Archive for March, 2012

Obama says enough world oil to crack down on Iran sales

Obama says enough world oil to crack down on Iran sales

Obama says enough world oil to crack down on Iran sales

President Barack Obama vowed on Friday to forge ahead with tough sanctions on Iran, saying there was enough oil in the world market – including emergency stockpiles – to allow countries to cut Iranian imports.

In his decision, required by a sanctions law he signed in December, Obama said increased production by some countries as well as “the existence of strategic reserves” helped him come to the conclusion that sanctions can advance.

“I will closely monitor this situation to assure that the market can continue to accommodate a reduction in purchases of petroleum and petroleum products from Iran,” he said in a statement.

Obama had been expected to press on with the sanctions to pressure Iran to curb its nuclear program, which the West suspects is a cover to develop atomic weapons but which Iran says is purely civilian.

The overt mention of government-controlled stockpiles may further stoke speculation that major consumer nations are preparing to tap their emergency stores this year.

“I do think it was interesting that it was laid out there,” said David Pumphrey, an analyst at the Center for Strategic and International Studies.

“It was sort of like a reminder that yes, this is part of the tool kit,” said Pumphrey, a former Energy Department official.


Oil markets remain tight, the White House said. Surging gasoline prices have become a major issue in the presidential election campaign.

“A series of production disruptions in South Sudan, Syria, Yemen, Nigeria, and the North Sea have removed oil from the market,” the White House said in a statement.

France is in talks with the United States and Britain on a possible release of strategic oil stocks to push fuel prices lower, French ministers said on Wednesday.

Senior Obama administration officials told reporters that the United States views releasing emergency stocks as an option, but said no decision has been made on specific actions.

Oil prices briefly rallied by about 70 cents on the announcement, but later reversed gains to end almost flat as traders turned mindful of the possible use of reserves.

“There’s been a shift from focus on a threat (by Iran) to close the Strait of Hormuz to whether or not reserves are going to be released,” said Dominick Caglioti, a broker at Frontier Trading Co. in New York.


Going forward, Obama is required by law to determine every six months whether the price and supply of non-Iranian oil are sufficient to allow consumers to “significantly” cut their purchases from Iran.

The law allows Obama, after June 28, to sanction foreign banks that carry out oil-related transactions with Iran’s central bank and effectively cut them off from the U.S. financial system.

“Today, we put on notice all nations that continue to import petroleum or petroleum products from Iran that they have three months to significantly reduce those purchases or risk the imposition of severe sanctions on their financial institutions,” said Senator Robert Menendez, co-author of the sanctions law.

Obama can offer exemptions to countries that show they have “significantly” cut their purchases from Iran, and recently exempted Japan and 10 EU countries from the sanctions.

A senior administration official told reporters that talks continue with China, India, South Korea and other importers.

“Each day I think really we see a number of positive indicators from a broad range of countries,” the official said, citing an announcement by Turkey on Friday that it would cut imports of oil from Iran by 10 percent as an example.


Obama faces a delicate balancing act on Iran, leading up to November U.S. general election. On the one hand, he must show voters he is being tough on the Islamic state.

But with oil and gasoline prices surging in response to geopolitical risks, he must also avoid steps that would unduly rattle oil markets. That could threaten the global economy and hurt voters already angered by the rising cost of fuel.

Obama also faces pressure from some lawmakers in Congress who want to make sanctions on Iran even tighter. The House of Representatives has already passed additional sanctions, and a bill is pending in the Senate.

Senior administration officials briefing reporters declined comment on the proposed new sanctions.

“We welcome the president’s determination and applaud the administration’s faithful implementation of the Menendez-Kirk amendment,” said a spokesman for Senator Mark Kirk, a Republican who has pushed for additional measures.

“To build on this momentum, we hope the Senate will consider amendments to the pending Iran sanctions bill that would continue to increase the economic pressure on the Iranian regime,” Kirk’s spokesman said.

