Billionaires Burn Israeli Savers on N.Y., U.K. Deals (Update1)

Billionaires Burn Israeli Savers on N.Y., U.K. Deals (Update1)
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By Tal Barak Harif

Jan. 14 (Bloomberg) -- Israeli pension funds helped diamond mogul Lev Leviev snap up Manhattan real estate, including the former New York Times building, in 2007. Now they’re sharing in his losses as property prices plunge, dragging down the value of corporate bonds that backed the deals.

Fellow billionaire Yitzhak Tshuva has the same problem after the foray by his Delek Real Estate Ltd. into British property and roadside restaurants helped force its bonds down 73 percent. Pension funds and individual investors lost about 20 billion shekels ($5.1 billion), or a quarter of what they had invested in corporate bonds, as yields fell in the four months to November.

Now, under threat of a strike by Israel’s biggest union over pension losses, the government is proposing a bailout to help close the savings gap for people near retirement age. Concern that some companies could be wiped out helped drag the Tel Aviv Stock Exchange TA-25 Index down 44 percent in the past year.

“These real estate tycoons imported the global financial crisis to Israel,” said Gill Beeri, managing director of Ramat Gan, Israel-based Ayalon Financial Solutions Ltd. Its Smadar fund lost 14.1 percent in the first 11 months of last year. “There’s increased concern that these companies may default.”

Israel is the latest country to suffer from the collapse of the U.S. subprime mortgage market, which led to an economic crisis in Iceland, currency devaluations in Russia and street protests in Greece and Kuwait. There may be more fallout as the economies of the U.S., Japan and the countries of the European Union contract in 2009.

Five-Year Boom

Global economic growth will slow to 2.2 percent in 2009 from 3.7 percent last year, the Washington-based International Monetary Fund said Nov. 6. The IMF defines a world recession as expansion of less than 3 percent.

The slowdown is blunting a five-year boom, during which the Israeli economy grew an average of 5 percent annually. It may expand 1.5 percent in 2009, the slowest pace since 2002, the Bank of Israel estimated Nov. 20, when it abandoned a previous forecast of 2.7 percent. Israel’s economy will probably show no growth this year, Merrill Lynch & Co. said Jan. 11, cutting its estimate from 1 percent.

Overseas property purchases helped drive up the amount of corporate debt in Israel over the past five years.

Retirement Savers

The country’s 15 largest real estate companies have about 140 billion shekels in overall debt, more than three times the amount in 2003, according to Dun & Bradstreet Israel.

“Pointing a finger at Delek Group Ltd. and Delek Real Estate, as well as Africa Israel, as the central reasons for the situation in the capital and pension market is a radical distortion of the reality,” Delek Group said today in an e- mail. The companies “have always been able to cover their liabilities and will continue to do so in the future.”

About 50 billion shekels of that debt is in the hands of those saving for retirement in so-called provident funds, long-term investment vehicles similar to U.S. 401(k) accounts that offer tax-free savings for employees.

Investors are suffering partly because of the billionaires’ property losses and from concern the companies they control won’t be able to pay debts or find refinancing because of the credit crisis.

Manhattan Property

Leviev, 52, made his money as owner of the world’s largest cutter and polisher of diamonds and was No. 227 on Forbes’s list of the world’s richest people last year, with a net worth of $4.5 billion. His charitable activities include helping fund Jewish schools in his native Uzbekistan.

Leviev’s Africa Israel Investments Ltd. bought the former Times headquarters on Times Square for $525 million. It paid $200 million for the 19th-century Clock Tower building on Manhattan’s lower Broadway, saying it would be converted into 55 apartments designed by Italian fashion company Gianni Versace SpA.

Those overseas deals were backed in part by investors and fund managers who acquired the company’s bonds, rated AA by Standard & Poor’s-Maalot. Leviev, the chairman of Africa Israel, moved to London last year, spending a reported 35 million pounds ($51 million) for a property in the Hampstead neighborhood.

Tshuva is estimated by Forbes to be worth $3.5 billion. As a contractor, he profited from the construction boom during the immigration of Russian Jews to Israel in the 1990s. The 60-year- old took over Delek, Israel’s No. 2 oil and gas company, in 1998.

U.K. Holdings

Delek Real Estate has about 2.8 billion shekels in outstanding bonds, according to the Tel Aviv Stock Exchange. Africa Israel has 7 billion shekels, according to the company.

Their bonds were snapped up in oversubscribed offerings, and were the most-traded notes on the stock exchange in October, according to Bank Hapoalim Ltd.

In April 2007, Delek Real Estate bought 47 hotels in the U.K. operated by Marriott International Inc. It also acquired RoadChef Motorway Holdings Ltd., a U.K. operator of highway service stations, for $738 million and owns the building leased to Britain’s Foreign Office.

Israelis hold about 220 billion shekels in provident funds and employee benefit funds, the Finance Ministry said. Through November, provident funds lost an average 17.8 percent. The long-term investments account for about 30 percent of the 200 billion-shekel corporate bond market.

Strike Threat

The losses have investors heading for the exits. About 3.5 billion shekels were redeemed from provident funds in October, according to Meitav Investments & Securities Ltd., which tracks the industry.

On Dec. 14, the cabinet approved a plan by Prime Minister Ehud Olmert to guarantee pensions and long-term savings up to 750,000 shekels, or about $193,000, for people age 57 and older. He said the aim was to provide a monthly income equal to the country’s average wage, which is 8,210 shekels.

The decision came after the Histadrut labor federation, which represents more than a quarter of Israel’s workforce, threatened a nationwide strike. The government didn’t estimate a cost for the program.

During the deregulation of the capital markets in 2003, the non-bank credit market expanded as union pension funds were privatized and the banks were forced to sell their asset- management units, creating a new class of institutional investors who had previously invested mainly in government debt.

Investing Abroad

At the same time, developers took advantage of financing opportunities to invest abroad. Critics say that these changes in the market led provident and pension funds to buy riskier assets.

“Institutional investors were fighting to get the best short-term yields for long-term investments -- it didn’t make any sense,” said Ami Cohen, head of the union’s pension department.

Africa Israel said in August that it will sell 49.9 percent of its holding in the Clock Tower and 49 percent of the Times building, along with its entire stake in a Wall Street property, in order to pay back its debt.

“I don’t see any problems in covering our debt or liabilities,” Izzy Cohen, chief executive officer of Africa Israel, said in an interview.

Africa Israel’s inflation-linked notes due in 2012, which have dropped 65 percent in the past 12 months, were downgraded to A3 from Aa3 by Midroog Ltd., the Israeli unit of Moody’s Investors Service. Leviev’s net worth plunged by about 13 billion shekels as the company’s shares fell 91 percent in 2008.

Asset Sales

Tshuva’s Delek Group Ltd., the parent company of Delek Real Estate, has lost about 8.5 billion shekels in market value and was removed from the TA-25 this month.

Delek Real Estate said Oct. 29 that it planned to sell assets, including its RoadChef holding, to repay debt.

That pledge doesn’t comfort politicians who say Israel needs protection from toxic financial imports.

“There has been a group of businessmen that acted irresponsibly and with great greed,” said Avishay Braverman, chairman of the parliamentary finance committee. “Long-term savings have been thrown out of the window and there is a need for more oversight and regulation.”

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Irish bail-out reports fuel market jitters

By John Murray Brown in Dublin

Published: January 14 2009 11:37 | Last updated: January 14 2009 18:32

Fears over the worsening state of the Irish economy hit currency markets on Wednesday, following media reports that Brian Cowen, prime minister, had raised the possibility of a bail-out by the International Monetary Fund if public sector unions refused to accept big pay cuts.

Mr Cowen, who is in Japan on an official visit, later denied there had been any mention of an IMF rescue in talks last week with trade unions. The fund said it had not been approached by Dublin.

A trade union leader who had earlier issued a circular updating members on the talks insisted all references to the IMF were his own conclusions drawn from briefings with ministers.

But the jitters in the currency markets – with the euro losing a cent against the dollar before stabilising following government denials – underscored the mounting concern over Ireland’s ballooning public deficit.

Irish credit default swaps, which measure the market’s view of the probability a country will default on its sovereign debt, jumped close to record highs before Dublin’s denial. The government calculates that, if it sticks to the pay deal agreed with unions in September, the deficit will rise from 6.5 per cent of gross domestic product in 2008 to 10.5 per cent this year, and remain at 11-12 per cent up until 2013.

Members of the European Union are meant to keep within a deficit limit of 3 per cent over the economic cycle under the rules on monetary union.

The Irish government, in a submission to the European Commission last week, said it was aiming to bring the deficit to less than 3 per cent in 2013. “Given the worsening position, it is no longer practicable and sensible to do this in three years as it would layer too great a shock on the economy and would be counter productive,” it said.

Ireland, the first eurozone member officially in recession, has been hit by a domestic property crash, which has blown a hole in public finances. Tax receipts in 2008 were down 14 per cent on a year earlier.

The country’s exporters, meanwhile, are struggling to cope with the recent weakness in sterling. Brian Lenihan, the finance minister, has accused London of devaluing the pound by expanding the UK’s money supply.

“It is a question for all of us in the EU as to the extent to which a competitive devaluation can be used as a kind of weapon,” he said. The UK has “in effect produced a devaluation of the pound through expansion of the money supply. That has put us under immense pressure”.

An IMF paper last year warned that Ireland was more vulnerable to a US slowdown than other EU economies because of its dependence on foreign direct investment from across the Atlantic.

