turkey

AT&T Defends $39 Billion Deal

by AP on December 1, 2011

Huffington Post…

NEW YORK — AT&T Inc. blasted the Federal Communications Commission on Thursday for compiling what it called an unfair and biased report on what would happen if AT&T were allowed to buy T-Mobile USA. AT&T agreed in March to buy T-Mobile USA for $39 billion, but the deal has encountered opposition, first from the Justice Department and then from the FCC. Analysts now give it only a slim chance of going through. The FCC took the unusual step of releasing its analysis of the merger on Tuesday. It found “questions of fact” about AT&T’s stated justifications for the merger and dismissed most of AT&T’s arguments. It said competition in the industry would suffer if AT&T swallowed T-Mobile, and potentially lead to higher prices for consumers. AT&T immediately attacked the release of the report, saying it was a draft that had never been voted on by the five-member commission. The “questions of fact” would have been addressed at an administrative hearing that now won’t take place, since AT&T has withdrawn its merger application. The company is expected to resubmit the application. On Thursday, AT&T released a more thorough, combative response to the report. It’s an unusual one for a company that spends heavily on lobbying and cultivates close relationships with regulators. “The document is so obviously one-sided that any fair-minded person reading it is left with the clear impression that it is an advocacy piece, and not a considered analysis,” the Dallas-based company said. The FCC report said the merger would threaten fragile competition in the industry, yet AT&T pointed out that it also cites existing competition from Verizon Wireless as a strong motivator for AT&T to build out its new data network, even without the resources it would gain by buying T-Mobile USA. The FCC report disputed AT&T’s claims that the merger would create jobs rather than eliminate them, as is usual for mergers. AT&T says the expansion of wireless broadband will stimulate job creation, and points out that the FCC itself says its own $4.5 billion broadband fund would create half a million jobs over six years. That’s counting not just phone-company jobs, but jobs created by the availability of broadband. “This notion – that government spending on broadband deployment creates jobs and economic growth, but private investment does not – makes no sense,” AT&T said Thursday. The war of words is unlikely to affect the outcome of AT&T’s quest to buy T-Mobile USA, since the chief hurdle is a suit filed in August by the Justice Department to block the deal.

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AT&T Defends $39 Billion Deal

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Super Fail Complicates Election Year Battle Lines

by AP on November 24, 2011

Huffington Post…

WASHINGTON — The failure of Congress’ deficit-reduction supercommittee adds a new dimension to the 2012 political contests, drawing political battle lines around broad tax increases and massive spending cuts that now are scheduled to begin automatically in 2013. President Barack Obama and his Republican challenger will be forced to debate alternatives for reducing deficits, made all the more urgent by the looming consequences of congressional inaction. The dividing lines already are sharply drawn, with Obama supporting deficit reduction that includes a mix of spending cuts and tax increases on the wealthy, while Republicans have declared themselves averse to tax hikes. An election that has been shaping up as a referendum on Obama’s stewardship of the economy now will require the candidates to offer competing forward-looking deficit-reduction plans to avoid cuts and tax hikes that neither side wants to see materialize. For Obama, that is a more favorable place to be, drawing contrasts with his opponent and arguing for higher taxes on the rich rather than defending his oversight of an economy that could still be suffering from high unemployment and slow growth next November. Beginning in 2013, the federal government faces two oncoming trains. When the supercommittee was unable to find agreement by Wednesday, it triggered spending cuts of $1.2 trillion starting in January 2013 and extending over 10 years. Half of the cuts would come from defense spending, the other from education, agriculture and environmental programs, and, to a lesser extent, Medicare. At the same time, tax cuts adopted during the presidency of George W. Bush will expire at the end of 2012, meaning an increase for every taxpayer. Defense Secretary Leon Panetta has said the cuts would “tear a seam in the nation’s defense.” Meanwhile, the tax increases would hit a still-fragile economy, endangering a recovery and raising prospects of another recession. But while neither side wants those outcomes, Washington’s recent history of tackling fiscal problems shows Congress does not act unless faced with a dire deadline. It extended Bush-era tax cuts in 2010 just days before they expired, it avoided a government shutdown by hours and it put off a debt crisis this summer in the face of a government default. “The next big event, barring some movement from Congress, may just well be the 2012 election,” said Kevin Madden, a former senior House leadership aide and an outside adviser to Republican Mitt Romney’s presidential campaign. “Then we look to either a new president and a new Congress, or the same president and the same Congress to restart it all.” Election years do not lend themselves to big legislative initiatives. Lawmakers are too busy seeking re-election to take potentially controversial stances that could cost them votes. Moreover, congressional leaders may well want to see how the elections affect Washington’s balance of power before undertaking changes that require compromises. An angry public could demand swift action. But even if Congress were to attempt to find common ground next year, the legislative maneuvering would unfold in the midst of the presidential contest, and White House aides acknowledge that it can’t avoid becoming a part of the political debate. They repeatedly point out that each of the eight Republican candidates have refused to endorse any deficit-reduction plan that contains any tax increases and that they reiterated that position en masse during a recent presidential debate. “The very men and woman who would occupy the Oval Office stood up on a stage and all raised their hand and said they would not accept a deal that had as its foundation $10 in spending cuts for every $1 in revenue,” White House spokesman Jay Carney said this week. While Republicans have criticized Obama for not engaging directly in the supercommittee negotiations, his hands-off approach was calculated, coming in the aftermath of his own failed attempts to strike a deficit deal with House Speaker John Boehner, R-Ohio. In a gridlocked Congress, Obama is more likely to lose if he gets deeply involved. The detachment allows him to set a clear dividing line for voters, one in which he can cast Republicans as protecting the rich. It’s a stance that for now has political appeal. A number of recent public opinion polls show that up to two-thirds of Americans support raising taxes on individuals earning more than $1 million, and about half favor raising taxes on families earning at least $250,000 a year. Even if some Republicans were disposed to negotiate a new deficit-reduction plan, Obama’s sharpening of the lines between the parties could drive them away. “If the president has decided that he is now in full campaign mode, that’s going to make things very difficult in terms of finding common ground,” said David Winston, a GOP strategist who advises House Republican leaders. Eager to maintain pressure on Congress, Obama this week issued a veto threat against any efforts to change the automatic spending cuts triggered by the supercommittee’s inaction. Aides said Obama did not prefer those cuts, but he made it clear that the threat of such cuts was essential to get Congress to act. “There will be no easy off-ramps on this one,” Obama said Monday. “We need to keep the pressure up to compromise, not turn off the pressure. The only way these spending cuts will not take place is if Congress gets back to work and agrees on a balanced plan to reduce the deficit by at least $1.2 trillion.” Republicans pounced on the veto threat, portraying Obama as indifferent to deep Pentagon reductions. Republican presidential candidate Rick Perry, the governor of Texas, said he found the veto threat “reprehensible.” He added: “If Leon Panetta is an honorable man, he should resign in protest.” But Democrats, and Obama in particular, don’t feel as vulnerable on defense as the party once was. Aides point to foreign policy advances, the killing of Osama bin Laden and other al-Qaida leaders, and the drawdown of forces from Iraq and Afghanistan as evidence that Obama has credibility on military issues. But Carney this week also said that if critics worry about maintaining defense spending levels, “There is an easy way out here, which is be willing to ask the wealthiest Americans to pay a little bit more in order to achieve this comprehensive and balanced deficit-reduction plan.”

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Super Fail Complicates Election Year Battle Lines

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Carlos Brito: Reaching Our Goal for Worldwide Responsible Drinking

November 24, 2011

With a history dating back to at least the 6th millennium BC, we know that beer has been enjoyed, and even revered, by many of the earliest civilizations. And most people, who drink beer today, do so responsibly. We all want to prevent the harmful use of alcohol, not only for the benefit of our company, but for the benefit of society as a whole. At Anheuser-Busch InBev, a core focus of our dream to be the Best Beer Company in a Better World is doing everything we can to ensure our products are enjoyed responsibly. As the leading global brewer and one of the world’s top five consumer products companies, we are passionate about brewing the highest quality beers for our consumers of legal drinking age. We don’t want or need business that comes from underage or irresponsible drinking. As our markets have grown, so too has the opportunity to reach even more people with our efforts to promote responsible drinking. But effecting lasting change on a global basis is a significant challenge. Because people and cultures differ, behaviors are as diverse. Research has shown — and we know from all we’ve learned over the past three decades — that there is no “one-size-fits-all” approach to reducing harmful use of alcohol. Efforts need to address the issue from all sides and must account for the different cultural contexts for alcohol consumption. It’s a problem that’s too complex to go at alone, but it can be tackled in partnership with consumers — especially parents — as well as with public, private and community groups. Encouraging responsible drinking requires supporting a variety of mutually reinforcing efforts. That is why our company is establishing a holistic set of industry-leading targets that we will work to achieve by the end of 2014. We believe that together they will help shape attitudes toward responsible drinking in the markets where we operate. Research has shown that parents are the No. 1 influence on their children’s drinking decisions, and that parents welcome help in talking with their young people about this issue. To that end, we have set a goal to reach at least 100 million adults with programs like our “Family Talk About Drinking” initiative that are developed by subject matter experts. We will also be reaching out to at least half a million bars, restaurants and grocery stores where we sell our beers to provide ID-checking and educational materials to help them prevent sales to minors. Further, we know that designated drivers save lives. While this concept is well known and accepted in developed markets, more can be done to share this life-saving practice in emerging markets as well. According to a poll conducted in our key global markets, only 49 percent of consumers are familiar with the concept. Together with law enforcement, government agencies and community organizations, we can do more to increase awareness of this life-saving practice, so we are pledging to reach at least a half-billion legal-age consumers with designated driver and safe-ride home messages to help drive positive behavioral change. Achieving these goals requires teamwork. For the second year in a row, our 114,000 employees around the world are marking AB InBev’s Global Be(er) Responsible Day by going into their communities and reaching out to their families, friends, bars and grocery stores that sell our products, as well as law enforcement and government officials with whom we work to promote responsible behavior. Through these efforts, we’ve been able to educate and engage more people to make responsible choices. The employees of Anheuser-Busch InBev are committed to reaching these goals each day, because we are parents too and we all have a vested interest in creating a culture of responsibility in our communities. If there is one message in each of our bottles, it is to enjoy beer responsibly.

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States Missing Out On Revenue From Whistle-Blower Law

November 23, 2011

(Andrew Longstreth) – For many states, a law intended to root out corruption also has been good for the bottom line. Over the last decade, more than 20 states have passed a version of the federal anti-corruption law known as the False Claims Act (FCA). The local laws, like the federal one, allow governments to join lawsuits filed by whistle-blowers who spot fraud involving taxpayers dollars. They have been a lucrative proposition, helping states collect millions of dollars in fines. In May, California announced a $241 million settlement of an FCA lawsuit against Quest Diagnostics Inc that alleged overcharges to the state’s medical program for the poor. California’s share of the settlement, $171 million, flowed to the state’s general fund. Yet at least nine states have tried and failed to pass local versions of the False Claims Act. In Ohio, there have been attempts to pass a bill since at least 2007. Republican state Attorney General Mike DeWine threw his support behind a bill in April, but so far nothing has come of it. Kentucky and Pennsylvania have also been unable to beat back opponents. Some of the most vocal criticism of the False Claims Act has come from the pharmaceutical and medical industries, which claim that the law encourages meritless lawsuits and creates a hostile business environment. They also question the cost-effectiveness of such statutes, which require significant government resources to investigate the claims and oblige the government to share recoveries with whistle-blowers. Samuel Denisco of the Pennsylvania Chamber of Business and Industry, said that a state False Claims Act would be duplicative of the federal law, adding that policy makers have a responsibility to avoid “protractive litigation that is not beneficial to the state.” States that have been unable to counter those objections are starting to pay the price, according to proponents of the law. In August, for example, Kentucky sought to join a sweeping lawsuit accusing Education Management Corp, a for-profit educational company, of fraud. The state said that EMC made false statements to the Kentucky Higher Education Assistance Authority and the U.S. Department of Education. California, Florida and Illinois — all of which have False Claims statutes — had already joined the case, first filed by a whistleblower in 2007 alleging that EDMC wrongfully received more than $11 billion in federal and state funds. But on October 24, Federal District Judge Terrence McVerry in Pittsburgh ruled that Kentucky could not intervene, citing its lack of a False Claims Act. A spokeswoman for the Kentucky attorney general’s office said it “respectfully disagrees” with the judge’s decision and is considering an appeal. “It’s a shame that Kentucky didn’t have all the tools that other states have to go after fraud against taxpayers,” said Harry Litman, an attorney for the whistle-blowers in the case. False Claims legislation has run into similar obstacles in Pennsylvania. A coalition of Pennsylvania business groups, mainly in the medical professions, urged the legislature to oppose a version of a False Claims Act bill that was introduced last year. It argued that the bill would duplicate the federal statute and would hurt the state’s efforts to recruit and retain physicians. Opposition to the False Claims Act hardly is hardly ever about politics or ideology, said Patrick Burns of Taxpayers Against Fraud, who notes that states with the law are both blue and red. “It’s really about how state legislators will sell themselves out for a few thousand dollars apiece,” said Burns. “Even in a state like Ohio or Pennsylvania where the economy is in shatters and unemployment is through the roof, a few thousand dollars will prevent the state legislature from passing a bill that will stop the hemorrhaging of fraud and recover hundreds of millions of dollars.” DATING TO LINCOLN’S ERA The federal False Claims Act has a long history. It was first passed in 1863 in an effort championed by President Abraham Lincoln to combat unscrupulous defense contractors defrauding the Union Army. But the act really got its teeth in 1987 when it was amended to allow whistle-blowers who discover fraud against the government to bring a lawsuit and to receive 15 percent to 30 percent of any recovery. The changes also increased potential recoveries available to plaintiffs to three times the amount of actual damages. As states began passing their own version of the False Claims Act, they tended to use the statutes to target healthcare fraud. Recoveries were initially relatively modest, according to findings published in a 2005 Tulane Law Review article. In Hawaii, for example, recoveries obtained between 2000 and the fall of 2004 were $4 million. But more recently, some states have reached eight and nine-figure settlements in whistleblower cases and begun to amend their False Claims Act laws to tackle other types of corruption. New York, with one of the most powerful state FCAs in the country, put the statute to novel use in October when Attorney General Eric Schneiderman intervened in a whistleblower case brought against Bank of New York Mellon for bilking investors in foreign exchange transactions. He is seeking nearly $2 billion on behalf of public pension funds and other investors. And False Claims Act boosters whose efforts have been unsuccessful are going back to the drawing board. Kentucky’s House speaker, Greg Stumbo, has been trying to push a False Claims Act since he was attorney general of the state from 2003 to 2007. Though an effort to pass a version of the law failed earlier this year, Stumbo says he plans to reintroduce the legislation in January. “There’s no reason for states not to have it,” he said. (Reporting by Andrew Longstreth; Editing by Eileen Daspin and Steve Orlofsky) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Richard M. Southall: Turning Turkey Into Tofu

