Daily Press Cuttings

Friday 16th March 2001

Mozambique: Debt relief gives Mozambique a ray of hope, but it fades very quickly. For decades, a vicious circle of give-and-take has been spinning across Africa: money comes in from the developed world as development aid and then goes straight back out as debt-service payments. In Mozambique, where 70% of the nation´s 17 million people live on less than 45 Euro cents a day, debt service payments of more than Euro 110 million a year flowed to creditors in wealthy countries like France, Britain and the US. These payments were far less than the amounts actually due, but still they were eating up about a quarter of the country´s export earnings. At the same time, less than Euro 2 per capita was being spent on basic medicine, and, with a shortage of schools, many pupils were learning under shade trees, fostering an illiteracy rate of 60%. Some debt relief savings are going towards the construction of primary schools but, as Pedro Couto, national director for research in the Ministry of Planning and Finance, says "we can´t go on living just with people in the primary level. To develop we need heads and hands, which means we need more technical education and higher education." At the Health Ministry, Humberto Cossa, the national director of planning, asks how a country without even enough penicillin hopes to launch a successful assault on HIV/AIDS, which the World Bank estimates affects one in seven adult Mozambicans? With debt relief comes higher expectations of poverty reduction, which in turn trigger the need for more money to sustain the improvements debt relief allows. And with more money looms the danger of new piles of debt.

India: India´s defence minister resigned late Thursday, denying allegation of corruption in a weapons procurement scandal revealed by Internet journalists using hidden cameras. "The allegations made against me are completely false," said George Fernandes, one of the prime minister´s close allies.

Russia: Swiss prosecutors investigating alleged misappropriation of $4.8bn lent to Russia by the IMF in the financial meltdown of 1998 face a wall of silence from the fund, which has denied them access to crucial information. Laurent Kasper-Ansermet, investigating judge in Geneva, officially asked the IMF two months ago for a list of Russian banks that received parts of the loan in 1998. Mr Kasper-Ansermet says he needs this information to determine whether the banks used the funds to prop up the rouble as intended by the IMF or diverted them to offshore accounts via Swiss banks. The IMF says it is satisfied that the money was well spent after an audit by Price Water Coopers. The audit, a copy of which was obtained by the Financial Times, states it "did not attempt to verify the completeness or accuracy of [the] information" on which it is based. The IMF is not the only body that seems unwilling to co-operate fully with the Swiss authorities. Last September, Mr. Kasper-Ansermet asked the Russia´s deputy prosecutor to obtain information from the central bank, to help determine whether the IMF tranche of $4.8bn was spent to support the rouble. The judge has yet to receive a reply.

WTO: WTO officials gazing out of their lakeside windows next Monday morning will be treated to one of the more engaging demonstrations staged by antiglobalisation protesters as campaigners dressed as giant water taps, books, first aid kits and telephones are stalked by "businessmen" with giant butterfly nets. The World Development Movement (WDM), the UK based pressure group behind the demonstration, says the "service safari" aims to highlight the threat posed to basic services globally by WTO negotiations which resume on Monday. The demonstrations are backed by a coalition of third world development groups and public service unions, and crystallises opposition to the talks under the WTO´s general agreement on trade in services (Gats)/ Protesters claim that the agreement will undermine government´s ability to maintain public services. They argue that Gats will force governments to privatise essential services, constrain their ability to regulate provision of basic services and oblige them to open these sectors to predatory foreign corporations.

US: The US labour market continued to weaken last week, while the US trade deficit hit both quarterly and annual records last year, according to official figures issued yesterday. US companies, faced with falling demand, mounting inventories and the need to sustain profits, have been forced to cut costs, including investments and payrolls. The Commerce Department reported that the US current account deficit, the broader measure of the trade gap, hit a record $115.27bn in the fourth quarter of 2000 from $113.11bn in the third. This brought the deficit for the whole year to $435.88bn – the largest annual deficit on record.

Russia: The Russian government yesterday gave itself a month to complete a law on money laundering which is likely to increase the power of the country´s secret services and police forces. Officials from the Russian federal security service, the ministry of justice and interior are calling on the government to give them the right to freeze any bank account or block any transaction simply on the basis of suspicion. "This contradicts the Russian constitution," said Alexander Urmanov, legal adviser at the Duma. Russia´s ministry of finance is lobbying the government to adopt a more liberal version of the law, which would require a court judgement to be passed before any legal action is taken against an individual or a company.