(Additional reporting by Deborah Charles; Editing by Xavier Briand)

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admin on March 31st 2012 in World

E-books settlement talks advancing – sources

E-books settlement talks advancing - sources

E-books settlement talks advancing - sources

The Justice Department could reach a settlement in the next few weeks with Apple Inc and some of the major publishers suspected of colluding to push up electronic book prices, according to two people close to the negotiations.

While negotiations are still fluid, the settlement is expected to eliminate Apple’s so-called “most favored nation” status, which had prevented the publishers from selling lower-priced e-books through rival retailers such as Inc or Barnes & Noble Inc, the people said.

The deal could also force a shift, at least temporarily, in pricing control from publishers to retailers, one of the people said.

Such a move to a “wholesale model” would not only benefit consumers but also Amazon, which had been the leading bargain e-book retailer with its Kindle reader.

“It would be a positive for Amazon because the company’s greatest strength is as a high-volume, low-price retailer and the wholesale model plays into that,” said Jim Friedland, an analyst at Cowen & Co.

The Justice Department is seeking to unravel agreements Apple secured from five publishers about two years ago, as the Silicon Valley company was launching its iPad and was seeking to break up Amazon’s dominance in the digital book market.

The publishers are Simon & Schuster Inc, a unit of CBS Corp; Lagardere SCA’s Hachette Book Group; Pearson Plc’s Penguin Group (USA); Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH; and HarperCollins Publishers Inc, a unit of News Corp.

The Justice Department declined comment. Apple did not reply to calls seeking comment. The publishers involved either did not return telephone calls or declined comment.

As part of the agreements with Apple, the publishers shifted to an “agency model” that allowed them to set the price of e-books and give Apple a 30 percent cut.

Prior to that, Amazon had operated on the wholesale model, in which publishers sold books to retailers, which were then free to set whatever price they wanted.

Amazon was able to charge only $9.99 for many e-books, sometimes pricing new releases or popular e-books below cost, to draw in shoppers.

The tactic worried publishers who felt readers might get used to cheaper books and that Amazon would gain more market power, putting downward pressure on sales and prices of physical books.

The Apple agreements effectively barred publishers from allowing rival retailers such as Amazon to sell the same e-books at lower prices.

Friedland estimated that a switch back to the wholesale model could increase Amazon’s revenues by about $1.1 billion this year and $1.6 billion in 2013, although gross profit may not increase as much because of the expected discounts.

The impact on Apple is expected to be minimal. Apple generates about $50 million from e-book sales, a tiny portion of its revenue of more than $100 billion.


The Justice Department and the European Commission are examining whether the way that Apple reached its agreements with the publishers rose to the level of violations of antitrust law.

While agency pricing itself is legal, the Justice Department believes that publishers may have colluded to implement it with e-book retailers.

Apple’s push for agency pricing was detailed in Walter Isaacson’s biography of Apple founder Steve Jobs, who died last October. Jobs was aware of publishers’ frustration with Amazon’s low-price strategy and took advantage of it, according to the book.

Isaacson quotes Jobs as saying: “So we told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30 percent and yes, the customer pays a little more but that’s what you want anyway.’ … So they went to Amazon and said, ‘You’re going to sign an agency contract or we’re not going to give you the books.’”

When Apple entered the digital books market with its iPad in January 2010, Amazon had nearly 90 percent of the e-book market.

Amazon now has about 65 percent of the e-book market, while Barnes & Noble has 20 percent and Apple has 10 percent at most, according to Cowen & Co estimates.

As the market shifted, prices have risen.

A class action lawsuit against Apple and the publishers that was brought last year in a Manhattan court on behalf of e-book customers said the price of e-books sold by the five publishers rose 30 to 50 percent in just a few months after Apple reached its deals.

Despite the higher prices, the digital book market has continued to grow rapidly.

The e-book industry has grown from $78 million in sales in 2008 to $1.7 billion in 2011, according to Albert Greco, a book-industry expert at the business school of Fordham University.

Greco estimates e-book sales will be $3.55 billion in 2012.