This was highlighted last week with the announcement that Dell, the US personal computer company, was closing its European manufacturing centre in Limerick and relocating to Poland, with the loss of 1,900 jobs.

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Gulf indices likely to be excluded from EM benchmark

By Robin Wigglesworth in Abu Dhabi

Published: January 13 2009 14:42 | Last updated: January 14 2009 13:19

MSCI Barra, the global market index provider, indicated last month that it would not include three large Gulf stock markets in its main emerging markets index, mainly due to “stringent” foreign ownership restrictions.

The result of MSCI Barra’s preliminary assessment of the equity markets of the United Arab Emirates, Qatar and Kuwait doused hopes that an inclusion in the important emerging markets index would bring a flood of passive, index-tracking capital into the region.

The UAE’s two main stock markets in Dubai and Abu Dhabi were the premier contenders to join the MSCI Emerging Markets Index.

However, the index provider said on 16 December that while the UAE was advanced in terms of market accessibility, the country suffered from a lack of segregation of custody and trading accounts, as well as the severe foreign ownership limits of Emirati companies.

Kuwait and Qatar are even less likely to be included despite being the oldest and the best performing stock markets in the region respectively.

“Kuwait still exhibits significant shortcomings in terms of market accessibility,” MSCI Barra said. “International investors have particularly expressed serious concerns relative to the disclosure and enforcement of market regulations as well as to the quality of the information flow.”

While MSCI Barra expected improvements on the regulatory front in Qatar, the “persistence of … very low foreign ownership significantly limits accessibility of the market.”

The index provider said it would continue monitoring developments and consulting with investors, and announce its conclusions no later than June 2009.

A senior Dubai-based banker said restrictions on foreign investments were likely to stay. “The mood has swung against foreign capital as people said it was hot money. The perception is that less foreign capital is a good thing.”

Early in 2008, overseas investors piled into Gulf stocks, hoping that elevated oil prices would decouple the region from financial woes elsewhere, and as a bet on possible currency revaluations amid rising inflation.

However, since the collapse of Lehman Brothers in September and the worsening of the global financial crisis, international investors have led an exodus out of Gulf stock markets, helping send the MSCI’s Gulf index towards its worst performance in years in 2008.

“With foreign investors heading out, there is less focus on corporate governance and less pressure for transparency,” the banker added.

This story has been corrected to show 16 December a the date of publication of MSCI Barra’s preliminary assessment.

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Iran and China sign $1.7bn oil contract

By Najmeh Bozorgmehr in Tehran

Published: January 14 2009 18:26 | Last updated: January 14 2009 18:26

Iran on Wednesday signed a $1.7bn oil contract with China bypassing international sanctions over the country’s nuclear programme.

Jiang Jiemin, the president of CNPC, China’s largest oil and gas company, and the head of National Iranian Oil Company, Seifollah Jashnsaz, signed the contract to develop part of North Azadegan oil field.

Iran’s energy sector urgently needs foreign investment to maintain production both to meet increasing domestic consumption and to maintain petrodollars in an oil-dependent economy. However, international sanctions have hindered major projects in Iran which sits on the world’s second largest oil and gas reserves.

Lack of investment in gas fields led to shortages last winter.

While US sanctions prohibit American companies from doing business, European majors are willing to develop oil and gas fields and stress Iran cannot be ignored in the long run. Europeans, however, have refused to sign any major contracts over the past few years due to uncertainty over the fate of Iran’s nuclear programme and difficulty in transferring money because of financial restrictions.

Iran has already shifted eastwards announcing that it cannot wait for western companies which have kept their foothold and continue negotiations for future projects to make investment decisions.

The North Azadegan oil field, located in southwestern Iran next to the Iraq border, has reserves of 6bn barrels of oil. The field is attached to southern Azadegan, the country’s largest oil field, the development of which was delayed when Japan’s Inpex withdrew in 2006 under US pressure.

Under the new contract, the Chinese company is due to produce 75,000bpd over 48 months. Iran hopes to earn an estimated $16bn in oil revenues over 25 years. The CNPC can develop the second phase of the same field if there is good progress in the newly-signed contract.

This follows China’s Sinopec contract in 2007 to develop the Yadavaran oilfield, while Malaysia’s SKS signed a $16bn gas contract the same year. Oil analysts doubt the two companies have done any major work so far, fuelling suspicions that Iran rushes to sign agreements to send a political message that sanctions have not been effective.

Oil analysts believe Iran has so far managed to maintain its oil fields and keep the production capacity at around 4.2m bpd but some accuse the oil authorities of doing so at the costs of damaging fields. They warn that if major investments are not forthcoming and new fields do not come on stream, Iran will face serious problems both for domestic consumption and exports.

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China becomes third largest economy

By Geoff Dyer in Beijing

Published: January 14 2009 14:20 | Last updated: January 14 2009 19:08

China overtook Germany to become the world’s third-largest economy in 2007 after the Chinese authorities revised upwards the figures for growth during that year.

China’s National Bureau of Statistics said on Wednesday that the economy expanded by 13 per cent in 2007, a sharp increase from the 11.9 per cent growth rate the authorities had previously stated.

With only the US and Japan larger than China, the new figures highlight the rapid transformation that the Chinese economy has undergone during the past 30 years since Mao-era controls were eased, although it is experiencing the toughest period in a decade as a result of the global financial crisis.

The fresh data will reinforce the case to give China and other large emerging economies a bigger role in global financial decision-making, even though China has been hesitant about taking on new responsibilities.

“It is symbolically significant that China is now bigger than Germany and it will not be too long before its economy overtakes [that of] Japan,” said Mark Williams at Capital Economics in London.

Many economists reckon that Chinese growth in 2009 will fall well short of the 8 per cent government officials are forecasting. It has slowed sharply in recent months. However, given the steep declines forecast for many developed economies, China will remain one of the main contributors to global growth.

In the medium-term, economists say that there is plenty of scope for China to maintain relatively high growth rates. Urbanisation and technology catch-up have decades to run. But the outlook is complicated by a rapidly ageing population and costs of damage to the environment.

Goldman Sachs forecasts that the Chinese economy will overtake that of the US by about 2040. The Economist Intelligence Unit forecasts in terms of purchasing power parity – which adjusts for price differences between countries to reflect actual buying power of local incomes – China will outstrip the US by 2017.

Despite rapid growth and hundreds of millions of people lifted out of poverty, China remains relatively poor. In the World Bank’s rankings of GDP per capita for 2007 using purchasing power parity, China took 122nd place at $5,370, behind Egypt, El Salvador and Armenia.

According to the IMF, Germany’s GDP was $3,321bn in 2007, using market exchange rates for that year. By the new estimate China’s GDP was $3,382bn. US GDP was $13,807bn and Japan $4,382bn. China is also close to surpassing Germany to be the world’s biggest exporter.

It was the second time China had revised upwards growth figures for 2007’s GDP, first calculated to be 11.4 per cent. Some suspect Chinese authorities of massaging figures to underplay economic volatility, exaggerating growth when conditions are tough, underestimating it when the economy is booming.

Germany’s economy has also slowed sharply, perhaps contracting by as much as 2 per cent in the fourth quarter, its statistical office said. First estimates, indicating that gross domestic product fell by between 1.5 per cent and 2 per cent compared with the previous three months, emphasise the downturn.

That is likely to intensify fears Germany’s recession will be the worst since the second world war, dragging down economies continent-wide. That would pressure policymakers to beef-up emergency rescue packages.

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Rice producers sound the alert as buyers default on contracts

By James Lamont in New Delhi and Javier Blas in London

Published: January 14 2009 02:00 | Last updated: January 14 2009 02:00

India's rice producers said yesterday that buyers in six countries were defaulting on contracts after bargaining for heavy discounts on orders and leaving shipments of high-quality basmati rice stranded at ports.

The All India Rice Exporters Association said it had circulated the names of nine companies, warning its members not to do business with them. The association declined to identify the companies but said they were based in Dubai, Saudi Arabia, Kuwait, Syria, the UK and Australia.

The association said that buyers were demanding discounts of $100-$200 a tonne as they sought to wriggle out of contracts struck when grain prices were higher.

European rice importers played down the significance of the defaults, saying the quantities of rice involved were small and the companies were unlikely to be able to buy rice from other countries as traders would be nervous about the possibility of further defaults.

The European traders portrayed the All India Rice Exporters Association public statement as an attempt to persuade New Delhi to scrap a $200 tax on basmati rice exports to gain competitiveness over Pakistan.

Vijay Setia, the president of Airea, said the companies were playing Indian producers off against their Pakistani counterparts and had "backtracked from their commitments" over the past month. Pakistan is offering rice at prices as low as $800 (€606, £549) a tonne, whereas Indian producers had agreed prices of $1,250 a tonne.

"The companies have the option to buy from Pakistan. They want Indian exporters to reduce their prices. Otherwise, they now go to Pakistan," Mr Setia said. In spite of a near-30 per cent price drop from last year's all-time high, basmati rice is trading at double its 2006 level.

The industry association is lobbying the Indian government hard to lift the tax and scrap a minimum export price of $1,200, imposed last year in response to fears that strong exports could leave the Indian domestic market undersupplied.

Traders said the government was looking at relaxing basmati rice export rules, probably lowering the minimum price or the export tax.

India's government had banned the export of non-basmati rice to prevent domestic shortages. Mr Setia warned of a "huge crisis" in rice farming, saying some farmers faced bankruptcy.

India shipped 1.8m tonnes of the premium grain in the financial year to March 2008. Agriculture contributes about 31 per cent to gross domestic product about 25 per cent of India's exports are agricultural products. More than 80 per cent of basmati rice grown in India is produced for export.