Asia: The Chinese operation of Asia Pulp and Paper Company was expected to miss a bond interest payment yesterday, providing the trigger for a debt restructuring by the parent group that promises to be one of the world´s largest and most complex. APP China was expected to default on a $28m interest payment on its $403m, 10-year notes due in 2010. The debt is guaranteed by APP, Asia´s largest corporate issuer of junk bonds, under its complicated system of cross-guarantees. Failure to pay will enable creditors to call a full-blown default on the parent´s estimated $12bn in debt. APP announced a self-declared moratorium on repayments of interest and principal. It blamed falling paper prices, lack of credit for working capital and the rising cost of borrowing.

Thursday 15th March 2001

Ecuador: A year ago this week, Ecuadoreans began exchanging sucres for US dollars as part of a government effort to rescue the country´s economy. However, it is unclear what lesson Ecuador´s experiment might impart to other Latin American countries. The issue of ‘dollarisation´ has been revived with El Salvador´s decision to adopt the US currency as legal tender. Analysts say the benefit of this policy may be seen in Ecuador´s improved growth prospects, declining inflation and rising bank deposits, as well as the increased credibility it has given the cash-needed country.

They note, however, that the improved economic performance of the past 12 months coincided with a surge in the price of oil, Ecuador´s most important export product. "Since you had a positive external shocks affecting the country, we can´t say that dollarisation per se has been the main driver behind the country´s positive scenario, said Leo Goldstein, an Ecuador analyst at Salomon Smith Barney in New York. "The dollarisation has brought some calm to the local population … but I wouldn´t say that dollarisation had been the main pillar of the current situation." Roger Scher, Latin America sovereign ratings director at Fitch in New York, notes that "the real test for dollarisation in Ecuador will be when the oil price declines. What will the economy policy reaction and political reaction be in that context?"

Turkey: Turkey unveiled a package of privatisation and banking reforms aimed at revitalising an economy that has seen 12 bank failures and the purchasing power of citizens fall sharply. The government announced that it would place its debt-ridden state banks under one board and quickly sell the state telecommunication company, airline and two other company. Kemal Dervis, the economic minister and formerly one of the World Bank´s vice presidents, said that a full economic recovery program would be put together in the coming days. The announced privatisation is a major shift for the government, which previously has only been willing to sell 20% and 33.5% blocks in the phone company. The government will now sell a 51% controlling share to one buyer and the remaining shares will be offered to employees and the public.

Russia: The Russian government and the IMF are putting the final touches to a one-year precautionary loan agreement. Alexei Kudrin, deputy prime minister and finance minister, said Russia needs the deal o raise its reputation in the eyes of the world business community. "The aim of the program is not to get credit, but to strengthen trust in the country as our credit ratings in the West are not very high," He said that interest payments on foreign debts were eating up to a quarter of budget revenue. Payments are expected to rise to about $19 billion in 2003, compared with $14.5 billion this year.

Pharmaceutical: Bristol-Myers Squibb Co. is offering to sell its two HIV medicines to poor nations in Africa at just below cost price, the first time any drug maker has made such a proposal. Bristol-Myers officials also say that the company would not use its patent on Zerit in South Africa to block that country´s efforts to buy less expensive versions of the drug from generic makers in India. Even at the newly reduced prices, the drug therapy will remain far beyond the economic reach of most in Africa. Also, Zerit and Videx must be combined with a third to complete the AIDS regime. If Bristol-Myers´s drugs are combined with Viramune, a drug from Boehringer-Ingelheim GmbH, the annual price of a three-drug combination goes up to $803.

Japan: Concerns of further weakness in Tokyo stock market and a rise in bad loans has prompted Fitch, the international credit ratings agency to review the ratings of 19 top Japanese banks for a possible downgrade. The announcement came as the deteriorating health of the financial industry hit banking shares, with the sector losing 5% yesterday.

Zimbabwe: International airlines have announced an effective 32% devaluation in the exchange rate for computing air fares out of Zimbabwe. In recent weeks, Simba Makoni, the finance minister, has said devaluation was no solution. Harare´s foreign debt is $4.5 billion, with $1 bn in arrears. Domestic and foreign debt and offshore arrears amount to $9.7bn, or 180% of GDP. In the first six weeks of this year, domestic debt grew at more than $40m a week, forcing the government to cut interest rates to service domestic debt.

