and culturally layered than recreated in China’s image. That is the whole point: China will not rule the world.
David Pilling is the managing editor of the FT’s Asia edition
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三井住友銀、ロシアで銀行免許取得 年内に業務開始
三井住友銀行は18日、子会社のロシア三井住友銀行が現地で銀行免許を取得したと発表した。日系企業向けに現地通貨ルーブルによる融資業務などを新たに展開できるようになる。40人程度の陣容で年内に業務を開始する。
同行は2005年に駐在員事務所を置き、日本円やユーロなどで融資や為替業務を展開してきた。成長市場での日本企業の活動を機動的に支えるにはルーブルを扱える現地法人が必要と判断した。
３メガバンクでは三菱東京ＵＦＪ銀行、みずほコーポレート銀行が現地法人を設立している。
ロシアは最近、株価も急回復している。今後、資源国としての恩恵を受ける可能性もあり、日系企業の投資意欲が旺盛であることを踏まえ、三井住友銀は現地法人化に踏み切った。(19:33)
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途上国の原発導入支援 産官学で組織旗揚げ
政府と産業界などは18日、原子力発電を新たに導入しようとする途上国などを支援するため、産官学連携組織「国際原子力協力協議会」を設立した。都内で第１回の会議を開き、途上国の人材育成や安全規制などで産官学が連携して協力することを決めた。これまで各省庁や民間での個別協力にとどまっていたが、一貫した受け入れ態勢をつくることで支援体制を強化する。(15:01)
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病気診断、遺伝子で10分 東レなど、ＤＮＡチップ実用化へ
微量の血液から病気の有無などを素早く診断できる「ＤＮＡ（デオキシリボ核酸）チップ」という次世代遺伝子検査技術の実用化に向けた動きが加速している。東レや東芝などが病院への普及を目指した検査法の標準規格をまとめたほか、三菱レイヨンなどは早ければ３年後の実用化を目指し厚生労働省に承認を申請する考えだ。実用化すれば遺伝子を手掛かりに個人の体質を簡単に調べられ、副作用が少ない治療が医療現場に広がると期待される。
ＤＮＡチップは手のひらサイズのガラス板などの上にＤＮＡを張り付けた検査器具。素材や半導体の技術を応用して作る。患者の血液などを上から落とすと、がんや感染症など病気の有無などが早ければ10分程度で分かる。(16:00)
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５月の粗鋼生産量、４カ月ぶり600万トン台 在庫調整が一段落
日本鉄鋼連盟が18日発表した５月の粗鋼生産量（速報値）は前年同月比38.5％減の648万8000トンだった。前年実績を下回るのは８カ月連続。ただ、減少率は２カ月連続で縮小し、前月との比較では13.1％増に転じた。
生産量が600万トン台を回復したのは2009年１月以来、４カ月ぶり。鉄鋼連盟は「自動車関連を中心に在庫調整が一段落した」のが原因としており、今後も「ゆるやかに回復していく」とみている。
炉別にみると、建材や自動車、電機など幅広い用途に使う転炉での生産は前年同月比37.9％減の484万1000トンだった。建材向けが多い電炉での生産は40.2％減の164万7000トンだった。(15:07)
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ライブドア側に賠償命令 東京地裁、虚偽記載認め6100万円
ライブドアによる有価証券報告書の虚偽記載で株価が急落し損害を受けたとして、大阪の建設機械製造会社など株主がＬＤＨ（旧ライブドア）や堀江貴文元社長（36）ら旧経営陣に計約１億5000万円の損害賠償を求めた訴訟の判決で、東京地裁（難波孝一裁判長）は18日、計約6100万円の支払いを命じた。