November 23, 2011

Indianapolis, IN – November 23, 2011… In a historic move, the National Collegiate-Vegetarian Association (NCVA) announced today that Turkey has been reclassified as a vegetable — specifically a legume — paving the way for student-vegetarians across the country to enjoy a guilt-free turkey dinner for the first time in collegiate vegetarian history. Adopted following a hastily convened NCVA Board of Directors meeting, the impetus for the decision was a series of embarrassing episodes involving high-profile student-vegetarians exploring their free-range options, trading in their celebrity in return for steak patties and bartering their much prized golden-carrot charms. Dr. Lewis Carroll, NCVA president, said turkey’s reclassification is consistent with NCVA Bylaw 3, which excludes meat from student-vegetarians’ diets. Carroll reiterated meat will never be served to student-vegetarians. He also disputed the suggestion that allowing NCVA cafeterias to serve turkey as early as this coming Thanksgiving is a move in that direction. “We’re still adamant that student-vegetarians should not be allowed to eat meat,” said Carroll, a former University of Washington rabbit-hole researcher. “Our students are vegetarians, not carnivores. When you move from a vegetarian model to one in which students eat meat, then you no longer have a vegetarian meal. We already have that. It’s called a hamburger. And I will guarantee one thing, ‘Hamburgers will not be served on my watch.’ ” The above faux-press release is easily seen as an attempt at literary nonsense; turkey is not a vegetable. However, while vegetarians will once again have to ‘make do’ with Tofurkey this Thanksgiving, college-sport fans and the media are seemingly deaf to the NCAA’s ‘steady drumbeat’ of Alice-in-Wonderland platitudes that characterize its aggressive public and media relations agenda surrounding the recent pay increase for the association’s least- compensated employees (NCAA Football Bowl Subdivision football and D-I men’s basketball players). To date, few so-called college-sport experts have questioned NCAA President Dr. Mark Emmert’s contention that directly paying college athletes an additional two-thousand dollars is not “pay” or salary. What has gone almost totally unchallenged is the ludicrous claim that this salary increase is simply “cost-of-living” cash. For decades, the NCAA has been winning the public relations war and legal battles over their obvious “pay for play” system through the deployment of propaganda and deft regulatory maneuvering. As former NCAA executive director Walter Byers noted in his memoir, “The colleges are already paying their athletes. The colleges, acting through the NCAA in the name of ‘amateurism’ installed their own pay system called the athletics grant-in-aid or athletics scholarship… we crafted the term ‘student-athlete’… We told college publicists to speak of ‘college teams,’ not football or basketball ‘clubs,’ a word common to the pros.” The NCAA’s newest “curiouser and curiouser” term of art is The Collegiate Model “… created [in 2003] by Myles Brand as a surrogate for — but not a replacement for — the concept of amateurism” and designed to ensure any dialogue surrounding college sport remains trapped in the false consciousness of the endless NCAA definitional “rabbit hole.” The constant invocation of this sacred model is a conscious attempt to counter the waves of skepticism inspired by the ever-increasing commercialism and visible inequities in the college-sport system. This strategy is intended to position big-time college sport as a morally-superior educational endeavor and protect a world view in which the proposition: “Amateurism describes the participants, but not the enterprise” can continue to go unchallenged. As Emmert continues to claim $2,000 in cash paid to NCAA athletes is not pay he is — within the NCAA’s reality — speaking the ‘truth.’ However, it must be pointed out his truth is not bound by an objective external logic, but rather based on NCAA Bylaw 12.02.2, which reads: “Pay is the receipt of funds, awards or benefits not permitted by the governing legislation of the Association for participation in athletics.” Once the NCAA Division-I Board of Directors approved what any “real-world” underpaid employee would view as a $2,000 salary bump, it ceased to be PAY and instead magically became simply part of an NCAA “grant-in-aid” (GIA). A GIA is — of course — also NOT PAY. The circular reasoning continues in Bylaw 12.01.4 of the NCAA’s legislative tome (The NCAA Division I Manual): A grant-in-aid administered by an educational institution is not considered to be pay or the promise of pay for athletics skill, provided it does not exceed the financial aid limitations set by the Association’s membership. By repeating the mantra, “A $2,000 stipend is not pay!” the NCAA has seemingly succeeded in removing the definitions of ‘stipend’ and ‘pay’( as well as any accompanying synonyms) from every English-language dictionary. Through such industrious application, the NCAA and its officials have so far overcome more than 600 years of common usage and transformed a $2,000 stipend from “a periodic, fixed or regular payment” to an ephemeral “something else entirely.” In the process, it has achieved what people in sport circles refer to as a two-fer. Not only is a $2,000 fixed and regular payment suddenly magically consistent with the NCAA’s Collegiate Model, it is also “… an effective constraint on practices that threaten to estrange intercollegiate athletics from higher education or from those firmly held perceptions that endear college sports to the American public.” To confront this subterfuge is to understand NCAA officials are not opposed to paying athletes a tightly regulated ‘stipend’ or turning their performances into mass-mediated spectacle. As a result, college athletes consistently lose ‘scholarships’ for poor athletic performance. What the NCAA opposes is not paying athletes, but allowing this unrecognized workforce to exert their human and employee rights. If nothing else, the NCAA’s symbolic universe, the production of the nation’s legal and higher education communities, serves as a lesson in how money, power, and media converge to diminish big-time college sport’s athlete-employees’ value and strip them of their rights. Just as his NCAA predecessors have done before him, Emmert paternalistically lectures interviewers and audiences alike on the fundamental tenets of the Collegiate Model, which hinges on the impression, belief, and assertion that “College athletes are students, not employees.” This model is a nonsensical alternative to what the NCAA describes as the “doggerel of cynics,” who argue college athletes have long been paid employees. However, these employees’ pay is artificially capped by the NCAA and its members, and they are denied access to the multi-billion dollar commercial market. Ominously, Emmert warns “misinformed skeptics” and adoring fans alike that to accept college athletes as “paid” employees would reduce the Collegiate Model to an evil and odorous “Other” — “The Professional Model.” What makes the Collegiate Model distinct and unique, however, is it’s capacity to obscure the practices that routinely deny employee rights to the athletes who contribute most to the economic engines that drive the college sport enterprise, most specifically football and men’s basketball players. It is not accidental that college athletes are denied access to legal counsel, the ability to collectively bargain, negotiate specified contracts, and perhaps most importantly — given ongoing antitrust litigation — access to the college-sport marketplace. In true “Chicken Little” fashion, the NCAA professes that if college athletes were to gain any of these basic rights, “College sport as we know it would cease to exist.” To date, this solipsistic and apocalyptic argument has been accepted by the courts, intercollegiate-athletic administrators, fans, Congress, and many college athletes. As we mark this national holiday of Thanksgiving, it is useful to be reminded that just because some vegetarians who crave ‘meat’ may gladly accept the Tofurkey masquerade, only the delusional would believe tofu is turkey! A few weeks ago, with one legislative stroke, the NCAA succeeded in turning turkey into tofu. Will the American people continue to accept such a flimsy rationale for protecting “college sport as they know it”? Is that really the kind of college sport they want to know? It is time to climb out of the rabbit hole and face the reality of what college sport is, an exploitative system that violates the fundamental rights of workers by denying their existence. Richard M. Southall – Associate Professor – The University of North Carolina at Chapel Hill Ellen J. Staurowsky – Professor – Drexel University

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Janet Tavakoli: MF Global Revelations Keep Getting Worse