Sudan: Christian Aid report accuses international companies of complicity in the mass displacement and killing of thousands people. Oil companies operating in Sudan are complicit in the systematic depopulating of large areas of the country and atrocities against civilians living around the oil fields, according to a report to be published today. In the searing report on the consequences of Sudan´s new oil bonanza, the charity accuses the oil companies of deep involvement in the government´s war against southern civilians. It calls on foreign oil companies – from Canada, Sweden, China, France and Austria –to suspend their operations in Sudan. It also calls on BP and Shell to divest their shares in firms whose parent company are involved.

 

Mexico: The Zapatista rebels have rejected a proposal for talks with Mexico´s national congress on the recognition of indigenous peoples rights. Subcomandante Marcos wants the congress to approve a bill recognising the said rights first. He insists that approval is a non-negotiable condition for starting peace talks. Despite the groundswell of national sentiment in favour of the proposed bill, no single party has a simple majority and there are many splits on the issue of the bill. The law would grant indigenous communities significant autonomy in the way they run their communities. It will also enshrine in the constitution, their right to live by traditions that differ from other Mexican forms.

Comment: Anatol Lieven and Celeste Wallander say that linking Russia´s debt to that of its neighbours is a very good idea and entirely legitimate. Russia owes $48billion to the Paris Club. The $3.4billion due this year is well within Russia´s budget. By 2003, however, Russia will owe $17.5 billion. The problem is that its entire budget in 2001 is only $42 billion. If creditors insist on the full sum, Russia will default and the West will be forced to renegotiate the debt sooner or later. Ukraine owes Russia $1.4billion for gas; Moldova owes $861 million and Georgia $179million. None of these countries can afford to pay. The analysts argue that US and its European partners should offer to forgive Russia all or part of its debt, while demanding that in return Russia acts similarly towards its neighbours.

Uganda: On Wednesday Yoweri Museveni was declared the winner of the presidential elections. Mr Museveni took 69.3% of the vote, his rival Kizza Besigye 27.8%. Dr Besigye said his agents had been chased from many polling stations or detained by the army during Monday´s election. He said that Museveni supporters had engaged in multiple voting and some ballots boxes were stuffed. International observers have not confirmed these allegations.

Wednesday 14th March 2001

Japan: Russia´s interest in a new structural adjustment loan from the World Bank has fade, but the bank would be ready to discuss fresh financing if asked, a senior official said. Higher oil and commodity prices, as well as the boost from the ruble´s devaluation in 1998, have replenished the state´s coffers, but the government is negotiating a precautionary loan pact with the IMF so it can restructure $40 billion in Soviet-era debt it owes to the Paris Club of creditor nations.

Vulture Funds: With the economy slowing down, investors are eyeing distressed debt funds, says Joshua Chaffin. Such funds, also knows as vultures, typically buy bonds at cents on the dollar and then hope prices will rebound as the market recovers –or that they will earn a lucrative pay-off in a restructuring. The inventory of distressed bonds has swollen in recent years as credit quality has deteriorated in the US and corporate bond defaults have risen to their highest level since 1991. The economy slowdown has helped drive hundreds of bonds to distressed prices and many managers believe more good companies will come their way if recession takes hold and new financing becomes scarce.

US: Larry Summers, the ex-US Treasury Secretary, has warned that America could become the new hapless Japan. One troublesome feature of the stock market boom of the late 90s was that Americans used the speculation as a substitute for saving. As times take a turn for the worse, the fear is that they will start to save more, adding to the squeeze on corporate earnings and profits. "At any stage", says Charles Dumas at Lombard Street Research, "crashing share prices could precipitate either a sharp upswing of consumer savings or serious financial trouble in over-leveraged America – or both."

Japan: The Japanese government´s numerous attempts to revive the economy with huge amounts of spending have left public finances in tatters. Debt is now equivalent to 130% of its annual output or GDP – the highest ratio among the major economies. The annual budget shortfall – the gap between revenues and spending – is now nearly 10% of output, the largest deficit on record in the post-1945 era. Last Friday, Tokyo unveiled a package of measures designed to eliminate bad debts from the banking system and encourage small investors back into the stock-market, which is at a 16 year low. A government-backed bank will takeover ailing financial institutions, assess their assets and provide enough money to recapitalise them. But is it enough? Paul Krugman, the American economist, believes the only way out of the doldrums is for the Bank of Japan to start printing money to reflate the economy. The central problem, he says, is that consumers and corporations in Japan are saving too much and borrowing too little.

