June 06 - 12, 2005






Tony Blair and Silvio Berlusconi have agreed on plans to increase aid to Africa and tackle climate change, they said after holding talks in Rome.
The UK and Italian prime ministers met as Mr Blair began a diplomatic offensive ahead of July's G8 summit.
Mr Berlusconi said they had "common views" on the G8 agenda. Mr Blair said the talks had been "constructive".



Pressing for a joint world aid plan, he argued Africa was the only continent to "go backwards" over the last 30 years.

This is the final phase of talks before the G8 industrialised nations meet at Gleneagles in Scotland. The UK is currently president of the G8 group and will chair the summit.

Mr Blair will also visit the US, Russia, France and Germany.

He will also hold talks via a video link with Canada and Japan.

The trip comes as environmentalists said an alleged leaked document showed real action on climate change was being blocked by the US.

EU development ministers this week agreed to double aid to poorer nations. Under the deal, the EU's aid will be worth an extra 14bn annually in five years' time.

Some Italian opposition politicians question whether the country's financial problems will mean its target will be hit.

But Mr Berlusconi said: "I have assured Mr Blair of my personal support and my country's support in favour of what I know is going to be a very reasonable, sound and viable set of proposals."

Mr Blair said Africa's plight had been on the G8 agenda for a long time but the new plans combined aid and debt with governance and conflict.


China is to scrap export tariffs on 78 categories of clothing and textiles in an apparent escalation of a trade dispute with the US and European Union.

Beijing introduced the tariffs to try to control burgeoning Chinese clothing exports, but the EU and US still say too many such goods are being exported.

With the EU now threatening to limit imports of such Chinese items, it appears that China is now retaliating.

The US has already brought in limits on Chinese textile and clothing imports.

Washington made the move on 14 May against Chinese cotton trousers, cotton shirts and underwear. The EU on Friday asked for formal talks with Beijing over two types of Chinese clothing and textiles flax yarn and T-shirts.

Last Monday, the EU's executive commission insisted that it had grounds to act to stem the flood of Chinese imports and rejected China's claims that there was no evidence to justify the complaints.

Under World Trade Organization rules, the US and EU can limit annual imports of Chinese clothing and textiles to a maximum of 7.5% more than the levels seen between March 2004 and February 2005.

Both the US and EU can evoke this 7.5% "safeguard rule" until 2008.

The EU can now bring in the 7.5% level if no agreement can be reached with China within 90 days of the start of talks on Monday.

The origins of this trade dispute between China on the one hand and the US and EU on the other was the end of a 30-year global agreement on clothing and textile exports on 1 January.


A much-needed rail system for Dubai in the United Arab Emirates is to be built by a Japanese-led consortium in a 12.45bn dirhams ($3.4bn; 1.86bn) deal.

Mitsubishi Heavy Industries will lead the contract to build the hi-tech system in the Gulf emirate.

The project, to build a 69.7km (43.5-mile) link, should be completed within five years, Dubai municipality director general Qassem Sultan said.

There is increasing road congestion in the rapidly expanding district.

The winning consortium named Dubai Rapid Link beat competition from France's Alstom, Canada's Bombardier and Siemens of Germany.

The deal was announced at a ceremony in Dubai last Sunday, with work due to start in July.

The metro rail system will have two lines covering major locations across Dubai, and will feature underground and raised points.

The first part of the project will be a 52.1km (32.5 miles) line between Rashidiya and the industrial zone of Jebel Ali.

Phase two will be 17.6km (10.94 miles) line from the airport through the city centre on both sides of Dubai Creek.

As well as the train link, the winning group, which includes Japan's Obayashi Corporation and Kajima Corporation and

Turkey's Yapi Merkesi, also secured a 1.88bn dirham deal to maintain the rail system over 15 years.

Gridlocked traffic is a feature of daily life in Dubai, which has grown hugely over the last three decades, and is in the middle of a massive construction boom.


