israel

UN to Deliver Aid Flotilla’s Cargo to Gaza Strip Under Accord With Israel

June 15, 2010

By Bill Varner June 15 (Bloomberg) — The United Nations will transfer humanitarian aid supplies to the Gaza Strip from a flotilla of foreign ships that Israel intercepted in international waters May 31, the world body’s top envoy to the Middle East said. “The government of Israel has agreed to release the entire cargo to the United Nations in Gaza on the understanding that it is for the United Nations to determine its appropriate humanitarian use in Gaza,” Robert Serry told the UN Security Council today. Serry said in reference to Hamas that the UN has “reason to believe that the de facto authorities in Gaza will respect the independence” of the world body’s agency to aid Palestinians in Gaza and the West Bank. The UN will begin the transfer of the supplies “as soon as possible,” he said, adding that the amount of aid was “modest in scale compared with the needs in Gaza.” The cargo includes medicine, food and clothing, the Israeli Defense Ministry said today in an e-mailed statement announcing Israel’s agreement to the UN role. Israel has faced international criticism over the raid by naval commandos on a flotilla of aid ships as well as calls for it to lift restrictions on the flow of goods into the Hamas- controlled Gaza Strip. The U.S. has declined to join in the criticism of Israel. Criticism within Israel on the flotilla operation has focused largely on the execution of the raid and not the blockade. Israeli Probe The incident, which resulted in the deaths of nine pro- Palestinian activists, has led to demands for Israel or others to investigate the raid on the ships that headed Gaza in an effort to undermine Israel’s blockade. Israel’s Cabinet yesterday approved a public probe into the raid. Israel said it issued numerous warnings to the flotilla beforehand to change course for the port of Ashdod and unload there. The violence took place on only one of six ships in the flotilla. Israel launched an operation in the Gaza Strip in December 2008 which it said was meant to stop the firing of rockets into its territory. More than 1,000 Palestinians and 13 Israelis were killed in the conflict. Since the end of the three-week operation, some 330 rockets have been fired from Gaza into Israel, killing one foreign worker last March, the Israeli army said. Israel has been blockading Gaza since Hamas seized full control there in 2007, after winning Palestinian parliamentary elections the previous year. The group is considered a terrorist organization by the U.S., the European Union and Israel. A survey of Israeli Jews published in the Maariv daily on June 2 showed 94.8 percent agreeing that it was necessary to stop the boats, with 62.7 percent saying it should have been handled in a different manner. Only 8.1 percent thought Prime Minister Benjamin Netanyahu should resign. The newspaper didn’t say how many people were surveyed or give a margin of error. To contact the reporters on this story: Bill Varner at the United Nations at wvarner@bloomberg.net

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UN to Deliver Aid Flotilla’s Cargo to Gaza Strip Under Accord With Israel

June 15, 2010

By Bill Varner June 15 (Bloomberg) — The United Nations will transfer humanitarian aid supplies to the Gaza Strip from a flotilla of foreign ships that Israel intercepted in international waters May 31, the world body’s top envoy to the Middle East said. “The government of Israel has agreed to release the entire cargo to the United Nations in Gaza on the understanding that it is for the United Nations to determine its appropriate humanitarian use in Gaza,” Robert Serry told the UN Security Council today. Serry said in reference to Hamas that the UN has “reason to believe that the de facto authorities in Gaza will respect the independence” of the world body’s agency to aid Palestinians in Gaza and the West Bank. The UN will begin the transfer of the supplies “as soon as possible,” he said, adding that the amount of aid was “modest in scale compared with the needs in Gaza.” The cargo includes medicine, food and clothing, the Israeli Defense Ministry said today in an e-mailed statement announcing Israel’s agreement to the UN role. Israel has faced international criticism over the raid by naval commandos on a flotilla of aid ships as well as calls for it to lift restrictions on the flow of goods into the Hamas- controlled Gaza Strip. The U.S. has declined to join in the criticism of Israel. Criticism within Israel on the flotilla operation has focused largely on the execution of the raid and not the blockade. Israeli Probe The incident, which resulted in the deaths of nine pro- Palestinian activists, has led to demands for Israel or others to investigate the raid on the ships that headed Gaza in an effort to undermine Israel’s blockade. Israel’s Cabinet yesterday approved a public probe into the raid. Israel said it issued numerous warnings to the flotilla beforehand to change course for the port of Ashdod and unload there. The violence took place on only one of six ships in the flotilla. Israel launched an operation in the Gaza Strip in December 2008 which it said was meant to stop the firing of rockets into its territory. More than 1,000 Palestinians and 13 Israelis were killed in the conflict. Since the end of the three-week operation, some 330 rockets have been fired from Gaza into Israel, killing one foreign worker last March, the Israeli army said. Israel has been blockading Gaza since Hamas seized full control there in 2007, after winning Palestinian parliamentary elections the previous year. The group is considered a terrorist organization by the U.S., the European Union and Israel. A survey of Israeli Jews published in the Maariv daily on June 2 showed 94.8 percent agreeing that it was necessary to stop the boats, with 62.7 percent saying it should have been handled in a different manner. Only 8.1 percent thought Prime Minister Benjamin Netanyahu should resign. The newspaper didn’t say how many people were surveyed or give a margin of error. To contact the reporters on this story: Bill Varner at the United Nations at wvarner@bloomberg.net

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Singapore, Thailand, Vietnam Added to Human-Trafficking Watchlist by U.S.

June 14, 2010

By Daniel Ten Kate and Nicole Gaouette June 15 (Bloomberg) — Singapore, Thailand and Vietnam all regressed last year in their efforts to battle trafficking of men, women and children for labor or commercial sex, according to the U.S. State Department . The three Southeast Asian countries were placed on a watch list of middle-tier countries, placing them one level above the worst offenders such as North Korea, Myanmar and Saudi Arabia, the report said. Malaysia was upgraded from the worst ranking, while Cambodia and Pakistan were removed from the watch list. The department’s 10th annual report grades 175 nations on their efforts to fight this modern form of slavery. The U.S. is listed for the first time, placed among those countries that are doing their best to comply with the Trafficking Victims Protection Act, the American law against human trade. Singapore’s government showed an “inadequate response” to sex trafficking in the city-state with only two convictions last year, the report said. Thailand and Vietnam similarly made little progress in prosecuting trafficking offenders, it said. Malaysia moved out of the worst tier with increased criminal charges against offenders, the report said. Cambodian authorities made a “significant increase” in convictions over the past year, including a public official, and Pakistan boosted efforts to combat bonded labor, the U.S. said. The U.S. is a source as well as a transit and destination country for people forced into labor, debt bondage and prostitution, the report said. The work is predominantly in manufacturing, janitorial services, agriculture, hotel services, construction, nail salons, elder care, strip-club dancing and domestic servitude, the U.S. said. ‘Tears of Families’ “Behind these statistics on the pages are the struggles of real human beings, the tears of families who may never see their children, the despair and indignity of those suffering under the worst forms of exploitation,” Secretary of State Hillary Clinton said at a State Department event to mark the release of the report yesterday in Washington. The International Labor Organization estimated there were 12.3 million victims of forced labor, sex trafficking, debt bondage and recruitment of child soldiers worldwide in 2009. In the same year, there were 4,166 successful prosecutions for trafficking, the State Department report said. The U.S. report lists three tiers of nations. Among those in the bottom section — nations that don’t comply with the law and make no effort to do so — are Zimbabwe, Cuba, Mauritania and Sudan. Japan, Israel and Oman are listed in the middle tier — nations that don’t fully meet the law’s minimum standards yet are making “significant” efforts to do so. Oil-rich Qatar is listed in between the middle and lowest tier on a watch list of countries that don’t meet minimum standards and whose progress is less certain. More Prosecutions Needed The trafficking report calls for better law enforcement, improved laws and more prosecutions for trafficking. The report changes each year, and countries can move from tier one, where the U.S. and others are, to the bottom tier. This year, 22 countries were upgraded, including Djibouti, which moved from the second tier to the first, while 19 lost ground, such as the Dominican Republic, which slipped from tier two to tier three. Sixty-two countries on the list have never prosecuted trafficking, according to the report. “Most countries that deny the existence of victims of modern slavery within their borders are not looking, trying or living up to the mandates” of a United Nations protocol mandate against trafficking, the report said. To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net ; Nicole Gaouette in Washington at ngaouette@bloomberg.net .

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Singapore, Thailand, Vietnam Added to Human-Trafficking Watchlist by U.S.

June 14, 2010

By Daniel Ten Kate and Nicole Gaouette June 15 (Bloomberg) — Singapore, Thailand and Vietnam all regressed last year in their efforts to battle trafficking of men, women and children for labor or commercial sex, according to the U.S. State Department . The three Southeast Asian countries were placed on a watch list of middle-tier countries, placing them one level above the worst offenders such as North Korea, Myanmar and Saudi Arabia, the report said. Malaysia was upgraded from the worst ranking, while Cambodia and Pakistan were removed from the watch list. The department’s 10th annual report grades 175 nations on their efforts to fight this modern form of slavery. The U.S. is listed for the first time, placed among those countries that are doing their best to comply with the Trafficking Victims Protection Act, the American law against human trade. Singapore’s government showed an “inadequate response” to sex trafficking in the city-state with only two convictions last year, the report said. Thailand and Vietnam similarly made little progress in prosecuting trafficking offenders, it said. Malaysia moved out of the worst tier with increased criminal charges against offenders, the report said. Cambodian authorities made a “significant increase” in convictions over the past year, including a public official, and Pakistan boosted efforts to combat bonded labor, the U.S. said. The U.S. is a source as well as a transit and destination country for people forced into labor, debt bondage and prostitution, the report said. The work is predominantly in manufacturing, janitorial services, agriculture, hotel services, construction, nail salons, elder care, strip-club dancing and domestic servitude, the U.S. said. ‘Tears of Families’ “Behind these statistics on the pages are the struggles of real human beings, the tears of families who may never see their children, the despair and indignity of those suffering under the worst forms of exploitation,” Secretary of State Hillary Clinton said at a State Department event to mark the release of the report yesterday in Washington. The International Labor Organization estimated there were 12.3 million victims of forced labor, sex trafficking, debt bondage and recruitment of child soldiers worldwide in 2009. In the same year, there were 4,166 successful prosecutions for trafficking, the State Department report said. The U.S. report lists three tiers of nations. Among those in the bottom section — nations that don’t comply with the law and make no effort to do so — are Zimbabwe, Cuba, Mauritania and Sudan. Japan, Israel and Oman are listed in the middle tier — nations that don’t fully meet the law’s minimum standards yet are making “significant” efforts to do so. Oil-rich Qatar is listed in between the middle and lowest tier on a watch list of countries that don’t meet minimum standards and whose progress is less certain. More Prosecutions Needed The trafficking report calls for better law enforcement, improved laws and more prosecutions for trafficking. The report changes each year, and countries can move from tier one, where the U.S. and others are, to the bottom tier. This year, 22 countries were upgraded, including Djibouti, which moved from the second tier to the first, while 19 lost ground, such as the Dominican Republic, which slipped from tier two to tier three. Sixty-two countries on the list have never prosecuted trafficking, according to the report. “Most countries that deny the existence of victims of modern slavery within their borders are not looking, trying or living up to the mandates” of a United Nations protocol mandate against trafficking, the report said. To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net ; Nicole Gaouette in Washington at ngaouette@bloomberg.net .

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Middle East Shares Advance, Paced by Israel, Qatar, Buoyed by Global Rally

June 13, 2010

By Zahra Hankir and David Wainer June 13 (Bloomberg) — Israel and Qatar shares led Middle East markets higher after global stocks rallied as concern about Europe’s debt crisis eased and the U.S. Federal Reserve said the American economic recovery is intact. VeriFone Systems Inc. jumped the most in more than nine months after the Israeli provider of electronic payment technology was raised to “strong buy” at Raymond James & Associates Inc. Israel’s TA-25 Index increased 1.2 percent to 1,103.36, the highest level this month. In the Gulf, Doha’s QE Index gained 1 percent to 6,920.48, the highest level since May 24 and in North Africa, Egypt’s EGX 30 Index gained 0.9 percent. “Local markets tend to follow global trends,” said Ziad Dabbas , a financial analyst at National Bank of Abu Dhabi PJSC , the United Arab Emirates’ second-largest lender by assets. “Today’s movements are following positive global closes toward the end of last week, as they improved investor sentiment.” U.S. stocks rose last week, pushing the Standard & Poor’s 500 Index to the biggest weekly advance since March, after Federal Reserve Chairman Ben S. Bernanke said the economic recovery is intact and commodity prices gained. European stocks gained for a third week as economic reports and a successful government bond sale in Spain boosted investors’ confidence. Bonds Advance Dubai’s DFM General Index rose 0.9 percent, the most since June 2, to 1,528.4. Arabtec Holding PJSC , the United Arab Emirates’ biggest builder, climbed 2.1 percent, the most in almost a week, to 1.97 dirhams. Ziad Makhzoumi , the company’s chief financial officer, said in Beirut on June 10 he expects cash flow to improve now that the Dubai government is helping developer Nakheel PJSC pay its bills to contractors. VeriFone rose 7.7 percent to 75.30 shekels. Raymond James & Associates set the 12-month price estimate for the company at $25 per share. The shares closed at $20.06 on June 11 in New York. Abu Dhabi’s ADX General Index advanced 0.6 percent and Oman’s index rose 0.3 percent, gaining for a fourth day. The Kuwait Stock Exchange Index increased less than 0.1 percent while Bahrain’s gauge fell 0.2 percent. Saudi Arabia’s Tadawul All Share index slipped 0.3 percent after gaining 2.7 percent yesterday. Israeli government bonds advanced with the benchmark Mimshal Shiklit note due February 2019 increasing 0.11 shekel to 111.96. The yield fell one basis point to 4.55 percent. The shekel traded at 3.8532 per dollar on June 11. — With assistance from Ronit Goodman in Tel Aviv. Editors: Susan Lerner , Shanthy Nambiar To contact the reporters on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net or David Wainer in Tel Aviv at dwainer1@bloomberg.net

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Bernanke Student Borrows Page From Fischer as Protege Writing Fed Policies

June 11, 2010

By Scott Lanman June 11 (Bloomberg) — William English took up fencing as a sophomore at Yale University in 1980, practicing a sport that has been likened to “physical chess” for its strategy and precision. Those skills will come in handy when he takes over next month as Federal Reserve Chairman Ben S. Bernanke ’s top adviser on monetary policy, a job that puts him in charge of crafting the statements the central bank will use to signal a withdrawal of the most expansive monetary policy in its 96-year history. The task is “about as challenging as any director of that post has ever had,” said former Fed Governor Lyle Gramley , now senior economic adviser at Potomac Research Group in Washington. “Markets have become extremely sensitive to every word the Fed puts out, so a slight mishap and he could send markets for a reel.” English takes over as central bankers debate when to start raising interest their benchmark interest rate from close to zero. They must also decide on the pace and timing of sales of $1.1 trillion of housing debt the Fed bought up in the course of fighting the financial crisis. “These are economic issues that academics are going to be thinking about for generations,” English said in an interview last month at the Fed’s Depression-era Washington headquarters. “I’m sitting in the middle of it, trying to make sense of it in real time.” One of the first steps for policy makers will be to alter the Fed’s pledge to keep its main rate low for “an extended period,” said John Ryding , a former Fed researcher who’s now chief economist at RDQ Economics LLC in New York. In March, Kansas City Fed President Thomas Hoenig , who’s dissented from the panel’s language this year, proposed saying the rate “would be low for some time.” ‘Considerable Period’ Central bankers faced a similar choice in 2003 and 2004, when they cut the federal funds rate to 1 percent and said low borrowing costs were warranted for a “considerable period.” The Fed surprised investors by removing the language in January 2004, sending Treasury and stock prices lower, while the dollar strengthened against the euro and yen. As monetary affairs director, English will oversee about 87 staffers and be responsible for compiling the confidential Bluebook, which outlines policy choices for Fed governors and regional presidents five days before meetings of the rate- setting Federal Open Market Committee. The 49-year-old English, whose 6-foot, 10-inch (2.08-meter) frame has earned him the nickname “Big Bill,” is no stranger to his duties. Since 2008 he has helped draft the statements issued by the FOMC as a deputy director of the Monetary Affairs division under Brian Madigan , who is retiring. Drafting Options English has also worked with Madigan to draft options for policy makers during the financial crisis while collaborating with officials at the Treasury Department and Federal Deposit Insurance Corp. on emergency aid to banks including Citigroup Inc. English “strikes me as a pretty natural successor to Brian Madigan,” said New York University Professor Mark Gertler , who’s collaborated on research with Bernanke. “I don’t think there’s any reason to think there will be a radical shift in policy.” Allan Meltzer , a historian of the Fed, has said its involvement in bailouts and emergency lending programs during the crisis has compromised its independence. He faulted the Monetary Affairs staff for being “far too supportive” of actions by Bernanke and other policy makers. “It’s a difficult job in the best of times,” Meltzer, a professor at Carnegie Mellon University in Pittsburgh, said of English’s new post. “And these are not the best of times.” Mahogany Table English will work with Bernanke before meetings to craft possible decisions and statements. He will then face Bernanke across a 27-foot mahogany-and-granite table, with Fed governors and presidents arrayed on either side. Officials can modify the proposed language of the policy statement before voting on it and releasing it to the public. At the last Fed meeting April 27-28, the FOMC voted 9-1 to leave the target for overnight lending among banks close to zero and retain the “extended period” pledge. The FOMC next meets June 22-23 in Washington. Economists surveyed by Bloomberg News this month expect the Fed to start raising its main rate in the first quarter of 2011, based on the median estimate. The Monetary Affairs division is also responsible for producing minutes of FOMC meetings, the discount lending window for banks and a quarterly survey of senior loan officers at banks. The Fed holds regular meetings eight times a year. Dinner Table Conversation The youngest of four children, English grew up in West Hartford, Connecticut. His interest in finance was spurred by dinner-table conversation with his father, James, who was chief executive officer of Connecticut Bank & Trust Co. in the 1970s and served on the Federal Advisory Council, a group of bank executives that advises the Fed. At Yale in New Haven, Connecticut, English wandered into a gym where the fencing team was practicing and was recruited on the spot because of this height. He earned a bachelor’s degree in economics and mathematics in 1982 and entered graduate school at the Massachusetts Institute of Technology. Among his teachers at MIT in Cambridge was Bernanke, then a 29-year-old visiting professor from Stanford University. His thesis adviser was Stanley Fischer , who now heads Israel’s central bank and who advised Bernanke on his dissertation at MIT in the 1970s. Mervyn King , now Bank of England governor, was also a visiting professor at MIT while English was there. English taught economics at the University of Pennsylvania for six years before joining the Fed in Washington as a banking economist in 1992. He helped Donald Kohn , the Fed’s monetary- affairs director from 1987 to 2001, analyze bank-capital rules. Kohn is retiring this month as Fed vice chairman. “Bill had an enormous capacity for detail and getting into the weeds and understanding the balance sheets of financial institutions,” said Vincent Reinhart , the Fed’s monetary- affairs director from 2001 to 2007 who is now a resident scholar at the American Enterprise Institute in Washington. To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net .

