NEWS,31.01.2013

Income surge releaves US consumers

American income growth surged in December as companies rushed to make dividend payments before higher tax rates set in, while buoyant wage growth also gave a lift to households. US personal income rose 2.6% last month, the biggest increase in eight years, the Commerce Department said on Thursday. While much of the gain was due to special payments aimed at beating tax increases due to begin this month, wages still grew at one of the faster rates seen last year. That should lend support to consumer spending and provide some underlying momentum for the economy despite a surprise contraction in gross domestic product during the fourth quarter."Even abstracting from the one-off surge in dividend payments ... the general tone of this report was quite encouraging," said Millan Mulraine, an economist at TD Securities in New York.The increase in overall personal income was well above analysts' expectations for a 0.8% gain. However, another economic report showed an increase in new jobless claims last week, and US stocks traded lower as investors sifted through the mixed data, while prices for US Treasuries were higher.The big rise in incomes put consumers on stronger footing entering the new year, even if the gains may not have been distributed evenly throughout the workforce. Extra dividend payments likely went to the nation's wealthier households who derive more of their income from investments.Still, wages and salary payments grew 0.6% last month, building on a sizable 0.9% gain in November.The income gains helped push the saving rate, the amount of disposable income households socked away, to 6.5%, the highest since May 2009. That offers a cushion for consumer spending as the temporary boost in incomes from investments unwinds and households deal with higher tax rates that took effect this month.Last month, consumer spending rose a modest 0.2%, which was just below the pace expected by analysts.The Commerce Department report also showed cooling inflation, which could help the US Federal Reserve continue easy-money policies aimed at boosting employment.Prices rose 1.3% in the 12 months through December, down a tenth from the reading in November and well below the Fed's 2% target. A core price reading, which strips out volatile food and energy prices to provide a better sense of inflation trends, was up a tame 1.4% from a year ago. A separate report from the Labour Department showed initial claims for state unemployment benefits increased 38 000 last week to 368 000. However, the increase followed a week where new claims were at their lowest in five years and still pointed to an economy where employers are adding jobs, albeit at a lackluster pace. The four-week moving average for new claims, which provides a better sense of underlying trends, gained 250 to 352 000.A report on Friday is expected to show employers added 160 000 jobs to their payrolls in January after an increase of 155 000 in December. The unemployment rate is seen holding steady at 7.8%.The number of planned layoffs at US firms rose in January from the prior month, but declined from a year earlier, another report showed on Thursday. Employers announced 40 430 job cuts this month, up 24.2% from 32 556 in December, according to the report from consultants Challenger, Gray & Christmas, Inc. Layoffs were down 24.4% from January 2012.

Worldwide tablet sales soar

Worldwide tablet sales jumped in the fourth quarter beyond even some of the most optimistic forecasts to 52.5 million, with Android-powered devices pacing growth, a survey showed on Thursday.The preliminary survey by business research firm IDC showed the tablet market grew 75.3% year over year in the quarter and rocketed 74.3% from the previous quarter's total of 30.1 million.IDC said the strongest growth came from Android, including tablets made by South Korea's Samsung and Taiwan's Asus, which makes a Google-branded Nexus tablet.Apple remained the biggest seller, but its market share was under 50%, IDC said. The survey found that Microsoft, which launched its new Surface tablet in the quarter, failed to break into the top five sellers and shipped a modest 900 000 of the devices in the quarter.Overall, the market's strong gains came from a spate of new product launches, including the iPad mini, and lower prices, which encouraged buyers over the holiday shopping season, IDC said."We expected a very strong fourth quarter, and the market didn't disappoint," said IDC analyst Tom Mainelli."The record-breaking quarter stands in stark contrast to the PC market, which saw shipments decline during the quarter for the first time in more than five years."Apple's iPad held its top position with 22.9 million units shipped. That was up 48% from a year earlier, but lower than overall market growth.As a result, Apple's market share declined for a second quarter in a row to 43.6% from 46.4% in the third quarter.Samsung, the number two vendor, saw year-on-year growth of 263%, selling 7.9 million tablets and grabbing a 15.1% market share.IDC said Amazon, which does not provide its own sales data, delivered some six million tablets in the quarter to retain its spot as the number three vendor.That represented 26.8% growth, giving Amazon a market share of 11.5%, IDC said.Fourth place belonged to Asus, which sold 3.1 million tablets, year-on-year growth of more than 400%. That gave the Taiwan-based firm a 5.8% market share.Barnes & Noble sold one million of its Nook tablets and accounted to 1.9% of the market, the survey found.IDC analyst Ryan Reith said Microsoft will need to shift its strategy to compete better in the tablet market."There is no question that Microsoft is in this tablet race to compete for the long haul," he said, calling the market reaction to Surface "muted.""We believe that Microsoft and its partners need to quickly adjust to the market realities of smaller screens and lower prices. In the long run, consumers may grow to believe that high-end computing tablets with desktop operating systems are worth a higher premium than other tablets, but until then (selling prices) on Windows 8 and Windows RT devices need to come down to drive higher volumes."