Germany: Seventeen leading Germany companies have covered a $668 million shortfall in the $2.4 billion fund to compensate Nazi-era forced labourers. Gerhard Schroder, the Chancellor, is demanding that one million surviving victims get their payouts soon.

Africa: In a largely self-congratulatory article, "Africans are ready for bold change, with help" Horst Koehler, the managing director of the IMF and his co-writer, James Wolfensohn, the president of the World Bank, stress that current levels of foreign aid, as some 0.24% of yearly GDP, falls far short of the UN target of 0.7% and is worth $100bn a year to Africa. They also point out that the phasing out of trade barriers by developed countries would help the fledgling African economies. Developed countries currently spend $300bn a year on agricultural subsidies, roughly the equivalent of the entire GDP of sub-Saharan Africa. Among the many aid-related initiatives cited by the two agencies in the article, mention is made of the need to work with "the countries involved to make sure that Africa does not again fall into a debt trap."

Indonesia: As Indonesia lurches from one new crisis to another, foreign economists and bankers are worried that the country will face increasing difficulty in repaying its massive debts and may default on them. At the end of 2000, the country´s total public and private debts amounted to approximately $262bn, or 170% of GDP. Meanwhile, a group of members of the Indonesian Parliament, including a former top economic adviser to President Wahid, warned that political instability on top of sectarian and separatist conflict had brought the country to the brink of collapse. They called for all major parties to work together and set up a national coalition government.

Santiago: The judge investigating General Pinochet, Juan Guzman, granted bail to the ex- dictator Augusto Pinochet, and to General Manuel Contreras, the chief of the Dina, the most repressive state apparatus in Chile. In both cases, the decision is subject to the payment of a fine and to consultation taking place at the Court of Appeals of Santiago today.

Contreras was under house arrest from the end of January, when he finished his seven year imprisonment for his responsibility in the disappearance in 1974 of David Silberman , the ex- manager of the copper mine Chuquicamata,.

Tuesday 13th March 2001

Aids: Momentum is building within the Group of Seven major industrial powers to announce an anti-Aids plan at their July summit in Genoa, Italy, according to G-7 officials. The latest price cuts, announced by the pharmaceutical Merck last week, puts more pressure on the G-7 come up with significant funding, either directly or through international agencies such as the World Bank. Italy has proposed to create a trust fund of at least $1bn – part from governments, part from private companies – that would be managed by the World Bank to fight Aids, tuberculosis, malaria, dysentery and other diseases.

Russia: Russia is pushing for a three-year accord before it opens talks with the Paris Club of sovereign creditors about rescheduling its heavy foreign debt. In the interim, the IMF has offered Russia a one-year "precautionary stand-by arrangement" which would hold out the prospect of funds in the event of a sharp downturn in the economy. Russia missed several Paris Club deadlines at the beginning of the year in an ill-fated attempt to bargain the club into rescheduling payments falling due in 2001 to 2003. Creditors led by Germany and the US rejected the move and demanded full and timely payment. Russia is scheduled to repay about $5.9bn this year on sovereign debt totaling $48.3bn.

US: Harvard University named former US Treasury Secretary Lawrence Summers as its next president. Mr Summers was best known for his role in steering Russia from communism to capitalism and shaping US global economic policy in the post-Cold War world, in particular spreading market forces to developing countries.

Indonesia: Debt-ridden Asia Pulp and Paper (APP) said yesterday it had stopped payment of interest and principal on its $11bn debt and the debt of its units. APP is controlled by the Sinar Mas Group, Indonesia´s second-largest conglomerate, which is owned by the Widjaja family.