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Obama Tells Palestinians’ Abbas Gaza Situation `Unsustainable,’ Offers Aid

June 9, 2010

By Kate Andersen Brower June 9 (Bloomberg) — President Barack Obama called the situation in the Gaza Strip “unsustainable” after he and Palestinian Authority President Mahmoud Abbas met in an effort to restore momentum to the peace process. Obama announced the U.S. will provide $400 million in aid for housing, school construction and other infrastructure improvements in Gaza and the West Bank to help improve the “day to day lives of ordinary Palestinians.” “The situation in Gaza is unsustainable,” Obama said after today’s Oval Office meeting. “Increasingly you’re seeing debates within Israel recognizing the problems with the status quo.” Israel’s security needs must be met as well as the humanitarian needs of the people in Gaza, Obama said as he called for a new “conceptual framework” for Israel’s blockade of ships bringing supplies to Gaza to focus on stopping the flow of arms into Gaza. Obama said he will be talking to leaders in Europe, Egypt, Israel and the Palestinian Authority, about ways to achieve that. Abbas, speaking through a translator, thanked the U.S. president for the aid pledge, calling it “a positive signal” that the “United States cares about the suffering of the people in Gaza and about the suffering of the Palestinian people.” Raid on Flotilla A May 31 Israeli raid on a ship in an aid flotilla that resulted in the deaths of nine pro-Palestinian activists has drawn international criticism. Israel says the blockade is aimed at preventing Hamas, whose charter calls for the destruction of the Jewish state, from getting weapons smuggled in with aid shipments. Obama said he and Abbas agree that “Israelis have the right to prevent arms from entering into Gaza that can be used to launch attacks into Israeli territory.” However, he said, “the key here is making sure that Israel’s security needs are met but that the needs of the people in Gaza are also met.” Obama affirmed Israel’s right to “not have missiles flying out of Gaza into its territories.” He said there should be a way “to stop the flow of arms that could endanger Israel’s security” while at the same time allowing “people in Gaza to live out their aspirations and their dreams.” Investigation Obama said he stands by a June 1 UN Security Council resolution condemning the violence and calling for a “credible, transparent investigation” into the raid. He said he has told the Israelis that it is in their interests to “make sure that everybody knows exactly how this happened so that we don’t see these kinds of events occurring again.” Still, Obama said if both sides recognize what’s at stake there could be “significant progress” in the peace process before the end of the year. “There’s a lot of work that remains to be done so that we can create a two-state solution in the Middle East,” he said, including more progress on security and incitement in Palestine. “In the long run the only real way to solve this problem is to make sure that we’ve got a Palestinian state side by side with an Israel that is secure.” Abbas said that he appreciated Obama’s “attention and determination” in moving the peace process forward and he said “time is of the essence” to bring peace and security to the region. Abbas said there is a need to “open all the crossings” and “let building material and humanitarian material and all the necessities” into Palestinian territories. The Palestinian president said he wants “an independent Palestinian state that will live side by side with Israel in peace and stability.” Israeli Prime Minister Benjamin Netanyahu ’s planned meeting with Obama at the White House was canceled last week because of the raid. To contact the reporters on this story: Kate Andersen Brower in Washington at Kandersen7@bloomberg.net

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Israel Seizes Gaza-Bound Aid Ship Organizers Say Boarded Without Violence

June 5, 2010

By Calev Ben-David and Gwen Ackerman June 5 (Bloomberg) — Israeli naval vessels seized an aid ship heading for the Gaza Strip with no violence, according to an army spokesman and the organizer of the boat. The MV Rachel Corrie was boarded by the Israeli navy in a peaceful takeover in international waters and is being taken to Israel’s Ashdod port, Free Gaza Movement spokeswoman Mary Hughes said in a phone interview. The crew put up no resistance, the army spokesman said, speaking anonymously according to regulation. The seizure caps a week of heightened tensions after the deaths of nine Turks during the boarding of a Gaza supply ship in international waters on May 31. Turkey and several European states have criticized Israel for its naval blockade of Gaza. The Jewish state is considering easing restrictions on the flow of aid into Gaza, Israel’s Channel Two television has reported. “We’re open to any suggestions,” Michael Oren , the Israeli ambassador to the U.S., said in an interview with Bloomberg Television’s “Political Capital with Al Hunt ,” airing this weekend. “We, too, are not happy with the status quo.” The Free Gaza movement, which organized the flotilla in the confrontation on May 31 and the MV Rachel Corrie — named after an American activist killed by an Israeli bulldozer while protesting home demolitions in the Gaza Strip in 2003 — rejected Israel’s proposal that the ship off-load its cargo at Ashdod port for transport to Gaza after security checks. It said Israeli restrictions are causing a humanitarian crisis in Gaza. Israel says the blockade is meant to prevent the smuggling of rockets and weapons into Hamas-ruled Gaza and insists the Palestinian coastal enclave is receiving sufficient aid. International Monitors Top Israeli ministers met June 3 to review the blockade policy and explore ways of changing its implementation after this week’s deadly naval raid, an Israeli official said, speaking on condition of anonymity because he wasn’t authorized to speak to the press on the matter. One possibility is the use of international monitors at Ashdod, Israel’s Channel Two news said without citing anyone. Israel says it attempted to prevent clashes with the aid flotilla earlier this week by issuing numerous warnings beforehand to change course for Ashdod and unload there. Israel has said that in its confrontation with the Gaza flotilla on May 31 its soldiers were attacked with knives and clubs after boarding the Mavi Marmara, one of the six vessels in the flotilla, and seven were wounded, including by gunfire after volunteers aboard the ship managed to grab Israeli firearms. Activists have said they threw the firearms into the sea. There was no violence on the other five ships. Turkish Autopsy A Turkish autopsy found that several of those killed were shot multiple times and from the back at close range, the U.K.’s Guardian newspaper reported today, citing Yalcin Buyuk, vice chairman of the council of forensic medicine. Criticism within Israel on the flotilla operation has focused largely on the execution of the raid and not the blockade. A survey of Israeli Jews published in the Maariv daily on June 2 showed 94.8 percent agreeing that it was necessary to stop the boats, with 62.7 percent saying it should have been handled in a different manner. Only 8.1 percent thought Prime Minister Benjamin Netanyahu should resign. The newspaper didn’t say how many people were surveyed or give a margin of error. Israel has faced global criticism over the raid and calls for an international investigation. The U.S. has declined to specifically criticize Israeli actions. It backed a United Nations Security Council resolution on June 1 that condemned the violence that led to the deaths of the aid activists, and called for an impartial inquiry. Diplomatic Protest Turkey, which along with South Africa withdrew its ambassador from Israel over the incident, says an Israeli investigation wouldn’t meet that criteria. Israel has been blockading Gaza since Hamas ousted forces loyal to President Mahmoud Abbas ’s Fatah group and seized control in 2007, after winning Palestinian parliamentary elections the previous year. Hamas is considered a terrorist organization by Israel, the U.S. and the European Union. A rocket fired from the Gaza Strip struck an open area in southern Israel this morning and no injuries were reported, an Israeli Army said. Israel launched an operation in the Gaza Strip in December 2008 that it said was meant to stop the firing of rockets into its territory. More than 1,000 Palestinians and 13 Israelis were killed in the conflict. Since the end of the three-week operation, some 330 rockets have been fired from Gaza into Israel, killing one foreign worker last March, the Israeli army said. Palestinians, backed by the UN and human-rights groups, say the restrictions on food imports and construction materials have created a humanitarian crisis. Israel says it blocks building materials because they can be used by Hamas to build rockets and bunkers. To contact the reporters on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net ; Calev Ben-David in Jerusalem at Cbendavid@bloomberg.net .

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Israel Seizes Gaza-Bound Aid Ship Rachel Corrie, Says No Violence Occurs

June 5, 2010

By Gwen Ackerman June 5 (Bloomberg) — Israel’s navy seized a Gaza Strip- bound aid ship today and met with no violence, an army spokeswoman said by phone, speaking anonymously by regulation. To contact the reporter on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net

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Israeli Ambassador to U.S. Oren Says Next Ship to Gaza Will Be Stopped

June 4, 2010

By Nicole Gaouette June 4 (Bloomberg) — Israel will stop another aid ship heading for the Gaza Strip to break the blockade on the territory, the Israeli ambassador to the U.S. said today. “We’ll have to stop it,” said Michael Oren in an interview with Bloomberg Television’s “Political Capital with Al Hunt ,” airing this weekend. The ship MV Rachel Corrie , named after an American activist killed in Gaza in 2003, is scheduled to arrive there within 24 hours, Oren said. The Corrie is being sent by the Free Gaza Movement, the group that organized the flotilla raided by Israeli commandos in international waters on May 31, leading to the deaths of nine pro-Palestinian activists. “The ship that is approaching now is a smaller ship; on board the ship are not Islamic extremist thugs,” but “Irish activists,” said Oren. “We’re hoping we can work with the Irish government to offer them the same offer we had given the flotilla: Give us the cargo, we will transfer it to responsible hands in Gaza.” To contact the reporter on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net

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Israelis Support Netanyahu Charging Hypocrisy by Critics of Gaza Blockade

June 3, 2010

By Calev Ben-David June 4 (Bloomberg) — Israeli Prime Minister Benjamin Netanyahu was unequivocal when he addressed the nation on the night of June 2 about the Gaza ship raid: “Israel faces hypocrisy and a biased rush to judgment.” His message that Israel was exercising its right to self- defense when naval forces boarded an aid flotilla, an operation that left nine pro-Palestinian activists on one ship dead at the end, resonated with Nechama Perelman, a 23-year-old tax adviser. “There is no need to apologize,” Perelman said while nursing her baby in the Jerusalem Mall the next day. “The army didn’t set out to kill people. It’s easy to judge from far away, and I don’t believe that anything we do will help us be loved by the world.” A poll of Israel’s Jewish population by the Maariv daily published on June 2 found 94.4 percent of respondents agreed it was necessary to stop the vessel, and 89.1 percent said Netanyahu shouldn’t resign over the matter. The opposition Kadima party has supported the government on the issue, and Netanyahu’s coalition has shown no signs of strain over the incident. These Israeli views illustrate the gap between how the Gaza flotilla confrontation is perceived at home and abroad. “I can’t remember a time over the past 30 years when Israel is so out of sync with the rest of the world, and not just its enemies,” said David Newman, professor of political science at Ben-Gurion University of the Negev in Israel’s south. “In the globalized world of 2010, where people travel and share and blog, I think it’s very dangerous for this country’s position.” No Blame In his address, Netanyahu, 60, made no mention of any change to Israel’s blockade of the Gaza Strip or reference to the hardships of its population, didn’t respond to calls by world leaders for an international inquiry into the May 31 deaths or make any suggestion that he or his government bore any blame for the incident. Just one week ago, Netanyahu was flying to Paris for Israel’s acceptance in the Organization of Economic Cooperation and Development before heading on to a planned White House meeting with President Barack Obama . Instead, he had to cut short his trip in Canada and return home without seeing Obama. The fatalities on one of the six ships defying Israel’s blockade of the Gaza Strip severely strained relations with Turkey, once its closest ally in the region, and led to the recall of South Africa’s ambassador to Jerusalem yesterday. All of the dead were Turkish; one was also a U.S. citizen. ‘Disproportionate’ French President Nicolas Sarkozy said Israel had used “disproportionate” force and German Chancellor Angela Merkel phoned Netanyahu to protest. Sarkozy’s predecessor, Jacques Chirac , said in 2006 that Israel’s military operations in Lebanon in response to the capture of two of its soldiers by Hezbollah were “disproportionate.” The international criticism has triggered the “Israeli Holocaust syndrome,” said political scientist Yaron Ezrahi of The Hebrew University of Jerusalem, in which Israelis see themselves as victims no matter what the circumstances. Still, he said, “Israeli public opinion is more plastic than is commonly assumed” when it comes to making concessions if they believe they are dealing with a genuine peace partner. Israel says its soldiers were ambushed on the ship by activists armed with clubs, knives and at least one gun, and opened fire only in self-defense. Witnesses among the activists say Israeli forces started the violence. Israel said it had issued numerous warnings to the Gaza-bound flotilla beforehand to change course for the port of Ashdod and unload there. Gaza Blockade Countries, including France and the U.K., oppose the blockade on Gaza, which Israel argues is needed to prevent the smuggling of rockets and weapons in the Palestinian coastal enclave controlled by Hamas. Hamas is considered a terrorist organization by Israel, the U.S. and the European Union. About 330 rockets have been fired from Gaza into Israel since the end of Israel’s January 2008 operation in the territory, killing one foreign worker last March, the army says. While Netanyahu hasn’t escaped domestic criticism, most of it has focused solely on the execution of the military operation. The Maariv poll found that 62.7 percent of those interviewed said it should have been carried out in a different manner. The number of respondents and margin of error weren’t given. Netanyahu’s position has been helped by the reaction of Israel’s chief strategic ally. The U.S. has stopped short of criticizing the Israeli flotilla raid and has blocked Turkey’s proposal for a United Nations Security Council statement condemning it and calling for an independent international investigation. ‘Right to Know’ Vice President Joe Biden said in a June 2 interview on PBS television’s “ Charlie Rose Show ” that Israel has an “absolute right to know” what is being transported to Gaza and that the U.S. supports a “transparent and open” investigation led by Israel. Statements released by the White House say the incident “underscores” the need for progress toward a solution to the Israeli-Palestinian conflict. “It was definitely a measured and responsible response, as we would expect,” said Jonathan Peled, the spokesman for Israel’s ambassador to the U.S., Michael Oren . ”The administration is working very closely, hand-in-hand with Israel to contain the situation and to work on promoting the efforts to bring about direct negotiations between Israel and the Palestinians,” Peled said. “We are exploring ways to reconcile between improving the humanitarian situation and Israel’s security needs.” Bush and Clinton In following this course, the Obama administration is taking an approach similar to that of Presidents George W. Bush and Bill Clinton , who maintained U.S. support for Israel when it faced international criticism. While most Israelis support the operation, several Israeli Arab leaders took part in the flotilla, including Islamic Association leader Sheik Raed Salah and legislator Hanin Zoabi. She was later at the center of a debate in parliament that almost ended in fisticuffs as some government members rushed the speakers’ podium in protest when she ascended to address the chamber. Israelis assume that the world will have a “Pavlovian response when there is an outbreak of violence between Israelis and Arabs,” said Mark Heller , principal research fellow at Tel Aviv University’s Institute for National Security Studies. “If you perceive this to be a long-term trend, one has to ask what it does to Israel’s relation to the rest of the world and its long-term viability,” Heller said. To contact the reporter on this story: Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

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Video: Aaron Miller Discusses Israeli Raid on Gaza Aid Flotilla: Video

June 3, 2010

June 3 (Bloomberg) — Aaron Miller, a public policy fellow at the Woodrow Wilson International Center for Scholars and a former U.S negotiator, talks with Bloomberg’s Margaret Brennan about the implications of Israel’s raid on a flotilla of aid ships. (This is an excerpt of the interview. Source: Bloomberg)

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American Citizen Was Shot Dead During Israeli Raid on Flotilla, U.S. Says

June 3, 2010

By Nicole Gaouette June 3 (Bloomberg) — The U.S. confirmed that an American citizen, identified as 19-year-old Furkan Dogan, was killed by multiple gunshots during the Israeli raid on a flotilla carrying activists attempting to run a blockade of the Gaza Strip. State Department spokesman Philip J. Crowley said the U.S. has made no decision on a response to Dogan’s death. “We take the health and welfare of American citizens seriously, it’s our fundamental responsibility,” Crowley told reporters today in Washington. Israeli commandos on May 31 raided six ships carrying humanitarian aid workers and activists trying to break Israel’s blockade, in place since 2007. The operation, in which nine people died, has led to international criticism, demands for an investigation and for an end to restrictions on sea traffic. Israeli Prime Minister Benjamin Netanyahu may ease the blockade and allow an international force to check aid coming on ships, Israel’s Channel Two television news said today. Netanyahu has defended the Israeli military action as necessary to protect Israel by preventing weapons from being shipped to militant Islamic group Hamas, which has run Gaza since 2007. “Our responsibility is to examine every ship going to Gaza, to stop the weapons and to let other cargo enter,” Netanyahu said yesterday. “If we don’t do that the result is going to be an Iranian port in Gaza.” There is widespread public support in Israel for enforcing the blockade of Hamas, which is considered a terrorist organization by the U.S., Israel and European Union. Main Ship The violence during the raid took place on the Mavi Marmara, one of six ships in the flotilla. The other five vessels were intercepted without violence. The decision to use military force on the sixth ship had to do with its size, Israel’s ambassador to the U.S., Michael Oren , said yesterday. “The particular ship that did encounter the violent incident was simply too large to stop by nonviolent means,” Oren said on National Public Radio. “The others ships were not, and that is one of the reasons they were towed safely to port.” The Mavi Marmara was carrying 581 passengers, about 300 of them Turkish and the remainder from about 30 other countries including Greece, the U.K. and Algeria, Turkish Deputy Prime Minister Bulent Arinc said on May 31. Arinc accused Israel of “piracy” for boarding the vessels in international waters. New York Native Dogan was born in Troy, New York, according to Crowley. The Dogan family now has his body, which is en route to their hometown in Turkey for burial, Crowley said. Another American man sustained injuries in the flotilla raid, Crowley said, without providing details. “We’re evaluating the facts as best we can,” Crowley said. U.S. Secretary of State Hillary Clinton said this week that the situation in the Gaza Strip is “unsustainable and unacceptable” and that “ultimately the solution to this must be found in an agreement on a two-state solution negotiated” between Israel and the Palestinians. The flotilla raid and the uproar surrounding it haven’t affected talks between Palestinians and Israelis, Crowley said. U.S. Middle East envoy George Mitchell , speaking in Bethlehem, said there should be a renewed focus on the talks. To contact the reporter on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net

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Netanyahu Calls Flotilla Raid Criticism Hypocrisy Amid Probe Calls

June 3, 2010

By Gwen Ackerman and Jonathan Ferziger June 3 (Bloomberg) — Prime Minister Benjamin Netanyahu said criticism of Israel’s raid against a Gaza Strip aid shipment that left nine dead was “hypocrisy,” as international calls for a probe into the incident mounted. “Israel is told it has the right to defend itself, but when we do exercise that right we’re condemned for it,” Netanyahu said in a nationally televised address in Jerusalem. “Israel should not be held to a double standard.” Israel has faced international criticism over the May 31 raid by naval commandos on a flotilla of aid ships, as well as calls for it to lift restrictions on the flow of goods into Gaza. The incident has led to demands for Israel or others to investigate the raid on the ships that headed for Hamas- controlled Gaza in an effort to undermine Israel’s blockade. United Nations Secretary-General Ban Ki-moon told reporters in New York that the blockade was “counter-productive, unsustainable and wrong,” and that it should end “immediately.” Israel “must provide as soon as possible a full and detailed accounting of the events surrounding this incident,” he said. Vice-President Joe Biden said Israel has “an absolute right to deal with its security interest” and a “right to know” what is being transported to Gaza. Biden said he supports a “transparent and open” investigation that is led by the Israelis and has “international participation.” He spoke in an interview on PBS television’s “Charlie Rose Show. Israel isn’t likely to agree to an international probe, said Jonathan Spyer , a political scientist at the Interdisciplinary Center Herzliya. Faulty Intelligence “There is a very strong sense that it is not that something actually wrong took place,” Spyer said in a telephone interview. “Rather, there was a mishap and a strong sense that the army made a mistake based on faulty intelligence. There is not a sense that Israel feels answerable to the world community.” At the same time, Israel has acted to end the crisis. All detained members of the flotilla were expelled yesterday, with the exception of seven people still in the hospital, said Interior Ministry spokeswoman Sabine Haddad. Three aircraft landed in Istanbul carrying 466 passengers and the bodies of nine people killed in the raid, Foreign Minister Ahmet Davutoglu said in comments carried by state-owned news agency Anatolia. Four of the dead have been identified as Turks and the nationality of the others isn’t clear. Nineteen injured people were flown to Ankara and were being given treatment. Supporters Welcome The planes were welcomed by hundreds of supporters and family members at Istanbul’s main airport. Arab foreign ministers meeting in an emergency session in Cairo urged their governments to defy the blockade, Arab League Secretary-General Amre Moussa said. The ministers called on Arab states to “work to provide the people of Gaza with whatever they need regardless of the blockade and using all means,” he told a news conference after a three-hour meeting that ended early today. Netanyahu spoke after the United Nations Human Rights Council adopted a resolution to authorize an independent international investigation of the Israeli raid on the flotilla. The U.S., the Netherlands and Italy voted against the measure. “Every Ship’ “Our responsibility is to examine every ship going to Gaza, to stop the weapons and to let other cargo enter,” Netanyahu said yesterday. “If we don’t do that, the result is going to be an Iranian port in Gaza.” The UN Security Council has also called for an investigation. French Foreign Minister Bernard Kouchner said in an interview yesterday on RTL Radio that any investigation should be overseen by the UN. In the past, Israel refused to participate in a UN panel led by former UN prosecutor and South African judge Richard Goldstone that investigated the 2008 Gaza war. Goldstone’s panel accused Israel and Hamas of war crimes and called on them to investigate the charges. Ban said after meetings with envoys of Israel, Turkey, the U.S., China, Russia and Arab nations that he would take “some time” to decide how an investigation of the raid should be conducted. He said he would “make it as impartial, credible and transparent as possible.” Stop Hamas Israel’s benchmark TA-25 Index was up 0.02 percent at the close in Tel Aviv yesterday. Israel said the Gaza war was meant to stop Hamas and other militant groups from firing rockets into its territory. About 330 rockets have been fired from Gaza into Israel since the end of the operation, killing one foreign worker last March, the army said. Alon Liel , former director general of the Foreign Ministry, said that unlike the Gaza probe, where many facts were unknown, photos and video footage of the flotilla incident was readily available on the Internet. “I don’t think it is an inquiry that should bother Israel too much except one thing, the fact that they acted 80 or 90 miles from the beach in international water,” Liel said in a phone interview. “I don’t know if an international inquiry will say Israel did something illegal. This is the soft belly.” Some Israeli opposition lawmakers called on the government to set up an official inquiry into the raid, the daily Haaretz said. A survey of Israeli Jews in the daily Ma’ariv newspaper found that 46.7 percent of those questioned want the government to establish a probe into the incident, while 51.6 percent say there is no need. Israeli Blockade The pro-Palestinian activists were attempting to sail into Gaza, which has been under Israeli blockade since the Islamic Hamas movement took control of the territory in 2007. A seventh ship has sailed for Gaza to try and breach the Israeli blockade. Hamas is considered a terrorist organization by Israel, the U.S. and the European Union. Palestinians, backed by the United Nations and human-rights groups, say the restrictions on food imports and construction materials have created a humanitarian crisis. Israel says it needs to control Gaza’s borders or Hamas will smuggle in material to make rockets and attack its territory. Israel said its soldiers were attacked with knives and clubs after boarding a vessel and seven soldiers were wounded, including by gunfire after activists aboard the ship managed to grab Israeli firearms. Kuwait lawmaker Waleed al-Tabtabai, who was on one of the ships, told reporters on his return home that the “Israelis started firing even before they landed on the ship. They killed two Turks, one was killed by helicopter fire and the other by fire from a ship.” To contact the reporter on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net ; Jonathan Ferziger in Jerusalem at jferziger@bloomberg.net

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Israeli Raid on Gaza Aid Ship Increases Pressure to Relax Border Controls