Ukraine economy in official recession

 

Kiev Ukraine's economy plunged into recession in the final quarter of 2012 with GDP contracting 2.7%, the second quarter running of negative growth, the statistics office said.Gross domestic product in Ukraine contracted 2.7% in the fourth quarter of 2012 compared with the same period last year. The economy had already shrunk by 1.2% in the third quarter.For the whole of 2012, growth was almost stagnant at 0.2% compared with 5.2% in 2011 and the projection in the budget for growth of 3.9%.Ukraine, which was one of the European states worst hit by the 2009 economic crisis, is hugely vulnerable to the current global slowdown due to its dependence on metals exports.

Bitter taste for German chocolate makers

German antitrust authorities have fined 11 chocolate makers €60m for colluding to rig the price of confectionary.The Federal Cartel Office says the offences committed by companies, including Kraft and Nestle, occurred between 2004 and 2008.The offences include agreeing on how much to increase the price of chocolate bars when the cost of raw materials rose sharply in 2007.The cartel office said in a statement on Thursday that the companies "simply ceased competing with each other and piled the price rises on to consumers".It said that Mars avoided a fine by alerting authorities to the illegal practices.

Nappy hunters bare Norwegian bottoms

Southern Norway is in the midst of a nappy shortage after a supermarket price war lured enterprising bulk shoppers from eastern Europe who have cleaned out the shelves, customs officials and retailers said.Norway is one of the world's most expensive countries. However, supermarkets in the south trying to lure local customers by undercutting rivals on the price of nappies inadvertently made it profitable enough for residents of nearby countries to start trading in them."They buy every last diaper [nappy], I mean everything we have on the shelves, throw it in the back of their car and take them home, where they sell it for a nice profit," says Terje Ragnar Hansen, a regional director for retail chain Rema 1000."It's not stealing and it's not even criminal but it's a big problem, ... they leave nothing for our regular customers.Customers come into Norway from Sweden, drive along the coast to fill their cars, then take a ferry back to the continent, said Helge Breilid, the chief of customs in Kristiansand on Norway's southern coast.Some have been stopped with nappies worth up to $9 100, roughly 80 000 nappies, a legal shipment even though Norway is not part of the European Union. "They told us that the only reason they came to Norway was to drive around and buy nappies to bring back home and resell," Breilid said. "These people mainly come from Poland and Lithuania, and we have no reason to believe that they are part of any criminal gangs."Norwegian nappies cost as little as $5.47 for 50, less than half of the prevailing price in Lithuania. Coincidentally, the internet is heaving with Lithuanian sellers advertising Norwegian nappies.

French civil servants go on strike

French civil servants went on strike on Thursday for better pay in their first mass show of dissent since the Socialist Francois Hollande became president last year.Dozens of street protests were planned across the country as part of the day of action called by three of the several unions which represent France's 5.2 million state workers.The main complaint of the unions relates to the index used to calculate salaries, which has been frozen for three years.Raising the index by one point would cost €800m if applied only to central government workers or €1.8bn if applied to all civil servants, according to the state audit authority.Jean-Marc Canon of the CGT union said the situation was "absolutely catastrophic", and noted that nearly a million civil servants were being paid the minimum wage.The unions are seeking to put pressure on Civil Service Minister Marylise Lebranchu ahead of pay talks next Thursday.She has acknowledged "the difficult situation facing civil servants" but hinted that pay rises were unlikely given the budgetary constraints on the government.The government was due later on Thursday to announce how many civil servants had answered the strike call.

