The eurozone faces its most difficult test yet
The Independent
The European single currency has entered the stormiest seas it has yet experienced. Sovereign debt anxiety is swelling among global investors. There have been mounting fears over the soundness of Greek debt for several months. And this week those fears spread to encompass the borrowings of Spain and Portugal. Some suggest that the euro ship itself could capsize if this weather gets much worse.
It is important to recognise that, while several European nations have weak public finances, Greece has exceptional problems. Athens' budget deficit is abnormally large, as is its stock of debt. And the European Commission discovered recently that the Greek government had been engaged in dishonest accounting to disguise the scale of its liabilities.
These problems might have been uncovered earlier were it not for Greece's euro membership. Athens was able to fund its extensive borrowing cheaply in the boom years. Euro membership also protected Greece in the 2008 banking crisis. But as Greece's economy has stagnated in the global recession, bond investors have begun to price in default risk. The interest rate demanded by those buying Greek debt has spiked sharply.
And it is impossible to rule out a panic by investors in which they stop buying Greek debt altogether. That would plunge the country into a downward spiral and possibly even force it out of the eurozone. A lethal domino effect could follow, with investors pulling their money out of other eurozone countries with relatively weak public finances such as Spain, Ireland, Portugal and Italy.
So what is to be done? In many ways the necessary medicine is already being prepared. This week the government of George Papandreou announced a programme of fiscal austerity – including a public sector hiring freeze, pension reform and a clampdown on tax evasion – to get the national finances back into a respectable shape. The central problem now is one of credibility. There are doubts about the Greek government's ability to force retrenchment in the face of rising public protests and strikes. There are doubts too about the EU's ability to get Athens to sort out its problems.
Policymakers across Europe need to address these doubts urgently. They must signal to the financial markets that Greece will be compelled to live up to its commitments and, also, that it will not be allowed to go under. These two messages will reinforce each other.
Those who argue that this raises issues of moral hazard are correct. It will be harder to ensure more responsible behaviour from Athens in future if it is bailed out now. So the task for the European authorities in the medium term will be to put in place a credible system of sanctions for national governments which run irresponsible deficits. The existing Stability and Growth pact has plainly not worked. Larger economic imbalances within the 16 nation currency union over wage levels and productivity will also need to be addressed if the eurozone is to avoid future crises.
But European policymakers should focus right now on the immediate danger. If Greece wants to stay in the eurozone its population will need to accept the immediate pain of fiscal austerity. And if richer members such as Germany want to keep the eurozone intact, they need to make it clear to the markets that they will backstop Greece. Only resolute action will calm the storm.
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Ethel Austin on brink of adminstration
Ethel Austin, the discount fashion retailer, is set to collapse into administration on Monday, putting 2,500 jobs at risk.
The chain, which previously fell into administration in 2008, had been trying to secure a refinancing, but poor trading in January is thought to have sealed its fate. A spokesman confirmed last night it had served notice to appoint MCR as administrator. Aurelia Properties served a winding up order on Ethel Austin earlier this week.
BAE admits guilt over corrupt arms deals
Arms firm pays out £300m after long-running Guardian investigation
David Leigh and Rob Evans - The Guardian
The arms giant BAE yesterday agreed to pay out almost £300m in penalties, as it finally admitted guilt over its worldwide conduct, in the face of long-running corruption investigations.
For 20 years, the firm refused to accept any wrongdoing, despite mounting evidence of alleged bribes and kickbacks, much of it uncovered by the Guardian.
But BAE yesterday said it would plead guilty to charges of false accounting and making misleading statements, in simultaneous settlement deals with the Serious Fraud Office in the UK and the department of justice in Washington.
The admissions in the US covered BAE's huge £43bn al-Yamamah fighter plane sales to Saudi Arabia and smaller deals in the Czech Republic and elsewhere in central Europe. In the UK, the admissions cover a highly controversial sale of a military radar to poverty-stricken Tanzania, which the development secretary Clare Short said at the time "stank" of corruption, but which the then prime minister, Tony Blair, forced through the cabinet.
The Serious Fraud Office said in its announcement yesterday that some of the £30m penalty BAE was to hand over in the UK would be "an ex gratia payment for the benefit of the people of Tanzania".
