Mar 18 - 24, 2002

UK attacks Bush grant plan

The UK's International Development Secretary, Clare Short, has launched a strong attack on US plans for aid to poor countries ahead of an international summit in Mexico.

Ms Short told that a US plan to convert aid payments into grants "lots of people say is populist grandstanding" and that it would "wreck" the World Bank's lending programmes to the world's poorest countries.

The criticism comes as the European Union hopes to put pressure on the US to increase the volume of foreign aid at the forthcoming Monterrey development summit.

Ms Short said that the UK had helped the EU to reach agreement on a $7bn boost to its own aid budgets by 2006.

Under the deal, EU countries have pledged to increase the amount of its foreign aid as a proportion of GDP to 0.39%, although individual countries will not be required to reach that target.

Meanwhile, President Bush has offered a $5bn boost in the US foreign aid budget from 2004, if developing countries pledge to respect human rights and root out corruption.

"To make progress, we must encourage nations and leaders to walk the hard road of political, legal and economic reform so all their people can benefit," he told Latin American leaders. Ms Short said she welcomed the pledge of additional aid from the world's rich countries. But the row over the future approach to aid threatens to overshadow the positive message world leaders are hoping to send to developing countries, after years of cuts to aid budgets.

The Monterrey summit on financing for development, which opens on Monday, aims at providing the funds to meet the ambitious development goals agreed by the UN — including cutting world poverty in half by 2015, and improving health and education for the poor.

The World Bank has estimated that to achieve these goals, total aid flows from rich to poor countries need to increase by $40bn-$60bn a year.

Barcelona's reform agenda

European leaders meeting in Barcelona this weekend are considering an ambitious agenda for economic reform.

But in the two years since they first set concrete goals at the Lisbon summit — which aimed at making the European Union the most competitive and dynamic economy in the world by 2010 — progress has been slow.

The Lisbon targets included creating 20 million new jobs and boosting productivity, in order to overcome the 50% gap in average income per head in Europe compared to the United States.

So far, 5 million new jobs have been created — but the EU unemployment rate is still around 10%.

Telecommunications have been liberalised and the use of internet is widely developed. But there is still a long way to go before other markets are opened up. And the downturn of the global economy is not playing in favour of further reform.

Now a row between France and other EU members over opening up of energy markets may threaten to overshadow progress at the summit.

With the presidential election due in six weeks, the French government has already warned that it won't take important decisions on sensitive issues.

It said it would allow French businesses to choose between energy suppliers but it is still refusing to give the same freedom to French consumers, warning that job losses could result. The Germans seemed to agree with this last year at the Stockholm summit.

But now, all EU countries have agreed that France should be forced to open its market to foreign companies, partly because its giant state-owned company EDF (ElectricitÈ de France) has moved aggressively to exploit the liberalisation of energy markets in the rest of Europe.

Japan threatens steel counter tariffs

Japanese trade officials have told the US that it may introduce tariffs of its own to counter the US decision to impose tariffs of up to 30% on steel imports, officials said.

At a meeting in Washington, the delegation also said Japan is prepared to file a complaint with the World Trade Organisation on Wednesday when the measure takes effect.

The threats raise the growing fear of a global trade war that would be damaging to everyone, economists said.

The move by the US sets out to protect the struggling US steel industry from competition from abroad.

But Japan's steel industry has problems of its own.

Just like their US counterparts, Japan's steelmakers are suffering due to the massive global overcapacity.

Brown orders bank charge clampdown

The government has said it will impose controls on charges for current accounts, following the publication a report into small business banking from the Competition Commission.

Mr Brown attacked the "excessive profits" made by the big four clearing banks, which have earned an annual £725m over the past three years from small businesses.

Banks will be required to switch accounts within five days, and impose no charges for closing accounts.

They will also be forced to provide portable credit histories, and stop bundling services. Click here for a list of Mr Brown's key recommendations.

The British Banking Association attacked the moves as amounting to price controls. But the British Retail Consortium, representing UK shopkeepers, praised the move.

The battle against blood money

The merchants who throng the covered markets in old Dubai are used to all kinds of clientele.

But even they may have been a little surprised to find, on one day in early March, a phalanx of Western business suits bearing down on them.

Yet stranger was the identity of those occupying the gent's tailorings: no less a personage than US Treasury Secretary Paul O'Neill, accompanied by more than 30 officials and Secret Service agents.

Mr O'Neill was there to see for himself the hawala system of informal banking.

Hawala is a centuries-old way of making money in one place and spending it somewhere else, run on the basis of personal trust, tokens representing funds and no paperwork or records of any kind.