NEWS,30.01.2013

US economy shrinks in fourth quarter

The US economy contracted at a rate of 0.1% in the fourth quarter, according to the government's first estimate on Wednesday.But the economy expanded overall a modest 2.2% for the full year in 2012, a gain from 1.8% in 2013, the Commerce Department said.The fourth quarter estimate was lower than forecast, but came after a strong 3.1% pace in the third quarter."The downturn in real GDP in the fourth quarter primarily reflected downturns in private inventory investment, in federal government spending, in exports, and in state and local government spending," the department said.It stressed that the first estimate of GDP growth is based on incomplete data and is often revised.

US adds more jobs than expected

US private-sector employers added 192 000 jobs in January, more than economists were expecting, a sign of growth in the labor market, a report by a payrolls processor showed on Wednesday.Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 165 000 jobs. December's private payrolls were revised down to an increase of 185 000 from the previously reported 215 000.The report is jointly developed with Moody's Analytics.Small businesses with less than 50 employees did the most hiring this month, adding 115 000 jobs. But large businesses of more than 500 workers cut 2 000 jobs."The job market is slowly, but steadily, improving," Mark Zandi, chief economist of Moody's Analytics, said in a statement.By industry,professional and business services firms led gains with 40 000 jobs while the manufacturing sector fared the worst, cutting 3 000 positions.

    

Europe's economic gloom lifts

Business leaders and consumers in the eurozone sent signals in January that the clouds of economic gloom are lifting slightly, marking the third month running of firming optimism, data from the European Commission showed on Wednesday.Confidence indicators are important pointers to how the economy will perform, and the latest figures suggested that optimism is gaining ground in the eurozone, pulled by Germany in particular and overall also by the construction sector.The Commission's eurozone confidence index rose by 1.4 points from the December level to 89.2 points against a background of easing tensions over the debt crisis.And the index for all 27 members of the European Union also rose by 1.4 points to 90.6 points.In the eurozone, the sector of activity where confidence rose most was the construction industry for which the indicator gained 4.6 points. This reflected orders taken and expectations concerning the need for labour.The reading for confidence expressed by consumers also rose by 2.4 points in January.Confidence in the services sector rose by 1.0 point.However, for industry and the retail sector, the indicators were flat.Sentiment about the outlook for employment was less pessimistic in all sectors of activity than has been the case, both in the eurozone and in the European Union.In the eurozone, confidence rose the most in Germany by 2.5 points, in the Netherlands by 1.0 point, and in Spain by 0.5 points.In Italy it was steady and in France it slipped by 0.3 points.US stock index futures showed little reaction to the ADP report, though futures extended declines later in the morning following data that showed the economy unexpectedly contracted in the fourth quarter.The ADP figures come ahead of the government's much more comprehensive labor market report on Friday, which includes both public and private sector employment."The data suggests that jobs growth is accelerating and bodes well for Friday's payrolls report," said Omer Esiner, analyst at Commonwealth Foreign Exchange in Washington.The government release is expected to show hiring held steady in January with 160 000 jobs created.Economists often refer to the ADP report to fine-tune their expectations for the payrolls numbers, though it is not always accurate in predicting the outcome.