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Summit row exposes Arab divisions

By Heba Saleh in Cairo

Published: January 14 2009 14:29 | Last updated: January 14 2009 14:29

A row over the venue for an Arab summit to discuss Israel’s offensive on Gaza is threatening to deepen Arab divisions and to complicate Egyptian efforts to secure a ceasefire.

Fourteen Arab countries have accepted a Qatari invitation to an emergency summit on Friday, but regional heavyweights Egypt and Saudi Arabia have refused.

In an apparent effort to prempt the Qatari meeting Saudi Arabia called on Wednesday for an emergency Gulf summit on Gaza to be held on Thursday in Riyadh, further aggravating the general impression of Arab disarray.

Egypt and Saudi - both American allies - have been resisting pressure for such a gathering from Qatar and Syria since the start of the offensive almost three weeks ago. Egypt has said on Tuesday that an Arab League economic summit to be held in Kuwait next week would provide a suitable opportunity to discuss Gaza.

”The image of Arab countries is very bad,” said Amr Moussa, secretary general of the Arab League .”We must overcome [divisions] not aggravate them. There must be a consensus.”

The tussle over the summit is a reflection of a continuing power struggle over who speaks for the Palestinians pitting US allies Egypt, Jordan and Saudi Arabia against regional rival Syria, a main backer of Hamas and close Iranian ally.

Qatar, which pursues what is regarded as a maverick foreign policy has been pushing hard for the summit and using Jazeera TV to lambast opponents of the gathering by suggesting that they are failing the Palestinians.

“Why should Egypt give something to the Qataris, who have been attacking it for three weeks,” said Abdel Moneim Said, the head of the Al Ahram Centre for Political and Strategic Studies in Cairo.

“What you will get in Qatar is rhetorical grandstanding and an attempt to embarrass Egypt. They want Egypt to do things it cannot do such as break off ties with Israel or expel the Israeli ambassador, but how can it then talk to the Israelis to secure a ceasefire or to send supplies into Gaza, or even, as it did this week, get safe passage for a Hamas delegation to come out for talks.”

Although both Cairo and Riyadh have condemned the Israeli onslaught and have led Arab diplomatic efforts to try to bring about a ceasefire, the two blame Hamas for provoking the Jewish state—a position that is both unpopular with Arab public opinion and one that has opened them to criticism from regional radicals.

Egypt in particular has been the target of accusations that it has colluded with the Israelis because it received Tzipi Livni, Israel’s foreign minister, a day before the start of the attack, and also because it has refused to open the Rafah border crossing with Gaza to anything other than medical aid and the injured. Rafah is the only Gaza crossing not controlled by Israel.

Egypt has been holding separate talks with Israel and Hamas in an attempt to broker a ceasefire. So far, Hamas has refused Egyptian proposals for an indefinite truce with Israel and foreign monitors to ensure an end to weapons smuggling in the territory.

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Report sees Dubai population fall

By Robin Wigglesworth in Abu Dhabi

Published: January 14 2009 10:31 | Last updated: January 14 2009 10:31

Dubai’s recent surging population growth will reverse over the next two years as the troubled, but important, real estate and construction sectors cause the number of immigrants to slow and many expatriates to leave, a report said on Wednesday.

Over half of Dubai’s population is employed in the the real estate and construction industries, which are suffering from oversupply and a dearth of financing. Property prices fell 8 per cent in the fourth quarter, according to a report released on Tuesday.

This will shrink the number of residents in Dubai by 8 per cent in 2009 and 2 per cent in 2010, according to calculations by UBS, the Swiss bank, released on Wednesday. Over 90 per cent of Dubai’s populace are expatriates.

High-profile developments such as an artificial palm-shaped island and an extensive canal project have been delayed indefinitely. UBS estimates that 20 per cent of construction industry jobs could be lost this year, and 10 per cent next year.

“Anecdotal evidence suggests 30-40% of new infrastructure project launches in UAE have been either delayed or cancelled with strict project and resource rationalization underway,” the report said.

Breaking with precedent, Dubai on Saturday released its 2009 budget where it said that spending would rise 42 per cent to Dh26.5bn. However, the emirate’s finance department lowered its previous gross domestic product growth targets of 11 per cent a year to 2015 to a more modest 4 to 6 per cent.

Developers and construction companies are already cutting head counts, and the practice of allowing expatriates only one month to stay in the country after losing a job could exacerbate both declining property prices and population, UBS added.

Continued population growth in some neighbouring emirates, particularly in Abu Dhabi, the capital, would cushion the overall blow for the United Arab Emirates, according to UBS.

The bank estimates that number of people in the UAE federation will remain flat in 2009 before rising 2 per cent in 2010.

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Etisalat wins Iran mobile licence

By Robin Wigglesworth in Abu Dhabi, Najmeh Borzogmehr in Tehran and Tom Burgis in Bloemfontein

Published: January 13 2009 11:05 | Last updated: January 13 2009 18:30

A consortium led by the United Arab Emirates’ state-controlled telecommunications company said it had won a bid for Iran’s third mobile licence on Tuesday, making inroads into a potentially lucrative market.

Etisalat, which is more than 60 per cent owned by the UAE’s federal government, said its consortium beat operators including Zain, Omantel, Telekom Malaysia and Bharti Airtel with a €300m ($396m) bid for the Iranian licence.

Middle East telecoms companies – primarily in the Gulf – have expanded rapidly in recent years, making more than $43bn of licence purchases and acquisitions since 2006, according to figures by Dealogic, a data provider.

Although many domestic markets are protected and so generate revenues for mostly state-owned operators, telecoms growth in the region is blunted by low population and high mobile phone saturation.

Iran, on the other hand, has the second-highest population in the Middle East and North Africa region (after Egypt) and has a low mobile phone penetration rate compared with many other countries.

The Islamic republic only has two mobile operators, the state-owned Telecommunications Company of Iran and MTN IranCell, a subsidiary of South Africa’s MTN.

The telecoms industry is not directly affected by international sanctions, though western countries’ ban on dual-use equipment, which may be used in nuclear and missile-related activities, affects this and other sectors.

The main restrictions come from the Iranian government, which controls telecoms activity for security reasons, holding back the sector’s development.

Also in the Etisalat consortium is Tameen Telecom, a company owned by the Iranian Social Security Organisation. Etisalat will pay 49 per cent of the purchase price, while Tameen will pay the rest, the company said on Tuesday.

“We are confident of the growth potential of this important market, especially with our two-year exclusivity to offer 3G services,” said Jamal Al Jarwan, Etisalat’s chief executive of international investments, in a statement.

MTN, the first big foreign entrant into the Iranian market, arrived in late 2006 and had amassed nearly 12m subscribers by the middle of last year. Iran is MTN’s third-biggest market, behind Nigeria and South Africa.

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EU halts upgrade of ties to Israel

By Tobias Buck and Andrew England in Jerusalem and Heba Saleh in Cairo

Published: January 14 2009 20:34 | Last updated: January 14 2009 20:34

The European Union called a halt on Wednesday to plans to upgrade diplomatic and economic ties with Israel, as Egypt stepped up efforts to secure a 10-day ceasefire to provide a first step to ending the Gaza war.

In the latest sign of the international backlash against Israel’s military offensive in the Gaza Strip, which has left more than 1,000 Palestinians dead, Ramiro Cibrian-Uzal, head of a European Commission delegation to Israel, said upgrading ties at a time when Israel was “using its war means in a very dramatic, in a powerful way in Gaza” was “not appropriate”.

The EU move came as Egyptian officials said they had made progress in talks with a delegation from Hamas, the Islamist group that controls the Gaza Strip, and suggested that the strategy was to reach a 10-day ceasefire.

Hamas has been seeking changes to the initiative launched by Cairo last week, which calls for a temporary ceasefire and talks on how to end the blockade of Gaza and prevent the Islamist group from rearming.

Hamas officials said they had given their views on the initiative and expected Egypt to discuss them with Israel. But an Egyptian official said the positions of Cairo and Hamas were narrowing.

Amos Gilad, a senior Israeli defence official, is travelling to Cairo on Thursday for talks. But a spokesman for Ehud Olmert, Israel’s prime minister, said the government was “not interested in some form of temporary ceasefire that will only allow Hamas to rearm and that will end with another rocket barrage on Israel”.

European officials said the “time-out” on upgrading ties with Israel was not intended as a sanction and had been mutually agreed with Israel. But it did reflect the widespread dismay at Israel’s conduct in the conflict.

Brussels decided to open talks with Israel over upgrading relations in December, despite protests from Palestinian and Arab leaders. The precise nature of the upgrade had yet to be determined, but the EU was holding out the prospect of a regular political dialogue, Israeli participation in EU programmes and agencies and closer integration into the European single market for goods and services.

Egypt is under huge pressure to broker a speedy ceasefire and assert its position as the regional leader that can speak for the Palestinians and act in their interests.

Cairo has been feeling the heat from rivals such as Qatar, which has been pressing for an emergency Arab summit. Analysts say this would give it an opportunity to embarrass Egypt and Saudi Arabia, US allies.

Many in the region accuse Cairo of colluding with Israel in its offensive by keeping the Egyptian border with Gaza closed to everything except humanitarian supplies.

Qatar was attempting to host a summit on Friday but, in an apparent bid to pre-empt it, Saudi Arabia announced its own summit for Gulf leaders on Thursday to discuss Gaza.