難波裁判長は判決理由で、有価証券報告書の虚偽記載があったと認定。そのうえで、虚偽記載が公表された場合、前後１カ月の平均株価の差額を損害額と推定する2004年の改正証券取引法（現金融商品取引法）の規定を適用した。
ライブドアによる虚偽記載の疑いが報道された06年１月18日を「公表日」として、公表日の前１カ月と後の１カ月の平均株価の差額１株585円を推定損害額と算出。ただ、株価の急落は堀江元社長の逮捕など虚偽記載以外の原因もあったとして、最終的に１株200円と損害額と判断した。(20:01)
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進む“銀証融合”米欧マネるメガバンク巨大化のワケ
「リスク管理技術を磨きつつ組織を維持できるのか」の声
三井住友や三菱ＵＦＪは「巨大化のワナ」から逃れられるだろうか（クリックで拡大）
三井住友や三菱ＵＦＪは「巨大化のワナ」から逃れられるだろうか（クリックで拡大）
規制が緩和され、国内の大手銀行と大手証券の距離がなし崩し的に狭まってきた。最近も、三井住友フィナンシャルグループが日興コーディアル証券などの買収を決めたばかり。大手行の主導で進む銀行と証券（銀証）の再編は、１９９０年代に米国で加速した銀証融合をほうふつさせる。が、その裏には「ワナ」も潜んでいる。
「銀証融合」の大先輩である米国も、もともとは法律（グラス・スティーガル法）で銀行による証券業務を禁じていた。それが８０年代後半以降、金融工学の発展に伴って「リスク管理技術が高度になれば、業務拡大は有益であり、財務体質も強化される」との見方が拡大。銀行と証券の兼業禁止は次第に緩められ、９９年には撤廃された。
一般に「銀行は預金を引き受け、所要自己資本を厳しく定められているため、証券会社に比べ資金調達力や資本力で優位に立ちやすい」（ＵＢＳ証券の大槻奈那氏）。
銀行と証券の間の高い垣根が外れると、シティなどの銀行グループが証券会社・投資銀行の買収を加速。対抗するようにゴールドマン・サックスなどの投資銀行も巨大化に突き進んだ。
そして、「銀証融合」で巨大化した米金融グループは、欧州の金融勢とともに金融派生商品、証券化商品の開発・取引を拡大。その結果どうなったかというと、米国で不動産バブルが弾けたのをきっかけに金融派生商品や証券化商品は壊滅的な状態に。昨年９月には米証券大手リーマン・ブラザーズが経営破綻し、リーマン・ショックに見舞われた米欧の巨大金融機関は公的資金注入に追い込まれた。
ここでクローズアップされたのは、銀証融合で巨大化した金融機関が陥った「巨大すぎて管理できない」という問題。
日本も９３年に、銀行、証券が子会社を通じて相互参入できるようになって以来、銀証間の垣根は低くなり続けてきた。国内金融の強化と国際競争力獲得に向け、金融庁が「ニューヨーク、ロンドンをイメージし、規制改革を進めてきた」（同庁幹部）結果だ。
規制緩和により「安定的に資金調達できる銀行主導で証券再編が進んできた」（大手証券幹部）のは事実で、その構図は米国と似ている。
米欧金融グループが失速した現在、日本の大手行グループは相対的に勢力を拡大。巨大化と多角化に突き進もうとしている。金融界からは「米欧の投資銀ノウハウを取り入れ、海外展開するチャンス」との声も上がる。
が、一方で「リスク管理技術を磨きつつ、その巨大化した組織を維持できるのか」とためらう声も。
日興コーディアル証券の買収に当初は意欲的だった三菱ＵＦＪグループが一転して“撤退”となったのは、傘下の三菱ＵＦＪ証券での顧客情報流失問題が影を落としたからだった。
「この問題で、三菱ＵＦＪのコンプライアンス（法令順守）とガバナンス（企業統治）が問われることになった。組織づくりを優先し、規模拡大を見送ることになった」（金融筋）という。
その三菱ＵＦＪは国内のモルガン・スタンレー証券と経営統合し、投資銀行業務などを充実させる計画だ。
巨大化とリスク管理のバランスをどうとっていくのか。大手行は巨大すぎて管理できないという「巨大化のワナ」に陥らないため、難しいかじ取りを迫られそうだ。
ZAKZAK 2009/06/18
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裁判員制度：宗教界から忌避の動き
日本カトリック司教協議会（岡田武夫会長）は１８日、司祭（神父）らの聖職者が裁判員に選ばれた際、辞退を促すとの見解を発表した。聖職者が裁判員として人を裁く立場になると、政教分離を定めたカトリック教会法に抵触しかねないというのが理由で、過料を払ってまでの不参加を勧めている。一方、真宗大谷派は死刑反対の立場から、制度見直しを決議した。