Obama's popularity highest in 4 years

US President Barack Obama's popularity has hit 60%, the highest level since he first took office four years ago, according to a poll released on Wednesday.The survey by ABC television and The Washington Post was made public just a little more than a week after the president's formal swearing-in was witnessed by an estimated one million people in Washington and millions more across the nation.The pollsters credited public approval of the president's inauguration address for his soaring poll numbers.In that address, Obama embraced a liberal agenda that vowed action during his second term on gun reform, gay rights and the environment, among other issues.But while the poll showed he has broad public support, it also found that his popularity is slightly less than that enjoyed by two other re-elected presidents - Bill Clinton and Ronald Reagan - at the start of their second terms.Obama's favourability rating at the start of this second term is higher, however, than that of his predecessor George W Bush at the same point during his tenure.The 60% popularity represents a 10-point increase since last summer, during the heat of the contentious presidential race against Republican challenger Mitt Romney.Obama has a way to go until he matches his all-time highest popularity numbers 79% achieved just days before he took office in January 2009, the pollsters said.The telephone survey of 1 022 adults was taken between 23 to 27 January and had a 3.5% margin of error.

Israel releases frozen Palestinian funds

Israel said on Wednesday it had released $100m of the tariffs and tax money it collects on behalf of the Palestinian Authority, which were frozen last year as punishment for the UN bid. But an Israeli official said it was a one-off measure to ease the financial crisis faced by the Palestinians and was not a sign that the transfers would be renewed."This decision was taken by Prime Minister Benjamin Netanyahu because of the Palestinian Authority's very difficult financial situation," an official at the premier's office told AFP."But this transfer is temporary and affects only funds owed for one month," he added, speaking on condition of anonymity."The prime minister did not commit to continue these transfers."The Palestinians said Israel's decision to transfer money on a one-time basis was effectively "extortion”."Israel's announcement that it will transfer 400m shekels [$107.31m] of our money on a one-time basis means they will continue to carry out extortion on this issue," Palestinian negotiator Saeb Erakat told AFP."Israel is using our money, which it collects, as a sword hanging over our heads," he said."Israel should pay us our money immediately and the international community should condemn this Israeli piracy and stop it immediately," he added."The transfer of the funds on a one-time basis means the financial and political siege is continuing and that nothing has changed in Israeli politics and Netanyahu's approach."Israel in early December announced it would not transfer tax and tariff funds it collects for the Palestinians in response to their successful bid for upgraded UN membership, a move the Jewish state had fiercely opposed.Every month, Israel transfers tens of millions of dollars in customs duties that are levied on goods destined for Palestinian markets that transit through Israeli ports, and which constitute a large percentage of the Palestinian budget.The transfers are governed by the 1994 Paris Protocols that governs economic agreements between Israel and the Palestinians.But Israel often freezes the transfer of funds as a punitive measure in response to diplomatic or political developments viewed as harmful.The measure has deepened an already dire financial crisis faced by the Palestinian Authority, which has frequently been unable to make payroll for its employees over the last year.In response to Israel's freezing of the funds, the Palestinians have urged Arab nations to activate a promised "safety net" of $100m a month to make up the shortfall.But despite pledging to deliver the money, funds have yet to materialise, leaving the Palestinian Authority unable to pay its thousands of government employees, who are still owed half their salaries from November and all their salaries from December.

NEWS,29.01.2013

RBS faces £500m fine over Libor scandal

Britain's Royal Bank of Scotland could face a £500m ($786m, €585m) fine from British and US authorities for its role in the Libor rate-rigging affair, media said Tuesday.The Wall Street Journal, citing people briefed on negotiations, added that US authorities were pushing for a settlement of allegations that would result also in an RBS division pleading guilty to criminal charges.The newspaper said that the deal could be completed within the next fortnight and added that RBS was resisting any guilty plea amid fears it would lose clients and spark costly litigation.A spokesperson for the state-rescued bank would not be drawn on the article, simply saying: "Discussions with various authorities in relation to Libor setting are ongoing."We continue to co-operate fully with their investigations," he added in a statement.Investors meanwhile took flight at Tuesday's development. RBS shares sank 5.98% to finish at 345.80 pence on London's FTSE 100 index of leading shares, which ended 0.71% higher at 6 339.19 points.The Edinburgh-based lender is 82% owned by the British government after a vast bailout during the global financial crisis.The Libor affair erupted in June 2012 when Barclays bank was fined 290m by British and US regulators for attempted manipulation of Libor and Euribor interbank rates between 2005 and 2009.In December, Swiss banking giant UBS was slapped with fines totalling $1.5bn after a major probe by Swiss, British and US regulators revealed evidence of massive misconduct."It cannot be said that this comes as a surprise given that it was well flagged that authorities will chase RBS following the successful takedowns of Barclays and UBS," said analyst Ishaq Siddiqi at trading group ETX Capital."However, it does serve to remind us just how careless and brazen traders at these banks were, taking excessive risk to manipulate rates."The response in markets may be somewhat muted in the sessions ahead as over the months we have learnt just how deep this corruption ran through the Libor market and instead, investors are likely to breathe a sigh of relief as these charges will remove an overhang in the stock price."The Libor rate is used as a benchmark for global financial contracts worth about $300 trillion. However, the system was found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.The London Interbank Offered Rate, or Libor, is a flagship instrument used all over the world, affecting what banks, businesses and individuals pay to borrow money. Euribor is the eurozone equivalent.