$500bn wasted on IT, survey says

Companies last year spent $500bn more on computer technology than they needed to, a hi-tech consultancy has calculated. According to research and advisory firm Gartner, one-fifth of the more than $2.7 trillion spent annually on IT is wasted.

Much of the wastage relates to projects launched during the tech frenzy of the late 1990s, many of which never came to fruition. Analysts now say that firms have a more realistic notion of the value of technology — something that bodes ill for any recovery in the hi-tech sector.

As Gartner's analyst Andy Kyte told BBC News Online, the most spectacular examples of overspending were in the telecoms and financial services sectors.

Many financial firms invested hugely, anticipating a boom in online banking and investment.

Wal-Mart takes on Japan

Wal-Mart, the world's biggest retailer, has taken its first step into the Japanese market by buying a stake in the Seiyu supermarket chain. The US-based group has agreed to pay 6bn yen (£32.4m; $46m) for a 6% stake in Seiyu, Japan's fifth largest supermarket.

South Africa raises interest rates

South Africa's Reserve Bank has raised interest rates by one percentage point to 11.5% to counter the inflationary impact of the rand's steep slide last year.

"The monetary policy committee is of the opinion that a more restrictive monetary policy stance is required," Central Bank governor Tito Mboweni said.

Expectations that inflation will continue to rise along with wages prompted the rise. The negative impact of higher rates on the country's growth rate would be offset by the "competitive external value of the rand", which lost 34% of its value in 2001, Mr Mboweni said.

Hong Kong hungers for fast food

Despite a vast array of Chinese food to feed on, in a city of seven million food fans half a million people per day choose to eat at McDonald's in Hong Kong.

There are more than 10,000 restaurants squeezed into Hong Kong, including 158 branches of the fast food giant.

Results

Oracle: The world's second largest software company, Oracle, has disappointed Wall Street with its latest earnings figures.

The company said that its third-quarter earnings dropped to $508m, or 9 cents per share, compared to $583m, or 10 cents per share, for the same period last year.

Thales: Thales has reported worse than expected profits after it wrote down the value of its UK subsidiary Racal.

The charge contributed to a Thales posting a net loss of 366m euro (£225m; $319.9m) for 2001, compared to a profit of 201m euros a year earlier.

Psion: UK computer group Psion has announced a loss of £150m after what it calls the most difficult and disappointing year in its history.

BASF: Operating profits at Europe's largest chemicals group BASF fell 70% during the October to December period, the company said.

The fall to 252m euros (£156m; $220m) from the same period a year earlier was in line with already pessimistic analysts' expectations.

Lehman offers fraud refund

Lehman brothers has offered to refund money to some of its clients, following the revelation of a 15-year scam by one of its brokers.

Frank Gruttadauria has been charged with defrauding several of the bank's customers of at least $40m (£28.3m) while working as a broker for SG Cowen and then Lehman Brothers, who bought its rival's brokerage business in October 2000.

The US stockmarket watchdog, the Securities and Exchange Commission, filed fraud charges against Mr Gruttadauria in February.

Amec pulls out of Turkish dam project

British engineering group Amec has pulled out of a controversial Turkish dam project, saying it is unlikely to yield sufficient returns.

"AMEC has concluded that its resources would be better deployed in other areas including the furtherance of its strategy to develop an international base of service-related activity," the company said in a statement.

"Accordingly AMEC has decided not to participate further in the project."

The Yusefeli Dam was expected to flood 18 towns and villages, displacing about 15,000 people.

EU mulls airline retaliation

Fears of a trade war between the US and European Union have risen after proposals for tariffs on airlines receiving "unfair" state subsidies were put before the European Commission.

EU Transport Commissioner Loyola de Palacio wants to hit state-aided airlines flying to the EU with penalties, including duties and landing rights restrictions.

The move, presented to European Commission on Tuesday, is being seen by some observers as retaliation against the United States, which has subsidised its carriers with $15bn in the aftermath of 11 September, and last week imposed duties of up to 30% on some steel imports from the European Union.

Nigeria's oil production cut drastically

International oil producers have been hit hard by the Nigerian government's attempt to follow the production quotas imposed by the Opec oil cartel.

Royal Dutch/Shell, Nigeria's largest foreign oil producer has said its February output fall to 647,000 barrels per day, 24% down from the average volume produced this time last year.

TotalFinaElf said its production in the West African country was 20% down over the past year due to the restrictions introduced by Nigeria's government.

Drought threatens Taiwan tech firms

A prolonged drought in Taiwan now threatens not only the island's farmers, but its hi-tech industry as well.

Making semiconductors — one of Taiwan's most important growth industries — requires a lot of water, to wash the chips after etching.

With water in short supply, the authorities now explore every method to make it rain.