In its request to dismiss the private lawsuit, Apple said it individually negotiated separate vertical agreements with each of the publishers and it insisted on agency pricing because it had “no desire to incur the losses that would flow from retailing in such an environment.”

Andrew Gavil, who teaches antitrust at the Howard University School of Law, said the consumer would win under a Justice Department settlement that rips up the agency model, even temporarily.

“The consumer will be the short-term winner because the autonomy to set the price of e-books will go back to Amazon. Manufacturers may have to lower the price of hard cover books. They may have to adjust their expectations of profits of hard copy books,” said Gavil.

(Reporting by Diane Bartz with Additional reporting by Alistair Barr in San Francisco; Editing by Gary Hill)

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admin on March 31st 2012 in Technology

Tribunal puts $12 billion POSCO plant in limbo

Tribunal puts $12 billion POSCO plant in limbo

Employees of POSCO talk behind the company's logos at the company's headquarters in Seoul

A tribunal on Friday suspended the environmental licence for POSCO’s $12 billion steel project in Orissa, India’s biggest foreign direct investment, in a fresh blow to business confidence in Asia’s third-largest economy.

“The National Green Tribunal has suspended the environment clearance,” environmental lawyer Ritwick Dutta with activist group Green Panel told Reuters.

South Korea’s POSCO signed the agreement for the mill in 2005 and was scheduled to begin production by the end of 2011. Protests, environmental concerns and government inquiries into alleged illegalities at a related mining concession have delayed it.

POSCO (005490.KS) spokesman Chung Jae-woong in Seoul said he could not immediately comment on the ruling and it was not clear if the company would appeal. POSCO said it had received no official notification of the court’s decision.

Foreign firms vying for a place in one of the world’s fastest-growing markets have been rattled by a series of decisions and policies governing investment in recent months, including the cancellation of more than 100 telecoms licenses by India’s Supreme Court hearing a corruption case.

The setback for the South Korean steelmaker, the world’s third largest, came just days after Prime Minister Manmohan Singh told a group of CEOs in Seoul his country was a stable location for their money.

On a state visit to South Korea this week, Singh tried to convince more Korean businesses to invest in India despite the recent dents to investor confidence.

“The government is keen to move forward with the POSCO project,” Singh told the business leaders on Monday. “I believe that India is a stable and profitable long-term investment opportunity. I urge Korean industry to have faith in India,” he said.

Environmental groups have long complained that POSCO’s plant would destroy large areas of forest in the poor state and would hurt the livelihoods of indigenous tribes in the area.

Dutta said there were serious discrepancies in the way the government issued a conditional approval for the project last year.

The company said it would build a 12 million tonne-per-year mill. Dutta said that was three times the size of project approved by the environment ministry.

“Strangely enough the environmental impact assessment studies are done only for a 4 million tonne project,” the lawyer told the CNN-IBN television station.

POSCO is seeking to expand overseas as it faces a growing threat from home rival Hyundai Steel, challenging POSCO’s dominance in high-end steel used in autos and ships.

(Additional reporting by Hyunjoo Jin in Seoul; Writing by Frank Jack Daniel; Editing by Matt Driskill)

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admin on March 31st 2012 in Business, Economy

Apple, Foxconn set new standard for Chinese workers

Apple, Foxconn set new standard for Chinese workers

Apple Inc (AAPL.O) and its main contract manufacturing Foxconn agreed to tackle violations of conditions among the 1.2 million workers assembling iPhones and iPads in a landmark decision that could change the way Western companies do business in China.

Taiwan’s Foxconn Technology Group, whose subsidiary Hon Hai Precision Industry assembles Apple devices in factories in China, will hire tens of thousands of new workers, eliminate illegal overtime, improve safety protocols and upgrade workers’ housing and other amenities.

It is a response to one of the largest investigations ever conducted of a U.S. company’s operations outside of America. Apple had agreed to the probe by the independent Fair Labor Association (FLA) to stem a crescendo of criticism that its products were built on the backs of mistreated Chinese workers.