November 22, 2011

• Shortfall estimated at $1.2 billion or more (up from $600 million) • “Repo-to-Maturity” is a “Total Return Swap-to-Maturity,” a Type of Credit Derivative • Probable Shortfalls Throughout 2011 • Regulators Waive Required Tests for Jon Corzine • Questions About How MF Global Became a Primary Dealer • MF Global Wrote Rubber Checks for some Electronic Checks for Others • Tip-Offs for Some Customers? • CFTC’s Gary Gensler Didn’t Act • MF Global Debacle Damages a Key Global Market When MF Global collapsed on October 21, it was the biggest financial firm to collapse since Lehman in September 2008. Then Chairman and CEO Jon Corzine is connected to the head of one of his key regulators, the Commodity Futures Trading Commission (CFTC), through his former protégé at Goldman Sachs, Gary Gensler. He also knows the Fed’s William Dudley, a key member of the Fed’s Open Market Committee, from their days at Goldman Sachs. The Fed approved MF Global’s status as a primary dealer, a participant in the Fed’s Open Market Operations, just before Jon Corzine took its helm and beached it on a reef called leveraged credit risk. MF Global’s officers admitted to federal regulators that before the collapse, the firm diverted cash from customers’ accounts that were supposed to be segregated : MF Global Holdings LTD. “violated requirements that it keep clients’ collateral separate from its own accounts…Craig Donohue, CME Group’s chief executive officer, said on a conference call with analysts today that MF Global isn’t in compliance with the rules of the exchange and the Commodity Futures Trading Commission.” ” MF Global Probe May Involve Hundreds of Millions in Funds ,” Bloomberg News – November 1, 2001 by Silia Brush and Matthew Leising Cash in customers’ accounts may be invested in allowable transactions, and MF was allowed to make extra revenue from the income. But what isn’t allowed, and what MF Global apparently admitted to doing, is to commingle customers’ money with its own and take money from customers’ accounts to meet margin calls on MF Global’s own allowable transactions. Even if all of the money is eventually clawed back and recovered, this remains an impermissible act. Moreover, full recovery–even if it is possible–is not the same as restitution. People have been denied access to their money, and businesses and reputations have been tarnished. In layman’s terms, you may buy a Rolls Royce with customers’ excess cash, sell it at a profit, and pocket part of the profits. You may buy a Rolls Royce and try to resell it at a profit with your firm’s cash. But you aren’t allowed to take customers’ money to make the car payments on your firm’s Rolls Royce. If one engages in this impermissible activity, it becomes almost impossible to cover up if you have an accident driving your Rolls Royce. Implausible Denial and an Ugly Surprise On November 1, Kenneth Ziman, a lawyer for MF Global, relayed information from MF Global to U.S. Bankruptcy judge Martin Glenn in Manhattan: “To the best knowledge of management, there is no shortfall. ” If that sounded like a cover-up, it was, unless of course you prefer to believe that the “best knowledge” of management is actually no knowledge at all. How long does it take to find more than $600 million to $1.2 billion of customers’ money? MF Global’s books seem so messed up that one person couldn’t have created this chaos alone. A lot of people had to agree to throw away controls, standards, and procedures. I doubt this happened just in the final week or two before MF Global blew itself up. “According to a U.S. official, MF Global admitted to federal regulators early Monday [October 31, 2011] that money was missing from customer accounts. MF Global acknowledged a shortfall in a phone call amid mounting questions from regulators as they went through the firm’s books.” ” MF Global’s Collapse Draws FBI Interest, ” by Devlin Barrett, Scott Patterson, and Mike Spector, WSJ , November 2, 2011 The initial bankruptcy estimate was a shortfall of around $600 million. As of Monday November 21, MF Global’s liquidating trustee believes the shortfall may be as much as $1.2 billion and possibly even more. “Repo-to-Maturity” is a “Total Return Swap-to-Maturity,” A Type of Credit Derivative If you call a total return swap-to-maturity a “repo-to-maturity,” you are much less likely to freak out regulators. Many regulators still remember that Long Term Capital Management (LTCM) used total return swaps (among other things). Jon Corzine should remember, too, since he was closely involved with LTCM when he headed Goldman Sachs. In September of 2011, FINRA seemed to catch on that MF Global’s transactions were riskier than it previously thought and asked for more capital against these trades. Part of AIG’s acute distress in 2008 was due to credit default swaps, another type of credit derivative, linked to the risk of shady overrated collateralized debt obligations. The basic problem was risk on fixed income assets that could only go down in value combined with lots of leverage. I’d like to interject a side note. I understand that some pundits tried to say that the New York Times’s Gretchen Morgenson was incorrect when she wrote MF Global was felled by derivative bets . She is correct. The pundits leaped to the conclusion that when she referred to credit derivatives and “swaps” that she meant credit default swaps, but she was referring to total return swaps, a type of credit derivative. (Later in the article she discussed a different topic, lack of transparency in credit default swaps, another type of credit derivative.) MF Global’s problematic trades were different from AIG’s, but they were also derivatives, in fact, they were a form of credit derivative. The “repo-to-maturity” transaction was just a form over substance gimmick to disguise this fact. Specifically the transactions are total return swaps, a type of credit derivative, and the chief purpose of these transactions is leverage. A total return swap-to-maturity includes a type of credit derivative. It allows you to sell a bond you own and get off-balance sheet financing in the form of a total return swap. Alternatively, you can get off-balance sheet financing on a bond with risk you want (but do not currently own so there is no need to sell anything) and take the risk of the default and price risk. (Price risk can be due both to credit risk and/or interest rate risk.) This is an off-balance sheet transaction in which the total return receiver (MF Global) has both the price risk and the default risk of the reference bonds. In this case, MF Global had the price risk and the default risk of $6.3 billion of the sovereign debt of Belgium, Italy, Spain, Portugal, and Ireland. As it happened, the price fluctuations of this debt in 2011 weren’t due to a general rise in interest rates, they were due to a general increase in the perceived credit risk of this debt. Repo transactions are on balance sheet transactions, but they don’t draw as much scrutiny from regulators. There was just one little problem. MF Global wanted the off-balance sheet treatment of a derivative, a total return swap, but it didn’t want to call it a total return swap, so it used smoke and mirrors. Even if MF Global engaged in a wash trade at the end (if there is no default in the meantime) to buy back the bonds, MF Global would receive par on the bonds from the maturing bonds. The repurchase trade at maturity is a formality with no real (or material) economic consequence. In other words, the “repo-to-maturity” exploits a form-over-substance trick to avoid calling this transaction a total return swap. Accountants paid by the form-over-substance seekers and asleep-at-the-switch regulators will sometimes, at least temporarily, go along with this sort of relabeling. The fact that MF Global was exposed in a leveraged way to default risk and liquidity risk because of these transactions and that the risk was- linked to European sovereign debt was disclosed in MF Global’s 10K for the year ending March 31, 2011, a required financial statement filed with the SEC. The CFTC and other regulators had the information right under their noses, but it appears they didn’t understand that they were looking at a leveraged credit derivative transaction that could lead to margin calls that MF Global would be unable to meet. See Also: ” Credit Derivatives and Leverage Sank Jon Corzine’s MF Global, ” by Janet Tavkaoli, Huffington Post, November 4, 2011, The result is that yet another large financial institution has been felled when it couldn’t meet margin calls due to the credit risk of fixed income assets combined with high leverage in an off-balance sheet transaction. The ugliest part of this story, however, isn’t that MF Global got in over its head, it’s that the bankruptcy trustee estimates customers’ money to the tune of $1.2 billion or more is still missing. Probable Shortfalls Throughout 2011 MF Global reportedly employed 35:1 leverage–some reports are 40:1–against a portfolio comprised around 20% of European Sovereign risks including Belgium, Italy, Spain, Portugal, and Ireland. MF Global would have had several trading days in 2011 with moves of 5% to 10% on this sovereign risk. MF Global was so thinly capitalized that this trade alone could eat up half of its capital. Any of MF Global’s other asset positions moving the same way in 2011′s highly correlated markets would have put MF Global in a position of negative equity. From a risk management point of view, examiners have to consider the very strong possibility that MF Global had several negative equity days throughout 2011. How did MF Global meet margin calls throughout 2011? It seems an investigation into money flows throughout 2011 is in order. By the end of October, the combination of a $90 million August legal settlement against MF Global coming due, increased capital calls by FINRA, and margin hikes from counterparties worried about MF Global’s credit made it impossible for MF Global to cover up its shortfall. Regulators Waive Required Tests for Jon Corzine Jon Corzine resigned as Chairman and CEO of MF Global on November 4, just days after the October 31 bankruptcy announcement. As a matter of corporate governance, holding the position of Chairman nad CEO meant that Corzine had a lot of concentrated power with little oversight. Many question the wisdom of a corporate structure that allows officers to hold this dual position. (Ken Lewis, the former Chairman and CEO that merged Bank of America into the poorhouse held this dual role, too. Lewis defended this practice at the Federal Reserve Bank of Chicago’s Bank Structure Conference in 2003.) Corzine was the former governor of New Jersey and had been out of the active markets for twelve years. Prior to that, until 1999 he had been the CEO of Goldman Sachs. The Financial Industry Regulatory Authority Inc. (FINRA) gave Jon Corzine a waiver from his Series 7 and Series 24 exams when he took the helm of MF Global in March 2010. The former is required for anyone involved in the investment banking or securities business including supervision, solicitation, or training of persons associated with MF Global, and that included Corzine. As an officer of MF Global the latter was required for Corzine, since he had been out of the business for around 12 years or more than six times the 2 year expiration date for reactivating these qualifications. Jon Corzine to Credit Derivatives Head: Next Time “Double Up” (See note below) The test waiver by regulators seems to be blatant cronyism, because Corzine not only hadn’t been involved in the day-to-day markets for more than a decade, his responsibilities at MF Global included active decision making. The waiver wasn’t justified. Corzine reportedly authored the strategy for the MF Global killing trades, and he also had authority on the trading floor. Jon Corzine pushed traders to increase their risk. According to an MF Global employee, Corzine knelt down beside Jim Parascandola, head of credit derivatives trading, and told him that next time he should “double up” on his winning protection bets on brokerages. Traders loved Corzine, because he pushed them to increase risk. Now the traders aren’t lifting offers, they’re pounding the pavement. Update : Subsequent to this report Jim Parascandola told me that he was never told to increase the size of any position, albeit his trades were profitable. MF Global Becomes a Primary Dealer Unregulated by the Fed: How Did That Happen? MF Global’s financials were shaky ever since Man Group spun it off in 2005 and saddled it with a lot of debt. Yet MF Global was added to the Fed’s list of 22 primary dealers in February 2011, just before former Goldman CEO Jon Corzine officially came on board. Primary dealers buy and sell U.S. treasuries at auction and are a counterparty to the Fed’s Open Market operations. William C. Dudley is the president and chief executive officer of the FRBNY. He is also vice chairman of the Federal Open Market Committee (FOMC) and VP of the Markets Group, which oversees open market and foreign exchange trading operations and provisions of account services to foreign central banks and manages the System Open Market Account. Dudley is a former partner at Goldman Sachs (1986-2007), and he was Goldman’s chief economist. David Kotok of Cumberland Advisors has raised important questions about the fact that the Fed has dropped its role of surveillance of primary dealers, and his commentaries are available here . Besides trading treasuries, the big benefit to primary dealers is the perception that the Fed will provide funding to primary dealers during a systemic liquidity crunch. Just before Bear Stearns imploded, the Fed changed the rules so that non-U.S. banks, along with brokers that were primary dealers (as MF Global later became), were allowed to borrow through a program called a Term Securities Lending Facility (TSLF) to finance mortgage backed securities, asset backed securities, and more. TSLF’s start date was too late to help Bear Stearns, and the program has now been discontinued, but the perception of a Fed safety net has precedence. Why did the Fed award prestigious primary dealer status to a shaky operation like MF Global, an entity it does not regulate? MF Global Stalled and Wrote Rubber Checks: Did Some Customers Get Better Treatment? The week before the bankruptcy, when customers asked for excess cash from their accounts, MF Global stalled. According to a commodity fund manager I spoke with, MF Global’s first stall tactic was to claim it lost wire transfer instructions. Instead of issuing an electronic check or sending an overnight check, MF Global sent paper checks via snail mail, including checks for hundreds of thousands of dollars. The checks bounced. After the checks bounced, the amounts were still debited from customer accounts, and no one at MF Global could or would reverse the check entries. The manager has had to intervene to get MF Global to correct this, and still hasn’t gotten the entries corrected. Reuters’s Matthew Goldstein reported more in ” MF Global and the Rubber Check. ” I thought that was bad enough, but on November 10 I was a guest on Stocks & Jocks, a Chicago radio show, when Jon Najarian said that a large broker he knows got a $400,000 electronic check from MF Global the Friday before that bankruptcy, and the check cleared. If that’s accurate, MF Global treated some customers differently than others. Tip-Offs for Some Customers? In August, customers started pulling billions of dollars out of their segregated accounts with MF Global. It was the biggest outflow of funds since January 2009 . The bankruptcy trustee may clawback transfers of funds from MF Global as it was teetering, because it is likely that employees within MF Global were well aware of the problems and tipped off key customers. Yet Gary Gensler, head of the CFTC, did not investigate or begin transferring accounts out of MF Global before the bankruptcy, and that is unprecedented for the CFTC. Given that Gary Gensler was a protégé of Jon Corzine at Goldman Sachs, one should question why Gary Gensler didn’t act and why he should be allowed to remain head of the CFTC. CFTC’s Gary Gensler Didn’t Act Gary Gensler, Jon Corzine’s former Goldman Sachs colleague and current head of the Commodities Futures Trading Commission (CFTC), had reason to be concerned about MF Global’s risk management. In early 2008, a rogue trader racked up $141.5 million in losses in unauthorized trades that exceeded his trading limits. It seems he accomplished this in under seven hours. In August of this year, MF Global and the underwriters of its 2007 initial public stock offering (IPO) agreed to pay around $90 million to settle claims by investors that they were misled about MF Global’s risk management prior to the rogue trader’s actions. Since 2008, MF Global’s financial condition has been nothing to brag about. Now the settlement is in jeopardy due to the bankruptcy. [Michael Stockman, the chief risk officer of MF Global as of January 2011 (after the previous mentioned incident) was in my Liar's Poker training class lampooned by another classmate, Michael Lewis.] In the past, the exchanges and CFTC “always” moved customer positions before a Futures Commission Merchant (FCM) declared bankruptcy. The CFTC had ample reason to have contingency plans for MF Global based on publicly available information. Yet the Gensler-led CFTC hasn’t followed this historical precedent when an FCM led by his former Goldman colleague teetered on the edge of bankruptcy. Gensler has recused himself from the CFTC’s probe of MF Global. The exchange-traded futures markets have been shaken to the core. The Bankruptcy Code apparently conflicts with the Commodity Exchange Act, so customers of MF Global have less protection than one might expect. The Securities Investor Protection Corporation (SIPC) is not the FDIC. Account holders have no idea how long it will take to get back all of their money, if it is there to be recovered, and right now, it appears a lot of it cannot be found. This is why many traders sweep all of the excess cash out of their accounts each day, and only put in cash when required. MF Global Debacle Damages a Key Global Market The “risk wizards” of Goldman Sachs once again look like market wrecking balls. The futures market is a globally connected market and it is a key mechanism for farmers, metals miners, and metals fabricators (among others) to hedge their risk. Confidence in the futures market has been shaken. No one knows if their money is safe, but what is more disturbing is the appearance of crony capitalism once again giving favored treatment, lax regulation, and absent oversight to a crony capitalist that abused all of these perks to blow up a large financial firm and damage a key global market. This commentary is available in pdf form by clicking this link .

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Michel Kelly-Gagnon: Should We Trust the Government to Protect Our Online Privacy?

October 29, 2011

Privacy is logically a matter of individual conscience. It belongs to every individual to decide what he considers part of his private life and how much of it he is willing to expose to others. When you invite a friend into your home, when you walk in the street, when you post something on the Internet, or when you make an economic transaction, you are releasing some information about you. In other words, social life necessarily involves a breach of privacy, and it is — or should be — up to each individual to decide which trade-off he is willing to make between the benefits of privacy and the benefits of social interaction. Of course, there are costs to whatever one chooses. One can’t have both the benefits of total privacy and the benefits of total social immersion. Sacrificing some social life in favour of privacy involves a cost; sacrificing some privacy in order to have more of a social life does too. But ultimately, that is a matter for each one of us to decide. As more and more of our social life seems to be going on in the virtual world of the Internet, this is the kind of fundamental principle that should inform the debate about privacy online. Unfortunately, this as on so many other issues, calls for the government to take this responsibility away and to decide on behalf of all of us have muddled the debate. For example, there have been more and more attacks on the privacy practices of large IT companies such as Google and Facebook in recent years. Governments are investigating Google for inadvertently collecting data transmitted to its Street View vehicles by unprotected home computer networks. Facebook is also under investigation by the Irish privacy commissioner for the way it uses its customers’ information. Now, in theory, nobody is forced to deal with Google or Facebook. If you stay inside your home or behind your garden walls, a Google Street View car will never see you. If you refuse to become friends with anyone on Facebook and you don’t post any pictures or information about yourself on the Internet, you will remain mostly invisible in that virtual world. There may of course be a high cost in avoiding Google, eschewing Facebook, and living as a recluse, but there is also a cost (a privacy cost) in making the opposite choice and trying, for example, to have as many friends and social connections as possible. Some people seem to think that individuals are not wise enough to make these choices, and that somebody has to decide for them and impose the same trade-off on everybody. I prefer to think that any individual, in matters concerning his own life, is wiser than anybody else. And that there is usually a way to solve these matters without recourse to government intervention. For example, private companies do have incentives to be careful with their customers’ data. Indeed, they usually have elaborate privacy policies . Google blurs faces and licence plate numbers from its street views, and you can ask them to delete more. This would be the case even without the threat of government intervention. Facebook bowed to pressure from users and privacy advocates and made various changes to simplify its privacy settings and allow less information to be shared and searched on its pages. Any private supplier can only use or request information from his customers up to the point where the marginal benefit for him stops outweighing the cost of bad publicity and the loss of unhappy customers. Free markets provide their own checks and balances, especially when hundreds of potential competitors are lurking. It is simply not possible to have everything — both to force companies to guarantee total privacy, and to have efficient social networks and information to which advertisers and investors will continue to flock. If somebody disagrees with that assessment, he is quite free to go and create the next search engine or social network, and use none of his customers’ data. Good luck! These views may seem unconventional in today’s debates, but they are not exactly far-fetched or original. I am simply proposing to rely mostly on private choices when dealing with privacy issue, something that should be obvious and logical. This is in opposition to the reigning ‘public,’ that is, government approach to this problem. There is indeed a great paradox here. The very governments which have built large databases with information that they legally force individuals to provide, which have created ID papers and systems that make individuals continuously traceable — these very governments are now harassing private companies that offer benefits in exchange for voluntarily giving up some privacy (or giving up privacy that is impossible to protect in an advanced society). Who will watch the watchdog? General legal rules are certainly necessary to facilitate life in society. But there is no place, in a free society, for bureaucrats and politicians to impose their uniform vision of privacy. Let every individual take care of his own privacy, and make the trade-offs he chooses. Let companies compete for offering consumers different mixes of privacy and other benefits. And let’s accept that, contrary to the public view of privacy, there is no panacea in politicians and government bureaucrats making such decisions for everybody.

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Poll: Majority Of Global Investors Back Buffett Rule

September 30, 2011

The majority of global investors support boosting taxes on households earning at least $1 million, according to a Bloomberg poll released Friday. Sixty-three percent of global investors said they support the so-called Buffett rule — named for billionaire Warren Buffett, who proposed raising taxes on the “super-rich” in an op-ed in The New York Times . American investors were less supportive than their colleagues around the world; forty percent backed the rule, according to the poll. But the majority of American voters are in favor of taxing the rich. Nearly three-quarters of Americans said they supported the Buffett rule , according to a poll released earlier this week by the website Daily Kos. Two-thirds of Americans also support raising taxes on households earning more than $200,000 , a recent Gallup poll found. And A majority of Republicans also support the rule, according to the Daily Kos poll. Still, the partisan rhetoric surrounding the measure may tell a different story. After Obama proposed the Buffett rule earlier this month as part of a larger plan to cut the national deficit using a combination of tax cuts and spending increases , Republican leaders accused him of stoking “class warfare.” In the op-ed, Buffett wrote that his tax rate is lower than that of everyone else working in his office . Buffett suggested raising tax rates on those making $1 million or more both as a way to “stop coddling” the rich and as a way to spur economic growth. Still, some argue that even if the Buffett rule were to survive and become law, it would do little to curb the budget deficit. Daniel Indiviglio of The Atlantic wrote earlier this month that if tax rates on the rich went back to pre-Bush-tax-cut levels they would bring in 4.5 percent of the 2009 national deficit. But many governments around the world think a Buffett rule-type law would help to solve their budget woes. France and England have boosted taxes on their wealthy , according to The New York Times , and Spain, Greece, Japan and Italy are considering doing the same. European investors had the highest level of support for the Buffett rule at 78 percent , the Bloomberg Poll found, while 69 percent of Asian investors back it. The Buffett rule may have less than half the support of U.S. investors, according to the Bloomberg poll, but it’s backed by one prominent American. Def Jam co-founder Russell Simmons told MSNBC on Thursday that he wants the U.S. government to raise his taxe s. The hip-hop mogul, who is worth an estimated $340 million, took a page out of Buffett’s book saying in the interview: “All my employees — every single one — paid more taxes than I did.”