Global tourism peaked in 2012 - UN

International tourist arrivals exceeded one billion for the first time last year, with the Asia-Pacific region posting the biggest increase in foreign visitors, and numbers will rise further in 2013, a UN body said on Tuesday. The number of international tourist arrivals grew by 4.0% to 1.035 billion in 2012, up from 996 million in 2011, the Madrid-based United Nations World Tourism Organisation said in an annual survey."2012 was a year of constant economic instability in the entire world, especially in the euro zone. Despite this international tourism managed to maintain its course," the body's Secretary General Taleb Rifai told a news conference.The organisation forecasts international tourist numbers will grow in 2013 although at a slightly lower rate of 3.0%  4.0%.Global tourism figures were hit hard by the 2008 global financial crisis, with the rise in international arrivals that year slowing to 2.1% after jumping 6.6% in the previous year.Arrivals plunged by 3.9% in 2009, its worst performance in 60 years, as the outbreak of the swine flu virus contributed to cash-strapped consumers' decision to stay home.But international tourism arrivals bounced back the following year, rising 6.6% in 2010 and by 5.0% in 2011 even though global economic crisis had not yet ended. The Asia-Pacific region posted the largest growth in visitor arrivals last year with the number of foreign tourists up by 14 million or 6.5% to 233 million.Growth in the number of foreign visitors was highest in Southeast Asia, with the number of arrivals up by 8.7% over 2011.Tourist numbers climbed 4.1% in emerging economies compared with a 3.6% rise in advanced economies.The only region to report a decline in tourist numbers compared with 2011 was the Middle East with 2.0% fewer arrivals because of political instability in popular tourist spots such as Egypt and Syria.But the drop in the number of visitors to the region was smaller than the decline of 7.0 posted in 2011, the UN body said.Asia and Africa are expected to post the greatest growth in tourist numbers this year.The agency predicts tourist arrivals will increase by 5.0%-6.0% in the Asia-Pacific region this year and by 4.0%-6.0% in Africa.The Middle East will see the number of foreign visitors to the region rise by 0 and 5.0% this year while Europe will post growth of 2.0%-3.0%.The forecast of continued growth in international tourist arrivals next year comes a week after the International Monetary Fund (IMF) predicted the global economy will grow slightly less in 2013 than expected.The IMF projects global gross domestic product annual growth of 3.5% this year, a dip of 0.1 point from its October forecast owing largely to weakness in the eurozone, and 4.1% in 2014.The UN World Tourism Organisation predicts international tourist arrivals will rise by an average of 3.8% each year between 2010 and 2020 and will reach 1.8 billion in 2030.