WTO: Mike Moore, the director-general of the WTO has made his strongest call yet for fresh global trade talks which he said could cut by a third, barriers in agriculture, manufacturing and services and boost the world economy by more than $600bn. However, failure to launch a round at the WTO´s ministerial meeting in Qatar in November, he warned, could divide the multilateral system into discriminatory regional trade deals and hostile blocs, while encouraging aggressive unilateralism by big countries. He also said that the interests of developing countries must be given high priority if a new round was to succeed. That would mean re-negotiating some past WTO agreements, liberalising manufacturing trade and discussing anti-dumping measures. In return, poor countries should be prepared to discuss competition and investment in the WTO. He ruled out the use of trade sanctions to enforce labour and environmental standards. Linking labour sanctions with trade, he said, would hurt workers in poor countries and could be abused for protectionist purposes.

Equatorial Guinea/Oil: Since discovering oil in commercial quantities in 1995, Equatorial Guinea, once ranked among the poorest countries in the world with a population of fewer than half a million, has attracted more than $1bn in foreign direct investment. Two fields are in production: ExxonMobil´s Zafiro and Triton´s La Ceiba. TotalFinaElf, EMS Nomeco, Vanco, Ocean Energy and Australian-based Roc Oil also have interests in the country´s oil and gas. President Teodoro Obiang Nguema Mbasogo, who overthrew his uncle in a military coup in 1979, has pledged to use revenue from oil to promote development and improve living standards. Opposition groups, however, complain of escalating corruption and say the diversion of oil money will help perpetuate what they call a clan dictatorship and the abuse of human rights.

Pharmaceuticals/Aids: Yale University in the US was under growing pressure from its students to put conscience before profit and allow an Aids drug invented in its laboratories to be made affordable to millions of sufferers in developing countries. Yale earns £40m a year in license fees for the drug d4T, but the university administration insists its hands are tied by an agreement it signed with Bristol-Myers Squibb giving the giant pharmaceutical company exclusive manufacturing rights. However, the university refuses to make public the said agreement. Cipla, the Indian generic drug manufacturer, has offered to produce the drug d4T at a thirty-fourth of the price charged by Bristol-Myers Squibb. Three years ago, Yale received a $250,000 donation from Bristol-Myers Squibb. The case has highlighted the growing tension in US universities between their identity as icons of academic independence on one hand and wealthy "profit centres" for corporate sponsors on the other. Professor Prusoff, who shares in Yale´s Bristol-Myers´ royalties, called on the company to reduce their prices and the industrialised nations, namely the US, Britain, France and Germany, to give to the World Health Organisation a certain amount of money to distribute to countries where the medication is needed.

Romania/Aids: The pharmaceutical company Merck has said that it would include Romania among the countries that are eligible to buy Aids drugs at reduced prices because so many Romanian victims are children. Of 6,270 Romanian patients with HIV, 5,629 are children. The drugs are being offered at 10% of the price they sell for in the US.

Russia/Arms: Breaking openly with both the US and his predecessor, Boris Yeltsin, President Vladimir Putin has agreed to resume sales of Russian conventional arms to Iran on Monday after a 6 year hiatus. The advantages for Russia are considerable: hard currency from arms sales; work for the country´s idle weapons-production lines; more money and influence from military training, and repair work in a critical Gulf country not far from its borders. Russia and Iran share common concerns in their opposition to Turkey and an expanding NATO and a common desire to limit US influence in central Asia, where US and Russian-backed pipelines are fiercely competing to control the flow of new oil finds in the Caspian Sea.

Indonesia: Indonesia, says Philip Bowring in his article "Indonesia´s Dual Images: Turmoil Masks its Growth", presents a paradox. On the one hand it is the most politically troubled country in Southeast Asia, with an unstable currency that reflects its problems. On the other, it boasts the best export performance in the region, surging by 28% in dollar terms, and an economic growth rate that is conservatively estimated at 4.8% in 2000. Indonesia critics of the IMF suggest that instead of preaching to Indonesians, the monetary fund should turn its attention to the ethical conduct of the investment banks that have generated huge fees while compounding Indonesia´s debt problems.

NAFTA: A small group of international tribunals that handles NAFTA disputes between investors and foreign governments, what Joan Claybrook, president of Public Citizen, a consumer watchdog group in Washington, calls "secret government", has led to national laws being revoked, justice systems questioned and environmental regulations challenged. One example cited in the article "NAFTA´s Long Reach: National Laws are Overturned" is the lifting by the Canadian government of restrictions on the manufacture of the hazardous ethanol-based gasoline additive after an American manufacturer said that the ban hurt its business. Officials who oversee the tribunals say that they understand concerns about the less-than-public aspects of the panels´ work but that anything that opens up the proceedings would undermine the promise of confidentiality. That they say, would undermine the primary purpose of the arbitration mechanisms – to help foster commercial development.