Osama bin Laden, leader of the al-Qaeda terror group, also entered the fray on Wednesday. A recorded message on the internet called on Muslims to rally in support of the Palestinians in Gaza, and lashed out at Arab governments that he said were largely “allied with the Crusader-Zionist coalition”.

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Banks accused of failure to protect assets

By James Mackintosh

Published: January 14 2009 23:34 | Last updated: January 14 2009 23:34

UBS and HSBC are being targeted by investors who lost money in the alleged $50bn fraud run by Bernard Madoff. They argue the two banks should have guarded assets allocated to Mr Madoff’s business more carefully.

Lawsuits have been filed in New York and Luxembourg against the banks, among Europe’s largest, and more are being prepared, lawyers say. The role of the banks has already prompted a diplomatic spat between France and Luxembourg.

The two banks were the biggest European custodians for the “feeder” funds which funnelled billions of dollars to Mr Madoff, holding assets on behalf of investors.

“The assets that the funds were supposed to have were not really held by the custodians for the funds,” said Erik Bomans, a director of Deminor, a Belgian-based investor consultancy representing up to 50 investors.

“Certainly the liability of the custodian and the asset manager will be questioned, that’s for sure.”

Mr Madoff required his clients to open accounts giving custody to Bernard L Madoff Securities, his market-making and investment management business, forcing feeder fund custodians to outsource custody to him as a sub-custodian.

Custodians are rarely sued in offshore fund frauds because it is hard to hold them responsible under widely drawn contracts, say administrators and lawyers.

But at least five Madoff feeder funds were set up in Europe, which has strict rules to protect investors by ensuring custodians have “safekeeping” of assets.

The money at stake is enormous. The five European feeder funds managed more than $4bn, including some from private investors putting in as little as $50,000.

UBS has said repeatedly that it set up two onshore funds – the Luxembourg Investment Fund’s US Equity Plus subfund and the Luxalpha Sicav – at the request of wealthy families.

But Oddo et Cie, a French brokerage, plus at least two French private investors also put money into the UBS funds. Oddo is suing UBS, while one of the private investors has asked the Luxembourg regulator to mediate his demand for recompense from the bank.

HSBC said it has no liability in its custody business, although it has revealed it faces losses of $1bn on loans to Madoff-linked vehicles, while clients had $500m invested. UBS declined to comment on liability.

HSBC was sued in New York this week by Repex Ventures, a British Virgin Islands operation which invested $700,000 in Herald (Lux) US Absolute Return fund, a $225m fund set up in Luxembourg last year. The fund was run by Bank Medici, the Vienna-based bank taken over by regulators after its Madoff exposure was revealed.

HSBC was also custodian to the two Irish-based feeder funds, Bank Medici’s Thema International and the Landmark Investment Fund, managed by a Spanish brokerage.

The responsibility of custodians is complex, with European law interpreted differently in different countries. But watchdogs in Ireland and Luxembourg insist that custodians retain responsibility for what sub-custodians do.

The Commission de Surveillance du Secteur Financier, Luxembourg’s regulator, is already investigating the role of UBS and HSBC and others involved with Madoff funds.

The regulator said in a statement that depositary banks – custodians – “must know at all times in which manner the assets are invested and where and how these assets are available”.

“This responsibility is not affected by the fact that the depositary has entrusted to a third party all or part of the assets in its safe-keeping.”

The Irish financial regulator takes a similar view, saying that appointing a sub-custodian “does not absolve the trustee [custodian] of responsibility for the custody of the funds’ assets”.

However, UBS sought to limit its responsibility as custodian of Luxalpha by including a clause on the subscription form that contradicted the sales prospectus approved by regulators.

The form, to be signed by investors or their agents, said assets would be “safekept” by a US broker – although it did not name Mr Madoff, and investors would bear most of the risk of that broker’s default.

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Germany pushes consolidation of banking

By Paul Betts

Published: January 14 2009 20:17 | Last updated: January 14 2009 20:17

In one way or other, European governments are all trying to stabilise and consolidate their beleaguered banking industries. Paris is prodding some mutual banks to consider combining, and President Nicolas Sarkozy continues to have hopes of seeing a merger between BNP Paribas and Société Générale to create a new French banking champion. In Italy, there is talk of merging UniCredit with Mediobanca and ultimately combining the two with Generali to form a domestic financial colossus.

But it is perhaps in Germany where the federal government has been the most active in promoting consolidation in both the commercial banking industry as well as in the state banking sector, albeit in a more subtle behind-the-scenes manner.

Berlin has long nurtured the dream of consolidating the country’s banking industry around a handful of large groups. The government has stepped up its intervention with massive capital injections, state guarantees and in some cases taking direct or indirect stakes in commercial banks to prop up the system.

For many, this smacks of something akin to the old Deutschland AG model with financial institutions forging a web of cross-shareholdings to bolster and protect German companies from takeovers. The government has now also taken a 25 per cent direct stake in Commerzbank to ensure that its merger with Dresdner will go ahead. Allianz, the former owner of Dresdner, has also agreed to maintain a stake in the new banking combination.

The government has this week given a helping hand to Deutsche Bank in its bid to acquire a large stake in Postbank to beef up Deutsche’s domestic retail franchise.

Although Deutsche’s chief executive, Josef Akermann, has resisted turning to Berlin for support, he is now nonetheless likely to find the government as one of his new indirect shareholders to enable him to pull off his Postbank acquisition.

In short, instead of having to pay cash for his Postbank stake, he has agreed to a share swap that will see Deutsche Post take an 8 per cent in Deutsche Bank. As the Deutsche Post is 31 per cent-owned by the state development bank KFW, Berlin would become an indirect shareholder of Deutsche Bank – albeit on a temporary basis. In any case, it is obviously not in Deutsche Post’s interest to retain a stake in Deutsche Bank at a time when it has made it clear it wants to dispose of its banking business.

Tempting as the idea of Deutschland AG coming together again may be, the reasons for Berlin’s manoeuvres in the banking sector could lie elsewhere. The German government, like some of its European neighbours, is increasingly worried by the consolidation being undertaken in the US at great expense to the American taxpayer.

The US strategy, so goes the Berlin thinking, is clearly intent in creating a handful of giant US banks that will pose a huge competitive threat to a fragmented European banking industry.

The crisis is prompting not only significant consolidation in US banking but is forcing European governments to orchestrate similar combinations to protect the competitive position of their own banking industries. Berlin’s generous helping hand is now at least set to complete the consolidation of the German commercial banking sector around two big groups: Deutsche Bank-Postbank and Commerzbank-Dresdner.

For Berlin the bigger challenge will be to persuade the Landesbank state banks to accept finally the logic of consolidation. During the good times, there was little incentive for politicians to agree to such consolidation. The Landesbanks were nice trophy assets to hold and all sorts of vested interests argued against merging. The crisis has now turned these banks into huge liabilities and the federal government has also come to their rescue. In so doing, Berlin now has much more ammunition to push them into combining.

Defensive advertising

BNP Paribas seemed until recently to have fared better than most of its European peers in tackling the financial crisis. Yet its shares have also been hammered of late after losses at its investment banking division and problems with its proposed Fortis acquisition. This seems to have upset the bank’s top brass. To set the record straight, Michel Pebereau, the chairman, and Baudoin Prot, the chief executive, jointly signed a full-page advert published in French newspapers underlining the solidity of France’s leading bank. It seems they were anxious to reassure customers that their savings were safe with BNP.

This may indeed be so, but the problem with this type of advert is that it raises as many questions as it answers. First, does the public believe everything bankers say these days? Second, does such an initiative suggest the bank is feeling the pressure and is on the defensive? Third, if it does not live up to the commitments made in the letter could it not risk further upsetting investors and customers?

One cannot help recalling an advert published by Richard Gere and Cindy Crawford claiming their marriage was perfectly solid. Months later the celebrity Hollywood couple split up.

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UniCredit chief scrutinised as bank struggles

By Vincent Boland

Published: January 15 2009 02:00 | Last updated: January 15 2009 02:00

Alessandro Profumo, the chief executive of UniCredit, the Italian bank, is under such scrutiny these days that sightings of him boarding an aeroplane make the news, as if he were an elusive celebrity.

Italian media reported this week that he spent last weekend in Abu Dhabi seeking new investors to inject fresh capital into the bank.

As Italy's most high-profile banker, Mr Profumo has had to get used to scrutiny since the onset of the global credit crisis, which has hit UniCredit harder than other Italian banks. And there is plenty to be scrutinised.

There was the U-turn on raising new capital. There is the collapsing share price - down 75 per cent in 2008. And there was the revelation, buried in a prospectus released two days before Christmas, that clients of the bank could lose up to €805m ($1m) from the alleged fraud perpetrated by Bernard Madoff.

Mr Profumo is the architect of UniCredit. He turned a domestic Italian bank into one of the top five banks in Europe in the past few years through intense expansion into Germany and central and southern Europe.

Now there is speculation that some shareholders are plotting to replace him and to merge the bank with Mediobanca, the Italian investment bank.

Mr Profumo's spokesman says the merger idea is "pure fantasy", and both UniCredit and Mediobanca insist the issue has not been and is not under discussion.

He will not confirm the trip to Abu Dhabi, though the bank sold a non-core asset to an investment fund owned by the royal family there three weeks ago to raise capital.

Analysts say it is a relationship that UniCredit would like to maintain, especially since its biggest challenge now is convincing investors that it has enough capital.

It is completing a €3bn convertible bond issue. The 2008 dividend of about €3.6bn will be paid in shares. Along with disposals of non-core assets at the end of last year, these measures have raised UniCredit's core tier 1 capital ratio - the key measure of a bank's balance sheet strength - to 6.7 per cent.