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On The Road: Solyndra’s Workers Join Scramble For Jobs

September 23, 2011

NEWARK, Calif. — While 51-year-old Mohammad Sharifi, a married father of two, was getting ready for work on Aug. 31, his son came into the bedroom to tell him a co-worker had called. Sharifi phoned his friend — who had just finished a night shift at Solyndra, the solar panel manufacturer where they both worked as equipment technicians — and learned, just before he put on his tie, that “there was no job anymore.” The company had filed for bankruptcy, and its headquarters in nearby Fremont were quickly surrounded by security guards and TV satellite trucks. In the weeks since, much attention has been given to Solyndra’s collapse and the half-billion-dollar loan guarantee the company received from the Obama administration. There’s been far less interest in the company’s roughly 1,100 former employees, all of whom were let go at the end of August. While it’s hard to know how many of these formerly well-paid workers are still out of work, several hundred gathered here Friday at Ohlone College to meet potential employers. Many of the laid-off workers — who came in dress shirts and ties, reminders of the booming industry in which they used to work, and carried stacks of r&eacutesum&eacutes — had eerily similar stories to tell of waking up one Wednesday morning and hearing from a colleague or relative that something was happening at Solyndra. For Daniel Hughes, a 48-year-old who had spent the last three years at the company, the search for work began when his sister called and told him to turn on the television. Now Hughes is growing increasingly worried. He was paid for just 30 hours of accrued vacation time and can’t afford the COBRA health coverage because it costs about $250 per week and he’s receiving just $450 per week in unemployment benefits. The competition for jobs is steep, especially with so many qualified former Solyndra employees applying for the same openings. Josh Plaisted, the chief technology officer at EchoFirst, another solar energy company, said he sees about a hundred applications for each job opening. Right now he has six spots available in Fremont, a technology-centric city that has a population of a little more than 200,000 and an unemployment rate of about 10 percent. Those odds make it tough for James Daniels, who is 55 and has two kids, to be optimistic as he meets on Friday with recruiters, who all hand out pens and candy and too often also bad news. In this way, even as the circumstances surrounding Solyndra’s demise are fairly unusual, the circumstances in which its former employees find themselves are all too common. Daniels, who worked a night shift in the manufacturing division, said the lack of notice about the company’s troubles made looking for a job even harder than usual. At a business update meeting about a month before the bankruptcy, Daniels said, he had asked an executive about the company’s cash flow. He was told Solyndra would have enough money to make it through at least the end of 2011. That turned out to be wrong. And while most of the ex-employees said there was plenty of blame to go around — from state and federal government officials to corporate executives, to say nothing of foreign competition — Daniels and others said it hurt to see Solyndra’s top leaders dodging questions on Capitol Hill about the company’s collapse and the odds it would ever repay the government-guaranteed loan. “At least he could have said something,” Daniels remarked, referring to Solyndra CEO Brian Harrison. “For our chief to plead the Fifth, that just doesn’t make you proud to have worked so hard for so long.” For now, though, there aren’t enough free hours to read all the accounts of Solyndra’s failure. Looking for a job can be a full-time job. Although some former employees joked that Friday’s event was like a family reunion, it was a reunion at which stress counseling services were offered. Sharifi said it had taken him 10 months to find a job at Solyndra, and he expects it’ll take longer to find work this time. But he said he couldn’t show a negative attitude in front of recruiters, and so, as his turn to speak with a representative from Applied Materials came, he added, “I feel great. I really do.” And then he turned back and said, “I’ll still feel great tonight if I get a job today.” This post is part of Patch: The Road Trip . Read Arianna Huffington’s introduction to the project , and be sure to follow Paul on Twitter and MapQuest .

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German FDP calls delay in Greek talks blow to euro

September 3, 2011

BERLIN (Reuters) – The interruption of talks between Greece and international lenders on a new aid tranche is a blow to the stability of Europe’s currency, the deputy leader of Germany’s junior coalition partners said on Saturday. Christian Lindner, general secretary of the Free Democrats, (FDP) junior coalition partners in Chancellor Angela Merkel’s center-right government, said Athens was endangering European solidarity. “The breakdown of talks between the Troika and Greece is a blow to the stability of the euro,” he said at a news conference in Berlin. Referring to Greece’s failure to meet deficit targets set in exchange for a second bailout package, Lindner said Athens was shirking responsibilities to which it had agreed. “This is not about non-binding statements of intent, but contractually secured reciprocity for the emergency loans,” he said. “We insist these agreements are observed.” Talks between Greece and the EU, IMF and ECB were put on hold on Friday after disagreement over why Athens has fallen behind schedule in cutting its budget deficit and what it must do to catch up. The unplanned early departure of senior inspectors from the three bodies showed tension between Athens and its lenders over reforms, as clouds gathered over the second bailout package aiming to pull the country out of a severe debt crisis. The pro-business FDP styles itself as a defender of the German taxpayer, a stance Lindner reiterated in his statement over Greece. “Taxpayers in Northern Europe and especially Germany cannot accept inability or reluctance. In the eyes of the FDP, Greece must reaffirm it will for stability and reform.” “Mediation or postponements are no longer acceptable for us. The heads of the IMF and euro countries should therefore travel to Athens immediately to obtain binding declarations toward the fulfillment of the agreed goals.” (Reporting by Brian Rohan)

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Glenn Llopis: 6 Essential Characteristics All Business Leaders Will Need in 2012

September 3, 2011

The United States is undergoing great change — and at an ever-accelerating pace – during these tough post-2008 economic times, with upheavals in the political, social, and economic spheres all at once. The political mood is bitter, the social fabric is ripped in many places, and the economy continues to deliver bad news in terms of foreclosures, business failures, and high unemployment. How to survive in this tough, fast-changing terrain? When my Cuban parents came to the United States in the wake of Castro’s revolution, the most precious possession they brought with them was their perspective. It was that perspective – their immigrant values – that enabled them to adapt, reinvent themselves and ultimately thrive in a new country, a new culture, and a new set of challenges. That’s what we need today. The following represent the six (6) characteristics that define the immigrant perspective on business leadership that will be essential for business leaders to embrace in 2012: 1. Keep Your Immigrant Perspective: Like an immigrant who comes to a new country with nothing but faith, hope and love, all employees must not have myopia where opportunities are concerned. We need to see that opportunities are everywhere, every day, and we must make the most of those that cross our path. We need to see the opportunities that others don’t see. 2. Employ Your Circular Vision: My family – like most immigrant families – experienced crisis and change in our mother country – strengthening in us a sort of essential sixth sense, an ability to anticipate false promises and unexpected outcomes. Because our immigrant perspective allows us to see opportunities others cannot, we have wide angle vision and are proficient at anticipating crisis and managing change before circumstances force our hand. All leaders in 2012 will need to develop this ability to see around the corners up ahead. 3. Unleash Your Passion: Our ability to inject intense passion into everything we do makes us potent pioneers. We not only blaze paths few would go down, we see them through to the end. Our passion opens new doors of possibilities that we aim to share with others. When the terrain is difficult, only passion for the quest will see you through. 4. Live With an Entrepreneurial Spirit: In America, you might be an entrepreneur. In Latin America and other developing countries, you must be one, just to survive. The ability to see and seize opportunities to build relationships, advance commerce, and better humanity is an inborn survival mechanism for immigrants – and must become one for all business leaders in 2012. 5. Work With a Generous Purpose: It is our nature to give. We are raised to consider others’ needs as much as our own. This begins with giving inside our family when we are young, and then, when we are older, we are taught that we are a part of a larger family all around us. Our propensity to give to others from our harvest ensures us a perpetual harvest. Business leaders who adopt this abundant, glass-half-full attitude will find 2012 a year of surprising opportunities. 6. Embrace Your Cultural Promise: Our familial style of relating brings potentially everyone within the circle. The strongest bonds in business, across the entire value chain, occur when employees, partners and distributors alike are treated like family. The treatment is reciprocated and opportunities continue to arise. Our cultural promise is that success comes most to those who are surrounded by people who want their success to continue. Business leaders – and their companies – that embrace this attitude, and practice this skill, will thrive in 2012. 2012 – the year of the immigrant perspective. Because the times demand it, and all business leaders need to embrace the opportunities this perspective provides.

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Four European Countries Ban Short Selling In Order To Protect Markets

August 12, 2011

Four European countries are banning the short selling of stocks in their markets to try to halt the precipitous plunge in value of troubled European banks, a step that some experts say could intensify fears and ratchet up risks of another financial crisis. Belgium, France, Italy and Spain have decided to impose a temporary ban on short selling, beginning on Friday, according to a statement from the European Securities and Markets Authority released Thursday evening, after markets had closed. It remains to be seen how American markets will react to the news. The past week has seen extreme volatility in the Dow and other benchmark indexes, as investors have greeted even seemingly minor developments with amplified responses. The Dow Jones industrial average finished Thursday 423 points up, or nearly 4 percent on the previous day, a lift that was widely attributed to a fall in the number of people submitting claims for unemployment benefits for the week. The ban on short selling carries echoes of the 2008 financial crisis, when the Securities and Exchange Commission temporarily banned short sales in the U.S. , a move that resulted in a brief rally but ultimately did little to arrest the market’s free fall. Thursday’s ban in Europe could be taken as a sign of lack of confidence in the markets, say experts. Investors might interpret it as a harbinger of disaster, and react accordingly. In short-selling, one investor borrows stocks from another and sells them off, hoping their price will drop before she has to buy them back and return them to their original owner. If the price of the borrowed stocks does drop, the difference in price is the borrower’s profit. Critics say that short sales can lead to a downward spiral in stock prices, and argue that policing is necessary to check runaway speculation. Earlier this week, South Korea and Greece both enacted temporary bans on short sales — effective for three months in the case of South Korea, and two months in the case of Greece. Turkey also took steps to restrain short-selling , though it stopped short of an outright ban. In France and Spain, the ban on short sales will last for 15 days , and will only apply to stocks in the financial sector, according to the Globe and Mail . Belgium will ban short sales on four financial stocks for an unknown period of time. It was unclear which stocks the Italian ban would affect, or for how long it would be in place. A spokesman for the U.K. Financial Services Authority told Bloomberg that Britain has no plans to ban short sales .

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Turkish, Israeli Nationals Trafficked Organs, E.U. Claims

June 13, 2011

PRISTINA, Kosovo — A European Union prosecutor in Kosovo has indicted a Turkish and an Israeli national for involvement in an international network that falsely promised poor people money for their kidneys and then transplanted the organs into rich buyers, the bloc’s rule of law mission said Monday. Turkish citizen Yusuf Sonmez, and Israel’s Moshe Harel were charged last week for “trafficking in persons, organized crime and unlawful exercise of medical activity,” the mission, known as EULEX, said in a statement. Sonmez and Harel are considered at large by EU authorities and Interpol has issued a warrant for their arrest. The indictments are part of a larger investigation into allegations that an organized criminal group conducted operations in a clinic outside of the capital Pristina where the victims’ organs were transplanted into the buyers. EU prosecutor Jonathan Ratel – who brought the charges in 2010 – said victims were promised up to $20,000 (euro14,000) for their kidneys, but were never paid, while recipients were required to pay between euro80,000 and euro100,000 euros ($115,000-$143,000). The victims came from Moldova, Kazakhstan, Russia and Turkey, and lived in “extreme poverty or acute financial distress,” EULEX said. Kosovo law forbids the removal and transplant of organs. The case was brought to the attention of authorities in 2008 when Kosovo police acted upon information from a Turkish national who said his kidney had been stolen. Since then seven Kosovars, including doctors and a senior official in the Health Ministry, have been charged and are standing trial. Sonmez and Harel were indicted separately after EU investigators located Harel in Israel and an EU prosecutor interviewed Sonmez in Turkey earlier this year. Harel was detained in 2008, but later allowed to leave Kosovo upon the promise of return pending legal proceedings.

