Daily Press Cuttings

Friday 19^th January 2001

Financial Times:

Tokyo: Mahatir Mohamad, Malaysia Prime Minister, says Japan's current economic problems "is due almost entirely due to Japan's attempt to adopt western practices and western norms...Japan has discarded life-time employment, co-operation between the government and the private sector, regional co-operation, ideology.Even Japanese youth want to be blondes, work less and play more"

Mr Mahatir became a staunch critic of western governments and financial institutions after Malaysia's economy almost collapsed during the Asian economic crisis in 1997. He blamed overseas speculators for much of the crisis. Mr. Mahatir is advocating for east Asian co-operation which he insists must, "include the development of a financial architecture and the regime for international trade".

Russia: President Vladimir Putin has told his government to rethink its decision to suspend payment of much of its foreign debt. This follows sharp criticism from Russia's creditors and his chief economic adviser, Andrei Illarionov. In an interview with the FT, Mr Illarionov argues that "respect for debt is the basic root of any civilized society". He says he is very worried that huge capital inflows from high-priced oil exports were suffocating Russian industry, fuelling inflation and exchange rates.

Taipei: Taiwan is to require banks to post detailed quarterly statements on their internet sites from April 1. The drive for greater transparency has been given added urgency by concerns over the effect of problem loans on the economy, Official figures show that non-performing loans accounted for a record 5.49% of lending at the end of October. A further 2.9% "was under surveillance", amounting to a total of £24.5bn in problem debts.

Jamaica: Caribbean leaders will today ask Jean Chretien, the Canadian Prime Minister, to help ensure that small countries in the Americas will not be at a disadvantage when the Free Trade Area of the Americas (FTAA) is created in 2005. A summit to discuss FTAA is scheduled for April. It is not certain whether Presidents Fidel Castro and Jean-Bertrand Aristide will be allowed to sit with the other Caribbean leaders because of long-standing differences with the US.

UK: BPAmoco will face pressure from shareholders to sell its £390m investment in PetroChina, human activists said yesterday. Alison Reynolds, the Free Tibet campaigner, said that "BP's reputation as a company committed to human rights has been placed at risk with this investment." At its AGM in April, BP shareholders will demand a full risk assessment of plans to drill in Alaska's Arctic National Wildlife Refuge.

The Wall Street Journal:

George Ayittey, the Ghanaian author of, Why Africa Remains Poor, argues that Clinton's Africa policy failed because it became an extension of US domestic affirmative action. The Clinton administration was misguided in its belief that it could micromanage African affairs from Washington. He says Bush is in danger of committing another serious blunder by asserting that Africa was of little strategic importance to the US. Now, the assassination of Laurent Kabila presents him with his first international crisis. He argues that Bush should place less emphasis on the rhetoric of African leaders and more on institution building. Four institutions are critical, : an independent central bank, an independent judiciary, an independent and free media, and neutral and professional armed forces.

Russia: The FBI has detained Pavel Borodin, a senior Russian official and political patron of President Putin in New York, under a Swiss arrest warrant. Russian officials have demanded his release. Borodin is wanted for questioning in connection with $25 million money-laundering and corruption cases.

The Guardian/The Observer:

USA – The editorial says that California is in darkness as a result of deregulation. The Republican law implemented in 1998 to deregulate the energy market aimed at increasing competition and consumer choice. The result has been darkness and critical debate. The failure of the market is the new century's impending question. Public ownership of some kind is increasingly been called for – or, what looks possible in California, a return to the good old days of regulated monopoly.

The Times:

DRC: Congo's neighbour countries plead that they have no part in the death of Laurent Kabila. Officials in Kinshasa say they expect Kabila's body to be brought back from Zimbabwe this weekend. He was flown there for urgent medical treatment after he was fatally shot on Tuesday.

Thursday 18^th January 2001.

FT: UK: The Chancellor Gordon Brown will tomorrow call on the EU to “to accelerate the restructuring of capital, product and labour markets” to sustain global economic growth in the face of the US slowdown. He will also urge the EU to press for the restart of WTO talks. Mr Brown wants to liberalize energy markets and capital markets by 2003.