However, this may not be enough. After the forced recapitalisations of banks elsewhere in Europe as a result of the credit crisis, Italian banks have among the lowest capital ratios. Almost all of them are under 7 per cent, and many are below 6 per cent.

Analysts say 7 per cent may be the minimum they will need, with some suggesting 8 per cent will be the benchmark sought by investors for European banks as they seek to recover.

Henry MacNevin, chief analyst for Italian banks at Moody's Investors Service, says Italian banks could get by with core tier 1 ratios of 7 per cent and upwards, compared with at least 8 per cent for some European peers because of their relatively small exposure to structured products.

"The main thing is that the banks continue to progressively raise their capital ratios over the next 12 to 18 months," he says.

The Italian government is one source of new capital. It has promised €20bn will be available if needed by the sector, although exactly how it might be used is uncertain. This is one reason why none of the banks have yet asked for state aid - concern about the strings that will surely accompany it from a government with a pronounced anti-bank streak. It may also be the reason Mr Profumo is keeping the lines open to Abu Dhabi - assuming, of course, that he actually went there.

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Russian considers stake in Evening Standard

By Ben Fenton and Salamander Davoudi

Published: January 15 2009 00:18 | Last updated: January 15 2009 00:18

Alexander Lebedev, the Russian billionaire and former lieutenant-colonel in the KGB, is understood to be in close discussions with Daily Mail & General Trust to buy a controlling stake in the Evening Standard. its London evening paper.

A person with knowledge of the talks said there would be no announcement today but said a conclusion was likely in coming days. He described it as “a very on-off process”.

Mr Lebedev would be the first Russian citizen to own a high-profile UK newspaper if the proposed deal went through.

He is believed to have been in direct discussions with DMGT, the Standard’s owner, over the sale of 75 per cent of the newspaper plus one share.

This structure is thought to give DMGT less liability when accounting the losses of the only paid-for evening newspaper in London.

The Standard is believed to lose somewhere between £10m and £20m a year but has been close to the heart of the Rothermere family, which controls DMGT.

The company is believed to have earlier rejected an attempt by Mr Lebedev to buy the newspaper outright.

Neither side has employed bankers to negotiate the deal.

Mr Lebedev, who is a member of the Duma, the Russian parliament, left the KGB to become a banker.

He made his fortune in that profession and now heads the National Reserve Bank in Russia.

He is also the owner of press interests in Russia, including the Novaya Gazeta newspaper, which has been critical of corruption there and whose main investigative reporter, Anna Politkovskaya, was murdered in 2006.

Mr Lebedev told the Bloomberg news agency on Wednesday: “This is not my way to make money, but I would like to explain to the public that newspapers are something they should love and cherish.”

Mr Lebedev said he would not take an active part in the news content of the Standard if he were to take control of it.

“Obviously I would be in charge of the financial side,” he said.

Mr Lebedev is thought to have been interested in buying a UK newspaper for some time but a person close to Independent News and Media said it was not true that he had made an offer to buy the Independent and Independent on Sunday, its London-based titles, .

Mr Lebedev’s son, Evgeny, spends much of his time in London and is a familiar figure on the social circuit.

The Lebedevs have met Lord and Lady Rothermere at social functions and, in a recent speech at a fundraising event, the younger Lebedev paid tribute to the peer.

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Russia speeds up rouble devaluation

By Catherine Belton

Published: January 14 2009 20:20 | Last updated: January 15 2009 00:06

Russia allowed the rouble to fall to its lowest level against the dollar in six years on Wednesday as it speeded up a step-by-step devaluation, conducting the third drop in the currency’s value in four days.

The rouble fell to Rs31.76 to the dollar, its weakest since February 2003. The move came as pressure mounted on the central bank to accelerate devaluation of the currency after it was disclosed this week Russia had spent a record $74bn in hard currency reserves in December defending the rouble.

Russia’s reserves have fallen by $160bn in the last four months amid central bank attempts to stem downward pressure on the rouble, which started after Russia’s war with Georgia in August and accelerated as the price of oil – a key Russian export – collapsed. A record $130bn fled Russia last year, data released this week showed.

Vladimir Putin, Russian prime minister, has insisted the government will not allow a sharp one-off devaluation, mindful of the memories of August 1998 when a 70 per cent devaluation wiped out the population’s savings overnight. The central bank has instead been gradually widening the rouble’s trading band against a euro/dollar basket. It did so for the 15th time on Wednesday as the rouble weakened to Rs36.3 against the basket. The rouble has now fallen 20 per cent against the basket since the bank began the mini-devaluations on November 11.

But economists argue the government’s options are running out because the gradual devaluation is adding to the pressure on reserves as investors bet on more weakening and shift money into dollars. The policy is also worsening a lending freeze, economists say.

The rouble needs to fall at least another 15 per cent against the basket to restore the balance of payments and stem the drain on reserves, estimates Anton Strouchenevsky, economist at Troika Dialog, the Moscow investment bank. If the central bank continues to allow the rouble to fall 1 per cent a day it could meet that level by the end of the month, he said.

But low interest rates on repo loans and government liquidity injections are stimulating further speculation against the rouble, meaning that the pressure could continue. “They are pouring oil on the fire. Unless the government closes up the sources of liquidity, downward pressure on the rouble could be endless,” he said.

“Whenever rouble liquidity is pumped in by the government to stimulate the economy, the logic of this money finding its way out of the door is extremely strong,” said Rory MacFarquhar, chief economist at Goldman Sachs in Moscow. “They need to do the [devaluation] as fast as possible and everything is in suspended animation until they do.”

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Medvedev to host talks on gas dispute

By Joshua Chaffin in Brussels and Ed Crooks in London

Published: January 14 2009 18:49 | Last updated: January 14 2009 18:49

Russia has invited European Union leaders and Ukraine to a meeting in Moscow at the weekend in an attempt to resolve the dispute over natural gas supplies that has left thousands of people in south-east Europe without fuel.

The invitation from Dmitry Medvedev, Russia’s president, came after José Manuel Barroso, the European Commission president, warned that Moscow and Kiev could no longer be considered reliable energy suppliers to the EU unless they allowed gas flows to resume.

“If the agreement [on pipeline monitoring] sponsored by the EU is not honoured as a matter of urgency, the Commission will advise EU companies to take this matter to the courts,” he told members of the European parliament.

The seriousness of the disruption is provoking a reassessment of Europe’s reliance on Russian gas, which provides about 25 per cent of its needs.

“We are in a different world,” said Professor Jonathan Stern of the Oxford Institute for Energy Studies. “This is hugely significant for European views of Russian gas supply.”

But making a difference to Europe’s energy security will be a long and difficult process.

The top priority will be to build more gas interconnections among members, according to EU officials, who argue that Bulgaria and Slovakia were hardest hit by the crisis because they were most isolated from the European energy grid. This meant other member states were unable to share their reserves.

“If you had a better gas market, you would have much more flexibility to deal with this,” said Christian Egenhofer, of the Centre for European Policy Studies. Increasing gas stocks would also provide a greater cushion in future crises.

However, that would mean investment in uncommercial infrastructure, needed only in a crisis, that the private sector will be reluctant to make.

EU policymakers have been reluctant to set obligations for gas storage because of the cost and difficulty of building new capacity.

Other options include pipeline projects – Nord Stream under the Baltic and South Stream under the Black Sea – connecting Russia directly to the EU. If in place, they would have greatly reduced the impact of the crisis for EU members, according to Prof Stern.

Opponents argue that by changing the route but not the source of the gas would simply entrench Europe’s dependence on Russia.

The proposed Nabucco pipeline would bring gas from the Caspian region, bypassing Russia and Ukraine, but it is not clear where the gas can be found to fill it. Azerbaijan looks the best bet, but it may not have enough spare gas for export to make the project viable.

Turkmenistan, Kazakh-stan, Iran and Iraq are other possibilities, but all present formidable difficulties.

Importing more liquefied natural gas is another option.

LNG supplied about a tenth of the EU gas market in 2007, and a significant amount of new import capacity is being built.

However, Frank Harris of Wood Mackenzie, the consultancy, warns that in the long term global demand for LNG will grow, particularly in Asia, and that many of the countries that might provide additional supplies – such as Nigeria, Venezuela and Iran – are also problematic.

Renewable energy has been advocated by EU policymakers as a way to strengthen security of supply.

But the rise of wind power could be counter-productive because it requires fossil fuel generation, often gas-fired, to back it up when the wind does not blow.

The other alternatives are increasing use of coal, which would improve security but have terrible effects on carbon dioxide emissions, and nuclear generation, which is expensive, slow and controversial.

In a worrying turn, Bulgaria and Slovakia have both announced plans to restart nuclear reactors they had previously shut as a condition of their EU accession.

The EU may be able to make its supply sources more diverse, but even that will take political and financial commitment.

“We shouldn’t have any illusions. It will take time,” a Commission official acknowledged, noting: “We haven’t got a gas reserve under the [Commission’s] Berlaymont building we can draw on.”

Until that changes, the EU will just have to make the relationship with Russia and Ukraine work.

----------------------------
EU threatens legal action over gas dispute

By Isabel Gorst in Moscow and Roman Olearchyk in Kiev and Joshua Chaffin in Brussels

Published: January 14 2009 11:31 | Last updated: January 14 2009 16:26

The European Commission is threatening legal action against Russia and Ukraine if they do not restore gas flows to Europe in a sign of mounting frustration at a crisis that has left thousands without fuel in the dead of winter.