Another $400m (£257m) would be paid in penalties to the US authorities. BAE will not face international blacklisting from future contracts, because it has only admitted false accounting, not bribery.
MPs admitted to mixed feelings about BAE's admission and are still furious that the SFO's own extensive inquiry into the al-Yamamah deal was shut down in 2006, following pressure from the firm and from Saudi officials, who reportedly threatened to withdraw co-operation over security matters. The then attorney general, Lord Goldsmith, cited national security when he announced the inquiry was being abandoned. Blair said he took full responsibility for the decision.
The Liberal Democrats' deputy leader, Vince Cable, said last night that BAE Systems had succeeded in ensuring that key details of its arms deals would remain hidden. "The one positive thing is we have now had an acknowledgement from BAE Systems that unacceptable practices were being conducted. But nobody has been brought to account." He added: "The British government was up to its neck in this whole business. Government ministers were almost certainly fully aware of what was happening."
The former Labour minister Peter Kilfoyle said: "I certainly think there is now an argument to be made for an independent judicial inquiry into the whole affair. This raises serious questions on what [Blair's] motivation was in intervening in the [al-Yamamah investigation in the UK] and what influences were brought to bear on him."
Richard Alderman, director of the SFO, called the pioneering deal "pragmatic". It later emerged that the only prosecution of an individual by the SFO – Count Alfons Mensdorff-Pouilly – was being dropped. Alderman added: "This brings to an end the SFO's investigations into BAE's defence contracts."
In Washington, the deputy attorney general, Larry Grindler, was more pointed. "Any company conducting business with the US that profits through false statements will be held accountable," he said. "The alleged illegal conduct undermined US efforts to ensure that corruption has no place in international trade."
Britain had previously been subject to condemnation at the OECD after Blair intervened to halt the British investigation into allegations of Saudi corruption.
Yesterday's announcement in Washington focused on BAE's acceptance of guilt of the Saudi deals, and described secret shell offshore companies for making covert payments, and specific payments into a Saudi intermediary's Swiss account. It also identified £19m secretly paid to lubricate Czech and Hungarian weapons deals. BAE admitted writing an untrue letter to US authorities in 2000, denying it was paying any secret commissions.
Yesterday's statement said BAE was now free of threats of corporate prosecution. BAE said the deal "draws a line under the past", and it regretted what it called "the lack of rigor in the past".
A government spokesman said last night: "It's right that these historical allegations have been addressed."
But two anti-corruption campaigners – Sue Hawley of the Cornerhouse NGO, and the former South African ANC MP Andrew Feinstein – said they reacted to the deal, under which no trials will take place, with "dismay". They said it "betrays the people of Tanzania, South Africa, the Czech Republic and Romania, who have the right to know the truth about corruption in their countries perpetrated by British and other companies. It … sends the message that large enough corporations are able to pay their way out of trouble."
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Tory treasurer Michael Spencer defends
£45m sale of Icap shares before price slump
Martin Waller, Suzy Jagger and Peter Stiff - The Times
Michael Spencer, the Conservative Party treasurer and one of the City’s richest men, who is accused of offloading £45 million of shares in his Icap interd to The Times.
Mr Spencer sold the shares early last month, only weeks before a profit warning from Icap yesterday that led to the shares plunging by almost a fifth. Anyone who had bought them, who would not have known that the founder of the business was the seller, would by now have lost a third of their money.
One City analyst said that the warning, which indicated that profits for the current financial year would be £295 million to £315 million, against an average City forecast of £336 million, had been a “bombshell” that suggested “some sort of integrity issue; management’s credibility is severely dented by this”.
He added: “There will be questions asked about the share sale. He must have known where the business was going. I feel a bit shafted by this.”
Mr Spencer defended his actions. “By definition, as you very well know, I wouldn’t have sold those shares at that time had I been aware that we were facing a profit warning,” he said. “That’s a statement of fact and a supportable fact.”
Speaking from New York, he said that he had complied with the strict rules that govern share sales by company directors. “I got clearance from my chairman [Charles Gregson], as you would have expected, and the whole thing was handled properly,” he said. “If the FSA [Financial Services Authority] has any issues, that’s for them to identify.”
The Tories’ opponents were quick to make capital over the affair. Lord Oakeshott of Seagrove Bay, the Liberal Democrat Treasury spokesman, said: “This is a real test of David Cameron’s wobbly leadership. He must sack Michael Spencer now as Tory treasurer.”
