An early election, which needs approval from the
president, could hand power to the more popular Christian Democrats.
If Mr Schroeder loses Friday's vote as he hopes to,
it will be up to President Horst Koehler to decide whether there are
sufficient grounds to call an early election.
Some experts have questioned whether Mr Schroeder's
move is constitutional.
The German leader is due to give his reasons for
calling the confidence vote just before politicians in the Bundestag,
Germany's lower house of parliament, cast their ballots.
SPD leader and closer Schroeder ally Franz
Muentefering echoed the chancellor's call for even his supporters not
to back him.
"One can voice confidence in the chancellor by
abstaining in the vote, because this will enable new elections to be
held," Mr Muentefering said.
But many MPs from among Mr Schroeder's own Social
Democrats and his Green Party coalition allies oppose the move and say
they will vote for the government.
Mr Schroeder's hand was forced after the
conservative Christian Democrat Union (CDU) won the former SPD
stronghold of North Rhine-Westphalia in May.
BUDGET KEY FOR UK'S EU PRESIDENCY
Britain would be assuming the presidency of the EU
on Friday with disputes about farm subsidy reform and the UK's £3bn
rebate set to overshadow budget talks.
UK Foreign Secretary Jack Straw said that drafting
what he described as a "rational budget" would top the
He wants a deal by the end of the six-month
presidency but EU Commission President Jose Barroso warned agreement
would not come without compromise.
Talks on fixing the budget for 2007-13 collapsed
two weeks ago.
Speaking in Dublin ahead of his meeting with the
prime minister , Mr Barroso criticised Tony Blair's attempts to link
the "very different" issues of the Common Agricultural
Policy (CAP) and the British rebate.
"I do not think the best way is to link reform
of CAP to the British rebate and I've said it very clearly to Tony
Blair," he said.
But he said the EU countries should be "ready
to support the efforts of the British presidency" and reaching
financial agreement was "possible".
He warned Britain it would have to compromise over
the rebate and there would have to be movement from countries who were
beneficiaries of the CAP.
Shadow environment and rural affairs spokesman
Oliver Letwin said Mr Blair was giving out conflicting signals, and
had talked of scrapping the CAP when in fact structural reforms were
He said: "It is really absurd that we have
tariffs still in place so high that there need to be export subsidies
for producers in Europe which disadvantage farmers in less developed
BUSH PLANS TO DOUBLE AFRICAN AID
President George W Bush has proposed doubling US
aid to Africa over the next five years.
He said this would happen if African leaders made a
commitment to honest government and the rule of law.
Outlining his priorities for the G8 summit next
week, Mr Bush said the West now had an extraordinary opportunity to
help end extreme poverty in Africa.
But on the other main issue facing the summit -
climate change - he gave no indication of a compromise.
The president criticised those who opposed energy
development and wanted to place restrictions upon it.
"About two billion people have no access to
any form of modern energy," he said.
"Blocking that access would condemn them to
Mr Bush said the US would double assistance to the
region by 2010, but stressed trade and good government were as
important as financial aid.
He said the "primary focus" would be on
African leaders, he said, must be the "agents
of reform" rather than "passive recipients of money".
The announcement is in addition to $674m (£350m)
in aid for Africa promised by Mr Bush in a summit with UK Prime
Minister Tony Blair earlier this month, at which the writing off of
debts owed by some of the poorest countries was agreed.
US government development aid is lower than most
Western countries when measured in terms of gross national product,
but its non-governmental donations are much higher.
IRAQ COMPENSATION PUT AT $52.5BN
The United Nations has approved $52.5bn (£29.3bn)
in compensation payments to Iraq's neighbours arising from its 1990-91
occupation of Kuwait.
The final figure is a fraction of the $354bn sought
by countries which suffered damage from the invasion.
Iraq has called for an end to payouts from its oil
revenue, seeking negotiated settlements instead.
Iraq has so far paid $19.2bn, but it is thought it
could be decades before all the claims are finally met.
The United Nations Compensation Commission (UNCC),
which oversaw the compensation claims, wound up its final three-day
meeting on Thursday last.
Over the past 12 years it has processed a total of
$354bn in claims but rejected the bulk of them.
Compensation was sought by individuals,
corporations and governments.
Rolf Knutsson, UNCC executive director, told
Reuters news agency: "I wouldn't say the claims were inflated.
They reflected the impression of claimant countries of the magnitude
of damage, which is a subjective matter."
A report said most of the outstanding payments are
owed to Kuwait, which was plundered by Iraq following Saddam Hussein's
invasion in August 1990.
Under a UN scheme, Iraq uses 5% of its oil revenue
in compensation payments.
Iraqi Deputy Foreign Minister Mohammed Hamud Bidan
called for an end to the arrangement, saying Iraq wished to negotiate
settlement of the claims instead.