The West Africa

Ghana: The announcement by the Ghana government to join HIPC, the international debt relief initiative has been accompanied by fierce public debate. None of the previous economic policies and programmes, such as the structural adjustment programmes under the Economic Recovery Programme, has changed the underdeveloped status of the country; yet the country is being coaxed into trying another experiment with HIPC, says Akoto Ampaw, prominent lawyer and Jubilee 2000 campaigner. The argument by those who support the initiative is that the relief offered will reduce the nation´s debt stock and bring down the amount, now estimated at about 40% of total foreign earnings. Japan, one of Ghana´s foremost creditors, opposed Ghana´s inclusion in the initiative but has now apparently acquiesced. The Ghana Trade Union Congress argued that accepting HIPC also meant accepting harsh IMF conditions, such as the sale of a number of state-owned enterprises including the country´s oil refinery. The TUC feels that the government must make public the full social and economic cost of HIPC membership.

Adu Amankwah said that HIPC is primarily aimed at protecting the financial integrity of the international financial institutions and getting the poor countries to continue with stringent structural reforms

WB/IMF: In his article "Africa, the World Bank and the IMF, Guy Arnold writes that the WB ought to be concentrating on reducing debt, bringing an end to external dependence, encouraging home-based industries and discouraging predatory takeovers from outside the continent. Apart from the slow-moving HIPC initiative to reduce debt, Arnold argues that they cannot be said to be interested in any of the other objects. Structural Adjustment Programmes (SAPs) and Economic Recovery Programmes (ERPs), the trademarks of the World Bank have contributed to undermining the legitimacy and authority of African governments and the power of the state. Any true African renaissance must be achieved outside the parameters of WB/IMF programmes, Arnold argues.

Monday 12th March 2001

Intellectual Property: A little-known firm called TechSearch LLC has wielded a patent in a way that opponents in court described as "extortionate" and other critics have slammed as "patentmail". Over the past 2 years, several dozen US companies, fearing litigation, have made payments to TechSearch after receiving letters demanding as much as $90,000 in patent-licensing fees. The company´s 1993 patent covers a basic process for sending files between computers. Prodded by complaints that the patent was invalid, the US Patent and Trademark Office reached an initial decision late last month to void it. Meanwhile, TechSearch is pursuing licensing fees in such areas as online education, computer-chip "emulation" and the ability of computers to recognise when peripherals such as printers are plugged into them. Nevertheless, bigger technology firms have found their reputations can get blemished when they try to enforce intellectual property claims to inventions that many people think obvious. Amazon.com Inc, for example, was pilloried by the media for its effort to block Barnes & Noble.com Inc from using its "1-click" online shopping method.

Pharmaceuticals: Yusuf Hamied says that his sole motive for offering to supply cheap AIDS drugs through his Indian company, Cipla Ltd. is "my social obligation to society". But as the patent lawyer Narendra Zaveri states, Dr Hamied´s offer was very much a business deal designed to build Cipla´s brand name outside India. Others say he wanted to impress Indian government officials with his ability to cut prices, as part of an effort to preserve the legal rights of India´s generic drug companies to make and market copies of newly developed drugs. Cipla´s offer to sell a triple-combination of "antiretroviral" Aids drugs to the international aid group Doctors Without Borders at less than $1 a day per patient may be transforming the debate over how to provide critical medicines to poor nations, but critics say it was merely symbolic, since the group lacks the resources, infrastructure or desire to be a global drug distributor. Cipla has not extended its $350-a-year offer to governments, which might buy large volumes of drugs, but it is willing to sell them the three drug regimen for $600 per patient per year which would be comfortably profitable for the drug maker whose overall Aids-drug sales have thus far been paltry.

Uganda: Uganda goes to the polls today and western donors are watching with increasing concern, writes Mark Turner. Many expect Yoweri Museveni to win. Over the past 15 years Uganda has dramatically reduced the incidence of Aids, from 30% to 10%, annual growth is 5-7%, there is universal primary education and investors from the US and South Africa have flocked in. However, Uganda´s "no-party" system of government tolerates only one political party – President Museveni´s "movement" – and dissenters say they face regular harassment. Although political parties are technically legal, they campaign or operate publicly. This was to safeguard against the parties of the past, according to the president, which served only to sharpen the country´s ethnic and regional divisions.