”I would like to convey a very clear message to Moscow and Kiev: If the agreement sponsored by the EU is not honoured as a matter of urgency, the Commission will advise EU companies to take this matter to the courts,” Jose Manuel Barroso, the commission president, told the European Parliament in Strasbourg on Wednesday.

“If the agreement is not honoured, it means that Russia and Ukraine can no longer be considered reliable energy suppliers to the EU,” Mr Barroso added.

Patience among European energy companies is wearing thin, even among traditionally supportive partners. The Financial Times has obtained a letter addressed to Alexei Miller of Gazprom and Oleg Dubin of Naftogaz, dated January 12, in which four of Europe’s biggest gas importers complain about the “unprecedented” stop of gas flows.

In the letter Eon Ruhrgas, GDF Suez, Eni and RWE Transgas brand the action “completely unacceptable” and claim that both sides are using “bureaucratic details” to delay the resumption of deliveries.

A spokesman for Eon Ruhrgas declined to comment on Wednesday about whether the company was considering legal action but said Eon remained in ”close contact” with its European competitors.

Meanwhile, in Moscow, Dmitri Medvedev, the Russian president, instructed Gazprom to take legal action against Ukraine to recover $1.1bn worth of losses incurred so far in the dispute.

Mr Medvedev, a former chairman of Gazprom, was speaking the day after the company declared force majeure on its gas sales to Europe, blaming Ukraine for blocking access to markets.

Gazprom opened the gas tap to Ukraine again on Wednesday raising hope of a resumption in supplies to Europe a week after they were halted.

But in a repeat of events on Tuesday, Naftogaz, the Ukrainian state gas company, refused to accept the gas, saying Gazprom had chosen a technically unviable route.

Yulia Tymoshenko, the Ukrainian prime minister, said the pipeline route chosen by Gazprom ”did not permit the transport of Russian gas to the European Union,” and accused Moscow of deliberately complicating the flow of gas through Ukraine’s pipelines.

The continuing dispute between Russia and Ukraine was ”most unacceptable and incredible,” Mr Barroso said.

Officials from European countries worst hit by the crisis rushed to Moscow and Kiev for emergency talks. Robert Fico, the prime minister of Slovakia, which claims to have 12 days of gas reserves left, appealed to Ukraine to release emergency gas supplies from storage during talks on Wednesday morning in Kiev with Yulia Tymoshenko, his Ukrainian counterpart.

Mr Fico later joined the prime ministers of Bulgaria and Moldova in a meeting with Vladimir Putin, the Russian president, in Moscow . Mr Putin accused Ukraine of taking Europe hostage in the dispute about gas supplies. “No country has the right to take other countries hostage, taking advantage of their transit role,” he said.

Viktor Yushchenko, Ukraine’s president, arrived in Poland on Wednesday to shore up support for Ukraine’s position.

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Coffee shortage brewing after poor Brazil crop

By Chris Flood

Published: January 14 2009 02:00 | Last updated: January 14 2009 02:00

A substantial fall in Brazilian coffee production this year looks likely to drag the global coffee market into a supply deficit in 2009-10, according to the International Coffee Organisation which released its latest monthly report yesterday.

The ICO said Brazil's coffee production, which follows a biennial cycle (high output one year followed by low the next), could fall from 46m 60kg bags in 2008-09 to between 36.9m and 38.8m bags this year, a drop of 16 to 20 per cent.

The ICO said the preliminary crop forecast for Brazil implied a shortfall of at least 5m bags for world supply in 2009-10 but cautioned that a more accurate picture would emerge once production estimates from other countries were published in the near future.

In New York, ICE March arabica coffee futures firmed 0.2 per cent at $1.1470 per pound following a drop of 17.7 per cent last year.

Global coffee consumption in calendar year 2008 is estimated at 128m bags, a rise of 2.4 per cent on the previous year and matching annual consumption growth since 2000, with little evidence of the global financial crisis affecting demand. Consumption could rise to more than 132m bags in 2009 and 134m bags in 2010 if future demand growth matches the historic average.

In London, Liffe March robusta coffee futures dipped 1.3 per cent to $1,643 a tonne following a fall of 7.8 per cent in 2008.

Oil prices staged a rebound on hopes of further government action to address the credit crisis after Ben Bernanke, chairman of the US Federal Reserve, said more capital injections and guarantees for financial institutions could be needed.

Nymex February West Texas Intermediate recovered from early weakness to rise $1 to $38.59, trading between a low of $36.10 and a high of $39.50. The March WTI contract traded $1.25 higher at $44.90.

The large spread which has developed between the February and March contracts has been attributed partly to expectations that oil companies will deliver more of the supplies that have been stored in offshore tankers to the US mainland now that the tax year end has passed. Crude oil in storage at Cushing, Oklahoma, the delivery point for WTI, has reached record levels and traders expect further deliveries from offshore tankers to be evident in the US weekly inventories data, due out today.

ICE February Brent rose $2.09 to $45.00 a barrel after touching a high of $45.59.

The rise for crude prices came in spite of the US government warning that a steeper fall for global oil consumption was likely this year. The Energy Information Administration revised its 2009 global demand forecast to a fall of 810,000 barrels a day, compared with its earlier projection for a decline of 610,000 b/d.

The EIA said that total US consumption fell 5.7 per cent in 2008 and that a further decline of 2 per cent was expected this year, with only a modest rebound of 0.8 per cent likely in 2010.

Gold firmed 0.6 per cent at $825 a troy ounce, moving between a low of $815.05 and a high of $829.80, helped by the rebound in oil prices.

Base metals reversed early falls following Mr Bernanke's comments.

Copper rebounded 3.5 per cent to $3,360 a tonne in spite of reports that an official from China's State Reserves Bureau had said there was "no massive rush" to resume buying stocks of the red metal for the country's strategic reserves.

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Big hunt for small change in Argentina

By Jude Webber in Buenos Aires

Published: January 13 2009 22:15 | Last updated: January 13 2009 22:15

Argentines scrambled to get their hands on scarce small change to pay for a hefty 22 per cent rise in bus and train fares on Tuesday, despite the government’s having announced that year-on-year inflation was just 7.2 per cent.

Thousands of commuters faced long queues at money-changing counters set up at stations to get their hands on coins.

Most fares can be paid only in cash but getting coins has become difficult in the past year.

Shopkeepers routinely put up signs saying “no coins” in their stores, or refuse to part with any coins they do have.

Consumer groups have reported a thriving black market in money changing, and 100 pesos ($29, €22, £20) is routinely changed for 95 pesos in coins.

They say coins are being sold abroad for their base metal value and that private bus companies hoard them.

Last year the central bank increased the number of coins in circulation by more than 500m, a rise of 13 per cent from 2007.

The perennial lack of change brings home to many Argentines the difficulty of keeping up with rising costs.

Public faith in official inflation numbers has evaporated in the past two years, since the government ejected key officials at the national statistics institute.

The administration is widely believed to have manipulated the figures since then.

Independent economists say inflation peaked near 30 per cent during 2008 and ended the year at about 20 per cent after the economy started to slow sharply.

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「液漏れしない」アルカリ乾電池、日立マクセル

　日立マクセルは電池内の液が漏れない設計にしたアルカリ乾電池「ボルテージ」全22品目を4月1日に発売する。製品の負極に用いる亜鉛の組成を変え、液漏れの原因となる水素ガスの発生量を抑えた。単3形と単4形の電池では正しく使用しても液漏れした場合、電池や使用した機器の修理・交換を受け付ける補償もつけることで販売を促進する。

　ラジオやＩＣレコーダーなどの機器に電池を入れたまま、電源を入れずに長期間放置すると「過放電」状態となる。これが電池内に水素ガスを発生させるが、ガスを逃がすさいに液漏れが起きていた。ボルテージでは過放電状態でも水素ガスの発生を抑えて、液漏れをほぼゼロにしたという。

　単1形から単5形までと9ボルトの角形をそろえた。オープン価格だが店頭想定は単3形の4本パックが500円前後。全国の家電量販店やスーパーなどで売り出す。(11:36)

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２０１６年東京五輪招致の支持は７０・２％ 2009.1.15 15:29

　２０１６年の五輪招致を目指す東京オリンピック・パラリンピック招致委員会（会長・石原慎太郎都知事）が招致の賛否を問う世論調査を実施し、全国で賛成が７０・２％だったことが１５日、分かった。平成１９年１２月に招致委が行った前回の世論調査では賛成が６２％で、課題とされていた世論の支持率をアップに成功した格好だ。１０月の開催都市決定を控え、国内の招致活動の追い風になるとみられる。

　世論調査は招致委が民間の調査会社に委託して１０代から６０代以上までの全世代を対象にインターネット上で実施。事前に居住地や年齢などの属性を登録しているインターネットのアンケートモニターが回答する方法で、都民１０００人、全国２０００人、計３０００人から回答を得た。

その結果、招致賛成は全国で７０・２％、東京都内で６８・６％だった。

　調査結果は２月１２日までに国際オリンピック委員会（ＩＯＣ）に提出する詳細な開催計画書「立候補ファイル」に盛り込まれる。明確な基準はないが、ＩＯＣは開催都市決定に際しては世論の支持を重視しており、例えば２０１２年の五輪開催都市のロンドンの場合、７割前後の市民の支持があった。