European leaders are struggling to keep the EU constitution alive after it was rejected by French and Dutch voters.

"This is a dangerous position to be in," said Prime Minister Jean-Claude Juncker of Luxembourg, the current president of the European Union.

European Commission head Jose Manuel Barroso will meet European Parliament leaders for talks.

The Netherlands overwhelmingly rejected the constitution on Wednesday, three days after French voters said "No".

Latvia's parliament ratified the constitution by a vote of 71-5 on Thursday, bringing the number of countries backing it to 10.

The charter needs to be approved by all 25 of the EU's member states to become law.

Provisional results from the Netherlands show nearly two-thirds of voters were against the draft treaty. Turnout was 62.8%.

The vote deals what could be a decisive blow to the constitution.

"We have a serious problem, but we must continue our work," Mr Barroso said.

Mr Juncker said other EU members should go ahead with their referendums.

But BBC European affairs correspondent William Horsley says Mr Juncker seemed so distressed that he could hardly take in the fact of the second "No" vote.

The mood in Brussels is deep gloom, our correspondent says.

UK Foreign Secretary Jack Straw said the double rejection "now raises profound questions for all of us about the future direction of Europe". Britain will take over the rotating presidency of the European Union next month.


Gold sat near its lowest in almost four months last Wednesday in Europe as the euro hit its lowest in more than seven months on worries about stability in the eurozone, dealers said. Spot gold slipped to $415.60/416.30 per troy ounce by 1045 GMT from $416.50/417.20 late in New York on Tuesday when the market hit a low of $413 last seen in mid February.

In other metals silver paused after hitting a 2-1/2-month peak on Tuesday in New York at $7.45. Speculators had snapped up the metal on talk of the launch of a silver Exchange-Traded Fund and on the price differential between gold and silver.

Spot silver eased to $7.36/7.39 from $7.42/7.45 late in New York last Tuesday. The break above the key band of resistance between $7.30 and $7.35 set up a possible test of the next band of resistance located between $7.55 and $7.65, Standard Bank said in a report.


Turkey's trade deficit widened by 17.8 percent to $12.1 billion in the first four months of 2005 from $10.3 billion in the same period last year, the state statistics institute said.

Imports climbed 21.9pc to $35.2 billion, while exports increased by 24.1pc to $23.1 billion, it said. In April alone, imports rose by 19.3 percent to $9.5 billion and exports climbed by 16.4 percent to $5.9 billion.

The embattled Turkish lira has steadily regained value over the past two years as the economy emerged from a severe crisis that erupted in 2001. The government, buoyed by improving macroeconomic indicators under a recovery program backed by the International Monetary Fund, wiped off six zeroes from the currency on January 1 in a major money reform.


The US economy has "solidified" over the past year and the outlook is favourable, but is relying on "unprecedented borrowing" from foreign sources, the International Monetary Fund said last Friday. The IMF staff's latest report card on the US economy said it remains "the main locomotive of global growth," outperforming the other Group of Seven industrialized.

The US economy should grow at a pace of around 3.5 percent in the next two years as the expansion matures, the IMF report said.

"Over the past year, the expansion has solidified as robust productivity growth and high corporate profits have contributed to a strong rebound in business investment and an acceleration in employment," the report said. But it added that there is no sign that the large current account deficit will be reduced.


The euro has hit eight month lows after Dutch voters gave a resounding "No" to the European Union constitution.

The euro fell to $1.2158, its lowest since September, but rebounded slightly to $1.2265 later.

The second "No" vote in a week has prompted fears that economic reform and integration across Europe will slow.

Analysts added the outlook for the euro remained downbeat.

Commentators have said that while the "No" votes from France and the Netherlands have not helped, the main reason for the currency's current lows was the recent string of interest rate rises in the US.

Meanwhile, Dutch central bank chief Nout Wellink dismissed claims that European Monetary Union could break apart as a result of the vote.