Bolivia: Bolivia´s financial authorities are poised to bring an independent money-laundering watchdog back under state control, despite warnings that this could undermine anti-corruption efforts. The unit´s probes into allegations of financial sleaze over the last 2 years have been highly publicised and have embarrassed the troubled administration of Hugo Banzer, the Bolivian president.

Zambia: In the three months to mid-January the local currency, the kwacha, lost 20% of its value, bringing the loss for the previous 12 months up to 40%. One factor cited in connection with the collapse was the change in the copper miners´ foreign exchange tactics after the industry was privatised early last year. To stop commercial transactions, in effect, from speculating against the currency, the government has placed controls on foreign exchange dealers, made pricing in dollars rather than kwacha inside the country illegal, and forced local suppliers to the mining companies, who used to be paid in dollars which they hung onto, to be paid in kwacha.

Weekend Edition

Debt: Nicaragua and Honduras were among the 22 states that qualified for $34bn of immediate debt relief under the Highly Indebted Poor Countries´ Initiative (HIPC), but while the World Bank began immediate help, the IMF has not contributed a cent. Under the initiative the fund dictates that all creditors provide proportionate debt forgiveness, but many are unable or unwilling to do so. For example, Costa Rica and Guatemala are each owed about $500m by Nicaragua and $30m by Honduras but as poor republics they cannot write off this money. Guatemala is talking to Spain about paying its debt to Madrid with what Nicaragua owes it with the idea that Madrid then forgives the total debt owed by both countries.

Angola: Jacques Attali, former president of the European Bank for Reconstruction and Development and the latest political figure from the Mitterrand era to be investigated, was released on bail after being detained for misuse of funds and influence peddling in connection with illegal arms deals and corruption in Angola.

Thailand: Thailand´s new government plans to buy up all bad loans worth an estimated £17.2bn at both state and private banks, paying net book value for the assets. The generous purchase price – which is likely to be well above the market value of the bad loans – means that banks with weak capital bases will not have to make immediate additional provisions for losses from the sale. However, if the government´s asset management company fails to recover what it paid for the bad debts, private banks will eventually have to absorb the loses of up to 30% of the transfer price. Thailand´s banks have struggled for 4 years to reduce their pile of bad debts, which peaked at 47% of total lending in May 1999.

Tax: Oxfam reckons that the combined figure for tax loss for multinationals and interest income on saving in developing countries could be above $50bn, which is roughly equivalent to the global aid budget. "This severely limits the capacity of developing country governments to finance economic development and provide vital social services." Accepting in principle the need to reform, the offshore, primarily Caribbean, financial centres, offered to sign letters of commitment to the principles of non-discrimination, transparency and effective exchange of information and complete a programme of reform by the end of 2005. In return, they are seeking admission to the OECD´s global tax reform, a loose association of OECD members started last year to discuss the globalisation of tax matters, and the OECD would drop the threat of sanctions.

Bankruptcy: Legislation in the US Senate that is designed to make it harder for Americans to wipe out their debts through bankruptcy contains a special clause that helps shield a group of 300 wealthy Americans including 20 millionaires from a debt of at least $15m owed to the insurance giant, Lloyd´s of London. The provision is an attempt by American investors to win a long-running battle with Lloyd´s that they had lost in the British courts. As Travis Plunkett of the Consumer Federation of America, a non-profit advocacy group says, "Wealthy investors get a bailout from their financial obligations, while Americans of modest means must confront harsh new bankruptcy barriers."

Mexico: The Zapatista rebel leader known as Subcommander Marcos and 23 confederates were set to make a triumphant entry into the heart of Mexico City on Sunday as they completed a 12 state trek in their campaign for Indian rights. Cheered by 20,000 supporters in Xochimilco on the southern outskirts of the capital, Marcos told the crowd, "Lower your voices you men of wealth. Lower your voices and listen because now there´s another voice that has not come to steal and to impose itself but something far more serious: to take its rightful place."