David Blunkett, the chairman of the Labour Party’s General Election Development Board and a former Home Secretary, said: “David Cameron has shown on a number of occasions that he doesn’t mind taking money from City businessmen involved in the most controversial practices.
“Whilst I would not wish to pre-empt any detailed examination of the facts, this latest story comes at a time when David Cameron’s credibility in terms of sorting out our financial system is under scrutiny. David Cameron needs to look into the substance of this deal to make sure he is happy to stand by his treasurer.”
A Tory party spokesman said: “This is an Icap matter.”
Mr Spencer said: “If someone’s attempting to try to start a political debate, it’s not supportable by the real facts. There’s a proper procedure to follow here. The proper procedure was followed. It’s ridiculous for someone to suggest that I have behaved improperly. I haven’t.”
Under market abuse rules, employees of a company are not allowed to trade on the back of inside information. In addition, under listing rules, a company is required to have an internal code of conduct that governs directors’ dealings in shares of their own company. Should the FSA suspect wrongdoing, the regulator can demand face-to-face meetings and seize specific documents.
An FSA official refused to be drawn yesterday on Mr Spencer’s share sale and declined to comment. Earlier a spokesman for Icap, which allows banks and other City institutions to trade anonymously in bonds and derivatives, said that Mr Spencer was unavailable for comment because he was meeting investors.
Mr Spencer set up Icap on a shoestring in 1986. It has grown to be the world’s biggest in its field, and his fortune, though eroded by the credit crunch and falls in the value of most financial businesses, is put at £750 million.
The sale of his shares, which reduced his holding in Icap from 18.4 per cent to about 17 per cent, was announced on January 11 and took place over the preceding days. Some of the shares were sold by him and some by IPGL, his family vehicle.
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I save tax by never visiting my family, says tycoon Guy Hands
• Hands would face 64% tax rate plus 18% in capital gains tax
• EMI's losses topped £1.75bn last year
Julia Finch - The Guardian
The multi-millionaire private equity boss at the centre of the debt crisis at music group EMI has spelled out the lengths to which he is going to avoid UK tax.
Guy Hands, who moved from Kent to Guernsey last April in protest at higher income and capital gains tax rates, says he has "never visited" his school age children since he left the country. They have remained with his wife at their former family home in Kent and they now have to travel to Guernsey to see him.
Neither has he visited his mother and father – and wouldn't unless there was a family crisis: "I do not visit my parents in the United Kingdom and would not do so except in an emergency."
The details of the sacrifices Hands – a close friend of shadow foreign secretary William Hague – is prepared to make to avoid tax are revealed in court papers filed in New York on Thursday. He is opposing a move by US bank Citigroup to shift a court case from New York to London.
In a personal statement lodged in New York's southern district court Hands says he faces a top tax rate of 64% on earnings from employment from April, plus 18% CGT. He says he has been an "outspoken" critic of UK tax levels and fears that the Revenue will be watching him closely to ensure he does nothing that could threaten his move to obtain non-resident tax status.
Hands says he does not use any UK airports, even for transfers. "I have not set foot in the United Kingdom since I left permanently… and have no intention of doing so until I have been out of the United Kingdom for at least three years".
The move to Guernsey is described as "burdensome" but Hands insists the move "is real, not a sham or a mere moniker for an otherwise unvisited location". He says he has spent 1450 days in Guernsey since last April, and 170 in other countries.
The financier is locked in a legal dispute with Citigroup, claiming the bank tricked him into paying too much when he took over EMI – home to artists ranging from the Beatles to Katy Perry – in a £4.2bn deal just as the credit crunch set in. Citigroup also provided £2.6bn of debt for Hands to finance the deal.
On Thursday accounts lodged at Companies House showed that EMI stacked up losses of more than £1.75bn last year. Hands's Terra Firma private equity group needs to inject emergency funds of £105m to avoid breaching Citigroup's lending covenants. If they are breached the bank could seize control of EMI. The court case underlines the chasm that has opened up between the two parties.
Hands has tried to thrash out a deal with Citi, and has now turned to a New York courtroom to claim he was duped into over-paying for the music group. Citi's response was to ask for the case to be moved to London, where any damages would be lower.