May 31, 2010

By Jonathan Ferziger and Calev Ben-David June 1 (Bloomberg) — Israel’s raid on a flotilla of ships bringing aid to the Gaza Strip, which left nine dead, has increased pressure for an end to the country’s control of the coastal enclave’s borders. British Foreign Secretary William Hague yesterday issued a statement calling on Israel to “allow unfettered access” to Gaza, while European Union foreign policy chief Catherine Ashton urged the “unconditional opening of crossings” into Gaza. Israel, which is facing international criticism over the boat deaths, says it needs to control Gaza’s borders or else Hamas will smuggle in material to make rockets and attack its territory. Palestinians, backed by the United Nations and human rights groups, say the restrictions on food imports and construction materials have created a humanitarian crisis. Blockading Gaza “is turning into a human rights and public relations disaster” for Israel, said Martin Indyk , director of foreign policy at the Brookings Institution in Washington and a former U.S. ambassador to Israel. “Israel needs to find a better way.” Israel said its soldiers were attacked with knives and clubs after boarding a vessel and seven soldiers were wounded, including by gunfire after activists aboard the ship managed to grab Israeli firearms. The clash was in international waters, said the Free Gaza Movement, which organized the flotilla. ‘Freedom Flotilla’ The six ships in the “Freedom Flotilla” came from Sweden, Greece and Turkey on a mission aimed at breaking Israel’s blockade of Gaza that organizers pledged would be nonviolent. Israel had warned it wouldn’t let the ships reach Gaza and called the mission a propaganda trick aimed at making it look bad. Several of the dead were from Turkey, which said relations with Israel may suffer irreparable harm. Israel committed “murder” and violated international law when it intercepted the ships, Turkish Foreign Minister Ahmet Davutoglu told an emergency meeting of the United Nations Security Council. French President Nicolas Sarkozy said Israel had used “disproportionate” force. German Chancellor Angela Merkel said she had spoken by phone with Israeli Prime Minister Benjamin Netanyahu and Turkish Prime Minister Recep Tayyip Erdogan and called for “a comprehensive investigation.” Netanyahu cut short a trip to Canada to return to Israel, canceling a meeting scheduled in Washington with President Barack Obama . ‘Hamas Terrorist Base’ “Gaza has become a Hamas terrorist base, backed by Iran, firing thousands of rockets at Israel, and has amassed tens of thousands more to fire at our cities, our towns, our children,” Netanyahu said yesterday during a visit to Ottawa. “Our policy is this: We try to let all humanitarian goods into Gaza after they have undergone our security checks.” Obama expressed “deep regret at the loss of life” and said it was important to learn “all the facts and circumstances around this morning’s tragic events as soon as possible,” according to a statement from the White House. Israeli stocks fell the most in four days. The benchmark TA-25 Index lost 1.6 percent, the biggest drop since May 25, to 1,082.74 at the close in Tel Aviv. The shekel fell as much as 1.5 percent to 3.8729 to the dollar and traded at 3.8652 at 5:14 p.m. yesterday. Aboard the ships were more than 500 people, including European members of parliament and Swedish author Henning Mankell , according to the Free Gaza Movement. Israeli Navy ships have intercepted three previous efforts by the Free Gaza Movement, formed in 2008 to deliver aid to the territory by sea. Attacked With Knives An Israeli military official, speaking on condition of anonymity, told reporters that soldiers boarded the ships after approaching on three military helicopters and several commando boats at about 4 a.m., according to a pool report provided by the Associated Press. One of the commandos, also speaking on condition of anonymity, said after descending from one of the helicopters on a rope, he was immediately attacked by a group of passengers with metal sticks and knives, the pool report said. The commando said activists grabbed soldiers, stripped them of their helmets and equipment, and threw them from the top deck to the lower deck, the report said. Saeb Erakat , the Palestinian Authority’s chief peace negotiator, called the incident a “war crime” and said the international community must take “swift and appropriate action.” Three-Week War Israel has restricted entry of people and goods into Gaza since the territory was taken over by Hamas in 2007, allowing in a limited range of supplies including food, clothing and medicine. Hamas is considered a terrorist organization by Israel, the U.S. and the European Union. Israel fought a three-week war in Gaza starting in December 2008 that it said was meant to stop Hamas and other militant groups from firing rockets into its territory. Some 330 rockets have been fired from Gaza into Israel since the end of the operation, killing one foreign worker last March, the army said. Israeli bombing and ground operations during the war destroyed thousands of houses across Gaza, and Israel’s restrictions on construction materials have prevented Palestinians from being able to rebuild. The army says Hamas has used materials such as cement and iron pipes to build rockets and bunkers. “The area is ruled by Hamas, a terror organization that is arming itself all the time with weaponry and rockets intended to hurt Israel,” Israeli Defense Minister Ehud Barak said at a news conference yesterday in Tel Aviv. Indyk said one way Israel could solve its “dilemma” was a “cease-fire deal in which Hamas commits to preventing violent attacks from Gaza and stopping all smuggling into Gaza in return for Israel opening the passages with international monitors.” To contact the reporter on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net ; Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

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Stocks Rise in Europe, Canada as Oil Gains Spanish Bonds Drop

May 31, 2010

By Andrew Rummer and Alexander Cuadros May 31 (Bloomberg) — Stocks in Europe, Canada and Brazil advanced along with oil as investors speculated the global economy will withstand the debt crisis in the euro zone. Spanish government bonds fell after Fitch Ratings stripped the nation of its AAA rating, and shares fell in Israel. The Stoxx Europe 600 Index gained 0.3 percent. The Standard & Poor’s/TSX Composite Index climbed 0.4 percent and the Bovespa advanced 0.4 percent as of 11:59 a.m. New York time. Crude rose 0.3 percent. The yield difference between Spanish and German 10- year bonds widened to 159 basis points. Stocks fell in Israel on concern tensions may escalate after 10 people were killed as commandos clashed with pro-Palestinian activists. Stock exchanges in the U.S. and U.K. were closed for holidays. Canada’s economy grew at the fastest pace since 1999 in the first quarter, led by consumer spending and manufacturing. Developing nations remain “a source of strength for the world economy,” European Central Bank President Jean-Claude Trichet said today via video link to a Bank of Korea conference. “There was no bad news over the weekend,” said Eduardo Favrin , who oversees about $2.5 billion in stocks as head of equities for HSBC Global Asset Management’s Brazil unit in Sao Paulo. “The absence of the American market really dries out the liquidity in other markets.” ‘A Little Bit’ The MSCI World Index of stocks in 24 developed markets has rallied 57 percent from its low in March 2009 after the economy recovered from the worst recession since World War II and central banks kept interest rates near record lows. Federal Reserve Bank of Chicago President Charles Evans told reporters in Seoul today that he “wouldn’t be surprised” if the Fed’s policy of low rates “gets extended just a little bit.” The Stoxx 600 pared its loss for May to 5.8 percent, the biggest monthly retreat since February 2009. The MSCI Asia Pacific Index, which rose less than 0.1 percent today, has slumped 9.8 percent since April 30. The S&P 500 fell 8.2 percent. Equities plunged around the world this month on concern a debt crisis is spreading from Greece. Shares of Sanoma Oyj rose 2.9 percent in Helsinki trading after the biggest Nordic media company agreed to sell its Welho unit. Daimler AG led automakers higher as Deutsche Bank AG lifted its share-price estimate for the world’s second-largest maker of luxury cars. Spain’s IBEX 35 slipped 0.7 percent after Fitch Ratings downgraded the nation to AA+. Behind Only Germany Canada’s S&P/TSX pared its May retreat to 4 percent, which is the second-best performance among 24 developed markets in the world, trailing only Germany. Gross domestic product grew 6.1 percent at an annualized pace in the January-March period, Statistics Canada said today. Economists predicted a 5.9 percent expansion, based on 20 predictions gathered by Bloomberg News. The Bank of Canada had projected a 5.8 percent gain. “Over the next one-two months a relatively resilient economic and profit outlook should push riskier assets up,” Jan Loeys , a London-based strategist at JPMorgan Chase & Co., wrote in a report e-mailed today. “Confidence surveys remain strong and lower interest rates, oil prices and a cheaper euro are providing positive feedback from the market correction.” Oil rose to $74.21 a barrel in New York. Futures are down 14 percent in May, poised for the biggest monthly retreat since December 2008. Yields on Spain’s 10-year bonds climbed to 4.25 percent, while the payout on German bunds fell to 2.66 percent. The difference surged to 1.64 percentage points on May 7, the highest since 1996. The MSCI Emerging Markets Index gained for a fourth day, rising 0.7 percent. The advance trimmed its May slump to 9.5 percent, its worst month since October 2008. Indexes for South Korea, Thailand and Indonesia rose more than 1 percent today. Israeli shares fell the most in four days on concern tensions may escalate following the deaths of the pro- Palestinian activists. The TA-25 Index lost 1.6 percent and the shekel weakened 1 percent against the U.S. dollar. Turkey’s ISE National 100 Index retreated 1.5 percent, snapping a three-day rally. The international flotilla carrying aid to Gaza included Turkish-registered vessels. The lira dropped 0.3 percent versus the U.S. dollar. To contact the reporters on this story: Andrew Rummer in London at arummer@bloomberg.net ; Alexander Cuadros in Sao Paulo at acuadros@bloomberg.net .

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European Stocks, Oil Climb Spanish Bonds Drop After Downgrade

May 31, 2010

By Andrew Rummer May 31 (Bloomberg) — European stocks and oil advanced as investors speculated the economy is strong enough to withstand the region’s debt crisis. Spanish government bonds fell after Fitch Ratings stripped the nation of its AAA rating. The Stoxx Europe 600 Index gained 0.3 percent at 10:29 a.m. in London, trimming this month’s slide to 5.8 percent. Futures on the Standard & Poor’s 500 Index rose 0.4 percent. Oil climbed above $74 a barrel in New York. The yield premium investors demand to hold Spain’s 10-year bonds rather than German bunds widened to the most in more than three weeks. The MSCI World Index of stocks in 24 developed markets has rallied 57 percent from its low in March 2009 as the economy recovers from the worst recession since World War II and central banks have committed to keeping interest rates low. Federal Reserve Bank of Chicago President Charles Evans told reporters in Seoul today that he “wouldn’t be surprised” if the Fed’s policy of low rates “gets extended just a little bit.” “Over the next one-two months a relatively resilient economic and profit outlook should push riskier assets up on average, and government bonds down,” Jan Loeys , JPMorgan Chase & Co.’s London-based strategist, wrote in a report e-mailed today. “Confidence surveys remain strong and lower interest rates, oil prices and a cheaper euro are providing positive feedback from the market correction.” Europe’s Stoxx 600 climbed 0.3 percent to 244.74 as the benchmark gauge for European equities pared its biggest monthly decline since February 2009. Sanoma Oyj jumped 4 percent in Helsinki trading after the biggest Nordic media company agreed to sell its Welho unit. U.S. and U.K. markets are closed today for holidays. $4 Trillion Concern the European debt crisis may worsen has wiped more than $4 trillion from the value of global equities this month. The selloff has left the Stoxx 600 trading at less than 15 times the reported earnings of its companies, the cheapest valuation since 2008, according to data compiled by Bloomberg. The MSCI Asia Pacific Index slipped 0.1 percent even as two stocks advanced for every one that declined. Asian stocks pared earlier losses as Japanese factory output rose 1.3 percent in April from March and India’s economy grew 8.6 percent in the three months ended March 31. The MSCI Emerging Markets Index gained for a fourth day, rising 0.4 percent. The advance trimmed its slump in May to 9.8 percent, its worst month since October 2008. Benchmark indexes in South Korea, Thailand and Indonesia rose more than 1 percent today. Gaza Flotilla Raid Turkey’s ISE National 100 Index retreated 2 percent, snapping a three-day rally, after Israel raided an international flotilla carrying aid to Gaza that included at least one Turkish-flagged vessel. The lira dropped 0.4 percent. Israel’s benchmark equity gauge lost 1.7 percent, the most in a week, and the shekel depreciated as much as 1.3 percent. The Czech koruna strengthened 1.6 percent against the euro, heading for the biggest advance in almost 14 months, after parties that pledged to rein in spending won the most votes in parliamentary elections. The yield on Spanish 10-year bonds rose four basis points to 4.28 percent after Fitch downgraded country’s the credit rating one step to AA+ from AAA, following the close of European markets on May 28. Spanish two-year yields climbed six basis points to 2.49 percent. German government bonds were little changed, with the yield on the 10-year bund one basis point lower at 2.67 percent. The difference in yield between Spanish and German 10-year securities widened five basis points to 158 basis points, according to generic data compiled by Bloomberg. Southern Europe “Spanish bonds are already trading as if they were BB- so a downgrade to AA+ won’t shake markets but it still reminds us of the problems in southern Europe,” said Arne Lohmann Rasmussen , chief currency analyst with Danske Bank A/S in Copenhagen. The yen weakened against 14 of 16 major counterparts as Japan’s Social Democratic Party left the government, weakening the coalition less than two months before parliamentary elections. The Japanese currency declined to 91.43 per dollar from 91.06 in New York on May 28. The yen has jumped 9.9 percent in May, according to Bloomberg Correlation-Weighted Currency Indexes. Oil rose 0.7 percent to $74.45 a barrel in electronic trading in New York on speculation that economic growth in the U.S., the world’s biggest energy consumer, will sustain a global recovery in fuel demand. Crude was still poised for its biggest monthly fall since December 2008, having declined 14 percent in May. Copper for July delivery gained 0.8 percent in New York to $3.1295 a pound. The most active contract tumbled 7 percent in May, the most since January. Gold for immediate delivery declined 0.1 percent to $1,212.65 an ounce. To contact the reporter on this story: Andrew Rummer at arummer@bloomberg.net

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European Stocks, U.S. Futures, Oil Gain on Growth Confidence Yen Declines

May 31, 2010

By Andrew Rummer May 31 (Bloomberg) — European stocks and oil advanced as investors speculated the economy is strong enough to withstand the region’s debt crisis. Spanish government bonds fell after Fitch Ratings stripped the nation of its AAA rating. The Stoxx Europe 600 Index gained 0.3 percent at 10:29 a.m. in London, trimming this month’s slide to 5.8 percent. Futures on the Standard & Poor’s 500 Index rose 0.4 percent. Oil climbed above $74 a barrel in New York. The yield premium investors demand to hold Spain’s 10-year bonds rather than German bunds widened to the most in more than three weeks. The MSCI World Index of stocks in 24 developed markets has rallied 57 percent from its low in March 2009 as the economy recovers from the worst recession since World War II and central banks have committed to keeping interest rates low. Federal Reserve Bank of Chicago President Charles Evans told reporters in Seoul today that he “wouldn’t be surprised” if the Fed’s policy of low rates “gets extended just a little bit.” “Over the next one-two months a relatively resilient economic and profit outlook should push riskier assets up on average, and government bonds down,” Jan Loeys , JPMorgan Chase & Co.’s London-based strategist, wrote in a report e-mailed today. “Confidence surveys remain strong and lower interest rates, oil prices and a cheaper euro are providing positive feedback from the market correction.” Europe’s Stoxx 600 climbed 0.3 percent to 244.74 as the benchmark gauge for European equities pared its biggest monthly decline since February 2009. Sanoma Oyj jumped 4 percent in Helsinki trading after the biggest Nordic media company agreed to sell its Welho unit. U.S. and U.K. markets are closed today for holidays. $4 Trillion Concern the European debt crisis may worsen has wiped more than $4 trillion from the value of global equities this month. The selloff has left the Stoxx 600 trading at less than 15 times the reported earnings of its companies, the cheapest valuation since 2008, according to data compiled by Bloomberg. The MSCI Asia Pacific Index slipped 0.1 percent even as two stocks advanced for every one that declined. Asian stocks pared earlier losses as Japanese factory output rose 1.3 percent in April from March and India’s economy grew 8.6 percent in the three months ended March 31. The MSCI Emerging Markets Index gained for a fourth day, rising 0.4 percent. The advance trimmed its slump in May to 9.8 percent, its worst month since October 2008. Benchmark indexes in South Korea, Thailand and Indonesia rose more than 1 percent today. Gaza Flotilla Raid Turkey’s ISE National 100 Index retreated 2 percent, snapping a three-day rally, after Israel raided an international flotilla carrying aid to Gaza that included at least one Turkish-flagged vessel. The lira dropped 0.4 percent. Israel’s benchmark equity gauge lost 1.7 percent, the most in a week, and the shekel depreciated as much as 1.3 percent. The Czech koruna strengthened 1.6 percent against the euro, heading for the biggest advance in almost 14 months, after parties that pledged to rein in spending won the most votes in parliamentary elections. The yield on Spanish 10-year bonds rose four basis points to 4.28 percent after Fitch downgraded country’s the credit rating one step to AA+ from AAA, following the close of European markets on May 28. Spanish two-year yields climbed six basis points to 2.49 percent. German government bonds were little changed, with the yield on the 10-year bund one basis point lower at 2.67 percent. The difference in yield between Spanish and German 10-year securities widened five basis points to 158 basis points, according to generic data compiled by Bloomberg. Southern Europe “Spanish bonds are already trading as if they were BB- so a downgrade to AA+ won’t shake markets but it still reminds us of the problems in southern Europe,” said Arne Lohmann Rasmussen , chief currency analyst with Danske Bank A/S in Copenhagen. The yen weakened against 14 of 16 major counterparts as Japan’s Social Democratic Party left the government, weakening the coalition less than two months before parliamentary elections. The Japanese currency declined to 91.43 per dollar from 91.06 in New York on May 28. The yen has jumped 9.9 percent in May, according to Bloomberg Correlation-Weighted Currency Indexes. Oil rose 0.7 percent to $74.45 a barrel in electronic trading in New York on speculation that economic growth in the U.S., the world’s biggest energy consumer, will sustain a global recovery in fuel demand. Crude was still poised for its biggest monthly fall since December 2008, having declined 14 percent in May. Copper for July delivery gained 0.8 percent in New York to $3.1295 a pound. The most active contract tumbled 7 percent in May, the most since January. Gold for immediate delivery declined 0.1 percent to $1,212.65 an ounce. To contact the reporter on this story: Andrew Rummer at arummer@bloomberg.net

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Israeli Forces Clash With Gaza Aid Flotilla Army Radio Says 10 Killed

May 30, 2010

By Jonathan Ferziger and Calev Ben-David May 31 (Bloomberg) — At least 10 members of a flotilla of ships carrying hundreds of pro-Palestinian activists and humanitarian aid supplies to the Gaza Strip were killed in clashes with Israeli naval forces, Israel Army Radio reported. Turkey’s Foreign Ministry called the raid “inhuman” and said it “may cause damage to our relations that will be impossible to repair,” according to the statement e-mailed by the ministry in Ankara today. Several of the aid ships were from Turkey. Israeli forces met resistance early today when they boarded the ships to prevent them from reaching Gaza, Army Radio said. A spokesman for the Israel army denied initiating violence. “We did not attack any boats,” the spokesman said, speaking anonymously under military guidelines. “The IDF is fulfilling the directions of the Israeli government to prevent anyone from entering the Gaza Strip without proper coordination and authorization from Israel.” Israel has said it wouldn’t let the ships reach Gaza, calling the mission a propaganda trick aimed at making it look bad. The Israeli government had said it would assist in offloading the cargo and sending it by truck to Gaza after a security inspection. Hamas, the militant organization that rules Gaza, said the Israeli action was an “act of terror.” Taher Nunu, a Hamas spokesman, said in an interview with Al-Jazeera television that Israel should be tried for war crimes. Three Israeli navy missile boats left the Haifa naval base last night, planning to intercept the flotilla, according to reporters on board. To contact the reporter on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

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Israeli Forces Clash With Gaza Aid Flotilla Army Radio Says 10 Killed

May 30, 2010

By Jonathan Ferziger and Calev Ben-David May 31 (Bloomberg) — At least 10 members of a flotilla of ships carrying hundreds of pro-Palestinian activists and humanitarian aid supplies to the Gaza Strip were killed in clashes with Israeli naval forces, Israel Army Radio reported. Turkey’s Foreign Ministry called the raid “inhuman” and said it “may cause damage to our relations that will be impossible to repair,” according to the statement e-mailed by the ministry in Ankara today. Several of the aid ships were from Turkey. Israeli forces met resistance early today when they boarded the ships to prevent them from reaching Gaza, Army Radio said. A spokesman for the Israel army denied initiating violence. “We did not attack any boats,” the spokesman said, speaking anonymously under military guidelines. “The IDF is fulfilling the directions of the Israeli government to prevent anyone from entering the Gaza Strip without proper coordination and authorization from Israel.” Israel has said it wouldn’t let the ships reach Gaza, calling the mission a propaganda trick aimed at making it look bad. The Israeli government had said it would assist in offloading the cargo and sending it by truck to Gaza after a security inspection. Hamas, the militant organization that rules Gaza, said the Israeli action was an “act of terror.” Taher Nunu, a Hamas spokesman, said in an interview with Al-Jazeera television that Israel should be tried for war crimes. Three Israeli navy missile boats left the Haifa naval base last night, planning to intercept the flotilla, according to reporters on board. To contact the reporter on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

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Colin Powell Says Stepped Up UN Sanctions Won’t End Iran’s Nuclear Program