US: Congress quickly did away last week with workplace safety rules - including the regulation requiring business to take steps to limit repetitive-stress injuries on the job - that had been 10 years in the making and moved onto a bankruptcy reform bill. Congressional leaders are reported to have consulted closely in the drafting of the bill with the American Financial Services Association, the Coalition for Responsible Bankruptcy, which represents dozens of corporations and trade groups, and MBNA Corp., the nation´s largest credit card issuer. Business representatives are now looking ahead to passing a broader agenda that would pare back environmental and land use regulations, limit corporate liability for faulty products, rewrite rules protecting the privacy of patients´ medical records, cut red tape blocking new oil refineries and pipelines, and open the Arctic National Wildlife Refuge in Alaska to oil drilling.

Yugoslavia: Investigators say evidence so far suggests that Mr Milosevic´s family and perhaps 200 loyal businessmen-politicians who controlled most of the country´s state-run companies skimmed anywhere from hundreds of millions to several billion dollars of public money for personal use. Officials say the trail points not just to Cyprus and Switzerland, but also to Greece, France, Germany, Italy, Russia, China, Britain, Liechtenstein and South Africa.

The Economist March 10th - 16th 2001

US: On March 6th the Federal Trade Commission (FTC) charged Citigroup with predatory lending, combining the tactics of a loan shark and a con-man. Citigroup bought Associates First Capital last September which makes its money by lending to the country´s poor, and to those whose credit records prevent them from borrowing elsewhere. "Consumer finance", people in the industry politely call it, "predatory lending" is how some of its customers see it. To make money, Associates naturally have to charge customers more than they would charge creditworthy types. The FTC admits that "predatory lending" is hard to define. One definition is lending that is profitable just from the repayment of interest, without the expectation of ever getting the principal back. To a loanshark, after all, someone who repays his principal is a customer lost. According to the FTC, people swimming in debt were advised to refinance, or "flip", outstanding unsecured charges into home-equity loans, on the false promise that this would lower costs. Rather, borrowers paid higher rates at greater personal risk, because their home could be repossessed.

US: America´s new administration wants to give oil companies new "incentives". Critics deplore such "handouts". George Bush has declared that there is an energy "crisis" in his country, and insists that more domestic supply is the answer. Allies in Congress have devised an energy bill laden with incentives for domestic oil and gas exploration. Cruitics have pounced on such proposals as thinly veiled handouts for Mr Bush´s cronies in the business –who, the critics insist, already receive plenty of fat subsidies. They point to earlier studies, such as one done by Greenpeace, that reckon the oil industry receives between $15 billion and $35 billion a year in subsidies. The extent to which oil is subsidised by America´s defence budget is a matter of lively debate among energy economists. Some point to the demand of defending Middle Eastern oil fields, and have suggested that defence costs add between $10 billion and $20 billion a year in subsidies to the true cost of oil. A new report –this one by Green Scissors, an alliance of American green organisations and taxpayers´ rights groups –tries to quantify all the indirect subsidies. For example, costly work done by the army corps of engineers to dredge waterways in order to ensure safe passage for oil tankers plainly benefits the industry, yet nowhere does it appear on the books as an oil-industry subsidy. Another example involves America´s Export-Import Bank, a government guarantees for overseas projects. Last year, the agency devoted over $2billion to funding projects such as power plants, fossil-fuel extraction and pipelines. It is unclear how much of this should be regarded as a subsidy. In one infamous case, the Ex-Im Bank joined the World Bank in helping to finance a controversial oil pipeline in Chad and Cameroon. Chad´s government, it has since been reported, spent $4.5 million of that foreign money buying weapons.

China: China´s National People´s Congress opened this week. Xiang Huaicheng, China´s finance minister, revealed a new 2001 budget that will rely on deficit financing to allow hefty spending increases on agriculture and education, and a 17.7% rise in military expenditure. Tang Jiaxuan, the foreign minister, took the opportunity to warn America of "serious dangers" if it proceeds with the sale of advanced weapons to Taiwan. Zhu Rongji, China´s prime minister, reported on progress toward the targets he set upon becoming prime minister three years ago. The goal of turning round the huge loss-making state sector had, he said, been "basically attained", with profits of state-owned industrial enterprises coming in last year at about $29 bn, 190% higher than in 1997. Much of that increase, however, was from state-owned oil firms in the form of higher oil prices, rather than from any broad rise in overall industrial efficiency. Worse still, state auditors have found that two-thirds of the state-run firms they checked last year had padded their books with billions of dollars of fake profits.