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Bin Laden’s Death Gives Markets Boost Of Optimism, Eases Fear Of Recession

May 2, 2011

This post has been updated. Osama bin Laden’s death has decreased the risk of doing business around the globe and especially in the Middle East, providing a needed boost to the broader economic recovery, economists said Monday. The leader of the al Qaeda terrorist group is dead, President Barack Obama announced from Washington late Sunday. The news has been a tonic for financial markets: the price of a barrel of oil fell; Japanese stocks rose to a post-earthquake high and U.S. stock futures surged. We live in a new and potentially less dangerous world, headlines are declaring. It’s a change that promises more investment in Middle East countries, cheaper transportation costs and less risk the U.S. economy will tip back into recession. “There’s a lot of positives out of this,” John Silvia, chief economist of Wells Fargo, said in an interview Monday morning. “It lowers the risk premium of anything. It generally decreases what we would call event risk — in other words, a sudden outbreak of terrorism.” “It will last as long as it’s perceived there’s no bin Laden junior coming along,” he added. Stocks across the world rose on the news of the terrorist leader’s death. Japan’s Nikkei 225 Stock Average gained 1.6 percent, reaching a high not seen since a devastating earthquake and tsunami struck the northeastern cost in March, Bloomberg News reported. The Stoxx Europe 600 index posted an eighth day of gains, and Standard & Poor’s 500 Index futures rose in London. “The nation finally caught a break,” Mark Zandi, chief economist of Moody’s Analytics, said in an email Monday morning. “At the very least, this will lift the collective psyche and rally financial markets for a bit, and confidence is vital to any recovery.” [ UPDATE: 9:40 a.m. -- Stocks had a strong opening in New York, with the S&P 500 up 0.29 percent, and the Dow Jones Industrial Average up 0.33 percent. Both indices pared immediate gains.] The good news comes during a period of economic strain. The price of oil has skyrocketed in recent months as protests across the Middle East turned violent, stoking investors’ fears that the supply from that crucial region would be compromised. Brent crude, a global benchmark, was up 50 percent compared to last year, as of Friday. As the price of oil rose, the price of gas followed, and a gallon of regular gas in the U.S. now costs an average of nearly $4, according to the American Automobile Association. High energy prices were leading economists to slash their forecasts for U.S. economic growth. Consumer confidence, an important economic indicator, plummeted in March. High gas prices were causing Americans to cut back on driving, and, as business contended with increased transportation costs, some were forced to scrap plans to hire new workers. Further, high gas prices take a profound psychological toll, making people feel poorer. Energy prices rose to highs not seen since 2008, when months of high oil prices helped drag the economy into recession. But, at least for now, that trend has reversed. In the U.S., a barrel of crude for June delivery fell from near $114 to just above $112 on Monday. The general feeling among investors seems to be that there’s now less risk of an oil supply disruption. Some tension that has accumulated over the last few months has apparently now eased, bringing the price of oil down. The dollar, which had reached a three-year low, began to climb. “One interpretation is that bin Laden’s death means that Al Qaeda will be in disarray for some time, leading to relative calm with respect to new terrorist threats, which in turn reduces the potential for disruption in oil supply,” Andrew Lo, a finance professor at MIT, said in an email early Monday. “Financial markets will likely react positively to this news in the short run, but the repercussions may be more complex over time as we learn how bin Laden’s death affects his organization and, consequently, the political economy of the Middle East.” It’s too soon to say what the long-term economic effects of bin Laden’s death will be, economists noted. Bin Laden himself did not much affect oil prices while he was alive, said Nariman Behravesh, chief economist of IHS Global Insight, in an email Monday morning. But for now, the terrorist’s death has apparently given investors a sense of optimism, which has propelled financial markets upward. Over the longer term, it could make secular Middle East countries like Turkey more attractive to investors, noted Silvia, the Wells Fargo chief economist. The so-called risk premium of doing business there could be lower, as a major terrorist attack now seems less likely. An influx of investor money could give the region an economic boost. But fundamental economic problems remain. Greece, which requested a bailout last year and has been crippled by debt, still struggles. Portugal, Ireland and Spain and the other relatively weak countries in the Euro zone still confront the prospect of painful and lengthy economic recoveries, as the high value of the Euro makes it difficult to undertake the monetary easing that a country with its own currency can implement. Bin Laden’s death is “not going to be the answer to what’s going on,” Silvia said. Further, the status of al Qaeda remains uncertain. The leader’s death could even spark a surge of terrorist attacks in the short run. The State Department issued a travel alert Monday morning, warning of the potential for anti-American violence. The alert lasts until August 1.

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May Day Protests Around The World

May 1, 2011

ISTANBUL — Activists flooded a central plaza in Turkey’s largest city Sunday and marked international workers’ day around the world with marches demanding more jobs, better working conditions and higher wages. About 200,000 workers gathered in Istanbul’s Taksim Square in the largest May Day rally there since 1977, when 34 people after shooting triggered a stampede. Turkish unions weren’t allowed back until last year. In South Korea, police said 50,000 rallied in Seoul for better labor protections. They also urged the government to contain rising inflation, a growing concern across much of Asia, where food and oil prices have been spiking and threatening to push millions into poverty. Thousands of workers also marched in Taiwan, Hong Kong and the Philippines to vent their anger over the rising cost of living and growing disparities between the rich and poor. Chinese holidaymakers flocked to Beijing’s Tiananmen Square to watch the daily flag-raising ceremony. In the Philippines, about 3,000 workers demanding higher wages held a protest in a Manila square that included setting alight the effigy of Philippine President Benigno Aquino III grinning in a luxury car. Aquino was criticized this year for buying a secondhand Porsche in a country where a third of people live on a dollar a day. In Taiwan, about 2,000 people rallied in Taipei to protest the widening income gap and to demand their government create better work conditions. About 3,000 people in Hong Kong took part in a Sunday morning protest while another 5,000 were expected at an afternoon rally, local media reports said, citing union organizers. In Spain, where the unemployment has reached a eurozone high of 21.3 percent, several thousand people gathered in the eastern port city of Valencia and protested the government’s failure to create new jobs. In Moscow, up to 5,000 Communists and members of other leftist groups marched through the city carrying a sea of red flags to celebrate their traditional holiday, what in Soviet times was known as the Day of International Solidarity of Workers. Since the 1991 collapse of the Soviet Union, the holiday has been known as the Day of Spring and Labor, and organizations from across the political spectrum held their own marches on Sunday. The dominant pro-Kremlin party, United Russia, gathered the largest crowd by pulling in workers from factories and institutes in and around Moscow. Party organizers claimed that 25,000 people took part. The holiday also brought out about 30 members of the Syrian diaspora to protest their government’s use of military force against protesters calling for an end to President Bashar Assad’s rule. Communist leader Gennady Zyuganov, whose party is the only nominally opposition faction in the Kremlin-loyal parliament, called for national solidarity. A handful of gay activists tried to join the Communist march, but organizers and police insisted they roll up their flags to avoid conflict. ____ Associated Press writers Kelvin K. Chan in Hong Kong, Gillian Wong in Beijing, Hyung-jin Kim in Seoul, South Korea, Aaron Favilo in Manila, Philippines, Lynn Berry in Moscow, Russia and Harold Heckle in Madrid, Spain contributed to this report.

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Starbucks To Help Pinkberry Achieve Global Frozen Yogurt Domination

May 1, 2011

If you have plans to vacation in Britain, Turkey, Morocco, and the Philippines this year, you might just find a tart, cold reminder of home. By the end of 2011, Pinkberry is planning to to be in 17 different international markets, according to Nation’s Restaurant News.

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Turkey Burger Recall Announced

April 3, 2011

The Jennie-O Turkey Store has recalled 54,960 pounds of frozen, raw turkey burger products, the U.S. Department of Agriculture announced . The recall was prompted by possible Salmonella contamination, according to the release . The affected product will have a use date of Dec. 23, 2011 and includes: “4-pound boxes of Jennie-O Turkey Store® “All Natural Turkey Burgers with seasonings Lean White Meat”. Each box contains 12 1/3-pound individually wrapped burgers.” At least 12 people in Wisconsin and nine in other states have reported illnesses, Milwaukee Journal-Sentinel reported , prompting the recall. According to WalletPop , illnesses have also been reported in Colorado, Ohio, Arizona, California, Georgia, Illinois, Mississippi, Missouri and Washington. For more information, read the USDA release here.

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Iran, Turkey discuss oil, gas fields projects

January 26, 2011

Iran, Turkey discuss oil, gas fields projects

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Mauritius, Turkey finalize free trade negotiations

January 24, 2011

Mauritius, Turkey finalize free trade negotiations

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Editorial: Turkey’s plans

December 23, 2010

Editorial: Turkey’s plans

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Parsons Appoints Price as Managing Director, Northern Mediterranean

December 21, 2010

PASADENA, CA–(Marketwire – December 21, 2010) – Parsons announces the appointment of William D. “Bill” Price as Managing Director for the Northern Mediterranean region (Portugal, Italy, Greece, Spain, and Turkey). In this capacity, he will be responsible for overseeing the sales and operations of Parsons’ work in these markets.

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POSCO to build $350m plant in Turkey

December 19, 2010

POSCO to build $350m plant in Turkey

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Katie Hafner: Investing In Divorce: An Exclusive Interview With Stacey Napp

December 18, 2010

Stacey Napp understands the ugly side of divorce–which is often the side that involves money. In fact, she understands it so well that in 2008 she started a business, Balance Point Divorce Funding , which invests in divorce and probate litigation, helping clients cover costs in exchange for a share of the winnings. Napp started Balance Point, based in Beverly Hills, California, after her own 13-year marriage fell apart in 2001. Napp was going to settle for $500,000 and the house, but when she discovered her husband was about to sell his business for nearly $6 million, she thought again. Family members and friends pitched in to help her with the legal costs. Seven years and countless court appearances later, Napp prevailed, and used some of the proceeds to help start Balance Point. The company lends clients the money to pay for lawyers’ fees, hire investigators to search for a spouse’s hidden assets, and maintain a “reasonable” lifestyle (“If you are accustomed to vacationing in Maui every winter, power to you, but not this winter,” she says). Napp currently has ten clients and expects her first case to be resolved soon. KH: Why do you think businesses like yours haven’t sprung up earlier? SN: Ours is really a unique business, which I suspect has a fair amount of pushback from investors for three reasons. First, litigation is far from the bricks and mortar investment of, say, real estate, where people can see what they are investing in. And a lot of potential investors don’t understand divorce litigation, so they shy away from it. Second, we are talking about divorce and probate litigation and I think there can be an uneasiness about treading in these waters. Third, this is a relationship-intensive business. The amount and level of support needed by clients requires an involvement with the personal dynamics of each case. To do it right, you have to help your clients manage the myriad issues they will encounter and increase their chances of coming out whole at the end of the process. Because I’ve been through this process and know what support is needed and how important it is, the support is an integral piece of Balance Point’s business model. Most investment firms treat investments as fungible — put their money up and move on. We embrace a format that includes the management component. KH: Is it true that all Balance Point’s clients are women? Why is that? SN: Yes, to date. It’s also true that I am determined to change this. We have looked at cases from prospective male clients, but each case has had some insurmountable sticking point such as an ironclad pre-nuptial agreement. But we’ve been receiving new inquiries from prospective male clients, which we are currently seeking to underwrite. Perhaps the more critical question is this: for a company that offers its services to the financial underdog in a marriage regardless of race, religion or gender, why do mostly women — and not men — seek out our services? I believe the answer to this question is fairly simple and it has to do with the dynamics of the earnings of husbands and wives. No big surprise here: men are typically the primary breadwinner spouse. As such, the husband has control of the income flow and the major assets of the marital community or family. Therefore, when a marriage goes south, it is usually the husband who is financially in control and the wife who gets cut off from both income and assets if the primary breadwinner is inclined to engage in gamesmanship over the finances. Ergo, it is usually the women who seek us out. KH: So essentially, what your services do is level the financial playing field, right? SN: From a financial perspective you are correct. However, we have found that our services really are more than simply writing a check. In reality, part of our services entail being able to read and help the client navigate through what is unfamiliar and frightening terrain to them, yet simply the page from a well-worn playbook to us. KH: You say ‘well-worn playbook.’ Have you had any clients so far whose situation has surprised even you? Not clients, but cases that have come to us yes, definitely. Just when you think it can’t get any worse, it does. The common thread that runs through these cases is the despicable manner in which the in-spouse treats the out spouse (the “out” spouse is the one with the significantly lower income). And I have news for you, the women who are in the in-spouse position and are inclined, are just as out of control as their male counterparts. KH: What’s an example of a despicable display? SN: Despicable can take many forms. To me, hands down the worst is when the children are caught in a tug of war between the parents, often because one or both of the parents bad mouth the other spouse to the children. We also see again and again a scenario where people build a life together, have children together and then when the marriage comes to an end the spouse with the income or assets financially washes their hands of their former spouse and their own children, claiming newfound poverty. Lastly, despicable are the spouses who for no reason other than sport use their superior financial resources to “break” the other spouse. Years ago in Ron Perlman’s infamous divorce from Patricia Duff, the following comment was attributed to him in the NY press: “I will destroy you, and I will enjoy it.” True or not in Mr. Perlman’s case, we have seen this sentiment at play over and over again. KH: Are there any humorous moments, even if it’s dark humor? SN: Every once in a while you hear a story that, amidst all the pain and suffering and bad behavior prevalent in divorce, makes you laugh. Here’s one: A husband and wife were headed into a divorce. They had a nice house on the side of a mountain, substantial assets but not living high on the hog by any means. The husband worked, wife was a stay-at-home mom to their two small children. I am told that there was a drinking issue with the husband and so one day while he was at work, the wife decided to avoid a confrontation with her husband (which she feared could turn nasty) and pack up the kids and move out. The wife somehow knew she should expect that the first several months apart would be rough financially and that she should expect no funds from her husband. In that spirit as she packed up her van, she threw into boxes and bags every food item she could find that would save her from spending money. Into the bags went all the kids’ clothes. Into more bags went the contents of the pantry and refrigerator. On her last trip back into the house, while the kids waited in the van in the driveway, she found a whole turkey in the freezer. It didn’t matter that it wasn’t Thanksgiving, this could feed them for a week. And so, having run out of bags, she grabbed the 20 pound bird and headed out the door. But she tripped and dropped the turkey. The turkey of course, dropped on her foot and broke it, then proceeded to slide down the driveway and down the side the mountain. I heard this story years ago and and it still tops all for a moment of levity in a business that showcases so much heartache. I call this story, “Give ‘em the bird”. This is the start of a regular column in this spot. I hope you’ll share your own stories, questions — and, of course, your viewpoint — via comments or email ( katieh@gmail.com ).

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Video: Turkey Draws European Retailers as Consumer Demand Rises

November 9, 2010

Nov. 9 (Bloomberg) — Bloomberg’s Eric Coleman reports on the attraction of Turkey’s economy for European retailers.

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Chile ratifies free trade accord with Turkey

November 6, 2010

Chile ratifies free trade accord with Turkey

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BBVA to buy a stake in Garanti Bank and expand into Turkey 

November 2, 2010

BBVA to buy a stake in Garanti Bank and expand into Turkey

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Video: Turkey Property Boom Transforms Istanbul, Draws Protests

October 22, 2010

Oct. 22 (Bloomberg) — Bloomberg’s Josh Bassett reports on the property boom in Turkey that has seen real estate developers transform parts of Istanbul while drawing protests from locals who are seeking to preserve traditional architecture.

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Video: Babacan Says Turkey’s Economy May Grow 5-8% This Year: Video

September 23, 2010

Sept. 23 (Bloomberg) — Turkey’s Deputy Prime Minister Ali Babacan talks about the outlook for the country’s economy. Babacan also discusses Turkey’s banks, fiscal policies and possible membership in the European Union. He talks with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

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Iran, Turkey to boost rail transport capacity

September 20, 2010

Iran, Turkey to boost rail transport capacity

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Turkey – a housing boom ready to roll

September 16, 2010

Through the years Turkey has had a unique presence in the European imagination, the exotic, the image of the ‘other’. Turkey brings to mind Istanbul, the rich cultural legacy of Constantinople and of the Ottoman Empire, its cultural and culinary pleasures.