May 30, 2010

By Mike Dorning May 30 (Bloomberg) — Former Secretary of State Colin Powell said that proposed stricter United Nations sanctions won’t bring an end to Iran’s nuclear program. “I don’t see that this causes sufficient pain,” Powell said on ABC’s “This Week” program. U.S. Secretary of State Hillary Clinton said on May 18 that the permanent members of the UN Security Council — Russia, China, the U.S., U.K. and France — and Germany have drafted a sanctions resolution designed to pressure Iran into stopping its pursuit of enriched uranium, a material that can be used for a bomb. “The Iranians have been around for thousands of years, trading and selling and getting around various constraints and what not,” Powell said. “They’re very clever. And they know what sanctions might be coming. And I’m sure that they have done their own planning and have their own counter-sanction strategy.” Powell’s comments echoed those of a top Iranian dissident, Mohsen Kadivar, a senior cleric and a visiting professor at Duke University’s department of religion, who predicted last week that “they will not manage to isolate Iran with sanctions.” Kadivar was a student of the late Ayatollah Hossein Ali Montazeri, a top cleric and dissident whose death in December reignited anti-government demonstrations. Legitimacy of Sanctions Iran says its nuclear program is aimed at generating electricity for a growing population. It also complains of a double standard on international nuclear agreements, saying Israel hasn’t been prevented from developing atomic weapons, and has called the proposed new sanctions “illegitimate.” Iran is already under three sets of UN sanctions for defying the council’s demands to suspend the enrichment of uranium. The proposed economic sanctions would bolster an arms embargo, restrict financial transactions and enhance authority to stop and seize Iranian cargo. Iran has experience in evading sanctions, and found ways to get hold of arms during the war against Iraq in the 1980s when it was under similar restrictions, Kadivar said. It will use oil revenue to counter the new measures, boosting inflation and hurting the Iranian public, he said. Powell was secretary of state to Republican President George W. Bush during the run-up to the Iraq War and the first years of the conflict and considered running for president as a Republican candidate in 1996. In the 2008 election, he crossed party lines to endorse Democrat Barack Obama for president. He was the chairman of the Joint Chiefs of Staff during the first Gulf War against Iraq in the early 1990s. Iraq Withdrawal Powell also said on ABC that recent violence in Iraq should not dissuade the White House from proceeding with plans to reduce the U.S. troop presence in the country. “I think the president is correct to keep it on track and continue with the draw-down,” Powell said. “We cannot maintain this level of deployment forever. It not only is a burden on our troops, it is enormously expensive in a time of budget deficits and national debt.” Powell said the Iraqi government and military “is ready” to function with fewer U.S. troops. “If they continue to show the effectiveness that their army has shown recently, they should be able to contain this and hold it as we continue our withdrawal,” Powell said. Powell said the success of efforts to bring stability to Afghanistan will depend heavily on establishing an effective national army, reducing corruption and building public confidence in the government. “We can do just so much,” Powell said. “It ultimately is going to be in the hands of the Afghans.” To contact the reporter on this story: Mike Dorning in Washington at mdorning@bloomberg.net

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Dan Ariely: The Irrational Side of Corporate Bonuses

May 27, 2010

In light of the financial crisis of 2008 and the subsequent outrage over the continuing bonuses paid to many of those deemed responsible for it, many people wonder how incentives really affect CEOs and Wall Street executives. Corporate boards generally assume that very large performance- based bonuses will motivate CEOs to invest more effort in their jobs and that the increased effort will result in higher- quality output.* But is this really the case? Through experiments we conducted, all of which can be found in much more depth in my new book, The Upside of Irrationality , we discovered that using money to motivate people can be a double-edged sword. For tasks that require cognitive ability, low to moderate performance-based incentives can help. But when the incentive level is very high, it can command too much attention and thereby distract the person’s mind with thoughts about the reward. This can create stress and ultimately reduce the level of performance. A few years ago, before the financial crisis, I was invited to give a talk to a select group of bankers. The meeting took place in a well-appointed conference room at a large investment company’s office in New York City. The food and wine were delicious and the views from the windows spectacular. I told the audience about different projects I was working on, including the experiments on high bonuses in India and MIT. They all nodded their heads in agreement with the theory that high bonuses might backfire — until I suggested that the same psychological effects might also apply to the people in the room. They were clearly offended by the suggestion. The idea that their bonuses could negatively influence their work performance was preposterous, they claimed. I tried another approach and asked for a volunteer from the audience to describe how the work atmosphere at his firm changes at the end of the year. “During November and December,” the fellow said, “very little work gets done. People mostly think about their bonuses and about what they will be able to afford.” In response, I asked the audience to try on the idea that the focus on their upcoming bonuses might have a negative effect on their performance, but they refused to see my point. Maybe it was the alcohol, but I suspect that those folks simply didn’t want to acknowledge the possibility that their bonuses were vastly oversized. (As the prolific author and journalist Upton Sinclair once noted, “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”) Somewhat unsurprisingly, when presented with the results of these experiments, the bankers also maintained that they were, apparently, super special individuals; unlike most people, they insisted, they work better under stress. It didn’t seem to me that they were really so different from other people, but I conceded that perhaps they were right. I invited them to come to the lab so that we could run an experiment to find out for sure. But, given how busy bankers are and the size of their paychecks, it was impossible to tempt them to take part in our experiments or to offer them a bonus that would have been large enough to be meaningful for them. Without the ability to test bankers, Racheli Barkan (a professor at Ben-Gurion University in Israel) and I looked for another source of data that could help us understand how highly paid, highly specialized professionals perform under great pressure. I know nothing about basketball, but Racheli is an expert, and she suggested that we look at clutch players — the basketball heroes who sink a basket just as the buzzer sounds. Clutch players are paid much more than other players, and are presumed to perform especially brilliantly during the last few minutes or seconds of a game, when stress and pressure are highest. With the help of Duke University men’s basketball Coach Mike Krzyzewski (“Coach K”), we got a group of professional coaches to identify clutch players in the NBA (the coaches agreed, to a large extent, about who is and who is not a clutch player). Next, we watched videos of the twenty most crucial games for each clutch player in an entire NBA season (by most crucial, we meant that the score difference at the end of the game did not exceed three points). For each of those games, we measured how many points the clutch players had shot in the last five minutes of the first half of each game, when pressure was relatively low. Then we compared that number to the number of points scored during the last five minutes of the game, when the outcome was hanging by a thread and stress was at its peak. We also noted the same measures for all the other “nonclutch” players who were playing in the same games. We found that the non-clutch players scored more or less the same in the low-stress and high-stress moments, whereas there was actually a substantial improvement for clutch players during the last five minutes of the games. So far it looked good for the clutch players and, by analogy, the bankers, as it seemed that some highly qualified people could, in fact, perform better under pressure. But — and I’m sure you expected a “but” — there are two ways to gain more points in the last five minutes of the game. An NBA clutch player can either improve his percentage success (which would indicate a sharpening of performance) or shoot more often with the same percentage (which suggests no improvement in skill but rather a change in the number of attempts). So we looked separately at whether the clutch players actually shot better or just more often. As it turned out, the clutch players did not improve their skill; they just tried many more times. Their field goal percentage did not increase in the last five minutes (meaning that their shots were no more accurate); neither was it the case that non- clutch players got worse. At this point you probably think that clutch players are guarded more heavily during the end of the game and this is why they don’t show the expected increase in performance. To see if this were indeed the case, we counted how many times they were fouled and also looked at their free throws. We found the same pattern: the heavily guarded clutch players were fouled more and got to shoot from the free-throw line more frequently, but their scoring percentage was unchanged. Certainly, clutch players are very good players, but our analysis showed that, contrary to common belief, their performance doesn’t improve in the last, most important part of the game. Obviously, NBA players are not bankers. The NBA is much more selective than the financial industry; very few people are sufficiently skilled to play professional basketball, while many, many people work as professional bankers. As we’ve seen, it’s also easier to get positive returns from high incentives when we’re talking about physical rather than cognitive skills. NBA players use both, but playing basketball is more of a physical than a mental activity (at least relative to banking). So it would be far more challenging for the bankers to demonstrate “clutch” abilities when the task is less physical and demands more gray matter. Also, since the basketball players don’t actually improve under pressure, it’s even more unlikely that bankers would be able to perform to a higher degree when they are under the gun. Could all this mean that sometimes we might actually behave less rationally when we try harder? If that’s so, what is the correct way to pay people without overstressing them? One simple solution is to keep bonuses low — something those bankers I met with might not appreciate. Another approach might be to pay employees on a straight salary basis. Though it would eliminate the consequences of over-motivation, it would also eradicate some of the benefits of performance-based payment. A better approach might be to keep the motivating element of performance-based payment but eliminate some of the nonproductive stress it creates. To achieve this, we could, for example, offer employees smaller and more frequent bonuses. Another approach might be to offer employees a performance-based payment that is averaged over time — say, the previous five years, rather than only the last year. This way, employees in their fifth year would know 80 percent of their bonus in advance (based on the previous four years), and the immediate effect of the present year’s performance would matter less. Whatever approach we take to optimize performance, it should be clear that we need a better understanding of the links between compensation, motivation, stress, and performance. And we need to take our peculiarities and irrationalities into account. Dan Ariely is the author of The Upside of Irrationality .

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Israel Says Gaza Aid Ships Are `Propaganda,’ Will Block Them From Docking

May 25, 2010

By Jonathan Ferziger May 25 (Bloomberg) — Israel won’t allow an international flotilla to reach the Gaza Strip with construction materials and humanitarian supplies, an official said, calling the shipment a provocative stunt. While the Free Gaza Movement, the group behind the shipments, has “wrapped themselves in a humanitarian cloak, they are engaging in political propaganda and not in pro-Palestinian aid,” Foreign Ministry spokesman Yigal Palmor said today in a telephone interview from Jerusalem. The eight vessels, carrying 10,000 tons of cargo and some 550 pro-Palestinian activists through the Mediterranean Sea, will probably reach the coastal waters of Gaza by May 28 or 29, Dror Feiler, one of the organizers, said by satellite phone from aboard the Swedish-Greek ship Sofia. Israel has restricted entry of people and goods into Gaza since it was taken over by the militant Hamas movement in 2007, allowing in only a limited range of supplies including food, clothing and medicine in truck convoys. Israeli Navy ships have stopped three previous efforts by the Free Gaza Movement, an international group formed in 2008 to deliver aid, to reach the territory by sea. The ships set sail from Ireland, Sweden, Turkey and Greece, Feiler said. Some are carrying television crews that plan to broadcast live any confrontation between Israeli forces and the activists. “This is not going to look good on television,” said 58-year-old Feiler, an Israeli-born resident of Sweden. “We’re on a peaceful mission to help end the misery of the people in Gaza and it’s going to be very ugly if Israeli soldiers try to take over our ships.” Gaza War Hamas is considered a terrorist organization by Israel, the U.S. and European Union. Israel fought a three-week war in Gaza starting in December 2008 that it said was meant to stop Hamas and other militant groups from firing rockets into its territory. It has been negotiating a prisoner swap with Hamas to exchange a captive Israeli soldier, Gilad Shalit , for about 1,000 jailed Palestinians. The Palestinian Authority condemned Israel’s decision to stop the ships. “This is part of the Israeli policy of suffocating Gaza’s population of 1.5 million people by tightening the blockade,” spokesman Ghassan Khatib said in a telephone interview from Ramallah in the West Bank. Along with medical and school supplies, the ships this time are carrying cement, iron rods and other construction material that Israel has banned from entering Gaza, and that are needed to rebuild homes and other buildings destroyed in the war, Feiler said. Making Bombs Such materials are used by Hamas “for developing its arsenal, building bunkers and launching sites, and making rockets and mortars,” according to a statement e-mailed by the Israeli army. The ships can unload their cargo at Ashdod port, north of Gaza, and Israel will determine which supplies can be trucked in, Shlomo Dror , a Defense Ministry spokesman said. To contact the reporter on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net

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Erakat Says U.S.-Mediated Indirect Peace Talks With Israel `Have Started’

May 9, 2010

By Gwen Ackerman and Saud Abu Ramadan May 9 (Bloomberg) — U.S.-mediated peace talks between Israel and the Palestinian Authority “have started,” senior Palestinian official Saeb Erakat said, ending a breakdown that lasted almost a year and a half. Palestinian Authority President Mahmoud Abbas will act as a chief negotiator and all core issues, such as Jerusalem, borders and refugees will be on the table during the four months of indirect negotiations, Erakat said in remarks published today by the official Wafa news agency. His comments followed a second meeting between Abbas and U.S. envoy George Mitchell in as many days. Mitchell was expected to return to Washington later today. Israeli Prime Minister Benjamin Netanyahu welcomed yesterday’s decision by the Palestinians to resume talks, saying he hoped they would lead to direct negotiations. “In the long term, it is impossible to arrive at decisions and agreements on critical issues, such as security and national interests, without sitting together in the same room,” he said at today’s Cabinet meeting. Talks between Israel and the Palestinians stalled in December 2008 after Israel sent forces into the Gaza Strip in an operation the government said aimed to stop cross-border rocket attacks. Abbas had linked participation in the talks to Israel’s agreeing to freeze plans to build new homes for Jews in east Jerusalem, captured by Israel from Jordan in the 1967 Middle East war and sought by the Palestinians as the capital of a future state. Core Issues An Israeli official, speaking anonymously because he was not authorized to give details of the negotiations, said Israel had agreed core issues such as Jerusalem, borders and refugees may be raised in the talks for preliminary discussion, on the understanding that any solutions would be found in direct talks. Netanyahu adviser Yitzhak Molcho will be sitting with Mitchell during the indirect talks, the official added. “In a certain sense, proximity talks are mainly theater,” said Gerald Steinberg , a political scientist at Bar-Ilan University outside Tel Aviv. “Certainly nobody expects proximity talks to lead to anything substantial.” Opposition and Kadima party leader Tzipi Livni , the former foreign minister who was a chief negotiator with the Palestinians under the previous government, called the indirect talks a test of Netanyahu’s readiness to make decisions for peace. “I hope these talks will have content, that they will be true talks, and I hope we will not miss this opportunity,” Livni said today in an e-mailed statement. Talks Stalled U.S. efforts to initiate indirect discussions stalled in March when Israel approved a plan to build 1,600 new homes for Jews in east Jerusalem during a visit by Vice President Joe Biden . U.S. officials criticized the plans and Palestinian officials said they were reconsidering their participation in the talks. Netanyahu, while publicly saying construction in Jerusalem will continue, may have slowed projects in disputed areas of the city. The planning committee responsible for approving construction in Jerusalem , which gave the go-ahead for the building plans in March, met last week for the first time since Biden’s visit. No building plans related to east Jerusalem were on the agenda, committee member and Jerusalem Councilman Yair Gabbay said in a phone interview last week. To contact the reporter on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net Saud Abu Ramadan in Jerusalem at sramadan@bloomberg.net

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Abbas Agrees to U.S.-Mediated Talks With Israel After Gaining PLO Approval

May 8, 2010

By Gwen Ackerman and Saud Abu Ramadan May 9 (Bloomberg) — Palestinian Authority President Mahmoud Abbas agreed to U.S.-mediated indirect talks with Israel after receiving Palestine Liberation Organization approval that cleared the way for the first negotiations in 17 months. Chief Palestinian negotiator Saeb Erakat said Abbas informed U.S. Mideast envoy George Mitchell of his decision in a meeting yesterday in the West Bank city of Ramallah. The indirect negotiations, also called “proximity” talks, will last for four months and focus on border and security issues that would include the issue of a disputed area of Jerusalem, he said. “It’s time now to take decisions and implement them on the ground,” Erakat told journalists after the meeting. Talks between Israel and the Palestinians stalled in December 2008 at the start of an Israeli military initiative in the Gaza Strip the government said was intended to stop cross- border rocket attacks. Abbas had linked his participation in the U.S.-proposed indirect talks to Israel freezing plans to build new homes for Jews in east Jerusalem, captured by Israel from Jordan in the 1967 Middle East war and sought by the Palestinians as the capital of their state. Israeli Prime Minister Benjamin Netanyahu “welcomes the resumption of peace talks,” a statement relayed by his spokesman Nir Hefez said. Netanyahu stressed that the negotiations should be exempt from any preconditions and lead quickly to direct talks. Core Issues An Israeli official, speaking anonymously because he was not authorized to give details of the negotiations, said Israel had agreed core issues such as Jerusalem, borders and refugees, could be raised in the talks for preliminary discussion, on the understanding that any solutions would be found in direct talks. “In a certain sense, proximity talks are mainly theater,” said Gerald Steinberg , a political scientist at Bar Ilan University outside Tel Aviv. “Certainly nobody expects proximity talks to lead to anything substantial.” U.S. efforts to initiate the indirect talks stalled in March when Israel approved a plan to build 1,600 new homes for Jews in east Jerusalem during a visit by Vice President Joe Biden . The plans were criticized by U.S. officials and led the Palestinians to reconsider their participation in the negotiations. Qatari Foreign Minister Sheikh Hamad Bin Jasim Bin Jaber al-Thani said May 1 that Arab ministers received “positive indicators from the U.S. mediator” before agreeing that the Palestinians should restart talks. U.S. Guarantees “U.S. guarantees, which were offered to the Palestinian leadership, were the reason behind today’s acceptance to join the talks,” Yasser Abed Rabbo , a member of the PLO’s Executive Committee that approved the talks yesterday, told reporters in the West Bank city of Ramallah. Netanyahu, while publicly insisting construction in Jerusalem will continue, may have slowed projects in disputed areas of the city. The planning committee responsible for approving construction in Jerusalem , which gave the go-ahead for the building plans in March, met last week for the first time since Biden’s visit. There were no building plans related to east Jerusalem on the agenda, committee member and Jerusalem councilman Yair Gabbay said in a phone interview last week. The U.S. will declare the starting day for the talks and describe what guarantees were offered the Palestinians, Erakat said. Abbas is expected to meet with Mitchell again today to discuss the mechanism for holding the indirect talks, the statement from his office said. To contact the reporters on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net ; Saud Abu Ramadan in Gaza at sramadan@bloomberg.net .

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Israel, Palestinians Plan Indirect Talks Next Week Aided by Envoy Mitchell

April 30, 2010

By Nicole Gaouette April 30 (Bloomberg) — Israelis and Palestinians will resume indirect talks next week aided by U.S. special envoy George Mitchell who will travel to the region, Secretary of State Hillary Clinton said. “We will be starting with proximity talks next week,” Clinton told reporters in Washington today. “We’ve been very clear in our efforts that the resumption of talks is absolutely essential for the progress we seek toward a two-state solution.” The Arab League would have to agree to a resumption of talks, State Department spokesman Philip J. Crowley said. The 22-member League meets tomorrow in Cairo. A U.S. push to resume negotiations stalled last month when Israel announced a plan to build 1,600 homes in disputed east Jerusalem, which it captured in the 1967 Middle East War and to which Palestinians also lay claim. That announcement came during a visit by Vice President Joe Biden and prompted a public rebuke by the U.S. “The resumption of talks is absolutely essential for the progress we seek toward a two-state solution,” Clinton said. “Ultimately we want the parties in direct negotiations and working out all the issues as they must, they’ve been close a few times before.” Abbas Committed Clinton called on the Arab League to support Palestinian Authority President Mahmoud Abbas in the talks. While Abbas has told Israeli television that he is committed to starting the proximity talks, the League has conditioned their support for the talks on a freeze in Israeli settlement building in the West Bank. “We’re looking forward to a resumption,” said Jonathan Peled a spokesman for the Israeli Embassy in Washington. “We’re carefully cautious and optimistic that we’re definitely coming closer.” Israeli Prime Minister Benjamin Netanyahu told Israel’s Channel Two last week that there would be no building halt. “I am saying one thing: There will be no freeze in Jerusalem,” he said. “There should be no preconditions for talks.” In a speech to the American Jewish Committee in Washington April 29, Clinton said both sides “should refrain from unilateral statements and actions that could undermine trust or prejudge — or appear to prejudge — the outcome of negotiations.” To contact the reporter on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net

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Russia Cuts Refinancing Rate as Easing Cycle Draws to End, Inflation Looms