UK: The number of employed people in Britain has fallen, bringing to an end the steady jobs growth of the 1990s. However the proportion of workforce claiming unemployment benefit is at the lowest rate for a quarter of a century. The number of vacancies at jobcentres continues to rise. Daniel Gabay from JP Morgan said that this might be “a sign of a mismatch between skills wanted and skills available”.

UK: A study reports that students will be £7000 in debt by the time they leave college. Nick Porter, chief executive of Unite, the listed accommodation group, say that this increase is because of tuition fees but also rising lifestyle expectations.

Asia: Disappointed trade figures focused attention on the vulnerability of Singapore's trade-oriented economy due to the slowdown in the US. The Trade Development Board (TDB) said Singapore's total trade was projected to expand 7.9% this year, compared to 22.9% in 2000. Economic growth is projected 5-7% this year down from 10.1% in 2000.

Japan:The global issuance of government bonds has risen by 10% since 1996, to $1,4000bn - according to JP Morgan the US investment bank, mainly as a result of the growth of Japanese government debt. Japan will provide 40% of the debt issuance so that it will overtake the US for the time in the JP Morgan's global bond index. “Last year saw an unprecedented level of buy-backs of govt debt around the world. In the US it was caused by large budget surpluses, while privatisation proceeds and revenues from third generation mobile phone license auctions prompted many European countries to start debt buybacks” JP Morgan said.

Japan: Japan's most senior cabinet ministers have to give account for alleged involvement in a bribery scandal. Payments up to £114,500 were made to a number of Liberal Democratic party politicians by KSD, an insurance company, in return of political favours.

US: In an analysis of trade policy, the FT asserts that Clinton's trade policy was marked with ambivalence. He promoted liberalization which raised US exports by 75%, but he would demand side agreements protecting labour rights and the environment. Opinion surveys from his chief pollster, Stan Greenberg, showed that if he backed Nafta, he would lose from 2-4 percentage points of support in several Mid west states.

Jamaica: Jamaica's bauxite production is projected to expand by 20% this year. Jamaica is the world's third largest producer after Australia and Guinea.

Congo: Copper and cobalt price changed very little after the report of Kabila's death. The DRC holds about 34% of the world's cobalt reserves and 10% of copper reserves. The DRC has seen a fall in copper production from over 400.000 tonnes in 1989 to little more than 30.000 tonnes a year, while cobalt exports dropped from over 9000 tonnes to 2000 in the same period.

Wall Street Journal: China: The head of the Chinese delegation negotiating Beijing's entgry to the WTO, said his country wouldn't agree to give up the right to subsidize its farmers in order to strike a deal. The issue revolves around whether China should be treated as a developing country for agriculture or as a developed country. Under WTO rules, countries classed as “developed” have the right to subsidize up to 5% of their agricultural output. For developing countries the figure is 10%.

OPEC cut output by 5.6% keeping prices high. Oil producers said that another cutback could come in March.

Italy: The head of the Interior Minstry's gunlicensing department and two other officials have been arrested on suspicion of receiving about $50.000 worth of bribes from a US firm that sought a permit to import non-lethal guns from the US

Russia: The Kremlin's top economic adviser said that Russia can and must pay its Soviet-era sovereign debts using Russia's reserves of hard currency, and claimed that President Putin agreed with him, indicating a rift among top officials over how to handle the $48bn burden. Prime Minsiter Mikhail Kasyanov and others have said Russia can't and won't pay all of the $3.5 bn it owes the so-called Paris Club.

Daily Mail: The Mail reports that Italy's Mr. Berlusconi will be meeting Mr. Blair at No. 10 on February 8, 2001.

The Times: Congo: Amid conflicting reports over the fate of President Kabila, his allies moved swiftly declaring his son, Major-General Joseph Kabila, head of state of the DRC. The Times also reports that the Zimbabwean government “declared yesterday that it did not regard Mr. Kabila's death as a chance to withdraw”.

Wednesday 17^th January 2001.

The Wall Street Journal: USA: Chiquita Brands International Inc, the company at the centre of a long-running trade dispute between the US and the European Union over bananas will miss some debt repayments and ask investors to agree to a restructuring of $862 million of bond debt. The deal involves a swap of debt for equity. The company says that, despite its financial problems, it will continue its eight year fight to reform the EU banana-import rules.