However, a London court date could trigger big tax problems for Hands. Having to appear in London, he said, might wreck his tax plans and leave him with a bill for the months he has so far been out of the country.
Hands had pinpointed David Wormsley, a senior UK investment banker at Citi, as responsible for duping him into overpaying for the music group, accusing him of "fraudulent misrepresentation". The new court documents say Hands did the deal with the backing of former Citigroup chief executive Chuck Prince and the bank's then global head of investment banking, Michael Klein, and they will be key witnesses in the case. He says he "did not talk with the litany of lower-level London personnel" that Citi claims.
The Terra Firma boss also accuses the bank of organising "a targeted press campaign to create the appearance that EMI is headed towards bankruptcy" .
Citi has until 13 February to respond
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Honda recalls thousands of cars amid fire fears
David Millward - Daily Telegraph
Honda has become the latest car manufacturer to recall thousands of vehicles amid fears that one of its models could catch fire.
The Japanese motor company has recalled 171,372 of its Jazz models in Britain, as part of a larger worldwide recall, after several accidents including one in which a South African child died.
Honda's recall comes after Toyota called in at least 180,000 cars amid concerns over faulty accelerator pedals and means that more than 350,000 cars have now been recalled in Britain due to safety fears in less than a week.
The figure is more than half of the total number of cars recalled in the whole of last year, The Daily Telegraph can disclose.
The Honda recall, which involves about 646,000 Jazz models built in China and Japan between 2002 and 2008, has been triggered by a faulty electric window switch on the driver's door, which can malfunction if exposed to water.
Honda said it can mean the window sticking or in rare cases the internal electrics short-circuiting, leading to smoke or even fire.
There have been three accidents due to the problem, including the death of two-year-old Vanilla Nurse who was killed in Cape Town in September last year when the car she was sleeping in caught fire.
Despite no complaints in Britain, Honda is contacting all drivers as a precaution.
The Honda safety alert, which has passed almost unnoticed, came as Akio Toyoda, Toyota’s company president was yesterday forced to issue a humiliating apology after his company recalled eight million cars worldwide.
"We, the ones supposed to relay to people the attractiveness of automobiles, have, instead, imparted on them worry. I regret this more than anything," he said.
The first British claim involving a crash linked to a Toyota vehicle was made yesterday by a solicitor for an unnamed driver in the Midlands.
He is said to have received head injuries when his Toyota hit a wall at 30mph last September.
"We understand the accelerator became stuck and he suffered injuries as a consequence," said Ciaran McCabe, of the Moore Blatch personal injury practice.
"My client is receiving medical rehabilitation."
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Britain in line for blistering economic recovery, OECD indicator suggests
Edmund Conway - Telegraph
Britain may be in line for its most blistering economic recovery in almost 40 years, at least according to an authoritative measure from the Organisation for Economic Co-operation and Development.
The OECD's leading indicator for the UK – a frequently reliable indicator of turning points in economies throughout the world – has risen to the highest level since 1973.
The indicator, which is designed to signal whether an economy is heading into recession or bouncing back towards recovery, rose for the 11th straight month in December, increasing to 105.8 points.
The increase will be taken as further evidence that despite the disappointment of last week's gross domestic product figures, which showed that Britain only squeaked out of recession in the final quarter of 2009 with 0.1pc growth, the UK is on track for a solid recovery. However, economists cautioned that the OECD figures fail to take into account the continued problems caused by the financial fallout from the crisis and the credit crunch.
Howard Archer of IHS Global Insight said that the indicator nonetheless "boosts hopes that the UK will continue to grow in the first half of 2010 after only just managing to stagger out of recession in the fourth quarter of 2009", but added: "There is serious concern that the UK economy could suffer a 'double dip' in the early months of 2010 as some of the temporary factors that have been supporting activity are removed - notably the cut in VAT from 17.5pc to 15pc (which was reversed in January) and the car scrappage scheme (which will end by March). In addition, the Bank of England has brought its Quantitative Easing programme to at least a temporary halt."
The Office for National Statistics also reported a 3.8pc increase in producer prices in the year to January, up from 3.5pc a month earlier and a further sign that manufacturers are feeling increasingly able to increase their prices. Input prices, which measure the cost of raw materials, rose from 7.4pc to 8.4pc, in what economists took as a further sign of the threat posed by inflation in the coming months.