April 29, 2010

By Maria Levitov and Paul Abelsky April 29 (Bloomberg) — Russia’s central bank cut its main interest rates for the 13th time in a year to bolster economic growth and spur credit flows, nearing the end of an easing cycle on the prospect of accelerating inflation. Bank Rossii lowered the refinancing rate a quarter point to 8 percent, effective April 30, it said on its Web site today. It also cut the repurchase rate charged on one- and seven-day central bank loans by the same amount to 7 percent. The decision was expected by 20 of 27 economists in a Bloomberg survey. The bank last cut rates a quarter-point on March 26. It also cut the overnight deposit rate to 2.5 percent from 2.75 percent. The cuts are intended “primarily” to boost lending and make credit more “accessible,” the bank said in the statement. “The consumer price dynamics remain favorable” and the main indicators point to a “gradual trend towards the recovery of economic growth.” Still, the recovery is “unstable,” and “the necessity of supporting domestic demand remains.” Lending growth in March and April was “insignificant,” it said. The regulator has reduced rates a total of 5 percentage points in 13 months while the government last year raised spending by 27.3 percent to drag the world’s largest energy supplier out of its worst recession by unlocking credit flows and rekindling demand. Finance Minister Alexei Kudrin on April 6 warned the stimulus may trigger faster inflation and bring an end to the cuts. The refinancing rate has been higher than the inflation rate since the fourth quarter. Ruble The ruble gained 0.5 percent against the euro to trade at 38.6468 at 11:24 a.m. in Moscow. Against the dollar, the ruble was little changed at 29.2775. “When rates enter positive territory in real terms you do fewer stupid things, take fewer risks and this produces better- quality growth,” said Anton Stroutchenevski , an analyst with Troika Dialog in Moscow, before the announcement. Today’s cut “is an urgent necessity” to spur a recovery. Russia is the last so-called BRIC country cutting rates. Brazil’s central bank yesterday became the first in Latin America to increase borrowing costs in more than a year, raising the Selic rate to 9.5 percent from 8.75 percent. China and India have increased reserve requirements for banks to avoid stoking unsustainable lending growth. Australia, Norway, Israel and Vietnam have raised rates since the peak of the global crisis while the U.S. Federal Reserve has raised the rate charged to banks for direct loans, signaling an end to emergency measures to supply liquidity to financial institutions. Russian economic growth slowed to a seasonally adjusted 0.6 percent last quarter from 1.7 percent in the previous period and 2 percent in the third quarter, according to the Economy Ministry. Inflation, Banks Inflation , the slowest in 12 years last month at 6.5 percent, is set to accelerate and Bank Rossii has signaled it may start raising rates in the second half. An increase in bank lending to households and businesses may also prompt the regulator to start tightening policy, economists said. Bank Rossii has indicated it may withdraw liquidity by forcing lenders to raise reserve requirements to pre-crisis levels. Lending may grow 15 percent this year, bank Chairman Sergei Ignatiev said on April 9. The credit portfolio of Russian banks excluding the nation’s largest lender OAO Sberbank expanded about 1.5 percent in March, he said, adding the rise may be “a coincidence or a change of trend.” Corporate loans shrank 0.7 percent in February and retail lending contracted 0.6 percent in the month, central bank data show. ‘World’s Biggest Rebound’ That will help the economy grow 7 percent this year, compared with last year’s 7.9 percent contraction, marking the world’s biggest rebound, Bank of America Merrill Lynch said in an April 8 note. The bank has also signaled it may do less to cap ruble gains and Ignatiev on April 9 said the regulator “sharply reduced” the extent to which it steers the currency. A 76 percent surge in the past 12 months in Urals crude, Russia’s chief export blend, has supported a 14 percent appreciation in the ruble against the dollar. Policy makers may let the ruble strengthen more than the government wants, according to UBS AG and Commerzbank AG . Even after the currency’s gains, the ruble remains about 25 percent undervalued, Clemens Grafe , chief economist at UBS in Moscow, said in an April 20 interview. The central bank may allow the ruble to rise as it targets a free float regime and uses a stronger currency to cap inflation, Barbara Nestor , an emerging-markets strategist at Commerzbank in London, said in an April 12 note. To contact the reporter on this story: Maria Levitov in Moscow at mlevitov@bloomberg.net

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Netanyahu Says He Will Know in Days If Talks With Palestinians to Proceed

April 25, 2010

By Gwen Ackerman April 25 (Bloomberg) — Israeli Prime Minister Benjamin Netanyahu said today he will know soon if the peace process will move forward, after he met with U.S. Middle East envoy George Mitchell . Mitchell had “positive and productive talks” with Israeli and Palestinian leaders in his three-day visit, an e-mailed statement from the U.S. Embassy said. The visit was the latest attempt to get Israel and the Palestinians to agree to U.S.- mediated indirect talks. “Israel wants the peace process to start immediately,” Netanyahu said today in comments broadcast on Army Radio. “The U.S. wants the process to start immediately, and I can only hope the Palestinians want to start the process immediately.” The Israeli leader said he will know “in the next few days” if negotiations will resume. Talks between Israel and the Palestinians stalled in December 2008 at the start of an Israeli military operation in the Hamas-controlled Gaza Strip that Israel said was aimed at stopping rocket attacks on its southern towns and cities. U.S. efforts to get the sides to resume negotiations have been stymied by Israeli plans to build 1,600 new homes for Jews in a part of Jerusalem captured from Jordan in the 1967 Middle East War and which the Palestinians seek as the capital of a future state. Palestinian Authority President Mahmoud Abbas has demanded the building plans be frozen before indirect talks can begin. Netanyahu has said Israel will continue to build in Jerusalem. Mitchell, who also met with Abbas, plans to return to the region next week, the embassy statement said. To contact the reporter on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net

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Israel Lifts Ban on Apple’s iPad, Finding Device Can Meet Local Standards

April 24, 2010

By Calev Ben-David April 24 (Bloomberg) — Israel has lifted a ban forbidding tourists and citizens from bringing Apple Inc.’s iPad into the country, the Communications Ministry said in an e-mailed statement. The ministry earlier this month requested that Israeli customs confiscate iPads brought in to the country at Ben-Gurion Airport, saying the product’s Wi-Fi transmitter did not confirm to local standards. To contact the reporter on this story: Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

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Saudis Tightening Chinese Energy Ties to Move Away From Dependence on U.S.

April 20, 2010

By Henry Meyer April 20 (Bloomberg) — Li Wei, a Chinese diplomat in Riyadh, had only just seen off a Ministry of Commerce delegation to Saudi Arabia this month when he started preparing for another Chinese governmental visit in two weeks. “Every month we have delegations coming to Saudi Arabia,” said Li, who works in the Chinese Embassy’s commercial section in the Saudi capital. “We are too busy.” China, the world’s second-largest oil consumer, and Saudi Arabia, holder of about a fifth of global crude reserves, are forging ever closer ties as the Persian Gulf kingdom responds to a Chinese drive to feed its rising energy needs. China in November overtook the U.S. as the main buyer of Saudi oil, and Saudi Arabian Oil Co. and Saudi Basic Industries Corp. are investing in refinery and petrochemicals projects in China. The partnership between Saudi Arabia and China is part of a broader strategy by the world’s largest oil exporter to tap Asian markets and extend global influence. It also helps Saudi Arabia reduce reliance on the U.S., which since World War II has protected Saudi security in return for stable oil supplies, said Ben Simpfendorfer , Hong Kong-based chief China economist at the Royal Bank of Scotland Plc. “China’s rise has provided Saudi Arabia with an excuse to knock on Washington’s door and to say, you are not our only partner,” he said. Compared with the U.S., whose support for Israel has created friction with Saudi Arabia, “with China, there is less baggage, there are easier routes to mutual benefit,” said Prince Turki al-Faisal , a former Saudi ambassador to the U.S. and brother of Foreign Minister Saud al-Faisal , in an interview. Booming Trade Since Saudi Arabia and China established diplomatic ties in 1990, two-way trade has grown to more than $40 billion in 2008 from $290 million. Oil lies at the heart of the relationship. With about a fifth of China’s crude imports now coming from Saudi Arabia, or about 1 million barrels a day compared with 455,000 barrels a day in 2005, the kingdom is investing to expand Chinese capacity for refining of Saudi heavy crude. Saudi Aramco, the world’s biggest crude producer, teamed with China Petroleum & Chemical Corp. and Irving, Texas-based Exxon Mobil Corp. to triple capacity at a refinery in China’s Fujian province to 240,000 barrels a day last year. Dhahran- based Saudi Aramco is in talks with the same Chinese partner, Beijing-based Sinopec, to take a stake in a 200,000-barrel-a-day plant in Shandong. Petrochemical Complex Riyadh-based Saudi Basic Industries Corp., the world’s largest petrochemicals maker, collaborated with Sinopec to build a petrochemical complex in the northern Chinese port city of Tianjin that starts up this year. “China is a country that has the greatest market for our products, so there is no politics behind this, it is only straight business,” Mohammed Al-Mady , the chief executive officer of the company known as Sabic, said in an April 10 interview at a conference on the Chinese island of Hainan. China’s need for oil is prompting it to seek greater influence in the Middle East , said Shi Yinhong, a professor of international relations at Renmin University in Beijing. Increasing economic ties to Saudi Arabia “will play some role in gradually eroding American preponderance over that country, but this is not a very elaborate and conscious objective of China’s relationship with Saudi Arabia,” Shi said. “This is a by-product. China’s objective is energy.” China and Energy Chinese demand for refined products is forecast to jump 7.2 percent this year to 9.12 million barrels a day, according to the International Energy Agency’s monthly Oil Market Report on April 13. Demand climbed 20 percent in February from a year earlier. U.S. demand for crude oil and petroleum products will average 18.84 million barrels a day this year, the Energy Department said on April 6. That will be a 9.4 percent drop from the 2005 peak of 20.8 million barrels a day, according to data from the U.S. Energy Information Administration. That mirrors a decline throughout the developed world. Consumption in the 30 industrialized countries that belong to the Paris-based Organization for Economic Cooperation and Development will average 45.4 million barrels a day this year, down 8.3 percent from 2006, according to the International Energy Agency, which coordinates the energy policy of 28 developed nations. Military Security China isn’t looking to provide Saudi Arabia with the protection it gets from the U.S., which maintains air, naval and army bases in the Gulf, including one in Saudi Arabia. In 1991, the U.S. assembled a coalition to reverse the Iraqi occupation of Kuwait and, before that, defended neighboring Saudi Arabia from a threatened Iraqi attack. Now it is enlisting Saudi help to pressure Iran to rein in its nuclear program. Saudi Arabia was the biggest foreign buyer of U.S. weapons between 2005 and 2008, agreeing to purchase $11.2 billion worth, according to the Congressional Research Service in Washington. “It shouldn’t surprise anyone that the Chinese are buying more Saudi oil than ever before,” Robert Hormats , the U.S. undersecretary of state for economics, energy and agriculture, said in an April 11 interview in Hainan. “But the fact is that our relationship with Saudi Arabia is much deeper and broader than oil.” King Abdullah , 86, picked China as the first destination on his maiden foreign tour in January 2006, months after becoming king. Chinese President Hu Jintao has been twice to Saudi Arabia since 2006, most recently in February last year. More Trade More than 90 Chinese companies do business in Saudi Arabia, including 70 construction firms employing 20,000 Chinese people, according to a study by John Sfakianakis , chief economist at Riyadh-based Banque Saudi Fransi. Among recent contracts won by Chinese companies in Saudi Arabia was a $1.8 billion award to a Saudi-Chinese consortium including Beijing-based China Railway Construction Corp. in March 2009, for a new high-speed line between the holy cities of Mecca and Medina. To cater to the influx, Riyadh’s Sheraton hotel last year started to offer a Chinese breakfast of rice porridge, dim sum and steamed buns along with Arab, continental and U.S. dishes. “We try to satisfy the cultural preferences of our Chinese guests,” said Farid al-Aauuar, director of rooms at the hotel. To contact the reporter on this story: Henry Meyer in Riyadh via the Dubai newsroom at hmeyer4@bloomberg.net .

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Dan Dorfman: Mayday!

April 16, 2010

A couple of weeks to go and it’ll be that time of the year again. Time for that old Wall Street saying–Sell in May and go away! But what does it all mean? Does this saying really have any legitimacy? And should you heed these worrisome words? For some thoughts, I rang up Sam Stovall, Standard & Poor’s chief investment strategist, and one of the Street’s leading historians. Actually, there’s a third part to that May saying–and stay away until St. Ledger’s Day, which is a reference to an annual horse race held in the U.K. during mid-September. The significance here, at least for the stock market, is that May is by no means the merry month of May, as the song or nursery rhyme would have you believe. The fact is it’s the year’s tenth worst month, averaging, as measured by the S&P 500, a yearly decline, dating back to 1928, of 0.04%. Further, Stovall tells me, the six-month period, May through October, has underperformed the other six months, November though April, 71% of time since 1945. The chief reason: money managers and traders tend to hang out at the beach during the traditionally slow summer months. My first reminder this year of the May saying came in a recent e-mail from of all places, Amman, Jordan. It was from a HuffPost reader, Caise Hassan, a 36-year-old trader in the U.S. markets and currencies, who took issue with a recent piece I did in which I quoted some money managers who predicted still higher stock prices. He thinks the bulls are on another planet. Hassan, who trades his own money, was born in Chicago (where his Palestinian-born father operated some small clothing stores) and moved to Amman in September of 2009, made a handsome score in 2008. In August of that year he heavily shorted the market (a bet stock prices would fall) with the S&P 500 in the 1260-1270 range. By October of that year, the index fell to about 800. In the process, Hassan tells me, he parlayed about $60,000 into $200,000. Though Wall Street is predominantly bullish, Hassan thinks the market rise is on borrowed time. “We’re within a month of the top, with the Nasdaq probably the first to fall,” he believes. Google and Amazon, he notes, look especially vulnerable. Hassan, who is closing out his long positions, looks for the market to kick off a 20%-25% correction starting next month. By the end of this month, he says, he will start shorting companies with weak earnings. For investors with a 6-12 month horizon, he observes, “I wouldn’t look at stocks until September.” Hassan offers a number of reasons to support his bearish stance. Chief among them: –Excessive bullish sentiment. –Falling dividend yields (now about 2.5% on the Dow). Often when this yield falls below 3%, a major correction has followed). –Bond prices have fallen since mid-March, resulting in higher interest rates, a fundamental killer of stock market rallies. Likewise, says Hassan, interest rates can only go higher from current levels –The VIX (a volatility index). a contrary indicator, is at its lowest level since May of 2008. –The New York Stock Exchange’s advance-decline line (a reference to the number of advancing stocks, versus those that are declining) is showing a divergence from the currently rising stock prices. –Turn of the decade years often seem to be preceded by large 18 month move up, followed by a steep drop that can last two years. For example, the 1998-2000 bull market was followed by a two-year drop. The 1998-1990 bull market (following a crash in October 1987) led to a 12% decline from mid-1990 until the Gulf War. Hassan also raises another development that could impact the market–the possibility of a major war in the Middle East. He notes that Israel is moving defensive missiles near its border with Syria and Lebanon. Further, the Israeli air force has flown over Lebanese air space several times in the past couple of months and the Lebanese government has interpreted this as a provocation for war. There is also palpable outrage across the Middle East, Hassan says, against Israeli policies in Jerusalem’s holy sites and settlements. Stovall, on the other hand, is a bull. For starters, he sees the economy on a roll, with GDP growing 3% this year and 2.9% next year. Further he pegs S&P 500 earnings growth at 37% in 2010 and 20% in 2011. He also points to such other market catalysts as the likelihood of continued low interest rates until after the November election, continued elevated economic and earnings growth projections, a reduced threat of a double-dip recession and expected easing in the value of the greenback into mid-2011. It’s not, though, as Stovall sees it, a case of up, up and away. He figures stocks could get hit by a 5%-10% decline, reflecting that May through October weakness, possibly triggered by corporate earnings guidance weaker than Wall Street expects, threat of a double-digit recession (which S&P doesn’t expect), an additional bailout required by a debt-ridden European country and anything that could trip up China’s growth, which is seen as an engine of optimism. These concerns aside, Stovall sees the S&P 500 (now about 1211) climbing to 1245 by year end. His five favorite stocks, which he believes have the potential to average a 25.6% gain over the next 12 months, all carry the highest five-star S&P rankings. They are State Street Corp., IBM, Adobe Systems, Medtronic and Jacobs Engineering. What do you think? E-mail me at Dandordan@aol.com

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Israel Tells Citizens to Leave Egypt’s Sinai on Evidence of Terrorism Plot

April 13, 2010

By Calev Ben-David April 13 (Bloomberg) — Israel warned its citizens to leave Egypt’s Sinai Peninsula immediately, saying there was “concrete evidence of an expected terrorist attempt to kidnap Israelis.” The warning from the Counter-Terrorism Bureau in the Prime Minister’s Office urged families with relatives in Sinai to “contact them and update them with this warning,” according to a text message sent to journalists. The Israeli government sent a warning last month before the Passover holiday advising its citizens not to travel to Sinai, a popular holiday destination for Israelis. Other such warnings have been issued in prior years regarding Sinai. In 2004, terrorist attacks against 3 Sinai resorts over the Jewish holiday of Sukkot left 34 people dead, 12 of them Israelis. More than 100 tourists were killed in bombing attacks at Sinai resorts in 2005 and 2006. To contact the reporter on this story: Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

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House Flippers in U.S. Rush Bums Off Courthouse Steps in Pursuit of Deals

March 31, 2010

By Prashant Gopal March 31 (Bloomberg) — During the U.S. housing boom , even amateur investors could buy and sell a property within a couple of months and turn a profit. Today there’s nothing amateur about house flipping. Homes with punctured walls and missing appliances draw multiple offers from professional investors at auctions in foreclosure-ridden states such as Arizona, California, Florida and Nevada. Competition is so stiff that experienced flippers such as Sergio Rodriguez and Brian Bogenn look back with nostalgia at last year, when they turned over 48 residences in the Phoenix area. “A year ago, bums outnumbered bidders at the courthouse steps,” where many foreclosure auctions take place, Rodriguez said. “Now the bums are way outnumbered.” In Phoenix, 4,661 foreclosed homes changed hands within six months of being purchased in 2009, an increase of 81 percent from the year earlier, according to RealtyTrac Inc., which sells foreclosure data. Flips in the California counties of Riverside and San Bernardino rose 45 percent to 17,203. In Las Vegas, which has the highest foreclosure rate in the country, they climbed 38 percent to 8,042. Nationally, flipped homes gained 19 percent to 197,784 in 2009. Final figures may rise because some homes bought in the fourth quarter may get flipped this year, said Daren Blomquist , a spokesman at Irvine, California-based RealtyTrac. FHA Waiver Sales could get a lift from the Federal Housing Authority’s one-year waiver of anti-flipping rules that took effect Feb. 1, allowing FHA borrowers to acquire foreclosed homes from owners who have held title for less than 90 days. That gives first-time buyers a shot at investor-renovated homes, said Vicki Bott, a deputy assistant secretary at the Department of Housing and Urban Development in Washington. The change also may help clear properties from markets such as Phoenix, where one in 124 homes in the metropolitan area received a foreclosure notice in February, the ninth-highest rate in the nation, according to RealtyTrac . Real estate values usually fall in neighborhoods littered with vacant homes. The steps in front of the Maricopa County courthouse in downtown Phoenix are crowded most afternoons as dozens of people wearing sunglasses and ear buds plugged into their cell phones gather around auctioneers. The bidders speak in hushed voices by phone to the investors they represent — both flippers and those who plan to rent out the properties — as they work out their “number,” or maximum offer. High-Stakes Poker “It’s like a high-stakes poker game out here,” said Frank Gerola, 34, who represents buyers for PostedProperties.com , one of many companies that have sprouted up in Phoenix to serve flippers. “They want to know what you’re bidding on. You’ll have one guy bidding and another guy around him seeing if he can peek at his number,” said Gerola, who competes against representatives of companies such InvestAZHouses.com and TopPriorityInvestments.com. Some investors try to cheat. Hours before the foreclosure auction for 7848 East Pampa Avenue in Mesa, Arizona, visitors were greeted with a handwritten sign pasted to the inside of the front window: “OCCUPIED. NO TRESPASSING,” read the note on the 12-year- old beige stucco house. “Needs carpet, paint. Tile is cracked.” It also warned of missing appliances and fissures in the pool and foundation. New Paint, Carpet It was a ruse, said Rodriguez and Bogenn, who checked out the house on March 18, the day after their $181,200 offer beat out a handful of bidders. An investor probably was trying to ward off competitors, Bogenn said. The house, which was vacant for months, only needed new paint, carpet, fixtures and a pool cleaning, they said. They planned to put it on the market this week for about $230,000. Rodriguez, 31, and Bogenn, 47, didn’t see the house before making an offer. Like many investors, they subscribe to a service that checks titles and sends drivers to properties before the auction to relay photos and descriptions by mobile phone. As the median existing price of U.S. homes climbed an average of 8.1 percent a year from 2000 to 2005, amateurs by the thousands jumped into flipping. Buying and selling homes with the aim of a quick profit was such an American obsession that it spawned two cable-television series — “Flip This House” on A&E and “Flip That House” on TLC — that debuted in 2005 as the market peaked. The reality shows, now in re-runs, tracked people as they tried to flip a home. Back to Flipping “Amateur hour is over,” said Richard C. Davis, who created “Flip This House” and appeared in its first season. Davis, now chief executive officer of Charleston, South Carolina-based Trademark Properties, said he has fixed and sold 25 properties since returning to the business in October and is filming a new series about multimillion-dollar homes built during the boom that he is buying, repairing and selling for half their original price. “The professionals will make more money in a down market than they ever made during the boom,” Davis said. In job markets decimated by the housing crash, flipping is also putting carpenters, construction workers and home inspectors back to work and attracting a new generation of real estate professionals. Josip Eljuga, 25, left a $9-an-hour job as a lot attendant at a car dealership nine months ago to work as a driver, or runner, as he is sometimes called. The pay is better — about $14 per house — and the days are unpredictable. Tell-Tale Signs Sometimes occupants scream at him, other times he comforts them, he said. Most often, his knocks go unanswered, and it’s his job to find signs of occupancy — water flowing from the hose bib, a car in the garage, a container of coffee creamer left on the kitchen table. A rotting pumpkin mixed in with scattered toys in the backyard of a house on South 30th Avenue in Phoenix one recent afternoon suggested the four-year-old home had been vacant since some time after Halloween. Eljuga wants to get into the flipping business and has already discussed pooling money with friends. “It seems like there can be good money if you do it right,” he said. “Based on what I have seen, I think I have enough knowledge to do fairly well.” Brandon Hunt, 28, said he and his business partner flipped 46 homes in the Phoenix area last year and made $1 million in profits. Hunt, who became a real estate agent during the housing boom, said he doesn’t have much in common with many of the flippers who jumped in at the top of the market . For one thing, he said, he buys low. “There was no buying at the courthouse steps in 2005 and 2004, because there was no foreclosure,” Hunt said. Helping Home Values Another important difference, said 42-year-old Phoenix investor Harry D’Elia, is that flippers in 2010 are stabilizing neighborhoods. “We’re the good guys because what’s happening is that the government doesn’t have enough money to fix these homes up,” said D’Elia, who also flipped properties during the boom. The FHA has given investors such as D’Elia a new stream of potential customers with the flipping waiver. “We do believe investors will play an important role in today’s marketplace because they tend to be more liquid than first-time homebuyers,” said Bott of Housing and Urban Development. Hunt said the FHA waiver might take time to have an impact because cash buyers are easy to find. Selling to an FHA borrower requires added paperwork and two appraisals when a property is sold for more than 20 percent of the seller’s acquisition cost. International Buyers Investors expect to be busy for years to come as continued weakness in home sales fuels foreclosures, which will climb to more than 4.5 million this year from 3.96 million in 2009, according to an estimate by RealtyTrac. In February, sales of new homes in the U.S. fell 2.2 percent to a record low annual pace of 308,000, the Commerce Department reported March 24. Sales of existing homes dropped 0.6 percent last month to a 5.02 million annual level, the lowest in eight months, the National Association of Realtors said March 23. U.S. median home prices dropped 28 percent to $165,100 in February from the peak in July 2006, according to the Washington-based trade group. In Florida, which along with Arizona has the second-highest foreclosure rate in the U.S. after Nevada, international buyers are scooping up blocks of rehabbed houses, said real estate agent Brad Cozza. Foreign Connections “The investors are re-emerging,” said Cozza, who flips foreclosed homes in the Cape Coral area on the west coast of Florida to Israeli, German and Spanish investors and vacation- home buyers. “These are wealthy people who have considerable amounts of savings.” In Lee County, Florida, which includes Cape Coral, flips almost tripled to 2,617 last year. Cozza said his business got a boost after he gave a presentation to 925 Israeli investors last month in Tel Aviv. The conference was organized by America Israel Investments LLC, which buys foreclosed homes in Lee County and sells them to Israeli buyers. Edmon Mamane, the company’s owner, said he pays $48,000 to $60,000 for residences, some of which have never been lived in, and flips them for about $80,000. Israeli real estate investor Dror Shlomi, 50, bought a 2,200-square-foot duplex from America Israel Investments a few weeks ago for $79,000; the two families occupying the four-year- old property pay a combined $1,300 a month in rent. Shlomi said he’s in the process of selling his 10 investment properties in Israel and shifting his focus to Florida. “Last year, prices in Israel went up and in the states they went down, so we decided this is the right timing to try to find interesting things in the U.S.,” he said. Grind It Out Robert Fahn, 50, who along with a partner has bought and sold 10 homes in the Sacramento area since last February, said he’s pleased with his 10 percent to 15 percent profit margin. But the window for house flipping is closing as newcomers are bidding up prices, he said. “If someone is thinking about quitting their day job, they should think twice because the market is going to go away at some point and margins are getting squeezed,” said Fahn, who is investigating opportunities in Florida and Phoenix. “This is not a get-rich-quick business,” he said. “This is a grind-it-out business. But once you know how to do it, you only have to commit resources when the price is right.” To contact the reporter on this story: Prashant Gopal in New York at pgopal2@bloomberg.net .