　２０１６年五輪招致の立候補都市は、東京、シカゴ（アメリカ）、マドリード（スペイン）、リオデジャネイロ（ブラジル）の４都市。東京はインフラ、治安、宿泊施設などが高く評価され、２０年６月の開催立候補都市１次選考をトップで通過。しかし、ＩＯＣによる世論調査の支持率では、マドリードが９０％、リオデジャネイロが７７％、シカゴが７４％と軒並み７割以上だったのに比べ、東京は招致委の調査よりもさらに低い５９％にとどまり、世論の支持率が最大の課題とされていた。

　五輪招致をめぐっては、昨年１２月に超党派の国会議員による招致推進議員連盟（会長・森喜朗元首相）が発足、今国会中に衆参両院で招致決議が行われる見通し。政府も大会運営で赤字が生じた場合の補填（ほてん）を約束する「財政保証」を行う方針で、国を挙げての支援態勢が整い始めている。

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築地市場移転先、汚染処理費は試算半額の５８６憶円　
2009.1.15 15:09

　東京・築地市場（東京都中央区）の移転先の豊洲地区（江東区）から有害物質が検出された問題で、東京都が汚染処理費を検討した結果、当初見積もられていた１０００億円超を大幅に下回る５８６億円になることが１５日、分かった。また工事期間も短縮され、開場時期は平成２６年１２月となる見通しとなった。

　汚染対策をめぐっては、都の専門家会議が予定地の土や地下水から環境基準の最大４万３０００倍のベンゼンなどの有害物質を検出。移転予定地の地下２メートルまでの土壌の入れ替えや、入れ替え後に土壌の上に高さ２・５メートルの盛り土を行い、東京ドームの約１・４杯分にあたる約１７０万立方メートルの土を投入する国内最大規模の工事を実施するよう要求。汚染対策費は１０００億円を超えると試算されたほか、開場時期も夏季五輪招致が開催される平成２８年度までずれ込むと予想され、五輪招致を目指す都は移転後の築地市場の跡地に建設を予定していた報道機関の取材拠点「メーンプレスセンター」を、東京ビッグサイト（江東区）に建設することを決めた。

　だが、専門家らによる「技術会議」で、汚染対策などに対応するための工法を検討した結果、高濃度のシアン、ベンゼンなど有害物質の処理は、費用のかかる高熱処理よりも中熱処理で対応可能と判断した。さらに、濃度の低いものについては水などによる洗浄処理で可能なことも判明。土壌入れ替えの際、入れ替えた土壌を取り置く場所も、高い輸送費のかかる都外ではなく、都内で確保できるとしている。

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高校入試副申書問題で県教委が注意呼びかけ　和歌山
2009.1.15 02:09

　県内の一部公立中学校が県立高校入試の出願時に同和地区出身の生徒の事情に配慮してもらえるよう「副申書」で伝えていた情報を、志望校側が「地区出身」と明記して分類し、県教委に報告していた問題で、県教委は県内の市町村教委と県立学校長会で説明し、留意事項を再通知することを決めた。

　副申書は中学校側が必要に応じて不登校や病気、農業後継者など一部の生徒の特別な事情を記載し、志望校に提出する書類。平成２０年度は５３１件が提出され、うち６６件で「地区出身」などと不適切な表現で分類、報告されていた。

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三浦元社長の単独犯行と発表　白石さん変死巡りロス市警

2009年1月15日11時37分

　【ロサンゼルス＝堀内隆】米ロサンゼルスで７９年、白石千鶴子さん（当時３４）が変死体で見つかった事件で、ロサンゼルス市警は１４日、白石さんと交際していた三浦和義・元会社社長（昨年１０月に自殺）の単独犯行による殺人とする捜査結果を発表した。

　三浦元社長は、８１年に妻の一美さんをロサンゼルスで銃撃し殺害した容疑で昨年２月にサイパンで逮捕され、昨年１０月にロサンゼルスに移送された直後に拘置所で自殺した。そのため訴追はされず、いわゆるロス疑惑をめぐる捜査はすべて終結した。

　白石さんは７９年３月、ロサンゼルスに渡航した直後に行方不明になり、同５月に遺体で見つかった。三浦元社長は白石さん、一美さんの事件のいずれも関与を否定していた。

　三浦元社長自殺後も捜査を続けていたロス市警は１４日の記者会見で、三浦元社長がロスからの帰国後に白石さんの銀行口座から預金をほぼ全額引き出し、アパートから衣類や化粧品などの私物を持ち出していた▽白石さんの失跡について「母の看病に行った」「北海道に行った」などのうそを周囲に話していた、などの不審な行動を状況証拠に挙げ、「８１年の事件は金銭目的だった。同じ理由で白石さんを殺害する能力も動機もあった」と結論づけた。

　第三者の関与についてロス市警のリック・ジャクソン捜査官は「ほかのだれかが関与したことを示す証拠はない」と否定した。

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富山大、お家騒動　学長再選に６学部反旗

2009年1月15日7時50分

　富山大学（富山市）で昨年１２月に再選された西頭徳三（さいとう・とくそう）学長に対し、８学部のうち６学部の教授会が異議や懸念を表明。その有志らが２１日、学長選考を考える集会を開くことになった。次期学長を決める学長選考会議の前段階に、教職員を対象に実施した２度の意向投票では、３人の学長候補で西頭氏がいずれも最下位だったためだ。

　学長選考会議は１２月４日にあり、出席委員２０人の投票で西頭氏が１１票を得て再選された。選考会議は、富山県知事ら首長や地元財界人ら学外の委員が半数を占める。

　西頭氏のほかに、大学院医学薬学研究部特任教授と大学院理工学研究部教授が推薦されていた。１１月にあった２度の意向投票では、西頭氏はいずれも、１位に約２００票離され、投票総数の約２割しかとれず最下位。ただし選考会議で、意向投票の結果は「選考の参考」とされていた。

　この結果に、８学部のうち経済、人文、人間発達科学、理学、医学、薬学の６学部の教授会が相次いで、「大差のついた意向投票の結果を前にして最下位候補を選任した決定は、他の国立大学法人でも類例はない」「大学の自治を著しく侵害している」などと、異議や選考方法の見直しを求める声明を出した。

　富山大は０５年１０月、旧富山大、富山医薬大、高岡短大の国立３大学が統合してできた。西頭氏は旧高岡短大の学長だった。旧高岡短大が前身の芸術文化学部と、工学部は意思表明をしていない。

　文部科学省などによると、０３年の国立大学法人法の制定以降、国立大学法人の学長選考に関する意向投票で、３位以下だった人物が学長候補に選ばれた例はないとみられるという。

　西頭氏は「新執行部は教職員の意見を踏まえつつ、大学改革を仕上げる大きな責務を負っている。この責務を全うできる体制を構築したい」と文書で続投を表明している。

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日本標準時子午線上の時計止まる　兵庫・明石天文科学館

2009年1月15日10時0分

　１４日朝、日本標準時の子午線上にある兵庫県明石市立天文科学館（同市人丸町２丁目）の時計台の針が止まっている、と市民から市に連絡があった。市によると、停止した原因は不明で復旧のめども立っていないという。

　時計は９５年の阪神大震災で２代目が損壊し、９８年に３代目として付け替えられた。先月７日にも冷え込みが原因で一時止まったが、すぐに自然復旧した。１４日は休館日だったが、職員が急きょ出勤して「調整中」と書いた垂れ幕をかけた。市は「復興のシンボルだけに１７日までには動かしたい」と話している。

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ＦＸ「アライド」、強制捜査へ　無登録営業の疑い

2009年1月15日5時57分

　外国為替証拠金取引（ＦＸ）で運用するとして出資金を集めたまま昨年１１月に配当を停止し、代表者が行方不明になっている「アライド」（大阪市中央区）について、大阪府警と高知県警は１５日にも、同社本社など関係先を金融商品取引法違反（無登録営業）容疑で家宅捜索する方針を決めた。両府県警は同社が全国の数百人の顧客から数億～十数億円を集めたとみている。

　ホームページ（閉鎖）によると、アライドは０７年６月に設立。同社は昨年１１月以降、顧客への説明がないまま配当を停止しており、両府県警は詐欺容疑も視野に、資産運用の実態について捜査する。

　両府県警などによると、同社は０７～０８年、国に金融商品取引業の登録をせずに、「１口１０万円で金額に応じて２～５％の配当を毎月払う」などと顧客から投資を募り、それを元手に外貨を売買する資産運用業を営んだ疑いが持たれている。

　高知県立消費生活センターなどによると、高知市に勧誘の窓口になっていた別会社があり、昨年１０月までは毎月１０日に配当が振り込まれていたが、顧客から１１月以降、「配当が止まり、代表者と連絡が取れない」との相談が相次いでいた。関係者によると、大阪市の本社事務所も同月閉鎖されたという。

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警察庁キャリア、空港検査員に暴言　トレーぶつける

2009年1月15日15時1分

　警察庁のキャリア官僚が昨年末、成田空港での手荷物検査の際に、テロ防止のため国際線航空機内への持ち込みが制限されている１００ミリリットルを超える液体物を持ち込もうとして女性検査員と口論となり、検査員に検査用トレーをぶつけていたことが、警察庁などへの取材で分かった。千葉県警は暴行の疑いで捜査、同庁も懲戒処分を視野に調査を進めている。

　同庁によると、このキャリア官僚は人事課課長補佐の３０代の男性警視。００年４月に入庁し、０８年４月から人事課で全国の警察に職務倫理を指導する担当だった。

　調べなどによると、同警視は昨年１２月２４日正午ごろ、成田空港第２ターミナルの手荷物検査場で、１００ミリリットルを超える男性用化粧水を持ち込もうとして女性検査員に制止された。「自分は警察庁のキャリアだ」という趣旨のことを言ったうえ、検査員の仕事を侮辱するような暴言をはき、検査の対象物をのせるトレーを放り投げたという。トレーは検査員の肩と足に当たったが、けがはなかった。

　国際線への液体物の持ち込みをめぐっては０７年３月から、飲料や化粧用品などすべてを１００ミリリットル以下の容器に入れなければならなくなった。０６年８月に発覚した英国での航空機爆破テロ未遂事件を受け、国土交通省がルールを策定した。

　通報で駆けつけた千葉県警の警察官はその場で警視から事情聴取したが、逮捕や警察署への任意同行などの措置はとらなかった。警視は検査員に謝罪しただけで、そのままドイツへ出国したという。

　内規では海外旅行は届けなければならないが、同警視は無届けだった。

　検査業務を請け負う財団法人・空港保安事業センターは警察庁と国交省が所管。ハイジャックやテロ防止のため、航空保安検査員の育成や検査業務を実施している。

　同庁は「法令に反する行為や公務員としてふさわしくない行為があったとすれば厳正に対処する」としている。

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11:19 GMT, Thursday, 15 January 2009
Italy and Brazil in fugitive row
Cesare Battisti at a book signing

Italy has summoned Brazil's ambassador to protest against his country's decision to grant refugee status to a former Italian left-wing radical.