同協議会の見解は、司祭や修道者に裁判員候補者の通知が届いた場合、調査票・質問票に辞退を明記し、それでも選任された場合は、過料（１０万円以下）を払って参加しないよう勧める－－との内容。国内のカトリック信者は約４５万人で、辞退を促す対象は約７０００人という。
協議会によると、カトリック教会法は政教分離の理念から「聖職者の国家権力行使への参与」を禁じている。協議会がローマ法王庁に非公式に問い合わせたところ、聖職者が裁判員になるのは「教会法抵触のおそれがある」との回答だった。
参審制のイタリアやドイツなどでは、聖職者は参審員に選ばれない。日本の裁判員法には神父や僧侶を裁判員から除外する規定はない。ただ、裁判員になることで「精神上の重大な不利益」を受ける場合は辞退を認める規定があり、最終的には裁判所の判断となる。
一方、真宗大谷派（信者約５５０万人）は９、１０の両日、僧侶でつくる宗議会と門徒でつくる参議会が、裁判員制度の見直しを求める決議をした。同派は「殺してはならない。殺させてはならない」との仏教の教えを踏まえ、死刑廃止を主張している。決議は「死刑事件に裁判員としてかかわったとき、自らは死刑の判断をしなくとも、心の傷は一生自らを苦しめる」と指摘。「司法制度改革は、死刑を廃止することから始まらねばならない」と訴えている。
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著作権訴訟：５０年代邦画のＤＶＤ、著作権認め販売差し止め
１９５０年代に公開された邦画３作品の廉価版ＤＶＤを販売する「コスモ・コーディネート」（東京都中央区）に対し、著作権が存続しているとして映画製作会社「東宝」が販売差し止めや１３５０万円の賠償を求めた訴訟の判決で東京地裁は１７日、販売差し止めと１０８万円の支払いを命じた。清水節裁判長は「公開から７０年を経ておらず、著作権の保護期間内」などと判断した。３作品は「おかあさん」（成瀬巳喜男＜みきお＞監督）と「暁の脱走」（谷口千吉監督）、「また逢（あ）う日まで」（今井正監督）。判決などによるとコスモ社は３作品のＤＶＤ計３０００本を作製し１本１８００円で販売した。
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核融合実験：２６年までに開始で合意 ＩＴＥＲ機構
日本や欧州連合（ＥＵ）、中国など７カ国・機関で進めている国際熱核融合実験炉（ＩＴＥＲ）計画について、実施機関のＩＴＥＲ機構は１７、１８両日、水戸市で理事会を開き、重水素と三重水素を使った核融合実験を２０２６年までに開始することで合意した。核融合実験の目標が明示されたのは初めて。
ＩＴＥＲは、太陽で起こっている核融合反応を炉内で再現し、エネルギー源としての利用を目指す。実験炉の建設は、フランスのカダラッシュで昨年から始まった。これまでの計画では、核融合反応を閉じ込めるためのプラズマ発生を１８年までに実現することが合意されていたが、その後は未定だった。
また、理事会では主要施設だけを先に建設し、プラズマ発生を確認した後に全体の施設を完成させることも決めた。池田要・ＩＴＥＲ機構長は「リスクを減らし、確実に２６年までの核融合実現を目指すため」と説明した。
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Russia, China to Promote Ruble, Yuan Use in Trade (Update3)
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By Lyubov Pronina and Alex Nicholson
June 17 (Bloomberg) -- The leaders of Russia and China agreed to expand use of the ruble and yuan in bilateral trade to lessen dependence on the U.S. dollar a day after they took part in the first summit of the so-called BRIC countries.