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Church of England dumps its Verdanta stock over tribe rights
Shares in miner Vedanta fell 75p to 2339p after the Church of England dumped its stake in the firm citing ethical reasons. The holding was worth £3.8m.
The Church said it is concerned about how the company treats people living around a Vedanta alumina refinery in India.
It is the first time in nine years that the Church has taken such a drastic step and comes after a series of meetings with senior executives.
A CofE spokesman said: ‘After six months of engagement, we are not satisfied that Vedanta has shown, or is likely in future to show, the level of respect for human rights and local communities that we expect of companies in whom the Church investing bodies hold shares.’
It is concerned about the treatment of the community around Vedanta’s facility in Lanjigarh, Orissa.
The firm has been criticised before over its treatment of local tribes.
The Church made its move ahead of a forthcoming report by Amnesty International alleging human rights abuses by Vedanta.
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The End of Switzerland
The economic crisis and rising xenophobia are breaking down the great Swiss myths and undoing this once unique model nation.
Denis MacShane - NEWSWEEK
In the third man, Orson Welles famously mocks Switzerland by saying, "Five hundred years of democracy and peace, and what did that produce? The cuckoo clock." This was never quite true. While 20th-century Switzerland often displayed a clocklike efficiency, with a skilled workforce and an enviable road-rail network, it also represented something more profound. Its unique blend of nationalities, languages, and religions, of farmers, bankers, and engineers, showed how forces that tore other nations apart could be formed into a relatively harmonious whole. The World Economic Forum does not hold its big annual meeting (which convened late last month) in Davos by accident. For the evangelists of globalization, Switzerland has long been the model nation.
The country appeared to combine deregulated low-tax economics with robust rule-of-law democracy. It was the first refuge for those fleeing communism after 1917 or Nazism after 1933—just as it offered safe haven to Voltaire, James Joyce, and Lenin. Openness made Geneva a world capital, with the League of Nations, the International Red Cross, and then key U.N. agencies all settling there. The Alpine nation was an island of freedom during World War II. Churchill went to Zurich to appeal for European unity after 1945. Diplomats signed peace treaties in Switzerland in the 1950s and 1960s. The country sold itself as neutral, free of Cold War alignments and the snares of the European Union. Reagan and Gorbachev met there to begin ending the Cold War. Switzerland was where the world came to find solutions.
Today, however, Switzerland's cities are grubby, its trains run late, its highways are always under repair, and its politicians often seem provincial. This former haven has turned ugly, as xenophobic populists have campaigned to close doors to outsiders (except the super-rich). More and more, Switzerland seems like just another small, struggling European nation. As Europe ponders its role in the new geopolitical order, Switzerland is looking less and less important to world affairs. The Swiss like to define themselves as a Willensnation—literally, a nation formed by the people's will. But the will to reinvent Switzerland now seems lacking.
In the meantime, the Swiss people's self-satisfied myths are rapidly evaporating. Take banking secrecy. The tradition began in the 1930s, when the Swiss sheltered French capital fleeing left-wing governments and then Jewish money escaping the Nazis. The trick was to make it a crime to reveal any details of a Swiss bank's dealings—even to the Swiss tax man. The country quickly became famous for its no-questions-asked depositories.
These are now a thing of the past. A decade ago, the Swiss were forced to disgorge unclaimed Jewish money banked in the Nazi era by depositors who had subsequently perished. Then the United States, chasing tax evaders, threatened to cut off Swiss banks from the lucrative U.S. market if they didn't reveal details on hidden American money. Washington also forced the Swiss to pay mammoth fines for allegedly breaking U.S. sanctions on Iran. Switzerland has now agreed to tax the savings of EU citizens holding Swiss accounts, and disgruntled bank employees have sold details of offshore deposits to German tax au-thorities. Even Italy, hardly a model of fiscal probity, has managed to use a tax amnesty to persuade its rich scofflaws to bring billions of euros back home from Switzerland. Swiss banks may still attract plenty of money, but they can no longer guarantee secrecy.