Japan to approve $1.02 trillion budget

Japan's cabinet was Tuesday set to approve a $1.02 trillion annual budget with boosts in defence and public works spending amid a festering territorial row with China and a renewed assault on deflation.The cabinet is expected to approve a ¥92.61 trillion budget for fiscal 2013, with revenue estimated at ¥43.10 trillion and new bond issuance at ¥42.85 trillion - the first time in four years revenue will have been greater than new bond issuance, local reports have said.The budget is down from the ¥92.9 trillion allocated in the fiscal 2012 initial budget, the first decrease in seven years, they said.But the defence budget is up by ¥40bn or about 0.8% from the previous year to ¥4.75 trillion, the first rise in 11 years, at a time Japan is embroiled in a row with China over a chain of islands in the East China Sea.Beijing has repeatedly sent vessels to the disputed waters, prompting calls in Japan for more measures to defend the Tokyo-controlled islands, called the Senkakus in Japan but known as the Diaoyus in China.Defence Minister Itsunori Onodera has said the military will add nearly 300 personnel to help defend the disputed islands.Meanwhile, public works spending rises for the first time in four years, growing by ¥710bn to ¥5.29 trillion, reports said.Prime Minister Shinzo Abe, who took office in December, has pledged to pull Japan out of years of deflation by active government spending coupled with aggressive monetary easing by the Bank of Japan.Abe's government announced a $226.5bn stimulus package earlier this month.In the fiscal 2013 budget, the issuance of new government bonds decreases by ¥1.4 trillion from the preceding year to ¥42.85 trillion, Jiji Press said.The government is planning an $86bn bond sale to pay for the stimulus, stoking fears about spending by Tokyo, which already owes creditors cash equal to twice the size of its economy.

 

Japan, China set to boost economic ties

Japanese Prime Minister Shinzo Abe said on Tuesday he was open to a meeting with Chinese leaders to rebuild ties damaged by a territorial dispute but said there was no room for negotiations on their row over a group of small islands.The remarks came after China's Communist Party chief, Xi Jinping, told a Japanese envoy sent to Beijing last week that he was committed to developing bilateral ties and would consider holding a summit meeting.Relations between the world's second- and third-largest economies plunged after the Japanese government bought three disputed islands from a private owner last September, sparking anti-Japan protests across China.Some Japanese businesses were looted and Japanese citizens attacked."It is precisely because we have a problem that we should hold the summit between leaders and have high-level talks," Abe said on a television programme, "I would like to consider a top-level summit if circumstances allow."The conservative prime minister has just increased the defence budget for the first time in 11 years and swept back to power in a December election calling for the protection of Japan's "beautiful seas".He reiterated Japan's stance on the islands, which it controls. Japan calls them the Senkaku while China calls them the Diaoyu."The Senkaku Islands are our land and China has taken provocative steps against them ... we have been clear that there is no room for negotiation on this matter," he said."But on top of that, there's an economic relationship. Japan invests in China and reaps benefits from exporting its goods there while China creates job places thanks to Japanese investment," said Abe, adding that maintaining strong economic ties were vital for both countries."If top-level meeting was necessary to achieve that, we should do it and from that point on rebuild our relationship."

NEWS,28.01.2013

Sweden directs jobless youth to Greece

Sweden's government-funded employment agency on Monday launched a campaign encouraging unemployed Swedish youths to look for summer jobs in crisis-stricken Mediterranean countries including Spain and Greece.The jobs, most of them in the hotel and entertainment sectors, will mainly serve Swedish tourists."We hope our Swedish youths will get every single one of these jobs. These companies have had good experience of young Swedish workers," said Kristina Gaerdebro Johansson, a European Employment Services (EURES) advisor at the Swedish agency.Hundreds of jobs in Greece, Spain, Italy and Cyprus - all popular tourist destinations for Swedes - will be marketed at a special event organised by the country's employment agency and EURES in the southern city of Malmoe next week.The positions include football coaches, aerobics instructors and dancers at hotels and resorts around the Mediterranean. Some of the jobs require Scandinavian language skills, but not all of them, said Gaerdebro Johansson.Youth unemployment in Greece and Spain currently stands at more than 50%.Although Sweden's export-driven economy is beginning to feel the effects of Europe's economic woes, it has posted strong growth since making a quick recovery from the 2008 recession. It also has a low level of government debt.But youth unemployment has remained above the European average, reaching a seasonally adjusted 23.9% in December.Sweden's employment agency is offering to reimburse those who want to travel to the Mediterranean job fair from other parts of the country."This is a great opportunity if you want to enter the job market," Gaerdebro Johansson said.