The association, in disclosing its findings from a survey of three Foxconn plants and over 35,000 workers, said it had unearthed multiple violations of labour law, including extreme hours and unpaid overtime.

FLA President Auret van Heerden expects the agreement between Apple, the world’s most valuable listed company, and Foxconn, which supplies 50 percent of the world’s consumer electronics, to have far reaching affects.

“Apple and Foxconn are obviously the two biggest players in this sector,” he said in an interview. “Since they’re teaming up to drive this change, I really do think they set the bar for the rest of the sector.”

(For slideshow: Inside Foxconn, click here

For graphic on workers survey, click

That could affect brand names that have contracts with the Taiwanese company, including Dell Inc, Hewlett-Packard, Inc, Motorola Mobility Holdings, Nokia Oyj and Sony Corp.

The agreement is a sign of the increasing power of Chinese workers to command higher wages given increasing prices in China, and an ageing workforce that has led to labour shortages.

“Foxconn is proposing this better deal,” said van Heerden. “Their competitors will be obliged to offer a similar package just in order to get enough workers.”

Working conditions at many Chinese factories supplying Western brands are considerably inferior to those at Foxconn, experts say.

Still, labour costs are a fraction of the total cost of most high-tech devices, so consumers might not see higher prices.

“If Foxconn’s labour cost goes up … that will be an industry-wide phenomenon and then we have to decide how much do we pass on to our customers versus how much cost do we absorb,” HP Chief Executive Meg Whitman told Reuters in February.

Under the agreement, Foxconn said it will reduce working hours to 49 per week, including overtime, while keeping total compensation for workers at its current level. The FLA audit found workers in the three factories put in more than 60 hours per week on average during peak production periods.

To keep up with demand, Foxconn will hire tens of thousands of additional workers and build more housing and canteens.

Apple CEO Tim Cook, who took over from the late co-founder Steve Jobs last year, has shown a willingness to tackle the criticism head-on.

“We fully support their recommendations,” an Apple spokesman said. “We share the FLA’s goal of improving lives and raising the bar for manufacturing companies everywhere.”

But New York-based labour advocacy group China Labor Watch said the report failed to address the workers’ primary concerns.

“Until Apple shares a larger proportion of its profits with its supplier factories, workers will receive the same pittance for a salary while working around the clock,” Li Qiang, the director of China Labor Watch, said in an emailed statement.

The agreement has not gone down well with some Foxconn workers, either.

Chen Yamei, 25, who has worked at a Foxconn factory at Longhua in southern Guangdong province for four years, complained that her salary will drop to just over 2,000 yuan a month from over 4,000 yuan.

“We are here to work and not to play,” she said. “Our income is very important.” Another worker was less concerned.

“Working here is just so-so. Working conditions and the pay are all right,” said Li Wei, a 20-year-old who has worked at the Foxconn factory for about a year.

“However there are around 100,000 people in there, so sometimes the feeling can be oppressive,” Li said, who works eight hours, or a maximum 10 hours, a day.


Hon Hai shares fell on Friday around 1.3 percent, underperforming a rising market. Apple shares, which hit a record high on Wednesday, dropped 1.3 percent on Thursday.

The report marks the first phase of a probe into Apple’s contract manufacturers across the world’s most populous nation.

Foreign firms have long grappled with working conditions in China, dubbed the world’s factory because of its low wages and efficient coastal transport and shipping infrastructure.

Global protests against Apple swelled after reports spread in 2010 of a string or suicides at Foxconn’s plants in southern China, blamed on inhumane working conditions and the alienation that migrant labourers, often from impoverished provinces, face in a bustling metropolis like Shenzhen, where two of the three factories the FLA inspected are located.

In months past, protesters have shown up at Apple events – the rollout of the new iPad, the iPhone 4GS and its annual shareholders’ meeting – holding up placards urging the $500 billion corporation to make “ethical” devices.

Some have also criticized the FLA for its close alignment with corporations.