Cesare Battisti, a former member of the Armed Proletarians for Communism, is wanted by Italy in connection with the murders of four people.

He escaped from an Italian prison in 1981, while awaiting trial, and went on to reinvent himself as a novelist.

He has repeatedly denied any involvement in the killings.

Mr Battisti was convicted in absentia by an Italian court and sentenced to life in prison in 1990 for the murders of a prison guard and a butcher in the 1970s.

He is also accused of being an accomplice in two other murders, including the killing of a police officer.

The former radical has always denied involvement in the killings, and in his memoir published in 2006, he protested his innocence.

"I am guilty... of having participated in an armed group with a subversive aim and of having carried weapons, but I never shot anyone," he wrote in "Ma Cavale" or "My Escape".

"Unanimous outrage"

Brazil's decision to grant Cesare Battisti asylum has provoked outrage in Italy.

The Italian foreign ministry summoned the Brazilian ambassador to Rome to convey Italy's "unanimous outrage".

The Italian Association of Victims of Terrorism said the release of Mr Battisti was unacceptable.

"[It is a] further wound to the Italian people, the victims and their relatives who have been subjected to the blind and bloody violence of terror," it said in a statement.

Brazil has defended its decision.

Brazilian Justice Minister Tarso Genro said he believed Mr Battisti risked persecution if extradited to Italy.

"I am absolutely convinced that we have taken a correct position," he told reporters in Sao Paulo.

Mr Battisti was first granted asylum in France in 1990 by then President Francois Mitterrand after he agreed to renounce violence in return for sanctuary.

But he fled to Brazil in 2004, after France reversed its decision and agreed to extradite him to Italy.

He was arrested in 2007 in Rio de Janeiro in a joint operation by Italian, French and Brazilian police.

Camilo Toscano, a spokeswoman for Mr Battisti's lawyer, said the Supreme Court might grant Mr Battisti's release as early as Thursday.

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トヨタ：新車、年度内に買おう　労使、社内に呼びかけ

　トヨタ自動車の部長級幹部らでつくる任意組織「部長会」が、会員にトヨタの新車購入を呼びかけていることが１４日分かった。トヨタグループ各社の労働組合で組織する全トヨタ労働組合連合会（加盟３００組合、組合員３０万６０００人）も新車購入キャンペーンを始めており、世界販売の減少分を補う活動を労使それぞれが展開している。

　トヨタの０９年３月期連結販売（子会社のダイハツ工業、日野自動車含む）は７５４万台と前年から１３７万台減少する見通し。

　部長会は理事、部長など約２２００人の管理職が会員となる親睦（しんぼく）団体。昨年末、管理職が率先しようと、３月末までに新車の自主的な購入を呼びかけた。ただ、「強制力のない自主的な活動」（広報部）という。

　一方、全トヨタ労連は今月から購入キャンペーンを開始。１～３月に新車を購入すると抽選で１００人に旅行券（１万～１０万円分）が当たる特典もあるという。

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ムーディーズ、朝日生命を格下げ

　格付け会社のムーディーズ・インベスターズ・サービスは15日、朝日生命保険の保険財務格付けを「（保険金の）支払い能力が適切である」Ｂａａ３から「支払い能力に疑問がある」Ｂａ１に格下げしたと発表した。株式相場の下落を受けて朝日生命の財務基盤が悪化していると判断した。

　朝日生命は昨年末に自己資本に相当する基金を350億円調達、財務基盤を強化した。一方、ムーディーズは「有価証券の含み損や評価損による資本基盤の低下は、資本増強などの対応を上回るもの」としている。

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民放、55社が経常赤字　08年９月中間、地デジ移行への投資響く

　日本民間放送連盟は15日、全国のテレビ局127社のうち43％にあたる55社が2008年9月中間期に経常赤字になったことを明らかにした。広告収入不振に加え、2011年7月に予定する地上デジタル放送への完全移行に向けた設備投資が収益を圧迫した。広瀬道貞会長は同日の記者会見で民放の経営状況について「民放連の58年の歴史で最悪」と語った。

　民放連に加盟する194社の地上波テレビ局とラジオ局のうち約47％にあたる92社が中間期に経常赤字を計上。テレビ局に限れば127社のうち55社が赤字だった。09年3月通期の見通しについて広瀬会長は「さらに悪化していく恐れがある」と厳しい認識を示した。

　地デジへの移行完了に向けた放送業界の設備投資額は民放だけで1兆円超にのぼる。同会長は「ローカル局の投資額は各30億―50億円で、各局の利益の約10年分」と説明。一方で「（減価償却負担が増す）当面の局面を乗り切れば、またテレビの時代になる」と力説した。

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定額給付金、財制審が撤回要求　「もう一度議論を」

　財政制度等審議会（財務相の諮問機関）は15日の会合で、今年度の第2次補正予算案に盛り込まれた2兆円の定額給付金について、政府に再考を求める意見で一致した。政府の審議会が政府の決定事項の撤回を求めるのは極めて異例。民主党は補正予算案から定額給付金を削除するよう求めており、国会審議に影響を与える可能性もある。

　財制審の西室泰三会長は会合後の記者会見で、定額給付金について「2兆円の使途をもう一度、考え直してもらいたい。与野党で議論すべきだ」と述べた。西室氏によると、会合では出席委員から定額給付金の景気刺激効果を疑問視する意見や、財政への悪影響を指摘する声が相次いだ。財制審として提言などは出さないが、会合の結果を中川昭一財務相に報告する。

　財制審は毎年の予算編成や国の財政のあり方を財務相に諮問する審議会。有識者や経済界などの代表者で構成し、6月と11月に財務相に建議（意見書）を提出する。(21:45)

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海賊対策の海自派遣、４月にも護衛開始　海保も同行、逮捕可能に

　アフリカ・ソマリア沖の海賊対策として、政府が最終調整している現行法での行動指針案が14日、明らかになった。商船などを守るため、自衛隊法に基づく海上警備行動を発令し、海上自衛隊の護衛艦を派遣。海上保安官も同乗させ、海賊犯拘束の際に逮捕や周辺国への引き渡しもできるようにする。

　政府は15日の与党プロジェクトチーム（ＰＴ）に具体案を提示する。麻生太郎首相が近く海上警備行動の発令を最終決断し、月内にも浜田靖一防衛相が海自に準備を指示。4月からの護衛開始を想定している。

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中国産ウナギ：塩素系の殺虫剤を検出　成田の業者が輸入　

　千葉県は１５日、同県成田市新田の食品輸入業者、丸勝（西勝光治社長）が輸入した中国・福建省原産のウナギから、基準値（０．０１ｐｐｍ）を超える塩素系殺虫剤ジコホール（ケルセン）が検出されたと発表した。県印旛保健所は同社に対し輸入したウナギ１５００キロの回収を命じた。健康被害の報告はないという。

　県衛生指導課によると、ウナギは今月３日に輸入され、成田空港検疫所の検疫でジコホール０．０３ｐｐｍを検出した。厚生労働省から１４日、県に連絡があった。

　ウナギは東京都、千葉、埼玉県内の加工、卸売業者に販売されたという。ジコホールは現在、国内では生産されていない。

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築地市場移転：汚染除去費、４割減可能　都が試算

　東京中央卸売市場築地市場（中央区）の移転が計画されている豊洲地区（江東区、約４０ヘクタール）から高濃度の有害物質が検出された問題で、１０００億円を超えるとみられていた汚染除去費が５８６億円に圧縮できることが、東京都の試算で明らかになった。都は１０年度に除去工事に着手、１４年末の新市場開業を目指す。

　都幹部によると、専門家を交えて除去工法を検討した結果、汚染土壌は現地に仮設プラントを設け、微生物などの方法を組み合わせて浄化。地下水は当初建物のある場所と、無い場所とに分けて処理する方針だったが、一括処理することで区切りに使う鋼材を省き、コストを低く抑えられるという。

　都は予定地を所有する東京ガスに工費負担を求める予定で、近く協議に入る。豊洲地区の土壌からは０８年、環境基準の４万３０００倍のベンゼンなどが検出された。都の専門家会議は地下２メートルまでの土壌をすべて入れ替えるよう提言していた。