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Video: Ash Says Erdogan in `Good Position’ After Referendum

September 13, 2010

Sept. 13 (Bloomberg) — Tim Ash, head of emerging-market research at Royal Bank of Scotland Group Plc in London, talks about the result of Turkey’s referendum on constitutional reform. Turkey’s ISE National 100 Index reached a record and the lira rallied the most in three months after Prime Minister Recep Tayyip Erdogan won the poll that may strengthen his government’s power, boosting re-election prospects. Ash speaks with Francine Lacqua on Bloomberg Television’s “On The Move.”

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Kuveyt Turk’s debut sukuk to open door for Turkey

September 6, 2010

Kuveyt Turk’s debut sukuk to open door for Turkey

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Iran, Turkey sign economic cooperation MoU

July 20, 2010

Iran, Turkey sign economic cooperation MoU

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Iran, Turkey to co-build power plants

July 8, 2010

Iran, Turkey to co-build power plants

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Turkish Military Clashes With Kurdish Group, Launches Bombing Runs in Iraq

June 20, 2010

By Steve Bryant June 19 (Bloomberg) — Ten Turkish soldiers were killed in attacks by the Kurdistan Workers’ Party, or PKK, according to Turkey’s armed forces. The military said 12 PKK members had been killed in subsequent clashes. PKK gunmen attacked soldiers in the Semdinli region close to the Iraqi border, killing eight, the military said in a website statement . Additional forces were sent into the area and aircraft staged bombing runs in northern Iraq, according to the statement. Fourteen troops were wounded, the military said. Two soldiers also died in Semdinli when they stepped on a landmine laid by the PKK, the state news agency Anatolia reported. The clashes came the day after Turkish forces warned of an increase in attacks from the PKK. The organization on June 1 decided to step up attacks because Turkey is ignoring its demands for constitutionally recognized autonomy, General Fahri Kir told reporters in Ankara. The military has killed 130 PKK fighters and lost 43 soldiers since March, he said. Prime Minister Recep Tayyip Erdogan has widened Kurdish cultural rights, allowing television broadcasts in the language and increasing investment in Turkey’s mostly Kurdish southeast. The increase in PKK violence reflects the group’s “efforts to sabotage the initiative,” Erdogan said yesterday. It was the second time in a week that Turkey attacked the PKK inside northern Iraq, which the group uses as a base for attacks on Turkey. Turkey, the U.S. and the European Union classify the PKK as a terrorist group. The group has been fighting the Turkish state since 1984 in a conflict that has killed at least 40,000 people. Turkish authorities don’t negotiate with the PKK and its leader, Abdullah Ocalan , who’s serving a life sentence on an island jail in western Turkey. To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net

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Turkish Military Clashes With Kurdish Group, Launches Bombing Runs in Iraq

June 20, 2010

By Steve Bryant June 19 (Bloomberg) — Ten Turkish soldiers were killed in attacks by the Kurdistan Workers’ Party, or PKK, according to Turkey’s armed forces. The military said 12 PKK members had been killed in subsequent clashes. PKK gunmen attacked soldiers in the Semdinli region close to the Iraqi border, killing eight, the military said in a website statement . Additional forces were sent into the area and aircraft staged bombing runs in northern Iraq, according to the statement. Fourteen troops were wounded, the military said. Two soldiers also died in Semdinli when they stepped on a landmine laid by the PKK, the state news agency Anatolia reported. The clashes came the day after Turkish forces warned of an increase in attacks from the PKK. The organization on June 1 decided to step up attacks because Turkey is ignoring its demands for constitutionally recognized autonomy, General Fahri Kir told reporters in Ankara. The military has killed 130 PKK fighters and lost 43 soldiers since March, he said. Prime Minister Recep Tayyip Erdogan has widened Kurdish cultural rights, allowing television broadcasts in the language and increasing investment in Turkey’s mostly Kurdish southeast. The increase in PKK violence reflects the group’s “efforts to sabotage the initiative,” Erdogan said yesterday. It was the second time in a week that Turkey attacked the PKK inside northern Iraq, which the group uses as a base for attacks on Turkey. Turkey, the U.S. and the European Union classify the PKK as a terrorist group. The group has been fighting the Turkish state since 1984 in a conflict that has killed at least 40,000 people. Turkish authorities don’t negotiate with the PKK and its leader, Abdullah Ocalan , who’s serving a life sentence on an island jail in western Turkey. To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net

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Twenty Killed in Turkish Military, PKK Clashes Aircraft Bomb Inside Iraq

June 19, 2010

By Steve Bryant June 19 (Bloomberg) — Eight Turkish soldiers were killed in an attack by the Kurdistan Workers’ Party, or PKK, according to Turkey’s armed forces. The military said 12 PKK members had been killed in subsequent clashes. PKK gunmen attacked a company of soldiers in the Semdinli region close to the border with Iraq, the military said in a statement on their website. The military sent additional forces into the area and aircraft were bombing locations within Iraq, the statement said. Fourteen troops were wounded, it said. The clashes came the day after the Turkish Armed Forces warned of an increase in attacks from the PKK. The militants, which cross into Turkey from camps in northern Iraq, have escalated their attacks in recent weeks, killing nine Turkish soldiers and wounding more than 20 people since May 31. Turkey, the U.S. and the European Union classify the PKK as a terrorist group. The group has been fighting the Turkish state since 1984 in a conflict that has killed at least 40,000 people. To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net

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Twenty Killed in Turkish Military, PKK Clashes Aircraft Bomb Inside Iraq

June 19, 2010

By Steve Bryant June 19 (Bloomberg) — Eight Turkish soldiers were killed in an attack by the Kurdistan Workers’ Party, or PKK, according to Turkey’s armed forces. The military said 12 PKK members had been killed in subsequent clashes. PKK gunmen attacked a company of soldiers in the Semdinli region close to the border with Iraq, the military said in a statement on their website. The military sent additional forces into the area and aircraft were bombing locations within Iraq, the statement said. Fourteen troops were wounded, it said. The clashes came the day after the Turkish Armed Forces warned of an increase in attacks from the PKK. The militants, which cross into Turkey from camps in northern Iraq, have escalated their attacks in recent weeks, killing nine Turkish soldiers and wounding more than 20 people since May 31. Turkey, the U.S. and the European Union classify the PKK as a terrorist group. The group has been fighting the Turkish state since 1984 in a conflict that has killed at least 40,000 people. To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net

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Twenty Killed in Turkish Military, PKK Clashes Aircraft Bomb Inside Iraq

June 19, 2010

By Steve Bryant June 19 (Bloomberg) — Eight Turkish soldiers were killed in an attack by the Kurdistan Workers’ Party, or PKK, according to Turkey’s armed forces. The military said 12 PKK members had been killed in subsequent clashes. PKK gunmen attacked a company of soldiers in the Semdinli region close to the border with Iraq, the military said in a statement on their website. The military sent additional forces into the area and aircraft were bombing locations within Iraq, the statement said. Fourteen troops were wounded, it said. The clashes came the day after the Turkish Armed Forces warned of an increase in attacks from the PKK. The militants, which cross into Turkey from camps in northern Iraq, have escalated their attacks in recent weeks, killing nine Turkish soldiers and wounding more than 20 people since May 31. Turkey, the U.S. and the European Union classify the PKK as a terrorist group. The group has been fighting the Turkish state since 1984 in a conflict that has killed at least 40,000 people. To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net

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European Stocks, U.S. Futures Rise on Spain Copper, Oil Fall

June 17, 2010

By Stephen Kirkland June 17 (Bloomberg) — European stocks and U.S. index futures gained and the euro strengthened as a Spanish bond sale eased concern the government will struggle to finance its burgeoning deficit. Copper and oil retreated and gold rose. The Stoxx Europe 600 Index advanced 0.4 percent at 8:45 a.m. in New York. Futures on the Standard & Poor’s 500 Index rose 0.1 percent, trimming an earlier rally of as much as 0.7 percent after U.S. jobless claims unexpectedly increased. The euro rebounded, climbing 0.4 percent versus the dollar. The Swiss franc appreciated against all 16 of its most-traded counterparts as the central bank softened its stance on restraining the currency. Copper fell 2.5 percent, oil declined for the first day this week and gold advanced 0.7 percent. The MSCI World Index has gained for eight days, rallying 7 percent from its 10-month low on June 7 on evidence the global economy is weathering Europe’s debt crisis. Spain sold 3.5 billion euros ($4.3 billion) of 10-year and 30-year bonds at yields lower than the prevailing market rates, attracting bids worth as much as 2.45 times the securities on offer, assuaging concern that it would face difficulty meeting bond repayments. “The strong demand for Spanish bonds should help restore confidence,” Ciaran O’Hagan , a fixed-income strategist at Societe Generale SA in Paris, wrote in a research note today. The MSCI World’s eight-day advance is the longest stretch of gains since July 2009. European banks led the Stoxx 600 higher for a seventh day, extending the longest rally in nine months. Spain’s gauge of 35 stocks increased the most among 18 benchmark indexes in western Europe, rising 1.2 percent to a one-month high. Bonds Rally Spanish bonds rose, with the yield on the 10-year note falling from the highest level in almost two years. The yield dropped five basis points to 4.88 percent after earlier touching 5.04 percent. The difference in yield, or spread, between German and Spanish 10-year government bonds narrowed five basis points to 216 basis points. Spain is trying to convince investors it can cut the euro- region’s third-largest deficit, while propping up the country’s savings banks and lifting the economy out of a two-year slump. Spain, which faces 24.7 billion euros of maturing debt in July, had seen the risk premium on its 10-year bonds rise to a decade high on concern it may need to tap a European Union financial lifeline. BP Plc, battling to contain the worst oil spill in U.S. history, rallied 7.9 percent as the company scrapped dividends and pledged asset sales to meet President Barack Obama ’s demand for a $20 billion fund to help victims. The stock headed for the biggest daily gain since November 2008. Spreads Narrow BP’s European bonds rose, with the spread on its 1 billion euros ($1.2 billion) of 4.5 percent notes due November 2012 narrowing to 555 basis points, from 696 basis points yesterday, according to HSBC Holdings Plc prices on Bloomberg. Credit- default swaps to insure the company’s debt for one year tumbled 521 basis points to 476, CMA DataVision prices show. The gain in U.S. futures signaled stocks may rebound, after the S&P 500 yesterday slipped 0.1 percent. Futures pared gains after initial jobless claims increased by 12,000 to 472,000 in the week ended June 12, Labor Department figures showed. Economists surveyed by Bloomberg News projected 450,000 claims, according to the median forecast. The number of people receiving unemployment insurance rose, while those getting extended benefits dropped. The cost of living in the U.S. dropped, adding to evidence the economic recovery is not stoking inflation. The 0.2 percent decline in the consumer price index was the biggest since December 2008 and followed April’s 0.1 percent decrease, figures from the Labor Department showed today in Washington. Excluding food and fuel, the so-called core rate increased 0.1 percent. The figures matched the median forecasts in a Bloomberg News survey. The Conference Board’s leading economic indicators, a measure of the outlook for the next three to six months, may have increased 0.4 percent in May, the 13th gain in the past 14 months, the survey showed. The report is set for 10 a.m. Another report today may show manufacturing in the Philadelphia region expanded this month. Euro, Franc The euro rose, mirroring the gain in the S&P 500 futures index. The currency advanced 0.4 percent to $1.2363, and 0.4 percent to 112.99 per yen. The yen was little changed at 91.30 versus the dollar. The Swiss franc approached an all-time high against the euro after the central bank softened its stance on fighting franc gains as deflation risks ease. The franc appreciated 1 percent against the euro to 1.3786 and 1.5 percent to 1.1141 per dollar. The Swiss National Bank, which has been buying foreign currencies since March 2009 to counter the threat of deflation, said today that those risks have “largely disappeared.” It also held the three-month Libor target rate at 0.25 percent at its quarterly meeting in Geneva. The MSCI Emerging Markets Index rose 0.8 percent, climbing for an eighth day in the longest stretch of gains in two months. Benchmark indexes in Turkey, Indonesia, Egypt and Romania climbed more than 1 percent. Copper for delivery in three months declined $164.50 to $6,485.50 a metric ton on the London Metal Exchange. Crude oil futures for July delivery fell 0.9 percent to $76.99 a barrel on the New York Mercantile Exchange. Gold for August delivery climbed 1.3 percent to $1,246.30 an ounce. To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net ;

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Iran Sanctions Tightened by UN as China Urges Further Diplomatic Efforts