The actor Mike Daisey also did much to raise awareness of the issue through his one man show in the United States, “The Agony and the Ecstasy of Steve Jobs”. His credibility was damaged though when it emerged parts of his monologue were fabricated.


The FLA in its report sought measures that will reduce working hours while ensuring that migrant labourers – often willing to pile up the overtime to make ends meet back home – do not forego much-needed income.

Foxconn committed to building new housing to ease situations where multiple workers were squeezed into rooms that seemed inhumane by Western standards. It agreed to improve accident reporting and help workers enroll for social welfare and increase their participation in committees and other union structures.

The FLA will conduct onsite verification visits to make sure the agreement is implemented, van Heerden said.

Apple is not the first U.S. consumer brand to respond to criticism of working conditions at factories abroad making its products.

Nike Inc implemented wide-ranging changes to improve safety and working conditions after it was rocked by reports in the 1990s that its contractors in China and elsewhere forced employees to work in slave-like conditions for a pittance.

Yet even Nike stopped short of Apple’s and Foxconn’s hiring and income-boosting spree. Last month, Foxconn said it was raising salaries by 16 to 25 percent, and was advertising a basic monthly wage, not including overtime, of 1,800 yuan in the southern city of Shenzhen, Guangdong province – where the monthly minimum wage is 1,500 yuan.

Future forays by the FLA over coming months will encompass Apple contractors Quanta Computer Inc, Pegatron Corp, Wintek Corp and other suppliers, all notoriously tight-lipped about their operations.

(Additional reporting by Sui-Lee Wee in Beijing, Tan Ee-lyn in Hong Kong Editing by Gary Hill, Tim Dobbyn and Mark Bendeich)

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admin on March 30th 2012 in Technology

French police swoop on suspected Islamists

French police swoop on suspected Islamists

French police commandos arrested 19 people and seized weapons in Friday morning swoops on people suspected of radical Islamist activity, in several cities including Toulouse, scene of the killings of four Jews and three soldiers this month.

President Nicolas Sarkozy, who is waging an uphill battle for re-election in an April-May vote, said more such raids would follow.

“There will be further operations, allowing us to expel a number of people who have no business in the country,” he said in an interview on Europe 1 radio.

The raids come just over a week after al Qaeda-inspired gunman Mohamed Merah was killed by police snipers after shooting dead three Jewish school children, a rabbi and three soldiers in attacks around Toulouse, turning internal security into a bigger campaign issue ahead of the presidential election.

Polls showed that more than 70 percent of voters approved of Sarkozy’s handling of the crisis, which reduced his chief rival, Socialist frontrunner Francois Hollande, to the role of bystander ahead of the two-round election on April 22 and May 6.

A police source said about 20 had been arrested in swoops in Toulouse in the southwest, Nantes in western France and also in the Paris region and southeast France.

Sarkozy put the number of arrests at 19 and said the police had seized weapons including Kalashnikov assault rifles.

The swoops, carried out by the RAID police commando unit and anti-terrorist specialists, were not directly related to Merah’s killing spree, according to the police source.

The police source said that Friday’s raids were not directly related to the investigation into the case of Merah, a Frenchman of Algerian origin, whose brother Abdelkader has been placed under official inquiry and is being held in custody on suspicion of complicity.

The same police source said several of the people arrested were believed to be close to a radical Islamist group called Forsane Alizza that was recently outlawed.

Several guns and a bullet-proof vest were seized in Friday’s raids, another police source said.

(Reporting by Gerard Bon and Brian Love; Writing by James Regan and Brian Love; Editing by Mark Heinrich and Geert De Clercq)

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admin on March 30th 2012 in World

No tax liability on P-notes holders: Mukherjee

No tax liability on P-notes holders: Mukherjee

No tax liability on P-notes holders: Mukherjee

Holders of participatory notes, or P-notes, will have no tax liability and a clarification on these notes will be issued in due course, Finance Minister Pranab Mukherjee said on Friday.