The Australian government has further liberalized services sector for developing countries, including Pakistan, by allowing the temporary entry and stay to business people for providing services in that market. The 148-WTO member countries under the July 2004 package had fixed May 31, 2005 as a deadline for submission of improved offers required under the general agreement on trade in services (GATS).

Only two countries Australia and Canada had submitted the revised offer in services within the scheduled time period. And 78 countries including Pakistan have submitted their initial offers. Excluding the least developed countries (LDCs), around 38 member countries are yet to submit even an initial offer, overdue since March 2003


China is technically ready to move to a flexible exchange rate, IMF chief Rodrigo Rato said at a news conference in Chile last Monday, reiterating the multilateral agency's stance on the yuan currency. "A more efficient Chinese economy is better for the world economy," the International Monetary Fund's managing director also told the news conference.

China's yuan currency is pegged in a narrow band at around 8.28 per dollar. The United States, which has a $162 billion trade deficit with China, has made increasingly urgent demands on rapidly-growing China to let its currency trade more freely.


The Shanghai Futures Exchange and China's futures regulator are considering the launch of steel futures, which to date have eluded efforts to identify a product standard enough to provide trading liquidity. "We have already completed studies for futures in rebar and in wire rod, and proposed them to the regulators," exchange chairwoman Wang Lihua told reporters on the sidelines of a conference on derivatives organized by the exchange.


Opec's president Sheikh Ahmed Fahd al-Sabah said last Wednesday that the oil producing cartel will most likely maintain current output levels at its next meeting set for June 15 in Vienna. "I started consulting with some of my colleagues. I think the situation is that we will continue to maintain our production (levels) now," Sheikh Ahmed, who is also Kuwait's energy minister, told reporters in parliament.

The 11 members of Opec are producing in excess of 30 million barrels per day compared with an official fixed ceiling of 27.5 million bpd for the Opec-10 (excluding Iraq), agreed in March in the Iranian city of Isfahan. Sheikh Ahmed said the organization will not cut output for the third quarter of 2005.


The European Union offered improved access for foreign companies to its service industries such as banking, energy and tourism, a key step in negotiations for a global free trade pact. The EU's revised offer comes amid intense debate over how far to open up the service sector across the 25-nation bloc itself, with western European countries anxious about the prospect of low-cost competition from new members to the east.

Sent by the European Commission to the Geneva-based WTO, the offer exempts from international competition sensitive sectors that provide public services.


New French Prime Minister Dominique de Villepin has named a cabinet designed to boost confidence in a government shaken by the "No" to the constitution. Mr de Villepin confirmed that his rival Nicolas Sarkozy will serve as his deputy in the new centre-right line-up, and succeed him as interior minister.

The new foreign minister is Philippe Douste-Blazy, formerly health minister.

The French "No" to the EU treaty and its rejection by the Dutch this week has sent shockwaves across the bloc.

France's flagging economy is believed to have fuelled the "No" vote in Sunday's referendum.



Both President Jacques Chirac and Mr de Villepin have promised to make tackling the country's 10% unemployment level a priority.


General Motors' Chinese joint venture is taking over a disused car factory in the city of Qingdao to help meet rising demand for small-sized vehicles.

GM said SAIC-GM-Wuling Automobile would be able to make up to 70,000 cars and trucks a year at the plant on the eastern coast north of Shanghai.

It intends to begin production at the facility by the second half of 2005.

GM also announced that it is to spend $387m (213m) building a new engine plant in China.


Israel has released almost 400 Palestinian prisoners, as part of a ceasefire deal agreed in February.

Israeli Prime Minister Ariel Sharon pledged to free 900 inmates in a deal with Palestinian leader Mahmoud Abbas.

Some 500 were let out soon after, but the second release was delayed while Israel said the Palestinians should do more to stop militant attacks.

Two men chose not to be released one so he could finish exams and the other to stay with his brother Israel said.