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Li May Raise Hutchison Dividends for First Time in 10 Years on 3G Business

March 30, 2010

By Mark Lee and Chia-Peck Wong March 31 (Bloomberg) — Li Ka-shing , Hong Kong’s richest man, said Hutchison Whampoa Ltd. may raise its dividend for the first time in a decade as the global recovery busies ports from the U.K. to Korea and drives retail earnings to a record. “If this year we can meet the budget, I will consider raising dividends on Hutchison,” Li said at a briefing yesterday, after Hutchison announced 2009 results. “The expectation on 3G business would be better than last year. If 3G can meet the target, there is a chance to increase dividends.” Hutchison, with investments from drugstores in the U.K. to phone services in Vietnam, last increased its full-year dividend for 2000, to HK$1.73, the amount it has paid shareholders in every subsequent year. The company and parent Cheung Kong (Holdings) Ltd. will generate growth in 2010, Li told reporters. Li sold some of Hutchison’s most profitable businesses and used ports, property, energy and retail earnings to finance more than seven years of losses at 3 Group, the provider of 3G, or third-generation, services in seven markets in Europe and Australia. The phone unit is expected to be profitable before interest and tax this year, the company said yesterday. Li said “the future is good” for 3G. “The cost of acquiring customers has come down and they are operating their businesses more efficiently,” Gary Pinge , who rates Hutchison shares “buy” at Macquarie Group Ltd. in Hong Kong, said before the announcement. The mobile-phone operations will show an “ongoing improvement,” while the ports and energy divisions are expected to rebound, Pinge said. Slower Spending Hutchison cut spending on its wireless units and increased property sales in China as the global recession dragged down earnings from oil production and shipping. The company, with operations in 54 countries, may increase investments this year as the economic recovery revives trade and consumer spending. “The company deferred some capital spending last year, and they will put some of that back this year,” said Kalai Pillay , senior director at Fitch Ratings in Singapore. The improvement at the mobile-phone division was marginal “and not game- altering,” Pillay said. Hutchison’s net income rose to HK$14.2 billion ($1.8 billion), or HK$3.32 a share, from a restated HK$12.7 billion, or HK$2.97, a year earlier, Hutchison said in a filing to the Hong Kong stock exchange yesterday. That compares with the HK$14.6 billion median estimate of five analysts surveyed by Bloomberg News. Sales fell to HK$208.8 billion from HK$235.5 billion a year earlier, Hutchison said. Ports Earnings Hutchison’s port unit earned HK$10.4 billion before interest and tax last year, 21 percent less than a year earlier, the statement said. Sales at the division fell 16 percent to HK$33.4 billion. The company handled fewer containers in China last year as slumping economies in the U.S. and Europe dampened demand for Asian-made clothes, furniture and other consumer goods. Volume at Chinese ports jumped 28 percent in the first two months of 2010 as the economy improved and retailers rebuilt inventories. The container-port industry will improve this year after an “extra difficult” 2009, Li said yesterday. In retailing, the operator of drugstores in Asia and Europe will have a record year, he said. Hutchison’s retail earnings before interest and tax increased 30 percent to HK$5.69 billion, according to yesterday’s filing. In Hong Kong dollar terms, sales fell 2 percent to HK$116.1 billion. The company also runs supermarkets and electronics chains in Asia. Husky Energy Husky Energy Inc. , the Calgary-based oil producer partly owned by Hutchison, last month said full-year profit more than halved to C$1.42 billion ($1.39 billion) as sales declined because of the drop in selling prices. Hutchison’s profit was lifted by HK$12.5 billion in one- time gains from transactions, including the sale of an indirectly held controlling stake in Israel’s Partner Communications Ltd. in October and the merger of its mobile unit in Australia with the local subsidiary of Vodafone in June. At parent Cheung Kong, 2009 net income climbed to HK$19.9 billion, or HK$8.59 a share, from a restated HK$13 billion, or HK$5.63, in 2008, the world’s second-biggest builder by market value said in a statement yesterday. That beat the average HK$17.6 billion estimate of 10 analysts compiled by Bloomberg. Excluding 49.97-percent-held Hutchison, profit jumped to HK$12.8 billion from HK$6.69 billion. Cheung Kong Cheung Kong’s income rose as Hong Kong home prices jumped 29 percent last year. It booked an HK$3.86 billion gain in the fair value of real estate held for investment, compared with HK$134 million in 2008. Revenue from China jumped 76 percent. “People would focus on their China number because Hong Kong shouldn’t be any big surprise,” Adrian Ngan , a Hong Kong- based analyst at CCB International Securities Ltd., said yesterday after the announcement. Victor Li , deputy chairman of Cheung Kong and Li’s son, said at yesterday’s briefing that “demand is very strong” for Hong Kong property. Li Ka-shing said that investors should consider buying real estate if they have “excess funds” and aren’t borrowing too much. “The local property market is expected to remain stable and positive in the medium to longer term” amid low interest rates and the government’s pledge to increase land supply, Li said in the statement accompanying the earnings announcement. Li, dubbed “Superman” by Hong Kong’s media because of his track record for investing, was born in Chaozhou in the southern Chinese province of Guangdong. The plastics company he started in 1950 spawned an empire with investments in industries ranging from oil drilling to telecommunications. Forbes magazine listed Li as the world’s 14th-richest person this month, compared with 16th a year earlier, after his wealth increased 30 percent to $21 billion. To contact the reporters on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net ; Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net .

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Israel Central Bank Raises Key Rate to 1.5% as Inflation Expectations Gain

March 28, 2010

By Alisa Odenheimer March 28 (Bloomberg) — The Bank of Israel raised its benchmark interest rate for the fourth time since August as inflation expectations increased and the economy expanded. Governor Stanley Fischer raised the rate by a quarter point to 1.50 percent, the Jerusalem-based central bank said today. Six of 14 economists surveyed by Bloomberg had predicted the decision, while eight expected no change. Economic growth accelerated to an annualized 4.9 percent in the fourth quarter from 3.6 percent in the previous three months. The spread between 2013 shekel-denominated bonds and inflation-linked bonds with a similar maturity has widened by about 30 basis points this month, meaning that investors are expecting inflation to accelerate. “The market is signaling to Fischer: Hey, we are concerned about inflation,” Alon Katz , head of research at Maor-Luski Investment House in Tel Aviv, said prior to the announcement. “The market had anticipated that he would raise in May or in June. Raising it a month earlier is an important signal. He is saying: ‘I can see what you are afraid of and I’m not going to let it happen.’” Fischer had held the rate since the end of December after increasing it by a quarter-point three times as the economy recovered from the global crisis. Inflation expectations for the coming year have risen to 2.9 percent, close to the ceiling of the government’s target range, Katz said. For the following year, expected inflation is 3.2 percent, he said. The government target for annual inflation is 1 percent to 3 percent. Growth Forecast Bank Leumi Le-Israel Ltd., the country’s largest lender, raised its growth forecast for the year to 3.8 percent from a previous 3.5 percent on March 25. Israel’s benchmark TA-25 stock index surged 75 percent last year, led by Delek Group Ltd., a partner in a gas find at the Tamar field off Haifa’s coast last year. The index has gained about 7.5 percent since the beginning of the year. Fischer was appointed to a second term on March 17. One of his tasks in the new term will be to implement a new law governing the central bank that calls for the creation of a six- member Monetary Policy Committee. Currently, Fischer has sole responsibility for setting rates. To contact the reporter on this story: Alisa Odenheimer in Jerusalem at aodenheimer@bloomberg.net .

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Israel Central Bank Raises Key Rate to 1.5% as Inflation Expectations Gain

March 28, 2010

By Alisa Odenheimer March 28 (Bloomberg) — The Bank of Israel raised its benchmark interest rate for the fourth time since August as inflation expectations increased and the economy expanded. Governor Stanley Fischer raised the rate by a quarter point to 1.50 percent, the Jerusalem-based central bank said today. Six of 14 economists surveyed by Bloomberg had predicted the decision, while eight expected no change. Economic growth accelerated to an annualized 4.9 percent in the fourth quarter from 3.6 percent in the previous three months. The spread between 2013 shekel-denominated bonds and inflation-linked bonds with a similar maturity has widened by about 30 basis points this month, meaning that investors are expecting inflation to accelerate. “The market is signaling to Fischer: Hey, we are concerned about inflation,” Alon Katz , head of research at Maor-Luski Investment House in Tel Aviv, said prior to the announcement. “The market had anticipated that he would raise in May or in June. Raising it a month earlier is an important signal. He is saying: ‘I can see what you are afraid of and I’m not going to let it happen.’” Fischer had held the rate since the end of December after increasing it by a quarter-point three times as the economy recovered from the global crisis. Inflation expectations for the coming year have risen to 2.9 percent, close to the ceiling of the government’s target range, Katz said. For the following year, expected inflation is 3.2 percent, he said. The government target for annual inflation is 1 percent to 3 percent. Growth Forecast Bank Leumi Le-Israel Ltd., the country’s largest lender, raised its growth forecast for the year to 3.8 percent from a previous 3.5 percent on March 25. Israel’s benchmark TA-25 stock index surged 75 percent last year, led by Delek Group Ltd., a partner in a gas find at the Tamar field off Haifa’s coast last year. The index has gained about 7.5 percent since the beginning of the year. Fischer was appointed to a second term on March 17. One of his tasks in the new term will be to implement a new law governing the central bank that calls for the creation of a six- member Monetary Policy Committee. Currently, Fischer has sole responsibility for setting rates. To contact the reporter on this story: Alisa Odenheimer in Jerusalem at aodenheimer@bloomberg.net .

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Israel Central Bank Raises Key Rate to 1.5% as Inflation Expectations Gain

March 28, 2010

By Alisa Odenheimer March 28 (Bloomberg) — The Bank of Israel raised its benchmark interest rate for the fourth time since August as inflation expectations increased and the economy expanded. Governor Stanley Fischer raised the rate by a quarter point to 1.50 percent, the Jerusalem-based central bank said today. Six of 14 economists surveyed by Bloomberg had predicted the decision, while eight expected no change. Economic growth accelerated to an annualized 4.9 percent in the fourth quarter from 3.6 percent in the previous three months. The spread between 2013 shekel-denominated bonds and inflation-linked bonds with a similar maturity has widened by about 30 basis points this month, meaning that investors are expecting inflation to accelerate. “The market is signaling to Fischer: Hey, we are concerned about inflation,” Alon Katz , head of research at Maor-Luski Investment House in Tel Aviv, said prior to the announcement. “The market had anticipated that he would raise in May or in June. Raising it a month earlier is an important signal. He is saying: ‘I can see what you are afraid of and I’m not going to let it happen.’” Fischer had held the rate since the end of December after increasing it by a quarter-point three times as the economy recovered from the global crisis. Inflation expectations for the coming year have risen to 2.9 percent, close to the ceiling of the government’s target range, Katz said. For the following year, expected inflation is 3.2 percent, he said. The government target for annual inflation is 1 percent to 3 percent. Growth Forecast Bank Leumi Le-Israel Ltd., the country’s largest lender, raised its growth forecast for the year to 3.8 percent from a previous 3.5 percent on March 25. Israel’s benchmark TA-25 stock index surged 75 percent last year, led by Delek Group Ltd., a partner in a gas find at the Tamar field off Haifa’s coast last year. The index has gained about 7.5 percent since the beginning of the year. Fischer was appointed to a second term on March 17. One of his tasks in the new term will be to implement a new law governing the central bank that calls for the creation of a six- member Monetary Policy Committee. Currently, Fischer has sole responsibility for setting rates. To contact the reporter on this story: Alisa Odenheimer in Jerusalem at aodenheimer@bloomberg.net .

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Blankfein’s Foundation Pumps $11 Million Into Harvard, Robin Hood, Others

March 25, 2010

By Patrick Cole March 25 (Bloomberg) — From the roughly $240 million Lloyd Blankfein received in salary, bonuses and stock awards at Goldman Sachs Group Inc . during the past decade, about $11.3 million went to Harvard University, the Robin Hood Foundation , the UJA-Federation of New York and several dozen other philanthropic targets. Donations by the Lloyd & Laura Blankfein Foundation, a nonprofit run by the Goldman chief executive officer and his wife, Laura Jacobs Blankfein, cover the period 2000 to January 2009 and average about $1.3 million a year, according to the organization’s tax filings. During that period, Blankfein’s compensation included an annual salary of $600,000 and $125.6 million in cash bonuses. As of March 8, he owned 3.37 million shares of Goldman stock worth $587.8 million at yesterday’s closing. Blankfein declined multiple requests for an interview about his philanthropy through Goldman spokesman Joseph Snodgrass . “Philanthropists are motivated to create a family foundation because it allows you to be fairly strategic and focused when making gifts,” said Patrick Rooney, executive director of the Center on Philanthropy at Indiana University , in a phone interview. “It also gives you a way to say ‘No, this area isn’t our focus.’” After Blankfein and Goldman Sachs were criticized for setting aside a near-record $16.7 billion to pay employees in the first nine months of the year, the firm subtracted $519 million in the fourth quarter and used $500 million to fund a charitable contribution. In 2007, he received a cash bonus, stock and options valued at $69.3 million on top of his annual salary, and he got no bonus in 2008. Robin Hood Robin Hood, a poverty-fighting organization led by David Saltzman , received gifts from Blankfein ranging from $23,350 in 2002 to two donations totaling $850,000 in 2006, the year Blankfein became Goldman’s CEO. He is also a Robin Hood trustee. Harvard, where Blankfein attended college and law school , has been a regular recipient of large and small gifts, including $1 million in 2000 and $1.7 million in 2006 for “general purposes.” He also gave $25,000 to the university’s parents fund in both 2007 and 2008 and $10,000 to the law school’s fund three years ago. Manhattan’s Ethical Culture Fieldston School , from which Laura Blankfein graduated in 1971, received $435,000 in 2008 and $200,000 in 2006. The Blankfeins’ sons, Alex and Jonathan, both attended Ethical Culture and Harvard. Medical organizations are well represented on the Blankfeins’ gift lists with the Weill Cornell Medical Center getting $100,000 in 2007 and 2008. The foundation gave $25,000 to the New York University Child Study Center in 2007 and $1,000 to both the Israel Cancer Research Fund and the Alliance for Lupus Research . Roundabout The Blankfeins handed out several dozen small and medium- size gifts to a range of organizations, including the Roundabout Theater Co . ($10,000), the Harlem School of the Arts ($500), the American Stroke Association ($262), the West Side Little League ($800) and the Bridgehampton, New York, fire department ($1,000). Usually, high-net-worth individuals and top Wall Street executives launch a foundation with a portion of their wealth and eventually “populate” it with their children or grandchildren, Rooney said. “Two of my children are on my foundation board, and I will pass on to them sufficient funds so that they can have the fun and experience of giving away money as I have been fortunate enough to do,” John Whitehead , Goldman’s co-chairman in the 1980s and a philanthropist, said in a phone interview. Other Sources The Blankfein foundation’s gift lists probably don’t reflect all the charitable giving done by the couple, said Melissa Berman , chief executive officer of Rockefeller Philanthropy Advisors. Many philanthropists also use donor- advised funds and write gifts from personal checking or brokerage accounts, she said. Peter Firestein , president of Global Strategic Communications in New York, which advises companies on image issues, said the Blankfein foundation’s giving would be “more impressive” if it had taken the “initiative to accomplish something” significant. He notes that junk-bond pioneer Michael Milken ’s foundation has raised more than $200 million for cancer research and funds several education and scholarship programs. “ Sandy Weill has given $100 million gifts to Weill Cornell Medical College, and he’s given credit for saving Carnegie Hall,” Firestein said about the Citigroup Inc. chairman emeritus. “Milken and Weill not only wrote checks but they conceived and advanced specific initiatives with their energy and influence. So perhaps something like this lies in Lloyd Blankfein’s future.” To contact the reporters on this story: Patrick Cole in New York at pcole3@bloomberg.net .