“The Indian tax authorities would examine the tax liability of the said financial institutional investors (FIIs). However, the tax authorities would not go beyond the FIIs to check any further detail about the participatory notes holders,” Mukherjee told reporters.

“Accordingly, the question of liability for tax in India of participatory note holders would not arise.”

P-notes are issued by foreign portfolio investors registered with the Indian market regulator, or by their sub-accounts, to investors overseas and they offer the buyer anonymity.

A lack of clarity on taxation of P-notes has contributed to the recent volatility in the domestic share market.

(Reporting by Arup Roychoudhury and Rajesh Kumar Singh; editing by Malini Menon)

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admin on March 30th 2012 in Business

Mauritius president says to quit, re-enter politics

Mauritius president says to quit, re-enter politics

Mauritius president says to quit, re-enter politics

Mauritian President Anerood Jugnauth said on Friday he would step down from his ceremonial position and return to party politics to challenge current Prime Minister Navinchndra Ramgoolam and his governing coalition.

Jugnauth said his resignation was effective Saturday, and it could rock the usually placid political arena in one of Africa’s most stable democracies. Ramgoolam’s coalition has accused Jugnauth of meddling in the running of the Indian Ocean island.

“I have said that if the country needed me I wouldn’t hesitate to leave the State House and to embark on a new fight,” Jugnauth said in a statement. “The future is bleak and the country is waiting for a renewal.”

Jugnauth is a political dinosaur in Mauritian public life now mandated to serve as a ceremonial figurehead. His return to party politics has stoked expectations of a political showdown with the coalition.

While the row over his alleged interference in governance has so far left markets in the prosperous economy unscathed, a prolonged spat risks unsettling investors at a time economic growth is already slowing due mainly to external shocks.

(Reporting by Jean Paul Arouff; Writing by James Macharia; Editing by Mark Heinrich)

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admin on March 30th 2012 in Top News

Arab summit to push Syria peace plan, violence persists

Arab summit to push Syria peace plan, violence persists

Fighting between Syrian security forces and rebels killed at least 15 people on Thursday as Arab leaders gathered at a summit in Baghdad to press Damascus for rapid implementation of a peace plan that President Bashar al-Assad has said he can accept.

Arab leaders, who appear to have backed away from their call on Assad to step aside and hand over to a deputy, remain split over how to deal with the continuing violence.

Pre-empting the summit, Syria said on Wednesday it would reject any initiatives from the Arab League, w hich suspended Syria in November, and said it would deal only with individual Arab states.

In Istanbul, Syrian opposition representatives met to try to settle deep internal disputes before the arrival of Western foreign ministers for a “Friends of Syria” conference on Sunday to map out where the year-old uprising is heading.

The opposition Syrian Observatory for Human Rights, which monitors the violence, reported 13 civilians, fighters and soldiers killed in clashes across the country.

In northern Hama province, an army convoy was ambushed and two soldiers killed. In Idlib province three people died when the army raided a rural area east of Maarat al-Nuaman.

In the city of Homs, three people were killed by army fire. Two died when the army opened fire in villages near the border with Lebanon and three were killed in clashes in rural districts of northern Hama province, the Observatory said.

The state news agency SANA said two colonels were shot dead in a morning attack in Aleppo, Syria’s second city.

“Four terrorists shot Abdul Karim al-Rai and Fuad Shaaban … while they were on their way to work,” SANA said.

U.N. Secretary-General Ban Ki-moon, attending the summit in Baghdad, has said Assad’s acceptance of the peace plan proposed by Kofi Annan “is an important initial step that could bring an end to the violence.”

He urged Assad to “put those commitments into immediate effect.” Western powers have expressed scepticism about Assad’s acceptance of the plan.

U.S. State Department spokeswoman Victoria Nuland said on Wednesday that Assad “has not taken the necessary steps to implement” the peace plan of Annan, the former U.N. Secretary General who is now special Syria envoy for the U.N. and the Arab League.