Switzerland's exemplary integration and tolerance are also slipping. Today the Swiss French hardly bother learning German, and Swiss Germans have stopped learning French. The most common second language is now English, not one of the country's four official tongues. The Swiss are also losing patience with outsiders. During the 1990s, the country took in more Kosovars fleeing Slobodan Milosevic's barbarism than any other European nation. Yet last November it passed a vicious-ly xenophobic referendum, amending the Constitution to forbid the construction of minarets. Never mind the fact that Swiss Muslims are unusually well integrated, coming mainly from secular Balkan communities.
This pattern—welcoming refugees and then reacting nastily against them—is actually part of a longstanding Swiss paradox. Before 1939, the country took in German Jews while Britain shut its doors. Yet it was also responsible for getting the Nazis to stamp the notorious J (for Jude, or Jew) on the front of German passports, in order to make it easier for Swiss frontier guards to see who was trying to get into their country. According to a recent book by Uri Gredig, a Swiss TV journalist, before Davos became synonymous with globalization it had a very different distinction: in the 1930s it was home to the biggest Nazi Party branch outside Germany.
Still another myth, much touted at home and by Euro-skeptics elsewhere, has been Switzerland's purported freedom from EU shackles. The country's refusal to join the Union supposedly allowed it to maintain its sovereignty and remain distinct from its neighbors who had to bow to Brussels. Yet today, most Swiss laws have been brought into conformity with EU norms—a requirement for trading with the Union. A little more than a year ago, Switzerland joined the EU's Schengen zone (which allows internal travel without passports), something not even Britain can boast of. As a result, some 3,000 Germans now arrive monthly to work and live in the country. According to Christa Markwalder, a young Swiss M.P., her country is now a "passive member of the EU"—a status that affords it some benefits but no input in decision making.
That fact has led Markwalder and others, including Jakob Kellenberger, the head of the Geneva-based International Committee of the Red Cross, to advocate for full EU membership. But such calls are opposed by the growing weight of the nationalist Swiss People's Party, which initiated the anti-minaret referendum. The party boasts a steady 30 percent support among voters—while none of the other 11 parties in the Swiss Parliament can muster more than 20. The nationalists are now campaigning to limit the number of German university teachers and doctors allowed into the country. With anti-foreigner and anti-immigrant identity politics becoming more powerful, Switzerland has even seen an upsurge in the popularity of Schwizerdütsch, the Swiss dialect impenetrable to other German speakers. Most TV programs other than the news are now broadcast in the dialect.
While many Swiss long to withdraw from the world, in other ways the country's old neutrality is rapidly vanishing. In the 20th century, Switzerland rejected fascism and communism but also avoided entangling alliances, rea-soning that doing so would allow it to make profits and enjoy access everywhere. In reality, Switzerland was firmly anchored in the Western free-market democratic camp. But in today's no-polar world, with the United States, the big EU countries, Russia, China, and others all jousting for influence, Switzerland's nonalignment has rendered it irrelevant. Its president and foreign minister have kowtowed to dictators in Iran, North Korea, and Libya with no reward. The fabled Swiss passport now counts for little. Libya's Muammar Kaddafi is holding two Swiss businessmen hostage in reprisal for the arrest of Kaddafi's son Hannibal in July 2008 for beating up his servants in a Geneva hotel. Switzerland's efforts to mediate with Iran and North Korea have been scorned by other powers. The country still boasts clever multilingual diplomats and foreign-policy experts. But the Swiss are now regularly pushed around by Washington and Brussels and are of little interest to the rising world powers.
Of course, the news from the Alps isn't all bad. Although it has been hit by the recession, Switzerland posted 3 percent annual growth over the five years prior to the banking crisis—higher than the rest of Europe. The country suffers from neither the public nor the private indebtedness of the Anglo-Saxon world and hasn't faced the collapse of a housing bubble, as Spain and Ireland have. Swiss unemployment may have risen, but it still stands at only 4.4 percent, less than half the EU average. The country boasts more green industry and technology actually in operation than any other nation in the world. Rule of law, a vigorous press, and a corruption-free state continue to make it attractive.
But the country seems utterly bereft of the kind of leaders or thinkers who could help it out of its current morass. Most Swiss politicians seem cozily comfortable with the old myths, and can't comprehend the criticism about the rising xenophobia in their politics. Part of the problem is structural. Because of Switzerland's unique form of direct democracy, any initiative by the Parliament in Bern or the seven-member Federal Council can be easily blocked by the threat of a referendum or by individual cantons, whose local politicians control Parliament's second chamber. This system allows the Swiss people much more say in the workings of government than almost any other country's citizens (although turnout for elections and referendums is very low). But it also stops the country's national leadership from making any tough decisions. In the past this might not have mattered, as Switzerland pottered along getting richer and trading off its non-EU neutrality.