Jakarta: The International Finance Corp. alleges that Panca Overseas Finance has created fake "creditors" to defeat a bankruptcy petition and win approval for a debt restructuring plan which requires Panca to repay just 17% on the dollar of its debt. The dispute highlights Indonesia's failure to revamp its bankruptcy procedures and illustrates some of the problems Indonesia faces in paying the debts from Asia's 1997-98 financial crisis.

UK: Royal Dutch Shell has held low-level talks with Iraqi Oil Ministry officials regarding negotiations over the Ratawi field in Iraq which is estimated to hold some 1 billion barrels of oil. Shell will not do business with Iraq until the UN sanctions are lifted.

UK: Lower gas prices and mortgage interest payments are keeping down UK inflation. There is pressure on the central bank to lower its 6% base rate with further falls in motoring and home buying costs.

Germany: German state prosecutors are focusing their money laundering investigation involving some of the country's biggest banks on former Russian aluminum exporter, Trans-World Group.

Asia: Singapore is pursuing bilateral agreements with a wide range of partners: New Zealand, US, Mexico, India, Australia, Japan. There is criticism that bilateral agreements will give scant attention to the creation of a regional trade bloc.

FT:Congo: President Laurent Kabila has been reported dead by the Belgian government after clashes in Kinshasa, Congo's capital. Since 1998, the country has been split in two, with Uganda and Rwanda supporting a group of the rebel movements in the east, and Zimbabwe, Angola and Namibia giving Kabila the support he needed to stay in power.

El Salvador: The leftwing opposition party FMLN has called for a suspension of dollarization for at least a year. El Salvador introduced the dollar alongside the national currency – the colon – on January 1. Under the new monetary arrangements, El Salvador has to set aside $450 million of its hard currency reserves to guarantee a fixed exchange rate. It has also forbidden the printing of new colon notes. The opposition party says that more liquidity is needed to rebuild the country. The FMLN has filed a legal suit against dollarization, arguing that the government's failure to consult the opposition was unconstitutional.

New York: The Basle committee of financial regulators has published a new proposal for capital requirements of banks. Borrowing will be easier for highly rated companies in emerging markets by reducing the amount of capital banks have to set aside for lending.

The amount of capital held for loans to lowly rated companies will make it harder for them to borrow from banks. The proposal also states that credit risk would be determined,

ultimately by also how exposed the bank is to the borrower or sector..

Mexico: Decline in US car production will be softer in Mexico than in the US and Canada because of its newer plants. Mexico is the second largest supplier of vehicle parts to the US.

Zimbabwe: The Reserve Bank of Zimbabwe has rejected IMF's advice to tighten its monetary policy and announced a scheme designed to force banks to step up their lending to `productive' sectors of the economy at concessional interest rates. The government hopes that cheaper bank loans will revive the economy. The IMF urged Zimbabwe to allow interest rates and exchange rate to be market determined.

India: The World Bank is backing a scheme to set up a private hospital in Maharastra, Western India. The £4.4 million project is part of a $134 million World Bank plan to upgrade healthcare in the Indian state.
UK: Tony Blair has been urged by some pro-single currency ministers to begin preparation for a referendum on the Euro.

Tuesday 16^th January 2001.

FT: Brussels: The European Commission may rethink rules on golden shares and allow governments to retain the right to veto foreign takeovers of newly privatized companies. The EU's founding treaty states that governments should not discriminate between public and private companies, and that restrictive legislation on foreign takeovers are illegal.

Beijing: It has been discovered that a web of corruption exists within China's power monopoly, lending weight to high level proposals for its fragmentation. The power monolpoly has been a bulwark of political support for Li Peng, the country's most powerful conservative.

Bangkok: A tribunal will be set up to try leaders of the Khmer Rouge regime. However it will be at least six months before the hearings start. An estimated 1.7 million Cambodians died during the Khmer Rouge regime between 1975-79. Many former Khmer Rouge leaders opposed setting up the international tribunal to review the events.