Kuwait, however, rejected the move, insisting on
"uninterrupted payments" to all the claimants.
CHINA DENIES FLEXIBLE YUAN CLAIM
China has again denied that it plans to revalue the
yuan after US Treasury Secretary John Snow suggested it would.
"[China] has agreed that it is in their
interest to adopt greater exchange rate flexibility," Mr Snow was
quoted as saying.
Mr Snow's comment mollified US senators who had
pushed for punitive measures against imports from China.
But a spokesman for the People's Bank of China
insisted that "with regard to the yuan's revaluation, we never
make predictions and there is no timetable".
Senators Charles Schumer and Lindsey Graham
announced their decision to delay a vote on tariffs on imports from
China after meeting Mr Snow and Federal Reserve chairman Alan
UK ECONOMIC GROWTH REVISED LOWER
An abrupt slowdown in consumer spending meant the
UK economy grew by just 0.4% in the first three months of the year,
slower than previously thought.
The Office for National Statistics (ONS) revised
the figure down from an earlier estimate of 0.5%.
The ONS also revised the annual growth rate from
2.7% to 2.1% - the slowest figure for more than two years - as it
revised past growth data upwards.
The figures could raise pressure for an early
interest rate cut, analysts said.
Household spending grew by just 0.1% in the
quarter, the weakest rate since the end of 2000. The ONS data also
showed manufacturing output fell by 0.9%
US GROWTH RETURNS TO ROBUST FORM
Strong exports and home-building has kept the US
economy growing faster than expected, official figures show.
Gross domestic product (GDP) rose at an annual rate
of 3.8% in January-March 2005, above the initial 3.1% estimate and in
line with the previous quarter.
The data from the Commerce Department suggests that
high oil prices have yet to dent the US's capacity to expand.
They could also indicate that the Federal Reserve
is likely to raise interest rates again.
The Fed began its monthly rate-setting meeting on
Wednesday, and is widely expected to push the cost of borrowing up to
3.25% on Thursday last - for the ninth month in a row - from the
current level of 3%.
GLOBAL ECONOMY 'TO SLOW IN 2005'
High energy prices and rising interest rates will
substantially slow the global economy this year, the United Nations
Worldwide growth will slow to 3% in 2005, down from
2004's 4.1%, according to the report from the UN's Department of
Economic & Social Affairs (UNDESA).
Industrialised nations will be the worst affected,
said the report.
Developing countries will generally see better
growth thanks to strong demand for their minerals and farm goods.
The report forecasts that growth in western Europe
will slow to about 2% in 2005, down from 2.2% in 2004.
US growth is expected to ease to 3% from 4.4%,
while developing nation economies are set to grow by 5% in 2005, the
same rate as last year.
The Chinese economy is expected to grow at 9% in
2005, as its economy continues to grow strongly, while Africa as a
whole will see growth of more than 5%.
SAUDI RULERS ISSUE 'LINGERIE LAW'
Lingerie shops in the strictly conservative Muslim
kingdom of Saudi Arabia have been ordered to recruit women to replace
At present women, who are not allowed to mix with
men other than close family members outside the home, must buy
underwear in shops staffed by men.
The country's labour minister said the ruling will
create jobs for women.
Women in Saudi Arabia are not allowed to drive or
vote, and face restrictions on where and when they can work.
OIL PRICES FALL BACK FROM HIGHS
Oil prices fell by $2.34 a barrel on Tuesday last,
after reaching record highs over the previous three days.
US light crude ended down $2.34 to $58.20 a barrel,
while London's Brent crude dropped $2.02 to $57.28 barrel.
Analysts said the fall was likely to be temporary,
and that oil prices should soon rise again due to supply concerns.
They put the drop down to some profit-taking by
traders after prices hit record highs on Monday - $60.95 for US light
and $59.59 for Brent.
US SENATORS BACK LATIN TRADE PACT
A Central American free trade agreement signed a
year ago has been approved by the US Senate despite much opposition.
The US textile and sugar industries and US trade
unions have opposed the deal.
But President George W Bush insisted it is
"good for American workers, good for our farmers and good for
Five countries in the region have signed up to
Cafta, which will aim to help ease poverty, foster development and
strengthen democracy in the region.
"The agreement is also a strong boost for
young democracies in our own hemisphere whose success is important for
America's national security and for reducing illegal
immigration," Bush added.
The US Senate voted 54-45 in favour of the trade
agreement which will next be considered by the US House of
BANK OF AMERICA IN $35BN MBNA BUY
Bank of America, the second-biggest bank in the US,
is to buy credit card firm MBNA for $35bn (£19.5bn).
The deal will double the size of the bank's credit
card operations to 40 million accounts.
Bank of America said the takeover will involve
6,000 job cuts, but gave no further details.