Now the old ways are no longer working. Switzerland today is just a small, self-involved European country, not fully in or fully outside the EU, with little influence anywhere. The rest of the world may still make its annual pilgrimage to Davos. But the participants at the global meeting seem to have little interest in or awareness of the nation in which they are meeting. Switzerland may have always been about more than cuckoo clocks and skiing. But just what those other attributes are is becoming harder and harder to see.
MacShane is a Labour M.P. and a former U.K. minister for Europe.
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Anna Bligh, Clive Palmer announce multi-billion coal to China deal
Darren Cartwright - News Com
Mining magnate Clive Palmer has secured a $60 billion deal to export coal to China which he says will create thousands of jobs in Queensland and most likely restore the state's AAA credit rating.
Mr Palmer put aside political differences to stand alongside Queensland Premier Anna Bligh and announce his company Resourcehouse would supply 30 million tonnes per annum to China for 20 years.
The coal will be mined from the Galilee Basin region near Alpha, west of Emerald. A private 495-kilometre rail line will be built and new jetties and ports erected at Abbott Point, near Bowen.
The royalties from the sales are expected to tip more than $700 million into the Government's coffers per annum from 2014, while creating 7500 direct jobs and 50,000 to 60,000 indirect jobs.
Mr Palmer, who is a life member of the state opposition Liberal National Party (LNP) and a former state director of the National Party, said the Export-Import Bank of China had financed a $6 billion loan but emphasised the project was 100 per cent Australian owned.
"When you need a lot of money there is no better place to get it than in China," Mr Palmer said.
"This is Australia's largest single, non-syndicated, finance deal and the interest from China highlights the strength of the project and the benefits for Queensland and Australia in developing a new world class coal region such as the Galilee Basin," Mr Palmer said.
"There will be four underground mines and two open cut mines."
Ms Bligh said there was some environmental red tape to negotiate before the project was signed off, but unlike the Traveston Dam debacle, she did not next expect any last minute problems.
"It is world demand which is making it a commercial opportunity," Ms Bligh said.
"It will create tens of thousands of jobs in construction and in operation of the mine, port and rail over that time."
She said the project would revive and revitalise Central Queensland's economy. More than 100 million extra tonnes of coal could be exported every year from Queensland with a total of $25 billion of new projects under consideration by the State Government.
The project is expected to start later this year.
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Competition Commission takes notice of cellular cartel?
In an interesting case of alleged cartelisation by the cellular industry, the Competition Commission of Pakistan (CCP) has unearthed involvement of CEOs and top management of mobile companies by entering into an agreement that was tantamount to anti-competitive behaviour.
On the basis of an inquiry report, which was also placed on the website of the CCP, the commission has issued show cause notices to 24 top management functionaries of various cellular companies.
By unearthing the first kind of international case where global players were allegedly involved in cartelisation, the inquiry report found that the Cellular Mobile Telecom Operators (CMTOs) had prima facie entered into an agreement to revise the selling price of SIM cards and missed call charges. This amounts to a violation of section 4 (1) in terms of section 4 (2) (a) of the Ordinance.
When contacted on Friday, a spokesman of one of leading company of cellular companies said that they had not yet received the stated show cause notice, so they were not in a position to give their response.
The CCP enquiry report reveals that an informer provided ample evidence to the CCP under the “Reward Payment to the Informants Scheme”, which consisted of print-outs and PST files of e-mails exchanged between top managements of the show-caused cellular companies. The e-mails referring to revision in SIM selling price point to an understanding or an arrangement or both based on collaborative strategy on pricing.
According to the CCP inquiry report, it appears that the agreement to fix a charge for balance enquiry services was entered into in a meeting of the top bosses of these companies, held on 15th June 2009.
The CCP found that interestingly all the CMTOs gave rather similar reasons for imposition of a charge for balance enquiries that due to excessive use of this free service there was increased load on system, which was impairing the quality of service, so in order to discourage customers they had introduced this charge. All of them, at the same time. Interesting coincidence, isn’t it?
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