June 9, 2010

By Bill Varner June 9 (Bloomberg) — The United Nations Security Council voted to impose new sanctions on Iran that restrict financial transactions, tighten an arms embargo and authorize the seizure of cargo linked to its nuclear or missile programs. The 15-nation Security Council voted 12 to 2, with one abstention, to adopt a resolution that freezes the assets of 40 companies, banks and government agencies, and bars the foreign travel of Javad Rahiqi, head of a branch of the Atomic Energy Organization of Iran. Turkey and Brazil voted against the measure, and Lebanon abstained from the vote. “We will ensure that these sanctions are vigorously enforced,” President Barack Obama said at the White House. “A nuclear arms race in the Middle East is in nobody’s interest.” The new round of penalties, the fourth set of sanctions imposed on Iran by the Security Council since 2006, is aimed at blocking Iran’s ability to develop nuclear weapons and pressuring the country to join international talks. The Brazilian ambassador to the world body, Maria Viotti , told the Security Council just before the vote that the resolution was a mistake. “Sanctions threats can result in tragic consequences,” Viotti said. The Turkish foreign ministry said the sanctions don’t contribute to regional peace and security, in an e-mailed statement. Uranium Deal Brazil and Turkey, a North Atlantic Treaty Organization ally of the U.S. that borders Iran, have pursued a deal to swap Iranian enriched uranium for fuel to power a medical-isotopes reactor. The two countries, which have temporary seats on the Security Council, say the exchange would build confidence and keep talks with Iran open. The U.S. and its allies say Iran has rebuffed diplomacy. Iran maintains that its nuclear development work is intended for energy production, not to build weapons. Its uranium-enrichment effort has fed suspicions among U.S. leaders that the Iranian nuclear aims are military in nature. Iran probably would need three to five years to complete a bomb, Marine Corps General James Cartwright , vice chairman of the U.S. Joint Chiefs of Staff, told a Senate Armed Services Committee hearing on April 14. Cartwright said U.S. officials have no evidence that Iran has decided to build a weapon and noted the timeline was based on historical estimates. The sanctions vote drew an immediate reaction from Iran. “It is neither constructive nor will it have impact,” Foreign Ministry spokesman Ramin Mehmanparast said in a telephone interview in Tehran. ‘Trash Bin’ Iranian President Mahmoud Ahmadinejad was more blunt. “The sanctions you pass should be thrown into the trash bin like a used tissue,” Ahmadinejad was cited as saying by the state-run Iranian Students News Agency. “They are not capable of harming the Iranian nation.” Lawrence Haas , senior fellow at the American Foreign Policy Council in Washington, called the resolution negotiated with China and Russia a “Pyrrhic victory” for the Obama administration that will do little to achieve its aim of preventing Iran from developing nuclear weapons and ballistic missiles. “There are elements that are good, but also loopholes built in so I don’t know if I can point to any one thing with real bite,” Haas said in an interview. “There is no question they are tightening pressure but, unfortunately, not enough.” Lebanon Abstains Lebanon, which represents Arab nations on the Security Council, said its Cabinet couldn’t reach a decision on the resolution. “There was no majority, no consensus, therefore it was an abstention,” Mohamad Chatah , a political adviser to Prime Minister Saad Hariri , said in a telephone interview. French Ambassador Gerard Araud said Iran is continuing to enrich uranium in the absence of a “credible” nuclear energy program. “These measures will increase the cost to Iran of its proliferative policy,” he said of today’s resolution. “It will slow down the progress of the nuclear program and help us to buy time for diplomacy.” The UN resolution bars Iran from investing in uranium mining or construction of new enrichment facilities. It bans sales to Iran of tanks, armored combat vehicles, artillery, fighter jets, attack helicopters, warships or missiles. Insurance Transactions Financial transactions, including those related to insurance and re-insurance, would be barred if they might have a nuclear purpose. The text “calls upon” nations to intercept and inspect any cargo by air or sea suspected of containing banned materials that would contribute to Iran’s nuclear or missile programs. Three annexes to the main text of the resolution cite 15 entities “owned, controlled or acting on behalf” of the Revolutionary Guard Corps, an arm of the Iranian military with extensive business interests. One is the Khatam al-Anbiya Construction Headquarters, described as being involved in “large-scale civil and military construction projects,” including the nuclear facility at Qom whose existence was made public in September. Also cited are three companies the resolution says are related to the Islamic Republic of Iran Shipping Lines and 22 companies it says are involved in nuclear and ballistic missile activities. The companies include the Armament Industries Group, identified as a small-arms manufacturer, and the Ministry of Defense Logistics Export, which the measure says sells Iranian- made weapons “to customers around the world.” Bank in Malaysia The resolution targets the Malaysia-based First East Export Bank, which is “owned or controlled” by Bank Mellat, named in previous sanctions. Mellat has “facilitated” hundreds of millions of dollars in transactions linked to Iranian nuclear defense and missile entities, according to the resolution. The U.S. Treasury Department has barred U.S. transactions with the Malaysia bank. The Export Development Bank of Iran, which was included on the draft sanctioned companies list as late as June 7, was dropped from the final version of the UN resolution. The measure approved today bars the foreign travel of 40 Revolutionary Guard officials and persons involved with Iran’s nuclear or missile programs, individuals who were listed in the three previous sanctions resolutions. Those texts only sought “vigilance” of their entry into other nations. More Talks The text “encourages” the Vienna-based International Atomic Energy Agency to continue talks with Iran aimed at “measures to build confidence” in its intentions. It takes note of the effort by Brazil and Turkey to reach an agreement with Iran under which half of its enriched uranium would be swapped for fuel in a form that can only be used in Tehran’s medical-research reactor. A fourth annex repeats the political and economic incentives to negotiations presented to Iran in June 2008 by the U.S., Britain, China, France, Germany, Russia and the European Union. The foreign ministers of the six nations released a statement today saying the resolution “keeps the door open for continued engagement.” To contact the reporter on this story: William Varner in New York at wvarner@bloomberg.net

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Gar Alperovitz: We’re Now Number 77 in Income Inequality (Tied With Turkmenistan)

June 9, 2010

On Food and Cooking: The Science and Lore of the Kitchen can all too easily numb, but occasionally a few very simple numbers are worth pondering a bit more closely than others. Like these three: The United States now ranks number 77 out of 142 countries in the United Nations Human Development Report ‘s latest estimates of income inequality–tied with Turkmenistan, Tunisia and Georgia. In the 2009 OECD review of the 30 most advanced nations, the United States ranked 27th—ahead only of Mexico, Turkey and Portugal. Over the last quarter-century, IRS data indicate that the top one percent of American taxpayers increased their share of the nation’s total pre-tax adjusted gross income from 10 percent in 1980 to 23.5 percent (in 2007). These are not routine numbers. Yes, of course, we know there is great inequality in the nation. But something is going on here that is quite extraordinary. Consider the following bit of arithmetic: If the top one percent had not increased its income share from 10 to 23.5 percent in recent years, then the bottom 99 percent would obviously still have a 90 percent income share. Quite clearly, the top one percent has somehow been able to capture huge amounts that would normally have flowed to the bottom 99 percent. If the federal government — instead of the top one percent — had taxed away that 13.5 percent of income from the bottom 99 percent over this period, it would have been deemed an extraordinary outrage. The top one percent was, of course, taxed on what it took in, but in practice–after accounting for various deductions and loopholes–only at an effective rate of approximately 25 percent (including state and local taxes.) In 2007 they kept roughly $900 billion of the $1.2 trillion they gained in that year alone. If the federal government had collected this entire amount in taxes, it could have used $900 billion to offset a large share of the 2009 budget deficit of $1.4 trillion. If it were to capture amounts in this range annually for the next ten years it would dramatically reduce our current (and growing) $13 trillion national debt. Alternatively, of course, the funds could be used for health care, schools, new energy technologies and created much-needed public or private sector jobs. Or, quite simply, the amount taken from the bottom 99% could be returned in appropriate tax cuts. A good part of the income bonanza received by the top one percent derived from the recent unusual financial sector gains: The top one percent owns more than half of all stocks, bonds, and mutual fund assets; the bottom 90 percent own less than 10 percent. When the value of equity in homes and other assets are added in, the top one percent also owns more than the entire bottom 90 percent. It is difficult to argue that such shares, to say nothing of major changes in the distribution of income like those recorded in recent years, have anything to do with a commensurate contribution that might merit extraordinary compensation. Indeed, as the revelations of the financial crisis have so dramatically shown, often top dollar bonuses went to bankers and brokers who did little more than move financial paper at huge taxpayer cost. Building on the Nobel Prize-winning work of Robert Solow (and of Edward Denison), Lew Daly and I have recently pointed out that in general not only do income shares of the kind that flow to the top one percent have little to with what anyone has actually done to deserve; rather the flows are largely traceable to technologies that ultimately either were paid for by the public, or, more importantly, that derive from our collective inheritance of scientific and technological knowledge. Unfortunately, our national discourse is focused almost entirely on different questions. A new presidential panel — the National Commission on Fiscal Responsibility and Reform — has begun meeting to try to find ways to cut spending and increase taxation at the margins. We are told nothing else can be done. Moreover, given our unwillingness to increase taxation, we can be sure that if changes occur, the big cuts will impact the same 99 percent at the bottom who have already lost huge shares of income to those at the top. The challenge posed by our Turkmenistan levels of inequality is to somehow jolt ourselves out of our usual complacency to open a very different dialogue. It is time to stop looking away as we tinker around the margins and the one percent continues on its merry way. Top marginal tax rates, we might remind ourselves, stood at 91 percent during the presidencies of both Democrats and Republicans (Truman and Eisenhower). Contrary to those who argue significant taxation must impede economic growth, these high tax rates coincided with the postwar boom, the period of greatest economic growth in all of American history.

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Tesco’s Clarke Faces Tough Start at Top Amid U.K. `Headwinds,’ U.S. Losses

June 9, 2010

By Sarah Shannon June 9 (Bloomberg) — Tesco Plc Chief Executive Officer Terry Leahy , who said yesterday he will step down next year, came to dominate the U.K. He’s leaving the rest of the world and a crowded domestic retail market to his successor. Under Leahy, Tesco doubled its market share and became the world’s fourth-biggest retailer. A money-losing U.S. business and a slowing U.K. grocery industry mean Phil Clarke ’s honeymoon period may be short lived when he takes Leahy’s job in March. “The new management is right for where the business is going, but we’re worried about the headwinds in the U.K.,” said Margaret Lawson , who helps manage about 500 million pounds ($720 million) in stock, including Tesco, at SVM Asset Management in Edinburgh. “The U.S. has not been a success. The concept is totally unproven and there are a lot of doubts.” In the U.S., Clarke will need to stem losses that have totalled 369 million pounds since Tesco opened its first Fresh & Easy store in 2007. At home, where the retailer’s share of its domestic market has plateaued at about 30 percent in the last five years, the new CEO’s main priority will be to maintain sales growth in the face of a slowing food retail market, more openings by competitors and falling food price inflation. Tesco shares have dropped 7.1 percent in 2010. They’ve advanced in 10 of the years of Leahy’s reign. Turkey, India The choice of Clarke as CEO “highlights the growing importance of Tesco’s international division,” and likelihood of little change in its oversees strategy, according to Chris Hogbin , an analyst at Bernstein Research. Liverpool, England- educated Clarke has headed the retailer’s operations in Asia and Europe since the end of 2003. U.S. chief Tim Mason will also take on the role of deputy CEO, Tesco said yesterday. Clarke has overseen the development of stores in Turkey, where Tesco plans to increase space by 30 percent this year, and a franchise agreement in India with Tata Group’s Trent Ltd., among others. The retailer now operates in 13 markets outside the U.K., representing more than half its selling space. International markets will drive Tesco’s “long-term earnings growth” as U.K. growth remains subdued, according to analyst Sam Hart , an analyst at Charles Stanley & Co. Leahy defended his decision to step down before Tesco has eradicated losses in the U.S. The 145-store Fresh & Easy chain made a 165 million-pound loss last year, and that won’t be “much lower” this year, the company said in April. He said he was certain the business would be a financial success when the economy recovers. ‘Extremely Difficult’ Even so, analysts including Mike Dennis at MF Global Securities say the U.S. economy can’t be entirely to blame for three consecutive years of losses. “They made a decision after five years of research to enter the U.S. and they’re still incurring significant losses,” Dennis said. “The current situation they are in is extremely difficult. It’s not an easy time for Phil Clarke to take over.” In the U.K., the food retailing industry is “heading for its most difficult time in many years,” according to Evolution Securities analyst David McCarthy . Store opening programs are doubling, comparable sales are falling and discretionary income is declining, said McCarthy, who rates Tesco “reduce.” Tesco’s market share held at 30.6 percent in the three months through May 16, according to Kantar Worldpanel. “Phil is very experienced and has been very successful at Tesco, but he has the toughest act to follow,” McCarthy said. “In losing Terry, Tesco is losing its best player and therefore the team is weakened. The competition will be happy.” To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net .

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Iran’s Revolutionary Guard Targeted for Sanctions as UN Prepares to Vote

June 8, 2010

By Bill Varner June 8 (Bloomberg) — Companies controlled by Iran’s Revolutionary Guard Corps, a bank and a top official of the nation’s atomic energy agency are targets of proposed United Nations sanctions set for a Security Council vote tomorrow. Javad Rahiqi, who heads a branch of Iran’s Atomic Energy Organization, is the only individual on lists that include 40 companies and government agencies cited in a text that will be taken up by the 15 nations on the council. The UN restrictions are aimed at blocking Iran’s ability to develop nuclear arms and pressuring the country to join international talks. U.S. Secretary of State Hillary Clinton said in Quito, Ecuador, that Iran is facing its “most significant sanctions” ever adopted by the UN’s principal policy-making panel. Her national-security counterpart, Defense Secretary Robert Gates , said passage of the resolution would open the way for even tougher restrictions. “One of the many benefits of the resolution is that it will provide a legal platform for individual nations to then take individual actions that go well beyond the resolution itself,” Gates said today in London. “I believe a number of nations are prepared to act pretty promptly.” The lists form three annexes to the main text of the resolution, which calls for freezing the foreign assets of the companies and agencies and barring Rahiqi from traveling outside Iran. The targets include 15 entities “owned, controlled or acting on behalf” of the Revolutionary Guard Corps, an arm of the Iranian military with extensive business interests. Manufacturer, Ministry Also cited are three companies the resolution says are related to the Islamic Republic of Iran Shipping Lines and 22 companies it says are involved in nuclear and ballistic missile activities. The companies include the Armament Industries Group, identified as a small-arms manufacturer, and the Ministry of Defense Logistics Export, which the measure says sells Iranian- made weapons “to customers around the world.” The resolution also targets the Malaysia-based First East Export Bank, which is “owned or controlled” by Bank Mellat, named in previous sanctions. Mellat has “facilitated” hundreds of millions of dollars in transactions linked to Iranian nuclear defense and missile entities, according to the measure obtained by Bloomberg News from Security Council diplomats who asked not to be identified. Mellat received a license from Malaysian authorities in late 2008 to set up First East Export Bank in Labuan, Malaysia, according to a U.S. Treasury Department statement in November. Treasury has barred U.S. transactions with the bank. Bank Dropped The Export Development Bank of Iran, which was included on a list as late as yesterday, was dropped from the final version. The annexes were the focus of Security Council bargaining after the May 18 release of parameters for what will be the fourth sanctions measure aimed at Iran’s nuclear ambitions. The UN resolution would bar Iran from investing in uranium mining or construction of new enrichment facilities. It would ban sales to Iran of tanks, armored combat vehicles, artillery, fighter jets, attack helicopters, warships or missiles. Nations would be asked to prohibit the licensing of Iranian banks on their territory or the opening of bank branches in Iran if there is reason to suspect a connection to nuclear activities. Financial transactions, including those related to insurance and re-insurance, would be barred if they might have a nuclear purpose. Cargo Intercepts Nations are urged to intercept and inspect any cargo by air or sea suspected of containing banned materials that would contribute to Iran’s nuclear or missile programs. Bunkering services, such as refueling as sea, are prohibited for Iranian- owned or contracted vessels suspected of carrying such goods. The text “encourages” the Vienna-based International Atomic Energy Agency to continue talks with Iran aimed at “measures to build confidence” in its intentions. It takes note of the effort by Brazil and Turkey to reach an agreement with Iran under which half of its enriched uranium would be swapped for fuel in a form that can only be used in Tehran’s medical-research reactor. Russian Prime Minister Vladimir Putin , attending a regional conference in Istanbul today, said he is ready to discuss Iran’s nuclear program and sanctions one-on-one with Iranian President Mahmoud Ahmadinejad “if necessary.” The Iranian leader last month criticized Russia’s support for the U.S.-sponsored sanctions in the UN Security Council as an “unacceptable stand.” Ahmadinejad has relied on the Kremlin for boosting his image in the past, traveling to Russia after his disputed re-election a year ago and feting Putin at a Tehran summit in 2007. To contact the reporter on this story: Bill Varner at the United Nations at wvarner@bloomberg.net