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Netanyahu Says Jerusalem Construction Rift Could Delay Peace Talks by Year

March 23, 2010

By Gwen Ackerman March 23 (Bloomberg) — U.S. acceptance of Palestinian demands that Israel halt construction in east Jerusalem could put Middle East peace talks on hold for a year, Israeli Prime Minister Benjamin Netanyahu said today. “For 42 years we have been building in the Jewish neighborhoods of Jerusalem. No one argued about it,” Netanyahu said in a meeting with U.S. House Speaker Nancy Pelosi , according to his spokesman, Nir Hefez. “This was never raised as a point of contention between us and the U.S.,” Netanyahu said. “The Palestinians are now raising a new demand. If this demand is adopted we are liable to lose another year.” Netanyahu met with Pelosi, a California Democrat, before planned talks today with President Barack Obama that come as the two countries seek to smooth over a dispute about Israel’s approval of plans to build new apartments in east Jerusalem. The housing announcement came during a March 9 visit by U.S. Vice President Joe Biden in what Israeli officials, including the country’s ambassador to Washington, have described as a surprise action by bureaucrats. Israel has never fulfilled its commitment under a 2003 U.S. backed peace “road map” to freeze all settlement activity. Netanyahu yesterday said Israel doesn’t consider Jerusalem to be a settlement. Still Building “The Jewish people were building Jerusalem 3,000 years ago, and the Jewish people are building Jerusalem today,” Netanyahu said in a speech. Palestinians have linked participation in indirect peace talks to the cancellation of the plans. “Netanyahu is challenging the international community,” chief Palestinian negotiator Saeb Erakat said in an e-mailed statement. “The policies of this Israeli government and Netanyahu’s provocative statements about intending to continue settlement activities are like pouring oil on fire.” Biden hosted Netanyahu for dinner yesterday in which a “productive, candid discussion on the full range of issues in the bilateral relationship” was held, the White House said in an e-mailed statement. In the meeting with Netanyahu scheduled for later today, Obama will seek “to create an atmosphere of trust and open dialogue,” White House spokesman Robert Gibbs said. Already Inhabited Netanyahu explained to Pelosi that the construction under question would be in an already inhabited Jewish neighborhood of Jerusalem. “The Palestinians don’t really think Israel will ever dismantle Pisgat Zeev or French Hill. We can’t get caught up in this unreasonable, illogical demand,” he said, mentioning two established neighborhoods built on land Israel captured from Jordan in the 1967 Middle East war and then annexed in a move never internationally recognized. Palestinians seek the area as the capital of their prospective state. U.S. Secretary of State Hillary Clinton told the pro-Israel American Israel Public Affairs Committee yesterday that Israeli settlement construction in areas sought by Palestinians “exposes daylight between Israel and the United States that others in the region could hope to exploit.” Clinton said the building “undermines America’s unique ability to play a role” in peace efforts. ‘Proximity’ Talks Israel has agreed to the U.S.-mediated “proximity” talks as a way to move to direct negotiations that Netanyahu has said are the only way to reach a peace agreement. The U.S. has called on Israel to halt all construction in the West Bank and east Jerusalem. Israel has imposed a partial freeze on building in the West Bank while saying construction in Jerusalem will continue. “There are fundamental problems that will continue to resurface,” Aaron David Miller , a public policy fellow at the Woodrow Wilson International Center for Scholars in Washington, said in a phone interview. “The real question is if the president and prime minister can work out an approach that will minimize potential difficulties, specifically on negotiations,” he said. “If they can’t do that, then we are headed to more soap operas.” To contact the reporter on this story: Gwen Ackerman in Washington at gackerman@bloomberg.net

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Clinton Awaits Israeli Response on Commitment to U.S.-Brokered Peace Talks

March 16, 2010

By Indira A.R. Lakshmanan March 17 (Bloomberg) — Secretary of State Hillary Clinton said the U.S. is seeking assurances from Israel and the Palestinian Authority of each side’s commitment to U.S.-brokered indirect peace talks following a flap over Israeli settlements. A scheduled trip to Israel and the Palestinian territories by U.S. special envoy George Mitchell was postponed in part because the Obama administration is awaiting a response from Israeli Prime Minister Benjamin Netanyahu to requests Clinton made during a phone call to him on March 12, State Department spokesman Phillip J. Crowley said yesterday. “We are engaged in a very active consultation with the Israelis over steps that we think would demonstrate the requisite commitment to this process,” Clinton told reporters in Washington yesterday. Mitchell was planning to set the so-called proximity talks in motion, adding momentum to President Barack Obama ’s efforts to settle Israeli-Palestinian differences and move toward creation of a Palestinian state. The Israeli government stood firm yesterday on its policy of building Jewish homes in all parts of Jerusalem in the face of U.S. objections and outbreaks of violence in the capital’s Arab neighborhoods. Israeli Foreign Minister Avigdor Lieberman said any ban on Jewish building in east Jerusalem is unacceptable. “There can’t be a situation where only Jews are prohibited from building in Jerusalem, while Arabs are allowed to both build and buy,” Lieberman said in an interview with Israel Radio. Protesters Dispersed Police used stun grenades to disperse Palestinian protesters in two areas of east Jerusalem and arrested 60 of the demonstrators yesterday. Fifteen policemen were injured in the disturbances. Clinton said she had expressed to Netanyahu U.S. “dismay and disappointment” over Israel’s announcement during a visit last week by Vice President Joe Biden of plans to construct 1,600 apartments for Jewish residents in east Jerusalem. Palestinians want east Jerusalem as the site of a future capital of an independent state. The U.S. asked Palestinian leaders this week to refrain from any incitement that could stoke tension in the region. Clinton dismissed the suggestion that U.S.-Israeli relations were experiencing their worst strain in three decades, saying, “I don’t buy that,” and stressing Washington’s “close, unshakeable bond” with the Israeli people. Speech Planned Clinton plans to speak next week at the Washington policy conference of the American Israel Public Affairs Committee, which has called on the administration to “defuse the tension” with Israel. Michael Oren , the Israeli ambassador to the U.S., said in a statement late yesterday that “recent events do not — I repeat — do not represent the lowest point in relations between” the two countries. He added: “Though we differ on certain issues, our discussions are being conducted in an atmosphere of cooperation as befitting long-standing relations between allies. I am confident that we will overcome these differences shortly.” Clinton’s Call In the 43-minute call on March 12, Clinton told Netanyahu that the U.S. wants three things from Israel to prove its commitment to Mideast peace: a freeze on construction of the new housing units announced for east Jerusalem; a gesture to bolster the Palestinian Authority, such as the restoration of economic exchanges, and a pledge that talks would tackle substantive issues, such as the final status of Jerusalem and the return of refugees, a U.S. official familiar with the talks said. The official, who was privy to the talks, spoke on condition of anonymity because the conversation was private. A response from Netanyahu is possible as early as today, the official said. As a gesture to kick-start stalled peace talks, Netanyahu had pledged a 10-month settlement freeze, with certain exclusions, on territories annexed by Israel since 1967. Palestinian officials for the past year had opposed any return to negotiations without a settlement freeze first. Arab states earlier this month endorsed U.S. plans for indirect talks, in part because of Israel’s conditional moratorium. The State Department last week used some of its strongest language toward Israel since Obama took office, going so far as to question Israel’s attitude toward its friendship with the U.S. Crowley said Clinton had told Netanyahu that he would have to “demonstrate not just through words, but through specific actions, that they are committed to this relationship and to the peace process.” To contact the reporter on this story: Indira Lakshmanan in Washington at ilakshmanan@bloomberg.net

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Biden Visits Middle East as Israel, Palestinians Agree to Indirect Talks

March 8, 2010

By Gwen Ackerman and Jonathan Ferziger March 8 (Bloomberg) — Vice President Joe Biden began a trip to the Middle East as the U.S. announced that Israel and the Palestinians accepted a plan to start indirect talks that analysts say are unlikely to lead to a breakthrough. Biden landed at Ben-Gurion International Airport as U.S envoy George Mitchell clinched understandings with Israeli Prime Minister Benjamin Netanyahu and Palestinian Authority President Mahmoud Abbas to participate in discussions aimed at reviving direct peace talks. “We’ve begun to discuss the structure and scope of these talks and I will return to the region next week to continue our discussions,” Mitchell said in a statement released in Washington today. Israeli-Palestinian peace negotiations have been frozen since the end of 2008, when Israel launched an offensive in the Gaza Strip that it said was to stop Hamas from firing rockets. Last week, Arab states endorsed a U.S. bid to break the ice by mediating a series of indirect talks that are designed to pave the way for direct negotiations. Hours before Biden’s arrival, Israel disclosed that it had approved the construction of 112 new homes in a West Bank settlement, drawing condemnation from the Palestinian Authority, which called the action “provocative.” Mitchell asked “the parties, and all concerned, to refrain from any statements or actions which may inflame tensions or prejudice the outcome of these talks.” ‘Dire’ Situation U.S.-led efforts to revive talks have foundered on the issue of West Bank settlement building, with Netanyahu announcing a partial halt and Abbas demanding a freeze of all construction. The fact that it has taken more than a year for Mitchell to arrange indirect talks indicates how “dire” the situation has become between the two sides, said Jonathan Spyer , a political scientist at the Interdisciplinary Center Herzliya, near Tel Aviv. The mediation effort is a “pleasant illusion” to avoid confronting the fact that the “positions are irreconcilable,” Spyer said. “It’s kicking the ball down the road for a few more years when someone else will have to deal with the problem.” President Barack Obama raised Arab hopes that the U.S. would apply pressure to Israel with a June 4 speech in Cairo in which he called for a total settlement freeze. Arab leaders expressed disappointment five months later when Secretary of State Hillary Clinton acknowledged that a complete construction halt is unrealistic and praised Netanyahu’s proposal for a limited 10-month freeze as “unprecedented.” ‘Proximity Talks’ The format of indirect negotiations enables Palestinians to engage with Israel even though Abbas made a public commitment not to hold talks until all settlement construction is stopped. The foreign ministers of Arab states agreed in Cairo last week to give the “proximity talks” four months and call for an emergency United Nations Security Council meeting if they fail. “The Americans, the Israelis and the Palestinians are afraid that a continuation of the stalemate might lead to a new round of violence in the near future,” said Mkhaimar Abusada, a political scientist at Gaza Strip’s Al-Azhar University. The indirect talks are a way “to keep things under control for the foreseeable future.” He said there was “no hope whatsoever that these proximity talks will be able to bridge differences or reach conclusive results.” Israel said it had approved construction of 112 new homes at the West Bank settlement of Beitar Illit. Defense Ministry spokesman Shlomo Dror said in a telephone interview that the building didn’t violate Netanyahu’s temporary construction freeze because “this is part of a project that had previously received approval.” Security Palestinian government spokesman Ghassan Khatib said the announcement of new settlement construction is “like putting a stick in the wheels of reviving the stalled peace process” and that “the Palestinian Authority considers the Israeli decision provocative.” “The diplomatic process is not a game, it’s the real thing, and it’s rooted first of all in security,” Netanyahu said in remarks broadcast on Army Radio. Abbas is willing to negotiate a West Bank land swap with Israel to set the borders of an independent state, chief Palestinian negotiator Saeb Erakat said today. In past negotiations, Israel proposed keeping areas of the West Bank close to the 1967 borders where there is a large concentration of settlements, and in exchange giving the Palestinians land inside Israel. Biden will also visit Jordan during his trip this week to the region, the White House said yesterday. To contact the reporters on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net Jonathan Ferziger in Jerusalem at jferziger@bloomberg.net

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Europe Presses Israel to Halt Settlement Construction as Ashton Visits

March 6, 2010

By James G. Neuger March 6 (Bloomberg) — The European Union pressed Israel to halt settlement construction as planned indirect talks with the Palestinians gave a new flicker of hope to the Middle East peace process. With U.S.-mediated talks slated to start in coming days, EU foreign policy chief Catherine Ashton said she will travel to the region to keep the pressure on both sides. Europe’s priority is “supporting the Palestinian Authority particularly in what I would describe as state building,” Ashton told reporters today after a meeting of EU foreign ministers in Cordoba, Spain. Peace talks ground to a halt after Israel’s military offensive in the Gaza Strip in late 2008. While Israeli Prime Minister Benjamin Netanyahu offered to partially freeze the West Bank settlements, Palestinian Authority President Mahmoud Abbas said only a full freeze would lead him back to the negotiating table. “This continuation of the settlements is really something that stands in the way,” Luxembourg Foreign Minister Jean Asselborn said. “This provocation has to stop.” Under the “proximity talks” at as yet undisclosed locations, U.S. envoy George Mitchell will shuttle between meetings with the Israeli and Palestinian sides in order to reopen communications channels. Arab states on March 3 endorsed that formula, which allows Abbas to sidestep a vow to boycott negotiations as long as Israeli construction on the West Bank continues. ‘Two to Tango’ In the absence of progress in four months, the Arab League ministers said they would make a new appeal to the United Nations Security Council. Israeli police clashed with Palestinians at a Jerusalem holy site yesterday after officers said stones were hurled at Jewish worshippers in the area. Injuries were reported on both sides. “It takes two to tango,” Finnish Foreign Minister Alexander Stubb said. “If there is no willingness for peace or a settlement on the Israeli side or the Palestinian side, we might as well be here in 10 years talking about the same stuff.” Ashton said she has asked Israel to make it possible for her to visit Gaza, home to 1.4 million Palestinians. Gaza is ruled by the Islamic Hamas movement and is under an Israeli economic blockade. The trip starting March 14 marks Ashton’s highest-profile diplomatic venture since taking on the EU post in November. National ministers in Cordoba defended her against criticisms that that she hasn’t been active enough. “I’m not here to raise questions about Lady Ashton,” German Foreign Minister Guido Westerwelle said. “Quite the contrary: I want her to succeed.” Discussions also started over the shape of a European foreign service headed by Ashton, bringing together as many as 7,000 EU and national officials. The EU will start setting up the service later this year. To contact the reporter on this story: James G. Neuger in Cordoba, Spain at jneuger@bloomberg.net

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Russell Simmons: The Secret Relationship Between Blacks and Jews

March 5, 2010

There is no question about the well-documented history where the Black and Jews have stood together in their fight for civil rights, equality and political power. But not so much is said about the creative alliances in business where Blacks and Jews are and have been forging new businesses and ideas that have helped enable Blacks and Jews to enter the mainstream in American business. These are the partnerships that have and will create goodwill and change the future. There are many examples of how Blacks and Jews have come together to fight against hatred and bigotry. In fact, as my friend Rabbi Marc Schneier at The Foundation for Ethnic Understanding , often states (and he even wrote a book about it called Shared Dreams ), Dr. King was an ardent supporter of Israel and the Jewish people, including taking part in efforts to ease discrimination against Jews in the Soviet Union and the safety and security of the State of Israel. Dr. King also spoke out strongly against anti-Semitism in the United States. We all know that no segment of the American population provided as much and as consistent support to Dr. King and to African Americans as did the Jewish community. But, like any relationship, the bond between Jews and African-Americans has experienced its ups and its downs. However, despite claims to the contrary, the relationship between Blacks and Jews today remains strong. Maybe it’s because the Jewish community has suffered from tremendous anti-Semitism throughout history and as a result of their plight, Jews have been able to better sympathize with the struggles facing Blacks. Or maybe it is because the Jewish community knows that if it happens to the Black community it can also happen to them. So for generations, Jews and Blacks have marched together in the streets of Birmingham and Washington, and shared the stage at venues in Harlem and elsewhere. Our two communities are not afraid to stand side by side, continually defying those who would prefer to see us behind solitary bars and forgotten, not in front of cheering crowds. Rabbi Schneier and I travel the country sharing these stories, discussing our tale with anyone who will listen – Blacks, Jews, or otherwise. This is true in synagogues and churches as well as college universities like Queens College – which Rabbi Schneier and I will address next week. Despite the years of anti-Semitism, the Jewish community has not let the hatred of others hinder their ambitions or drive for success. The Jews have been resourceful and have stood together and time and time again prospered in business, medicine, law and entertainment. This is a great example of what a tight knit family and education can accomplish even against a world filled with shut doors and hate. While I have many first hand experiences in records, jewelry, fashion, internet, TV, film, financial services, and much more, I have also noticed Jay Z, Puffy, and most of hip-hop out-branding the record business that is dying its own death, and building partnerships in areas previously reserved for white men. Both Jay Z and Puffy are truly creative entrepreneurs, and both have learned a lot of these skills from their Jewish partners and suppliers. Entrepreneurs are usually raised in cultures that feed that free spirit that allows them to dream up new ideas and break the mold. Without documentation I can still safely state that in most hoods, and certainly in mine, going to school to “get a good job” was the goal. But I built many businesses with Jews who didn’t let school dim down their dreams and they were comfortable with the idea to let go of the idea of job security and fly. This I learned from Orthodox Jews, Syrian Jews, Reform Jews and other sects of Judaism. All of these communities have welcomed me. Since the days when the white gang “The Green Ways” in Queens chased me into the white housing development where the kids and mothers accepted me, and I learned the difference between the “different whites in Queens,” the Jewish community has proven to be a safe haven and a place to empower myself and other Blacks. From our president to everyone in the hip-hop community, we have a strong history and partnership with the Jewish community and today I thought I would restate this fact in case there is any doubt about who else has struggled like Blacks and who else has stood by Blacks in our most difficult times. We know that we still have work to do, however, each individual must exude the kind of tolerance and love that we would want to receive ourselves. We must learn how to love everyone, not just within our own community, as the world is too small, and our potential is too great.

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Drought Threatens Syria’s Economy as 300,000 Families Flee Parched Farms

March 1, 2010

By Daniel Williams March 2 (Bloomberg) — A few miles beyond an irrigated golf course on the outskirts of Damascus, scores of refugees fleeing drought in Syria’s northeastern breadbasket have settled into tents on a rocky field. “Our wells are dry and the rains don’t come,” said Ahmed Abu Hamed Mohieddin, a wheat farmer from the town of Qamishli in the Fertile Crescent, a rich agricultural area stretching from Iraq to Israel. “We cannot depend on God’s will for our crops. We come to the city, where the money is.” He and three sons work as porters in the capital’s vegetable markets. They are among about 300,000 families driven to Damascus, Aleppo and other cities in one of the “largest internal displacements in the Middle East in recent years,” according to a Feb. 17 report by the United Nations Office for the Coordination of Humanitarian Affairs. The water shortage is undermining efforts to maintain economic growth in a country where agriculture until recently accounted for about 25 percent of gross domestic product. The drought is also a potential source of tension as Syria seeks to increase its political influence in the region, where it competes for shared river resources with Turkey, Iraq and Israel. “It’s a problem for the government,” said Jihad Yazigi, editor-in-chief in Damascus of The Syria Report , an online business journal based in Paris. “They don’t like the image of Syria as a drought-ridden, Middle Eastern Ethiopia. Also, it’s not just a lack of water, it’s bad water management by the government itself.” Modernization ‘Neglected’ Much of Syria’s farmland is irrigated by flooding, which wastes water, instead of through pipes and tubes, Yazigi said. “Modernization of agriculture has been neglected.” Rainfall has averaged between 45 percent and 66 percent less than normal in three eastern provinces during the past two years, according to a February UN report . The country uses more water than it receives from rivers, and wells dug to make up the shortfall are depleting aquifers, Theib Oweis, a senior researcher at the Aleppo-based International Center for Agricultural Research in the Dry Areas , said in a telephone interview. Syria’s economy grew about 4 percent last year, a decline of 1 percentage point from 2008, the International Monetary Fund said in a Dec. 21 report . The harvest of wheat, Syria’s biggest crop, fell to about 2 million metric tons, half the usual amount, according to the U.S. Department of Agriculture . Net Importer “For the first time in two decades, Syria has moved from being a net exporter of wheat to a net importer,” said a February 2010 report by the U.S. State Department , which added that agriculture accounted for about 17 percent of 2008 GDP. The country buys wheat mainly from Mediterranean and Black Sea countries, including France, Ukraine and Russia, according to Syria’s official government news agency. Rain and snow this winter have raised hope for a revived harvest, although one isn’t assured, Abdulla Bin Yehia, a UN Food and Agriculture Organization representative in Damascus, said in the Feb. 17 UN report. “If there is no more rain in the drought-affected areas within the next six to seven weeks, then we may not have any crop,” he said. Frost could destroy produce and devastate farmers “for another year,” he added. The water shortage has contributed in the past to conflict with Israel over the Golan Heights , which the Israelis conquered in the 1967 Middle East War and Syria wants back. The area contains watersheds that flow into the Sea of Galilee, a major source of Israel’s water, and control of these resources has been a sticking point when the countries have met in negotiations. Water Policies Repeated requests to discuss the drought and water policies went unanswered by the government of President Bashar al-Assad , 44, who has ruled Syria for a decade. The lack of water has caused more than 800,000 people in eastern Syria to lose “almost all of their livelihoods and face extreme hardship,” according to an Aug. 11 report by the UN humanitarian office. About 80 percent of the hardest hit “live on a diet consisting of bread and sugared tea,” the report said. Mohieddin, 47, said he left Qamishli when his well ran dry and he couldn’t afford a new pump. He sold a flock of sheep because grazing land had withered and he didn’t have commercial feed. He came to Damascus last May and lives among the dusty lanes separating do-it-yourself tents of plastic and cotton sheets. “I’m thinking maybe we can build a little house here,” Mohieddin said. “We can’t go back to Qamishli. We prayed for rain too long.” Limited Help Complicating life for the refugees is limited humanitarian help. The World Food Programmme in Rome appealed last August for $23 million in aid. It received only about $6 million, the organization’s country director, Mohannad Hadi, told Syria Today magazine. The winter rain “means farmers in the northeast may have crops after the harvest,” he said. “But it won’t put food on the table for them today.” Or fill their tea cups. Mohieddin trudges 200 yards into Khirbet al-Waled village to get drinking water from a trickling outdoor faucet. “I’m used to this,” he said. “Water is as hard to get for us as gold.” To contact the reporter on this story: Daniel Williams in Damascus at dwilliams41@bloomberg.net .