NEW HURDLE FOR CHINA'S UNOCAL BID
The US House of Representatives has voted to block
the Bush administration from backing a Chinese takeover attempt for US
oil firm Unocal.
The Republican-led house voted against any backing
for the $18.5bn (£10bn) bid put forward by China's CNOOC oil firm.
But the move needs approval from the Senate, which
has not considered such a proposal.
CNOOC's bid trumps a $16.3bn cash and share offer
tabled by fellow US oil group Chevron.
US FED INCREASES RATES TO 3.25%
The US Federal Reserve has maintained its
"measured" pace of interest rate rises, raising the cost of
borrowing by 25 basis points to 3.25%.
It was the ninth monthly rise in a row by the Fed's
Open Market Committee.
Analysts had widely expected the move as the Fed
tries to maintain economic growth but keep a lid on inflation.
The economy has fared well with 3.8% growth in the
first three months of the year, but rising oil prices have stoked
The recent cycle of increases has seen US rates
gradually rise from 50-year lows of 1% set in 2002.
SHELL ESCAPES CHARGES ON RESERVES
US prosecutors have decided not to take Royal Dutch
Shell to court for overstating its oil reserves by 4.47 billion
barrels, the company has said.
The threat was withdrawn after the company assisted
an investigation into how it had overstated reserves by 20%.
The firm revealed the miscalculation last year, and
agreed to pay a $120m (£66.9m) penalty to settle with the US
Securities and Exchange Commission.
Oil reserves can affect share prices as they
indicate potential future income.
Shell's shares dived when it downgraded its
reserves last year, but they have since recovered, boosted by the
rising global price of oil.
ONE-OFF COSTS HIT MONSANTO PROFIT
US agrochemical giant Monsanto has blamed an 81%
drop in third quarter profits on write-offs caused by two large-scale
St Louis-based Monsanto said net profits for the
three months to 31 May fell to $47m (£26m) compared with $252m for
the same period last year.
Net sales rose by 22% to more than $2bn, and the
firm said demand continued to grow for its products.
ZIMBABWE TRIPLES PRICE OF PETROL
The cost of petrol in Zimbabwe has been raised by a
factor of three, in an attempt to curb rampant fuel smuggling and cope
with the rising cost of oil.
An announcement in the official Herald newspaper
said a litre of petrol would cost 10,000 Zimbabwe dollars ($1;
£0.55), up from Z$3,600. The rise follows months of extreme fuel
shortages in Zimbabwe.
EU OPENS CHINA SHOE-DUMPING PROBE
The European Commission has opened an investigation
into whether China and India are dumping footwear in Europe.
The move follows calls for an investigation from
Europe's shoemakers, after an estimated sevenfold leap in China's
imports since January 2005.
If it finds predatory pricing from either country,
the European Commission promised it would take action.
Chinese clothing exports in general have surged
following the end of an international quota agreement.
The shoe-dumping investigation would probably take
between nine and 15 months, a spokeswoman said.
SLOW DEBUT FOR CHINA SHIP GIANT
Shares in Chinese shipping firm Cosco have fallen
sharply on their first day on the Hong Kong stock exchange.
The group, which includes the world's
seventh-largest container firm, floated shares in a holding company in
Hong Kong to raise money for expansion.
But fears of a glut in the shipping market - driven
by China's booming economy - meant investors stayed nervous about the
NIGERIA TO GET $18BN DEBT RELIEF
The Paris Club of creditor countries has agreed the
outline of a debt relief package for Nigeria.
About $18bn (£10bn) of debt will be written off
and Nigeria plans to buy back a chunk of outstanding loans.
The country owes the rest of the world $35bn, and
the new talks are linked to an agreement between Nigeria and the IMF
on debt repayments.
Nigeria is the world's seventh-largest oil exporter
and Africa's most populous nation, but also one of its poorest.
About $31bn of Nigeria's debt is owed to members of
the 19-nation-strong Paris Club. It has not received any fresh loans
since 1992, but repaid $8bn debt since then.
GERMANY TO BREACH EU DEFICIT RULE
Germany looks set to face disciplinary proceedings
after warning it is likely to break European Union (EU) budget deficit
limits for another year.
Official figures showed that without policy changes
Germany is likely to break the EU deficit cap of 3% of gross domestic
product (GDP) until 2008.
It has already broken that limit every year since
2002, and is set to unveil a deficit of 3.7% of GDP in 2005.
Europe began action against Italy last week for
breaking deficit rules.
The European Commission (EC) gave Italy until the
end of 2007 to slash its deficit to below EU limits.
Italy's deficit stood at 3.2% of GDP in 2001, 2003
and 2004, and the EC has predicted it will record a 3.6% shortfall
this year - before rising to 4.6% in 2006.