The 398 detainees who were freed last Thursday were taken by bus from Israel to the West Bank and the Gaza Strip. They waved and many made the V for victory sign as they stepped off into Palestinian territory.


Exports of Indian software and services have grown by more than a third in the past year, with further rapid expansion predicted for the coming year.

The National Association of Software Companies (Nasscom) said technology and IT services exports were worth $17.2bn (9.5bn) in the year to March 2005.

It predicted that the rise, of 34.5%, was set to repeat in the coming year.

Nasscom president Kiran Karnik also said that companies were focusing more on sales at home as well as abroad.

Predicting a 30% expansion of exports in the next 12 months to $22.5bn, Mr Karnik said the organisation was aiming to encourage more collaboration between Indian firms.


Botswana has surprised the currency markets by devaluing the pula by 12%.

Its central bank said the move against a number of other currencies was in line with its aim of seeing a "stable and competitive real exchange rate".

The change is intended to deliver a boost to both Botswana's exporters and domestic producers, in the face of flagging growth and high unemployment.

It surpasses a 7.5% devaluation back in February 2004, and comes after interest rates dropped to 14% in April.


Rail travel across France has been severely disrupted by a strike in protest against the centre-right government's economic policies.

The strikes are the first since French voters firmly rejected the proposed EU constitution in a referendum on Sunday.

The "No" vote triggered a change of prime minister. Dominique de Villepin is to announce his new team soon.

Trade unions, who had campaigned for a "No" vote, are protesting against job cuts in France's state-run railways.


The new chairman of the main US stock markets watchdog will be Republican congressman Christopher Cox, said President George W. Bush.

Mr Cox, a former chair of the Homeland Security committee, will take over at the Securities and Exchange Commission (SEC) if he gets US Senate backing.

He will oversee corporate disclosure, stock market regulation and investigate allegations of corporate wrongdoing. Mr Cox will replace William Donaldson, who will step down on June 30.


At least 16 people including a local official have died and 42 have been hurt in a series of car bombs in Iraq.

An attack on a convoy in Baquba killed at least four, including the deputy head of a local council, police said.

Ten died in Tuz Khurmatu, 90km (55 miles) from Kirkuk, in a restaurant where the bodyguards of Deputy Prime Minister Ruz Nuri Shawis were eating.

At least one child was killed and several other people were injured in a suicide attack in Kirkuk.

The bomber is thought to have been targeting two US consulate vehicles, one of which was slightly damaged.


The UK has been the top destination for immigrants from the 10 new European Union member states since the trade bloc expanded last year, a report says.

Germany's DIW Institute estimates that up to 150,000 people have migrated to the older members since May 2004.

Economic research group DIW found that more than 50,000 people had made their way to the UK over the past 12 months.


Kuwaiti men have been casting ballots in the last elections in the Gulf state before women get the right to vote.

The 130,000 voters are electing 10 municipal councillors, responsible for planning and public services.

Last month, the Kuwaiti parliament passed a law allowing women to vote and stand for election, but it came too late for Thursday's polls.

Women will be able to take part in parliamentary elections in 2007 and the next local elections in 2009.


Phone and telecoms firm Nokia has agreed a 100m euro ($125.7m; 68.9m) deal to upgrade the network of Kuwaiti mobile phone provider Wataniya Telecom.

According to Wataniya, the deal opens the way to "beyond 3G", with work due to start now and end by early in 2006.

The network will support High Speed Packet Access technology (HSPA), which opens up broadband internet access at speeds of up to 2 megabits per second.

The signing ceremony was attended by Finnish Prime Minister Matti Vanhane.

He is on a state visit to the Gulf state for talks on economic co-operation between the two nations.


European Union ministers are meeting in Luxembourg to discuss changes to Europe's 48-hour working-week laws.

Among the amendments are proposals to eliminate a clause allowing employees to work longer hours if they agree to do so with their employer.