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Gov. Jennifer M. Granholm: A Clean Energy Triple Play

February 25, 2010

Last May, I first posted here about how Michigan would lead the green industrial revolution . Some folks scoffed at that idea. They said I was too optimistic. They said Michigan would never lead in a green economy. We’re working to prove them wrong. Today, I was in Midland, Michigan, as the Dow Chemical Company announced over $1 billion in clean-energy expansions – which, combined with nine other projects announced today, will create over 17,000 new jobs . In three separate ventures, Dow will help create the future of wind, solar, and advanced-battery technology in Michigan’s Great Lakes Bay Region – a triple play for our nation’s clean-energy future. First, Dow announced it is moving forward on a truly game-changing product: It will build a $600 million full-scale production facility for its DOW™ POWERHOUSE™ Solar Shingle in Midland. These shingles have the potential to transform the way consumers get power by turning a typical home roof into a true powerhouse in every sense of the word. What makes the product revolutionary is its easy installation – no different from an ordinary shingle. That’s why it was one of TIME magazine’s “50 Best Inventions of 2009″ . It’s a win for Michigan, for consumers, and ultimately, for our planet. Dow is also a key player in Michigan’s bid to be the advanced-battery capital of the world. Its Dow Kokam joint venture is investing $342 million to build a large-scale manufacturing site to help power the hybrid and electric vehicles of the future. Since we passed the first-in-the-nation advanced-battery credits, Michigan has seen more advanced-battery activity than any other state, meaning up to 40,000 great new jobs by 2020. Last, but certainly not least, Dow has been designated a Center of Energy Excellence, a program we instituted in 2008 to help make Michigan the North American center of the clean energy industry. As Michigan’s seventh Center of Energy Excellence, Dow will partner with the Oak Ridge National Laboratory to help tackle a major challenge for the wind-energy sector: making strong, light carbon fiber materials available for applications like wind turbine blades. This is a great opportunity for Dow to find a solution that can be used throughout the wind-energy industry. The DOW™ POWERHOUSE™ announcement is the latest in a series of solar wins for Michigan . Hemlock Semiconductor, the world’s leading producer of polycrystalline silicon (the critical component of solar panels), has invested $2.5 billion in the Great Lakes Bay Region over the years , spurring other development. Also headquartered in Midland is the world’s leader in silicon product research, Dow Corning, where crucial research into the solar products of the future is conducted. Other companies are following Dow Corning and Hemlock Semiconductor’s lead. In Midland, Evergreen Solar opened a new solar plant last year, and is ramping up production of its new “string ribbon solar wafer” technology. Last October, Suniva announced it would invest $250 million in a new solar manufacturing facility in Saginaw County . And just in December, GlobalWatt decided to locate its newest solar plant in Saginaw — choosing Michigan over a competing site in Texas, largely because so many solar businesses are already in the area. But, that’s not all. Since targeting clean energy as a major sector to help diversify and grow Michigan’s economy in 2006, we’ve made great strides. In fact, just since I posted here last May, we’ve made progress toward turning the green industrial revolution into a reality in Michigan: • In June, General Electric announced its new advanced technology and training center outside Detroit , where new renewable-energy products will be researched and developed… meaning thousands of great, green jobs for Michigan. • In July, I issued an executive directive to reduce Michigan’s greenhouse gas emissions by 20 percent by 2020 and 80 percent by 2050 , because going green isn’t just good for the environment – it’s good business. • In August, Vice President Biden announced over $1.35 billion in Department of Energy grants funded by the Recovery Act for Michigan advanced-battery manufacturers – the largest share of any state in the nation. • In September, I traveled to Japan and met with key executives considering clean-energy projects in Michigan. My previous investment missions to Austria, Belgium, Germany, Israel, Japan, Jordan and Sweden have resulted in more than 10,800 jobs created and retained. • In October, Michigan State University restructured its MSU Extension, maintaining its traditional focus on agriculture while expanding its role in renewable-energy projects. After all, now is the time to “Go Green!” • In November, Michigan was proud to host the American Wind Energy Association’s Small and Community Wind Conference and Exhibition in Detroit , with over 112 exhibitors from around the world. • In December, General Motors announced it would invest $336 million in its Detroit Hamtramck Assembly plant to begin building the Chevy Volt later this year. GM has invested $700 million in the eight facilities across the state involved in Volt production. • Last month, as the world’s gaze shifted to the future of the American auto industry at the North American International Auto Show in Detroit, Ford announced an investment of $450 million in expanding electric vehicle initiatives in Michigan … including moving battery assembly work from Mexico to Michigan. We’re becoming the hub for advanced-battery technology. Our solar-energy industry is rapidly progressing. This year, we will aggressively pursue companies in the wind-energy sector to give Michigan the competitive advantage that is so successful for our battery and solar sectors. We will continue to focus on leading the way to a clean-energy future here in Michigan. We are building the new Michigan economy, piece-by-piece, town-by-town, in communities across the state. Just click here to see some more examples. And so, as I wrote last May: “Watch – Michigan will lead a green industrial revolution. I invite you to watch us, encourage us, and join us. And the doubters? I encourage them to just try and keep up.”

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Live Terrorists Are Worth More Than Dead Ones: Celestine Bohlen

February 22, 2010

Commentary by Celestine Bohlen Feb. 23 (Bloomberg) — The good news last week was that the Americans, with the help of the Pakistanis, didn’t kill a top Taliban commander. They captured him instead. Alive, Mullah Abdul Ghani Baradar might reveal some valuable information. Dead, he would be just one of some 20 al- Qaeda or Taliban fighters who have been picked off by Predator drones armed with Hellfire missiles launched by the U.S. military or the Central Intelligence Agency. The Taliban isn’t listed as a terrorist group yet, though it has harbored al-Qaeda members for years. The Obama administration has stepped up these kinds of remote-control bombardments, launching at least 64 drone strikes within Pakistan in its first 13 months; in its last three years, the Bush administration unleashed 41, according to an analysis by the New America Foundation. The U.S. doesn’t like to think of itself as being in the assassination business, which is why the preferred term is “targeted killings.” Either way, this growing practice involves large legal and moral questions that should loom large, but don’t — not compared with the outcry over coercive interrogation or extraordinary renditions. How many terrorists have been killed? How many innocent civilians? The CIA program is shrouded in secrecy, and therefore virtually unaccountable. Information about the strikes is often second-hand; mistakes aren’t always reported. One study , published last May, cited Pakistani sources who claim more than 700 civilians have been killed by drones, or 50 civilians for every terrorist — a shocking ratio that explains why public opinion in Pakistan is so outraged. Death-by-Drone Yet, targeted killings have barely penetrated U.S. consciousness, let alone its conscience. You didn’t hear human- rights groups or congressmen raise their voices over last month’s death-by-drone of Hakimullah Mehsud, a 28-year-old Taliban leader from Pakistan’s province of Waziristan accused of orchestrating the Dec. 30 suicide attack that killed seven CIA operatives. There are reasons to support targeted killings, up to a point. It’s sometimes the only viable way to nab top terrorists, known killers like Mehsud, particularly those who have found refuge in chaotic regions such as Yemen, Somalia or Waziristan, where local governments are powerless to carry out arrests. That said, it is still a second-best policy. Dead men don’t talk; they make good martyrs; they are easily replaceable in decentralized organizations like al-Qaeda or the Taliban — just a few reasons why capturing enemies such as Baradar is always better than killing them. 1976 Ban The U.S. still has a ban on political assassinations, adopted in 1976 after the CIA’s botched attempts at political murder. That ban has been eroded by the war on terrorism, but there’s no question that the quickening shift to targeted killings makes it hard for the U.S. government to take the high ground when other countries — say, Russia or Israel — send hit squads after their political enemies. While Americans may know nothing about the innocent civilians who have died in drone attacks in remote Pakistani villages, the families, neighbors and countrymen of the victims have no doubt about who was behind the unmanned killers. In the long run, their anger is more likely to be a boon for the terrorists, than any help to U.S. counterterrorism efforts. Hellfire Missiles Robotics already changed the way we fight wars, just as gunpowder, fighter bombers and nuclear weapons did in the past. This time, the change is set to fast forward. When the U.S. invaded Iraq in 2003, it had only a handful of unmanned systems in the air, none of them armed. Today, the U.S. has more than 7,000 such systems, ranging from 48-foot-long Predators packed with Hellfire missiles to micro-aerial vehicles that fit in a soldier’s backpack. According to P.W. Singer, author of “Wired for War: The Robotics Revolution and Conflict in the 21st Century,” robotics is one of the fastest-growing sectors in the aerospace industry, now in development in 44 countries. Innovations like the Reaper, a smarter more heavily armed version of the Predator, have already made our old definitions of war outdated. “We have the equivalent of a war being conducted in Pakistan, and yet no one views it as a war,” Singer said. “This technology can be very seductive, because it is seen as ‘costless,’ but there are long-term costs, and no one is weighing them.” In a 2006 study of Israel’s history of aggressively pursuing and killing its enemies, Dan Byman , director of Georgetown University’s Center for Peace and Security Studies, found that the Israelis, who faced a constant threat of terrorism, decided that the benefits of their policy outweighed the costs, which included heavy international condemnation. His advice then was that it would be “a mistake for the United States to rush too far down Israel’s path” without careful scrutiny, and public debate. Since then, the U.S. has stepped up its “targeted killings” but so fаr, no one has opened the debate. ( Celestine Bohlen is a Bloomberg News columnist. The opinions expressed are her own.) Click on “Send Comment” in the sidebar display to send a letter to the editor. To contact the writer of this column: Celestine Bohlen in Paris at cbohlen1@bloomberg.net

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Clinton Pushes Hard Line Against Iran, Says Evidence Grows of Nuclear Plan

February 14, 2010

By Indira A.R. Lakshmanan      Feb. 15 (Bloomberg) — U.S. Secretary of State Hillary Clinton , shoring up support in the Middle East for a hard line against Iran, said “evidence is accumulating” of that nation’s intention to produce nuclear weapons. The world has “little choice but to impose greater costs” on Iran to force it to rein in its nuclear program, Clinton said last night in remarks to the U.S.-Islamic World Forum in Doha, Qatar. She said the U.S. is working with allies “to prepare and implement new measures to convince Iran” to reconsider. Clinton is visiting Qatar and Saudi Arabia to build support for pressuring Iran and for urging Palestinians to return to peace talks with Israel. Clinton also used her speech to address concerns in the region that the U.S. has not done enough to make good on President Barack Obama ’s promise of improved relations with the Muslim world. Qatari Prime Minister Sheikh Hamad Bin Jasim Bin Jaber Al- Thani , speaking in a question-and-answer session following Clinton’s speech, said Iran has told its neighbors its nuclear program is for peaceful purposes. Iran has said its intention is to provide material for a medical-research reactor. The Qatari prime minister acknowledged that if fears over Iran’s intentions spur “a nuclear race in the region, it will be an unhealthy race for all.” He urged “direct dialogue between Iran and the United States” to resolve the impasse. Clinton replied that Obama made numerous overtures last year to engage Iran, with scant results. “Engagement has to be a two-way street,” she said. “It cannot be done alone in a room talking to yourself.” Referring to concerns by UN atomic energy inspectors that Iran has built a secret facility near Qom, she added, “We don’t want to be engaging while they’re building their bomb.” Turkey’s Possible Role Turkish Prime Minister Recep Tayyip Erdogan , also in Doha, said his country is willing to serve as the venue for a swap of Iran’s low-enriched uranium for fuel rods needed for the Tehran medical reactor. Iran rejected a similar offer last October by members of the UN Security Council. Erdogan said the UN’s International Atomic Energy Agency recently approached Turkey about being a neutral venue for such a deal. The U.S. is worried about the risk a nuclear-armed Iran would pose to Israel and other neighbors, as well as the possibility of a regional nuclear arms race. Clinton and other U.S. officials are trying to rally support in the Mideast and at the United Nations for sanctions to force Iran to halt the enrichment of uranium, which may be used to make a bomb. Other top U.S. officials visiting the region in the coming days include General David Petraeus , chief of the U.S. Central Command, and Mike Mullen , chairman of the Joint Chiefs of Staff. China’s Veto Power China, a veto-wielding member of the UN Security Council, relies on Iran as the third-largest source of its crude oil, according to official statistics, and has resisted pressure from the U.S. and Europe to back new penalties on Iran. The U.S. wants any new sanctions to target Iran’s Revolutionary Guard Corps, a military unit involved in nuclear and missile programs. Iran is subject to three rounds of UN sanctions, including a 2007 resolution freezing assets and banning travel for some companies affiliated with the Revolutionary Guards.      Addressing concerns about stalled Israeli-Palestinian peace talks, Clinton said the U.S. is disappointed that “we have not yet achieved a breakthrough” in a comprehensive Middle East peace. She said Arab states need to rally behind getting Palestinians to return swiftly to talks. “The United States stands ready to support the parties and play an active and sustained role in these negotiations,” she said. Frozen Peace Talks Peace talks have been frozen since late 2008, when Palestinians broke off a year of negotiations to protest Israel’s offensive in the Gaza Strip. Israeli leaders said that action was aimed at halting rocket fire by the Palestinian militant group Hamas.      U.S. mediator George Mitchell , who helped forge a peace agreement in Northern Ireland, is shuttling through the Middle East this week to get sides back to the negotiating table.      Efforts to restart talks have foundered on the issue of Jewish settlements in the West Bank. While Israeli Prime Minister Benjamin Netanyahu imposed a partial 10-month freeze on settlement building, Palestinians want a complete halt.      “We see the current Israeli settlement moratorium as a positive step, and we look for further steps,” Clinton said. “The United States’ policy on settlements has not changed: We do not accept the legitimacy of continued Israeli settlements.” She acknowledged concerns in the region about air travel restrictions on citizens of nations that prompt U.S. terrorism concerns, the U.S. failure to close the prison camp in Guantanamo by the start of this year, and the sense that efforts to improve relations with the Muslim world have been “insufficient or insincere.” The U.S. is determined to better relations with the Muslim world, she said, adding, “building a stronger relationship cannot happen overnight or even in a year.” To contact the reporter on this story: Indira Lakshmanan at in Doha, Qatar or ilakshmanan@bloomberg.net .

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Buffett Tells CTB Hog-Product Employees They’re on Farming `Superhighway’

February 6, 2010

By Andrew Frye Feb. 6 (Bloomberg) — Warren Buffett , the billionaire chairman of Berkshire Hathaway Inc. , told employees of the firm’s hog-products unit he expects the operation to expand for decades. “CTB has been moving ahead every year since we bought it,” Buffett said in a video posted on the Web site of CTB Inc., Omaha, Nebraska-based Berkshire’s agriculture-equipment unit. “We’ll hit a bump in the road every now and then but we’re looking at a superhighway out there in front of us.” Buffett became the second-richest American by investing in businesses he expects to grow for decades. He’s said his $26 billion takeover of railroad Burlington Northern Santa Fe Corp. , announced in November, will benefit Berkshire “over the next century.” CTB, which Berkshire bought in 2002, may produce profits beyond the year 2200, Buffett, 79, said in the video. “Most years are going to be good, a few years will be standouts, and there will be a few that are bummers,” Buffett said. “But that’s the way we look at everything here at Berkshire Hathaway. We’re going to be in these businesses for 100 years or 200 years.” CTB, which sells feeders and stalls under the PigTek and Chore-Time Hog brands, has expanded abroad by buying businesses in Israel, Germany and the Netherlands. Chief Executive Officer Victor Mancinelli persuaded Buffett to buy his firm. Howard Buffett , a farmer and the billionaire’s son, endorsed the deal. Good Things “I checked with Howie; he told me CTB was an absolute first-class company and he’d heard good things about Vic,” Buffett said. “Howie would rather spend an evening on a tractor in the field than a date with Angelina Jolie , which is not true of all members of the family, but that’s true of Howie.” Howard Buffett has been picked to succeed his father as Berkshire’s chairman when Warren Buffett’s tenure, entering its fifth decade, comes to a close. The elder Buffett, who owns about a quarter of Berkshire and is its CEO, has said settling on his eventual replacement as chief is the No. 1 responsibility of the firm’s board. In the CTB video, Buffett praised Mancinelli. “Vic is a manager that could run any company in the Fortune 500,” Buffett said. “He’s done a wonderful job for us.” U.S. hog farmers have shrunk the size of sow herds to the smallest since at least 1976, as feed prices jumped to a record in 2008 and the recession and an outbreak of swine flu sapped pork demand in 2009. ‘Year After Year’ “There will be low prices and there will be high prices,” Buffett said. “But the one thing you can be sure about is that our industry is going to be there year after year after year.” Berkshire’s acquisition of CTB was valued at $177 million, according to Bloomberg data. Six years later, in 2008, the unit produced pretax earnings of $89 million, Buffett said in the company’s 2009 annual letter. CTB bought six companies in the interim, including Swine Services Specialists Inc. and Porcon group of Deurne, the Netherlands. “The CTB story is just starting,” Buffett said. “I am 79 so I’ll be 100 in 2030. Stay tuned for a rebroadcast at that time and I’ll be telling you about all kinds of wonderful things that have happened in the company. It’s in the right industry. Farming is as fundamental as things get in this country.” To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net .

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U.S. Must Adjust More Quickly to Security Threats, Obama Aide Jones Says

January 30, 2010

By Viola Gienger Jan. 30 (Bloomberg) — The U.S. will be able to protect itself only by adjusting more rapidly to threats such as extremism and cyber attacks and by working more closely with other countries and alliances, Obama administration National Security Adviser James Jones said. “The forces of globalization shape a radically different security environment” than the dangers posed during most of the past half-century, Jones told an audience yesterday at the Center for Strategic and International Studies in Washington. Violent extremists, nuclear arms and other weapons of mass destruction, disease and economic turmoil move across borders, and climate change threatens communities worldwide, Jones said in an address that focused on President Barack Obama ’s national security aims. “The ties and technologies of our interconnected world mean that threats are emerging and challenging our national security faster than ever before,” Jones said. “We have to be just as fast in responding to those threats.” Such changes may be reflected in the Defense Department’s Quadrennial Defense Review due to be issued next week, a plan devised every four years to update the military’s programs and priorities. The administration also is developing a new national security strategy to be completed within weeks, Jones said. The defense review will seek to balance the need to continue developing conventional weapons for major conflicts with an imperative to modernize war-fighting techniques and build up foreign allies so they can do more. Critics’ Concerns The review is raising concerns among critics of Obama’s approach to defense. A Heritage Foundation report earlier this month, co-written by former House and Senate Armed Services Committee member Jim Talent , a Republican from Missouri, cited “signs” that the review results will be “shortsighted.” Talent and co-author Mackenzie Eaglen said that, intheir view, Defense Secretary Robert Gates has signaled a reduced military force “inconsistent with the nation’s security commitments,” along with a focus on a limited number of threats and today’s wars at the expense of preparing for another conventional war. In a speech in Singapore in May that cited the defense review, Gates said the U.S. will shift away from “conventional military deterrence” illustrated by “mechanized divisions poised along the Korean demilitarized zone or on the central plains of Germany” to a mix of military, diplomatic, economic, cultural and humanitarian approaches. Increased Engagement Obama, in his State of the Union speech on Jan. 27, cited increased engagement with alliances such as the Group of 20 as helping pull the global economy back from the brink. The U.S. in the past year “strengthened partnerships from the Pacific to South Asia to the Arabian Peninsula,” Obama said. Renewed discussions with Russia on an agreement to further reduce each side’s nuclear weapons stockpiles and talks with China on issues from Iran to climate change are examples of engagement to increase security and spread the burden of doing so, Jones said. Obama described nuclear weapons as “perhaps the greatest danger to the American people.” The risk that such weapons might fall into the hands of terrorists or regimes that aim to threaten others creates “one of the great ironies of the nuclear age,” Jones said today. “Just as the risk of a nuclear exchange within superpowers decreased, the risk of a nuclear weapon being used against an American city has gone up,” he said. “Nations with nuclear weapons have a responsibility to move toward disarmament. Nations without them have the responsibility to forsake them.” Deeper Cuts The administration expects to reach a new Strategic Arms Reduction Treaty with Russia, and plans to follow that with a Nuclear Posture Review that will “open the door to deeper cuts and reduce the role of nuclear weapons,” Jones said. The prospect of Iran developing nuclear weapons heightens the urgency for a political resolution between Israel and the Palestinians, Jones said. History shows that pressure such as what Tehran is experiencing internally and will see externally in the event of more international sanctions will increase the risk of Iran lashing out through militant groups opposed to Israel, Jones said. “It’s only becoming even more important, even more urgent to restart the negotiations between Israelis and the Palestinian Authority to show that progress cannot be derailed or denied,” Jones said. To contact the reporter on this story: Viola Gienger in New Delhi via vgienger@bloomberg.net .

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Ben Protess: Congressman to AIG: Show Us Your E-mail

January 29, 2010

You might imagine that by now the public would know every last cause and consequence of the government’s $180 billion bailout of insurance giant American International Group. The AIG deal has been the subject of dozens of public hearings (including a confrontational one this week), an inspector general’s report last fall and a recent congressional subpoena that produced some 250,000 documents. But many people inside and outside the government believe the whole story has yet to be told. Among them is Rep. Steve Israel (D-N.Y.), who this week introduced a bill that he said would “get to the bottom of the AIG collapse.” Israel’s Financial Crisis Public Disclosure Act would require the Treasury Department to obtain and publicly release all internal AIG e-mail related to the current financial crisis. Treasury would put the results online for citizens and journalists to examine. “My bill will force AIG to publicly open company e-mails from top employees so we can find out what they were thinking as they made decisions that wrecked our economy,” Israel said in a statement. The Investigative Fund previously reported on calls for AIG’s trustees to make public a decade’s worth of AIG’s e-mail and internal accounting documents. Experienced fraud investigators, including former New York Governor Eliot Spitzer and University of San Diego Law School professor Frank Partnoy, have made that request. So far the trustees – appointed by the Federal Reserve Bank of New York, which made the original decision to bail out AIG – are resisting the idea. Most recent scrutiny of the bailout has centered on the Fed’s decision to use about $24 billion in government money to help AIG settle deals with big banks. AIG had sold the banks insurance on risky mortgage investments. When the insured investments soured, AIG owed billions to Goldman Sachs, among others. Instead of honoring the insurance, AIG used taxpayer funds to buy the mortgage investments from the banks at 100 cents on the dollar, even though they were worth much less. Rep. Darrell Issa of California, the ranking Republican on the Committee on House Oversight and Government Reform, recently released e-mails showing that the New York Fed kept details of these payouts secret while now-Treasury Secretary Timothy Geithner was in charge of the New York Fed. Rep. Ed Towns (D-N.Y.), chairman of the oversight committee, ultimately subpoenaed the New York Fed for all documents related to the payouts, including Geithner’s e-mail and phone logs. The documents showed Geitner approved the full payouts, but did not suggest he was involved in concealing them. E-mails show that some Fed officials questioned the decision to pay the banks in full. One document also indicated that Goldman had approached AIG about tearing up the insurance contracts months before the government got involved. Still, for all this congressional digging, much remains unknown about the causes of AIG’s collapse and we surely haven’t heard the last revelation.

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