FRENCH CONSUMER CONFIDENCE SLUMPS
Falling consumer confidence in France has
underlined the problems facing new Prime Minister Dominique de
Villepin as he tries to revitalise the economy.
Consumer confidence was worse than expected in
June, while the unemployment rate refused to budge from a five-year
Unless the job situation improves, economic growth
is unlikely to pick up and may even slow, analysts warned.
Separately, a fall in Germany's jobless rate was
attributed to summer hiring.
The seasonally-unadjusted jobless rate dipped to
11.3%, but the German Labour Office made clear that this figure
reflected seasonal factors, not an improving economy.
SRI LANKA'S GROWTH TURNS UPWARDS
Sri Lanka's economic growth has started to recover
from the tsunami which hit the island state in December.
Expansion for the year to March was 4.8%, up from
the 4.4% recorded three months earlier.
But the central bank warned that the after-effects
of the tsunami which killed thousands and devastated tourism and
fishing could still depress growth.
It also said instability within the government
could pose a threat to continued recovery.
It is predicting growth of 5.3% for 2005, down from
5.4% in 2004 and 5.9% the year before that.
UK PROPERTY MARKET 'COOL' IN JUNE
UK house prices dipped by 0.2% in June, according
to the Nationwide, while annual price growth fell to 4.1% - the lowest
level since July 1996.
Prices in the three months to June were up 0.8%
against the previous quarter, the building society added.
"While the weather was hotting up, house
prices in June cooled," the Nationwide said, adding price growth
this year had been "almost horizontal".
The survey said the price of an average house in
June was £157,791.
Nationwide said that activity levels in the market
had "stagnated" recently, after a pick-up in the first few
months of the year.
US LIFTS SOUTH ASIA TRADE CURBS
US President George W Bush has restored duty-free
access of some goods from India and Pakistan to US markets.
Mr Bush said he restored the trade benefit because
the two countries had made progress on intellectual property and
The list of goods was not made available by the
The US has been strengthening trade and defence
ties with India, while Pakistan is a key ally in its war against
Mr Bush said that he had made the decision after
reviewing the steps taken by Delhi and Islamabad.
"I have determined that India has made
progress in providing adequate and effective protection of
intellectual property rights," he said.
"Accordingly, I have determined to terminate
the suspension of India's duty-free treatment for certain
articles," he said.
UK SEES JUMP IN INWARD INVESTMENT
The UK attracted a record number of investment
projects from foreign firms last year, official figures have shown.
Government body UK Trade and Investment said nearly
40,000 jobs were created in 2004/05 from 1,066 investment projects.
That was an increase from the 25,463 jobs created
by 811 projects in the previous year.
The figures showed a 61% increase in the number of
IT and software projects to 240, with research and development
projects up 22% to 101.
A total of 451 projects were in the services sector
- the most popular sector for investment - while 268 projects were in
the manufacturing sector.
FOREIGN INVESTMENT IN JAPAN SOARS
Foreign investment in Japan in 2004/05 outstripped
the country's investment overseas for the first time in half a
century, official figures have shown.
According to the Finance Ministry, foreign firms
sank more than 4 trillion yen ($36bn; £20bn) into Japan in the 12
months to March.
The figure, which had doubled in three years, was
driven by an upsurge in money coming from the US.
Japan has till now had a reputation for being
hostile to foreign investment.
Its corporate structures have traditionally been
set up to cement cross-shareholdings between Japanese companies,
preventing hostile takeovers by either domestic or outside buyers.
WEAK EURO LIFTS GERMAN CONFIDENCE
German business confidence has improved for the
first time in five months, following recent falls in the euro.
Research institute Ifo said its business index rose
to 93.3 points from 92.9 points in May.
The retail sector index hit its highest level since
October 2003. Construction was the only sector not to improve.
The weakening euro had proved to be good news for
exports, analysts said, adding that news of a September general
election had also improved confidence.
The euro has fallen by about 11% since the
beginning of the year. By Monday last, it was trading close to the
$1.20 level - approximately four cents lower than at the time of the
previous Ifo survey.
EGYPT DEFENDANT WITHDRAWS CLAIMS
A co-defendant in the trial of Egyptian opposition
leader Ayman Nour has withdrawn his testimony, saying his confession
had been forced out of him.
Ayman Ismail said security agents had threatened to
harm his family if he did not testify against the politician.
Mr Nour denies forging signatures to register his
party and says the charges are politically motivated.
He wants to challenge incumbent Hosni Mubarak in
the first multi-candidate presidential elections, in September.
If convicted, he would lose his right to take part
and could face up to 15 years in prison.
Mr Ismail had admitted forging documents at Mr
But he told the Cairo court that "security
people threatened to hurt" his nephews if he did not confess.
"Anybody in my shoes would have done the same.
I don't know what will happen to me now," he said.