Manila: A secret bank account linked to President Joseph Estrada reinforces allegations of corruption in Estrada's impeachment trial.

Japan: The Asem meeting between 25 European and Asian finance ministers challenges the view on free-floating regimes of the Washington institutions. A jointly authored French and Japanese paper argued that a managed or pegged exchange rate is the best method of stabilizing exchange rates across Asia.

South Africa: The South African government has refused to allow a special investigation unit to inquire into allegations of corruption in a £3.7 arms deal.

Syria: Syria's president Bashar al-Assad is slowly delivering his promise of modernisation: political prisoners have been released and intellectuals are speaking out. However on the domestic economic the president is still hesitant. He hasn't appointed a reformist government or resume the anticorruption drive.

US: The expansion in the US of credit by US banks has yet to be tested in an economic downturn. The banking system is haunted by the dramatic increase in corporate borrowing in the late 1990s and the erosion of lending standards that accompanied it. There are rumours that Bank of America will write off $1.1-1.2 billion of loans.

Guardian: Washington: Saddam Hussein has donated £64 million in humanitarian aid to poor America's inner cities and rural poor. The UN has to investigate if the money comes from the oil-for-food program.

UK: The recent technology revolution will have deflationary implications as the lower cost of manufacture feeds through, says David Potter in comment.

Wall Street Journal: Ivory Coast: Ivory Coast cocoa supplies are slowing down. Attempted coups are disrupting the cocoa market and ethnic violence has led many immigrants to leave the country causing cocoa production to drop.

Tbilisi: The IMF will grant Georgia $141 million in loans over the next three years. The loan will go to support the national currency and to help the government pay pensions and fulfil other social obligations.

Monday 15^th January 2001

FT: Lisbon: Jorge Sampaio, the Socialist Party candidate, has been re-elected President of Portugal.

Canada: The USA has banned the import of potatoes from Prince Edward Island because of a potato wart which seems to be affecting the PEI crop. Canadian authorities say that there is no scientific basis for the ban since the fungus is harmless to humans. According to PEI's agricultural minister Mitch Murphy, “The reason is market driven.” The USA is trying to protect the low price of US potatoes due to a record crop this year.

India: Li Peng, chairman of the National People's Congress is visiting Atal Behari Vajpayee, India's Prime Minister. This is an attempt to improve their relations after India's nuclear tests in May 1998.

New York: Raw coffee prices have plunged to 30-year lows over the last few months. However prices for consumers have risen. The losers are the farmers in coffee producing countries who are paid very little and cannot afford fertilizers for their crops.

The Wall Street Journal: Rome: The battle for winning the national elections in May sees the entrepreneur Silvio Berlusconi against Francesco Rutelli, currently mayor of Rome. Berlusconi, leader of Forza Italia promises to cut taxes. Mr Rutelli says he will run Italy as successfully as he managed the Catholic Jubilee celebration in Rome that attracted 25 million people.

Nairobi: Leaders from Kenya Tanzania and Uganda meet to restore the East African Community (EAC). The new community is equipped with a council of ministers a court and legislature and will sit in Arusha, Tanzania.

The Guardian: Washington: US will give $12 million in humanitarian aid to the Iraqi National Congress to help Iraqi opposition. Under the Iraq Liberation Act of 1998 the USA was supposed to provide the Iraqi opposition with $97 million but only $2 million has been spent so far.

The Economist: Buenos Aires: Argentina's economy is enjoying an economic respite after the Fed cut interest rates. Hopefully this will help Argentina meet the IMF's target for the fiscal deficit of $6.5 billion this year.

Peru: There are 10 candidates registered for the presidential election due on April 8^th. The big surprise is the candidacy of Alan Garcia, Peru's president from 1985 to 1990.

Dakar: Senegal. Electorate votes for a new constitution. Senegal's electorate has endorsed President Adboulaye Wade's new constitution which extends democratic rights in the west African republic. The new constitution gives the right to form oppostion parties, confirms the status of the prime minister, and for the first time, gives women equal property rights with men. It also cuts the president's term of office from seven years to five. President Wade ten month term appears generally, to be consolidating the country's fragile democracy, even though the failure to end fighting in the Casamance region is beginning to give cause for concern.