Syria’s big-power backers, Russia and China, have inched up the pressure on Assad by endorsing the Annan plan, with the unspoken implication that if he fails to act on it, they may be prepared to back action by the U.N. Security Council.

But Russia is also pressing the opposition Syrian National Council formally to accept the Annan proposals, which do not meet their demand that Assad step down immediately.


Sunni powers Saudi Arabia and Qatar have led the push to isolate Syria, suggesting arming Syria’s opposition, but non-Gulf Arab states such as Algeria and Shi’ite-led Iraq urge more caution, fearing that toppling Assad could spark sectarian violence.

Annan’s six-point plan calls for the withdrawal of heavy weapons and troops from population centres, humanitarian assistance, the release of prisoners and free movement and access for journalists.

Diplomats say one of his ideas is for a U.N. observer mission to monitor any eventual ceasefire, a mechanism likely to require a U.N. Security Council mandate. An Arab League mission last year failed to make any difference to the crisis.

The United Nations says Assad’s forces have killed 9,000 people. Damascus blames foreign-backed terrorists for the violence and says 3,000 soldiers and police have been killed.

As U.S. Secretary of State Hillary Clinton prepared to visit Saudi Arabia and later Turkey to consult Gulf states and promote unity in Syrian opposition ranks, there was little sign that President Barack Obama’s administration was ready to change its hands-off approach.

Unless opposition splits are healed, there is little chance that Assad’s opponents can oust him without a military intervention the West clearly does not want.

The Obama administration’s approach to the crisis in Syria will continue to be “wary and slow-moving,” said Michael O’Hanlon, a military expert at the Brookings Institution.

“If Assad has reached a turning point and really made headway against insurgents, I believe there is a good chance he will ‘win’ without too much American pushback,” O’Hanlon said.

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admin on March 29th 2012 in World

BRICS interests differ over joint bank, says Zoellick

A plan to form a joint development bank by the BRICS group of the world’s most powerful emerging economies will have a hard time getting off the ground and could struggle to match the World Bank’s expertise, World Bank President Robert Zoellick said.

Deflecting criticism that the World Bank is too dominated by the United States, Zoellick said it had changed dramatically in his term, with a managing team now made up of many more figures from the emerging world.

Leaders from Brazil, Russia, India, China and South Africa were meeting in New Delhi on Thursday to outline plans for a new bank which will help fund infrastructure and act as alternative lender to the World Bank and other finance bodies.

Zoellick told Reuters in an interview late on Wednesday that there are already a series of regional development banks and many countries have their own such banks, but if a BRICS bank was formed, the World Bank would work closely with it.

“I think the interests of India may be more in terms of bringing capital in, the interests of China may be more in terms of internationalising the Renminbi. I think Russia is a little uncertain and Brazil has a very big development bank,” he said.

“The World Bank works with private sector funders, development banks, regional banks and we’d work with a BRICS bank, but it would probably be difficult for it to replicate the knowledge and expertise that we fund.”

Zoellick, who was visiting a bank-funded coastal conservation project in east India’s Orissa state, told reporters later that setting up a new bank was “a complicated venture” which would present challenges such as getting capital and a good rating from international financial agencies.

The head of the global money lender is ending his five-year term in June and the job is now one of the most hotly contested, with a U.S. candidate for the first time being challenged by two contenders from the developing world.

Under a so-called “gentleman’s agreement” between the U.S. and Europe, Washington has claimed the top post at the World Bank since its founding after World War Two, while a European has always led the International Monetary Fund (IMF), its sister Bretton Woods institution.


There have been calls by BRICS and other developing nations that these top positions should better reflect the growing power and influence of emerging economies, which are now responsible for more than half of global economic growth.

Ngozi Okonjo-Iweala, Nigerian finance minister and former managing director of the World Bank under Zoellick, has gained the support of African leaders, while Brazil has nominated former Colombian finance minister Jose Antonio Ocampo.

But they face stiff opposition from the U.S.-nominated candidate Jim Yong Kim, a Korean-American health expert whose name was put forward by U.S. President Barack Obama on Friday.