“We agreed to take further steps in this direction, including, perhaps, by adjusting contracts and laws that already exist,” Russian President Dmitry Medvedev told reporters in the Kremlin today after talks with his Chinese counterpart Hu Jintao.
Russia, the world’s biggest energy supplier, wants to start selling oil to China in rubles, said Deputy Prime Minister Igor Sechin, who is also chairman of OAO Rosneft, Russia’s biggest oil company. Energy sales in rubles are a “strategic” issue for Russia, he said, adding that oil exports to China over the next 20 years will surpass $100 billion.
Brazil, Russia, India and China agreed yesterday to push for more clout in global financial institutions during what Medvedev called BRIC’s “historic” first summit in the Ural Mountains city of Yekaterinburg. China and Russia have called for a more diversified financial system to give emerging economies a bigger say in economic affairs, including the creation of alternatives to the U.S. dollar as a reserve currency. The four countries may also consider buying each other’s bonds, a notion that drew skepticism from some analysts.
‘Direction of Movement’
“This is not something for the immediate future, but rather a direction of movement,” said Stanislav Ponomarenko, a fixed-income analyst at ING Groep NV in Moscow. “I don’t think more than a few percent of reserves could be reinvested into BRIC bonds. What we’re seeing is a continuation of discussions to find an alternative to the dollar, yet nobody is going fundamentally to alter anything yet.”
China has the world’s biggest foreign-currency reserves, almost $2 trillion, while Russia is third with more than $400 billion.
Meantime, dollar bonds sold by the largest emerging-market countries are outperforming debt traded in reais, rubles and yuan. Bonds sold in dollars have beaten domestic debt in part because Russia and China manage the ruble and yuan. Those denominated in the U.S. currency can trade more freely, giving fund managers confidence they can sell the securities and get their money when they need it.
‘Market Decides’
“It’s not up to politicians to determine which currency will be the world reserve currency,” said Lutz Karpowitz, a currency strategist at Commerzbank AG in Frankfurt. “In the end the market decides it.”
The ruble weakened 0.1 percent to 31.2396 against the dollar in Moscow today after earlier strengthening as much as 0.4 percent. The yuan was little changed against the dollar on speculation China will prevent appreciation to avoid a prolonged slump in the nation’s exports.
Expanding the use of national currencies in trade and in mutual settlements “is a separate, important task,” Medvedev said today.
Even so, it will take “at least a couple of years” to start converting the first contracts into domestic currencies, said Elina Ribakova, Citigroup Inc.’s chief economist in Moscow.
‘Symbolic Value’
Today’s announcement has “important symbolic value,” she said. “If you take a 10- or 20-year perspective, trade between Russia and China will increase significantly.”
Total trade between the neighboring countries reached a record $56.8 billion last year, according to the Kremlin.
After today’s Moscow meeting, Russia and China signed an agreement worth $3 billion to cooperate in trade and investment in areas including light industries, high technology and energy.
The dollar’s status has come into question as leaders of the BRIC nations consider substituting other assets for their dollar holdings amid a ballooning budget deficit that keeps the U.S. dependent on foreign financing. China alone owns about $744 billion of U.S. Treasury bonds among its $2 trillion of foreign- exchange reserves.
Russian central bank First Deputy Chairman Alexei Ulyukayev’s comment on June 10 that Russia may sell some of its U.S. bonds to buy International Monetary Fund notes helped push 10-year yields on Treasuries to the highest level since October.
Brazilian President Luiz Inacio Lula da Silva today denied that BRIC leaders discussed buying each other’s bonds at the Yekaterinburg summit, after Medvedev’s top economic adviser said the matter might be discussed.
Dollar bonds sold by China earned 11.4 percent in the past year, more than double the 4.6 percent for debt in yuan, JPMorgan Chase & Co. indexes show. Brazil’s U.S. currency bonds returned 3.6 percent as real-based notes lost 4.9 percent, and Russia’s dollar bonds outperformed with a 1.9 percent loss compared with a 7 percent drop in ruble debt. India doesn’t have dollar-denominated debt.
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