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Israeli Ministers Oppose International Probe of Gaza Flotilla Raid Deaths

June 6, 2010

By Gwen Ackerman and Jonathan Ferziger June 6 (Bloomberg) — Two Israeli ministers said they opposed an international inquiry into the deadly naval raid on a Gaza Strip-bound aid flotilla as the United Nations discussed options for such a commission. “There shouldn’t be an international inquiry,” Finance Minister Yuval Steinitz said today. “If an inquiry is required it should be handled by parliament’s Foreign Affairs and Defense Committee.” Minister of Science and Technology Daniel Hershkowitz agreed and said he wouldn’t trust a probe that included Turkey. Calls for an international investigation began after nine Turkish citizens were killed when Israeli commandos raided their boat, one of six in a flotilla attempting to breach Israel’s three-year blockade on Hamas-controlled Gaza. The raid sparked calls for a lifting of the blockade, which Israel says is necessary to prevent weapons from reaching the area. UN Secretary General Ban Ki-Moon discussed yesterday with Turkish Prime Minister Recep Tayyip Erdogan and Israeli Prime Minister Benjamin Netanyahu “options for moving forward with the investigation,” a statement on the UN Web site said. The proposed commission would have members from Turkey and Israel as well as others appointed by the UN and would be headed by former New Zealand Prime Minister Geoffrey Palmer, an aide to Erdogan said in a telephone interview from the western city of Bursa, speaking on the usual condition of anonymity. Palmer didn’t reply to a voicemail message left on his cellphone in New Zealand today. Israeli State Comptroller Micha Lindenstrauss will participate tomorrow in a parliamentary committee discussion on the government’s performance. ‘Decision-making Process’ “There is a real need to examine ourselves and the quality of the decision-making process before and after the operation,” said Yoel Hasson, the head of the state comptroller committee in the Knesset. Criticism within Israel of 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 Netanyahu should resign. The newspaper didn’t say how many people were surveyed or give a margin of error. Israel’s benchmark stock index, the TA-25 Index, fell 1.8 percent at 3 p.m. in Tel Aviv. The U.S. has declined to specifically criticize Israeli actions. It backed a June 1 UN Security Council resolution that condemned the violence that led to the deaths of the aid activists, and called for an impartial inquiry. Turkey, which along with South Africa withdrew its ambassador from Israel over the incident, says an Israeli investigation wouldn’t meet that criterion. Numerous Warnings Israel has said it issued numerous warnings to the Gaza- bound flotilla asking it to change course for the port of Ashdod and unload there, before it seized the vessels. The other five vessels, as well as a separate boat that arrived yesterday, were commandeered peacefully. The raid on the flotilla, and the deaths of the activists, has focussed world attention on the blockade of Gaza. “The time has come to lift the closure and find an appropriate alternative,” Welfare and Social Services Minister Isaac Herzog , a member of the Labor Party, said on Army Radio. US Secretary of State Hillary Clinton has said the situation in Gaza is “unsustainable” and top Israeli ministers met June 3 to discuss ways to change how the blockade on Gaza is implemented, a senior Israeli official said, speaking on condition of anonymity. Blockade End The European Union, Russia and Turkey have called on Israel to end the blockade. Israel has been blockading Gaza since Hamas ousted forces loyal to President Mahmoud Abbas ’s Fatah group and seized full control in 2007 after winning Palestinian parliamentary elections the previous year. Hamas is considered a terrorist organization by the U.S., the European Union and Israel. Israel says its blockade is legal because it is in “a state of armed conflict” with Hamas. Some countries, such as Turkey, dispute the legality of the blockade. Some 330 rockets have been fired from Gaza into Israel since the end of a 2008 Israeli military operation in the area, killing one foreign worker last March, the Israeli army said. Israel says it launched the 2008 operation to stop the firing of rockets into its territory. More than 1,000 Palestinians and 13 Israelis were killed in the conflict. Activist Expulsions Israel will expel today all 19 passengers and crew from the aid ship intercepted this weekend. “They should all be gone by tonight,” said Sabine Haddad, an Interior Ministry spokeswoman. The Free Gaza movement, which organized the flotilla in the May 31 confrontation and yesterday’s attempt by the MV Rachel Corrie the breach the blockade said they are planning another flotilla in two months. The Rachel Corrie was named after an American activist killed by an Israeli bulldozer while protesting home demolitions in the Gaza Strip in 2003. “We are getting a huge amount of donations, about 2,000 euros a day,” said spokeswoman Audrey Bomse. “We will have no problem getting ships.” Israel says that on May 31 its soldiers were attacked with knives and clubs 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 and that the Israelis instigated the violence. Multiple Times 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 yesterday, citing Yalcin Buyuk, vice chairman of the council of forensic medicine. Turkey’s Hurriyet newspaper today published photos showing what it said were bloodied Israeli commandos, and activists standing at a door with what appeared to be iron bars. Palestinians say the restrictions on food imports and construction materials have created a humanitarian crisis. Israel says it restricts imports because building materials and even some foods can be used to build rockets, bunkers or bombs. Hamas’s charter calls for the destruction of the Jewish state. Hamas leaders say they will renounce violence when Israel withdraws from territory occupied in 1967 and allows Palestinians to return to areas in Israel from which they fled in 1948. To contact the reporters on this story: Calev Ben-David in Jerusalem at Cbendavid@bloomberg.net ; Jonathan Ferziger in Tel Aviv at jferziger@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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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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Gaza Activists Send Boat to Test Blockade Israel Kills Five Palestinians

June 1, 2010

By Jonathan Ferziger and Calev Ben-David June 1 (Bloomberg) — Pro-Palestinian activists are sending another ship to try and breach Israel’s blockade of the Gaza Strip, a day after nine people were killed in an Israeli commando raid on boats attempting to enter Gaza. Russia today joined the European Union in demanding that Israel open its borders into the Gaza Strip. Egypt, which shut its frontier with Gaza after the Islamic Hamas movement seized full control of the area in 2007, said it will allow medical and aid shipments into the enclave. In Gaza today, Israeli forces killed two Palestinians who tried to infiltrate into Israel and another three who attempted to fire a rocket. Israel 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 UN and human rights groups, say the restrictions on food imports and construction materials have created a humanitarian crisis. “We conduct a dialogue with countries about the sanctions that apply on Gaza and we’re open to suggestions, though obviously the naval blockage must remain in place as long as we know that Iran, Syria and Hezbollah will try to bring in deadly missiles that will be shot at Israel,” Prime Minister Benjamin Netanyahu ’s spokesman, Mark Regev , said in an interview today. Israel is holding 634 people who were taken from the boats, Interior Ministry spokeswoman Sabine Haddad said. Forty-five others signed statements waiving their right to a court hearing and were deported immediately. Deportation Hearings The detainees were taken to a prison in the southern city of Beersheba to await deportation hearings, Haddad said. The majority of them are from Turkey while others are from countries including the U.K., U.S., Greece, Sweden, Norway, Morocco, Kuwait and Lebanon. “This disaster with the Israeli commandos has just made us more determined to reach Gaza,” said Audrey Bomse, a spokeswoman for the Free Gaza Movement, one of the flotilla’s organizers. The MV Rachel Corrie, named after an American pro- Palestinian activist killed in 2003 by an Israeli army bulldozer in Gaza, lagged behind the original flotilla because of mechanical problems and should get to the waters near Gaza by the end of this week, she said. Israel’s benchmark TA-25 Index fell for a fourth day, declining 0.9 percent at the close in Tel Aviv after a 1.6 percent drop yesterday. Russia and the European Union called for the “immediate opening of crossings for the flow of humanitarian aid, commercial goods and people to and from Gaza,” according to a joint statement. The United Nations Security Council today condemned “acts which resulted” in the deaths while Turkish Prime Minister Recep Tayyip Erdogan said the Israeli raid was an act of “despicable recklessness.” Open Crossing Egypt will open its Rafah border crossing to allow medical and humanitarian aid into the Gaza Strip, state-run Nile News television reported today. Egyptian authorities said the border will be open from 8:30 a.m. to 7 p.m. until further notice, Hamas Interior Ministry spokesman Ihab al-Ghussein said in an e-mailed statement. Though Egypt supports Palestinian independence, it opposes Hamas, which wants to create an Islamic state. Egypt has periodically opened its crossing for humanitarian supplies. Israeli aircraft attacked the northern Gaza Strip today, an army official said, speaking on condition of anonymity. The Popular Resistance Committees, a militant group, said three of its members were hit by an Israeli air-to-ground missile as they were trying to launch a rocket, a spokesman for the group who goes by the name Abu Mujahed said in a telephone interview. Knives and Clubs The army said that the two Palestinians killed trying to infiltrate Israel from Gaza were armed. 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. The six ships in the “Freedom Flotilla” came from Sweden, Greece and Turkey on a mission aimed at breaking Israel’s blockade that organizers pledged would be nonviolent. Israel had warned it wouldn’t let the ships reach Gaza and called the aid delivery a propaganda trick. Norman Paech, a 72-year-old former German lawmaker who returned to Berlin today, said he heard shooting while he was below deck on one of the ships. ‘They’ll Stop Us’ “We didn’t at all prepare for such an attack,” Paech told reporters in Berlin. “We said ‘they’ll stop us; they’ll control us.’” He said three lightly injured Israeli soldiers were brought below deck to a converted medical hold, where activists in the “double digits” with heavier injuries were treated. He said he saw three activists carrying sticks. “I tried to hold them back, but they went on deck with them,” Paech said. “There really wasn’t anything more than that. We never saw any knives.” Israeli newspaper columnists criticized the way the raid was carried out, with Ben Caspit writing in Ma’ariv that “the flotilla operation, conducted at dawn off the Gaza shore, was complete idiocy.” Several of the dead were from Turkey, which said relations with Israel may suffer irreparable harm. Netanyahu cut short a trip to Canada to return to Israel, canceling a meeting scheduled in Washington with President Barack Obama . Rocket Fire 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 yesterday from the White House. Israel has restricted entry of people and goods into Gaza since 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. To contact the reporters 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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Israel Intercepts Gaza-bound Aid Ships, Killing 10

May 31, 2010

By Jonathan Ferziger and Calev Ben-David May 31 (Bloomberg) — Israeli commandos killed at least 10 pro-Palestinian activists after encountering resistance while intercepting a flotilla of ships carrying humanitarian aid supplies to the Gaza Strip, the Israeli army said. Israeli Prime Minister Benjamin Netanyahu cut short a trip to Canada to return to Israel, according to a statement from his office. Turkey’s Foreign Ministry said relations with Israel may suffer irreparable harm while German Foreign Minister Guido Westerwelle said his country was “deeply concerned.” Israel said its forces were attacked today with guns, knives and clubs after boarding a vessel and seven soldiers were wounded. The clash was in international waters, said the Free Gaza Movement, which organized the flotilla. “What we have seen this morning is a war crime,” Saeb Erakat , the Palestinian Authority’s chief peace negotiator, said in an e-mailed statement. “The international community must take swift and appropriate action.” 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 non-violent. Israel had warned it wouldn’t let the ships reach Gaza and called the mission a propaganda trick aimed at making it look bad. 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. U.S. Visit “The United States deeply regrets the loss of life and injuries sustained, and is currently working to understand the circumstances surrounding this tragedy,” White House spokesman Bill Burton said. Israel has restricted entry of people and goods into Gaza since the territory was taken over by Hamas in 2007, allowing in only a limited range of supplies including food, clothing and medicine. Israeli Navy ships have intercepted three previous efforts by the Free Gaza Movement, formed in 2008 to deliver aid, to reach the territory by sea. The army has said that Hamas has used materials such as cement and iron pipes to build bunkers and rockets. Aboard Ships Aboard the ships today were more than 500 people, including European members of parliament and Swedish author Henning Mankell, according to the Free Gaza Movement, which organized the trip. “We are sorry about those hurt, but the responsibility lies completely with the organizers of the flotilla and those participants who initiated the violence,” Defense Minister Ehud Barak said at a press conference in Tel Aviv. “During the incident, because of danger to their lives, the soldiers were forced to use methods to disperse demonstrations as well as firearms.” He said the organizers had ties to terrorist organizations. 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. Hamas, the militant movement that controls Gaza, called on the Palestinian Authority to break off peace talks with Israel. Opened Fire An Israeli military official, speaking on condition of anonymity, told reporters that most of the 10 dead were Turkish and 20 people were wounded, according to a pool report provided by an Associated Press reporter. Of the soldiers wounded, one was hurt seriously. The official said the soldiers boarded the ships after approaching on three military helicopters and several commando boats at about 4 a.m., according to the pool report. 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. Mary Hughes Thompson, a spokeswoman of the Free Gaza Movement, said Israel’s allegation that the passengers were armed was “totally ludicrous” and “we would never initiate violence.” Bloodied Passengers Turkey’s NTV television showed footage of helicopters dropping armed soldiers onto a ship in the dark, and of bloodied passengers being treated on board. A passenger said the ships were attacked with live ammunition and tear gas. U.K. Foreign Secretary William Hague said he deplored “the loss of life during the interception of the Gaza flotilla” and called on Israel to give “unfettered access” for aid to Gaza. “I think the major issue here is Europe’s policy toward Hamas,” Yitzhak Reiter a political scientist at Israel’s Ashkelon Academic College and Hebrew University, said in a telephone interview. “The clash has probably managed to achieve a greater awareness to the plight of the Gazan people.” In Gaza, Hamas leader Ismail Haniyeh called for the suspension of peace talks. His speech was broadcast live on Al- Jazeera television today. 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. It has been negotiating a prisoner swap with Hamas to exchange a captive Israeli soldier, Gilad Shalit , for about 1,000 jailed Palestinians. 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. 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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IMF: Turkey should unwind rescue measures

May 30, 2010

IMF: Turkey should unwind rescue measures

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