Zoellick said all three candidates were “excellent”, but added that the bank’s senior leadership was already showing more and more representation from emerging economies.

“If you take the overall leadership at the bank, with all the different positions, it is more representative. I appointed the first chief economist who was from China,” he said.

“At one point, the three managing directors that reported to me were all from the developing world. I think that it’s not just a question of the head of organisation, but the organisation as a whole.”

He said the decision on his successor would be made in April by the bank’s board, which represents its 187 shareholders. The selection process is transparent and based on merit, he said, dismissing concerns by BRICS that it was heavily weighted in favour of the U.S. candidate.

The candidates will have to think through where they want to take the bank, he said, adding that the board of governors, will interview each of them to understand their plans for the future.

Zoellick who took over the bank in 2007 after serving as the U.S. deputy secretary of state, said it was good that Americans have a chance to run global institutions.

“The United States has never had anybody lead the IMF, they’ve never led the World Trade Organisation, they’ve never had anyone be the U.N. Secretary General, they’ve never had anybody lead the regional development banks,” he said.

“So personally as an American, who has worked with multilateral organisations, it’s good for Americans to have a chance to run some of them. Whether it’s the World Bank or others, that’s a whole different question.”

(Editing by Frank Jack Daniel & Kim Coghill)

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admin on March 29th 2012 in Economy, Top News

Vijay Mallya may sell United Breweries stake to Heineken: sources

Vijay Mallya may sell United Breweries stake to Heineken: sources

Vijay Mallya may sell United Breweries stake to Heineken: sources

Tycoon Vijay Mallya, scrambling to raise funds to rescue his ailing Kingfisher Airlines Ltd(KING.NS), is considering the sale of all or part of his stake in United Breweries (UB), his flagship beer business, to Dutch brewer Heineken NV, said people familiar with the situation.

They added that Mallya has the option of selling a stake in UB to ease his financial woes, and Heineken would be a keen buyer to gain control of India’s biggest brewer and maker of Kingfisher beer.

The Amsterdam-based brewer holds a 37.38 percent stake in UB as a legacy of its takeover of Scottish and Newcastle in 2008. The purchase of 13 percent, valued at $370 million at current market prices, would be enough to take Heineken over the 50 percent mark.

Mallya owns around 19 percent of UB and has held talks with a number of different parties to try and raise cash for his ailing Kingfisher Airline. There are no active talks going on at the moment with Heineken, the people said.

“Mallya is clearly looking at all his options and if he did look to sell a stake to give Heineken control of United Breweries then he would find a willing buyer,” said one person with knowledge of the situation.

A spokesman at Mallya’s UB Group did not answer calls or reply to text messages from Reuters. A spokesman for Heineken declined to comment.

United Breweries (UBBW.NS) controls around half the fast-growing Indian beer market with SABMiller Plc having around a third, but beer consumption is still relatively low at less than 1 litre per person per year compared with China at close to 30 litres and western Europe of around 60 litres.

The Financial Times reported that Mallya was close to selling a 13 percent stake in UB to Heineken, while the Business Standard newspaper said he may be looking to sell part of his holding and invest some of the process in his airline.

Mallya is under pressure from his airline’s lenders to inject equity into Kingfisher, which has debts of $1.3 billion and has slashed its flight schedule and grounded most of its fleet as it has been unable to pay staff.

Mallya’s UB Group confirmed it had entered talks with the world’s biggest spirits group Diageo Plc in late 2008 about buying a stake in his 38.7 percent-owned United Spirits company. But the talks broke down in 2009 after Diageo was offered a high-priced small stake and saw no future path towards increasing its holding or influence.

Shares in United Spirits were up 1.4 percent and United Breweries were up 0.6 percent in Thursday trading.

(Additional reporting by Philip Blenkinsop in Brussels and David Jones in London; Editing by Ranjit Gangadharan and David Holmes)

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admin on March 29th 2012 in Business

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