The UK is staunchly opposed to such a move, claiming the opt-out is vital for competitiveness and job creation.

Last month, the European Parliament voted to end the UK's current working week exemption by 2012.


A political storm has broken out in Germany over reports that the government may be distancing itself from the European single currency.

Stern magazine said that Finance Minister Hans Eichel had been present at a meeting where the "collapse" of monetary union was discussed.

The government is planning to blame the euro for Germany's economic weakness, the magazine added. The report was dismissed by both the ministry and Germany's central bank.


UK house prices rose 0.3% during May, down from a 0.9% increase in the previous month, according to the Nationwide building society.

On a three-monthly basis house prices rose by 0.5%, compared to 0.6% for the previous period.

Year-on-year property prices rose by 5.5%, the lowest annual growth rate since August 1996.

Nationwide said the figures strengthened its view that the housing market was heading for a soft landing.


Portugal is planning to shrink its budget deficit back in line with European Union rules by 2008, its government has promised.

Prime Minister Jose Socrates said he would raise value-added tax to 21% from 19% now, and cut public spending.

The result, he said, would be to get the deficit down to 6.2% of gross domestic product this year and 2.8% of GDP by 2008.

Some projections see this year's figure at 6.8%, more than twice the EU limit.

The EU's EU's Growth and Stability Pact says countries need to keep deficits below 3% of GDP, a broad measure of the size of the economy.

Portugal became the first of the 12 countries in the eurozone to breach the pact's limit in 2001.


Paul Wolfowitz has marked his first day as the new head of the World Bank by reaffirming his plan to focus primarily on reducing poverty in Africa.

In addition, he intends to tackle corruption and make poor countries feel more involved in the decision making process at the global lender.

Mr Wolfowitz added that although Africa would be his main focus, he would not forget other developing regions. Some have attacked his appointment because of his role in the Iraq War.


US consumer confidence fell during May from April, but has picked up towards the end of the month as gasoline prices eased and the job market got stronger.

The University of Michigan said its measure of confidence fell to 86.9 in May from 87.7 in April.

"Consumers are not euphoric over the economy, but confidence is slowly improving," said Lynn Reaser, an economist at Bank of America.

She said there had also been better stock market news in the past weeks.

Consumer spending accounts for 66% of US economic activity and is viewed as a gauge of the health of the economy.

The figures came as separate data from the US government's Commerce Department showed that personal income rose at its fastest pace this year in April.


Japanese unemployment has fallen to its lowest level in more than six years, boosting hopes that the nation's economic recovery is gathering speed.

The latest official figures show that Japan's jobless rate fell to 4.4% in April, down from March's 4.5%. It is the lowest figure since October 1998.

A separate official survey showed that Japanese industrial production was increasing, driven by domestic demand.

Yet the jobless figures were mixed, as unemployment rose amongst the young.

The jobless rate increased by 5.6% for people between 25 and 34 compared with 5.2% in April 2004.


General Motors and Ford are both planning to lower prices and cut more production in the US as they continue to lose sales to their Asian rivals.

GM saw US sales in May fall by 5.5% on the same month a year earlier, while Ford's dropped by 3%.

By contrast, Nissan saw its US sales rise by 15.5% in May, while Toyota gained 7.8% and Hyundai/Kia almost 9%.

The US firms' focus on sports utility vehicles (SUVs) has caused them trouble in the face of sky-high fuel prices.

Analysts have said that in contrast to GM and Ford's SUV-heavy line-up, their Asian rivals have a wider range of fuel-efficient saloon cars too.


The second state pension should be reformed in order to give lower-paid workers more money in retirement, the CBI employers organisation has said.

The body said reform could raise the retirement income of someone earning 20,000 a year by up to 2,000 a year.

Returns would be boosted by savings the state could make on administration costs, the CBI said.

The proposal will be put to the Pensions Commission, which is seeking a solution to the UK's pension problem.