WTO to probe Argentina trade disputes

The World Trade Organization on Monday established a dispute resolution panel to probe allegations of unfair trade practices lodged against Argentina by the United States, the EU and Japan.It also created a panel to look into Argentina's claim that the United States has imposed unfair barriers to its meat exports.In the first case, the three complainants have attacked Argentina's import licencing rules, which among other things require firms eager to export goods to the country to import Argentinian goods in exchange.One of the most well-known examples is that of German car maker Porsche, which was forced to commit to purchasing Argentinian wine and olive oil in order to get around 100 of its cars into the country.Canadian mobile phone maker RIM, which makes Blackberry, was meanwhile forced to open a production unit in southern Argentina in order to continue selling its phones.On Monday, Argentina told the WTO's Dispute Settlement Board that it had taken measures since January 25 to calm the tensions, stressing that it had repealed "all non-automatic import licences".The complainants however told the board they were "not convinced" by the measures taken by Argentina, a source close to the matter said. The WTO's dispute settlement board also established a second panel Monday to look into Argentina's claims that Washington has blocked meat imports.Buenos Aires has accused the United States of imposing measures over the past 11 years that have in effect closed off the US market to Argentinian beef.Argentina has also criticised the US for not recognising that the Patagonia region is free of the foot and mouth disease, despite a clean bill of health from the World Organization for Animal Health.The United States meanwhile insisted Monday that it was fully compliant with its obligations under the WTO agreements, but said US authorities were in the process of evaluating sanitary issues related to Argentinian products.According to WTO rules, the panels each have up to six months to report their findings.

Eurozone break up fades - survey

The prospects of a country being forced to leave the euro zone have all but vanished since the middle of last year, a survey released on Monday showed. The poll of 956 investors by research group Sentix showed just 17.2% expected one or more states to leave the 17-state bloc over the next 12 months.This was down from 25% in December, and a high of 73% in July 2012, a month after the index began."A euro breakup is almost no issue anymore," Sentix said in a statement. Since the start of the index, the European Central Bank has unveiled a plan to buy the bonds of stricken euro members, and Greece successfully completed a debt buyback, easing financial market tension and prompting policymakers to say the worst was over. Greece remained the country deemed most likely to exit the eurozone in the survey but the percentage of those who expect a "Grexit" within the next year fell to 13.9% from 22.5%  in December. For Cyprus, which applied for a bailout in June last year, the percentage fell by 2% points to 7.5%.

 

Gas drilling boon for ordinary US folks

Private landowners are reaping billions of dollars in royalties each year from the boom in natural gas drilling in some US states, transforming lives and livelihoods even as the windfall provides only a modest boost to the broader economy.In Pennsylvania alone, royalty payments could top $1.2bn for 2012, according to an analysis by The Associated Press that looked at state tax information, production records and estimates from the National Association of Royalty Owners.For some landowners, the unexpected royalties have made a big difference."We used to have to put stuff on credit cards. It was basically living from paycheck to paycheck," said Shawn Georgetti, who runs a family dairy farm in Avella, about 50 kilometers southwest of Pittsburgh.Natural gas production has boomed in many states over the past few years as advances in drilling opened up vast reserves buried in deep shale rock, such as the Marcellus formation in Pennsylvania and the Barnett in Texas.Nationwide, the royalty owners association estimates, natural gas royalties totaled $21bn in 2010, the last year for which it has done a full analysis. Texas landowners received the most in gas royalties that year, about $6.7bn, followed by Wyoming at $2bn and Alaska at $1.9bn.Exact estimates of natural gas royalty payments aren't possible because contracts and wholesale prices of gas vary, and specific tax information is private. But some states release estimates of the total revenue collected for all royalties, and feedback on thousands of contracts has led the royalty owners association to conclude that the average royalty is 18.5% of gas production."Our fastest-growing state chapter is our Pennsylvania chapter, and we just formed a North Dakota chapter. We've seen a lot of new people, and new questions," said Jerry Simmons, director of the royalty owners association, which was founded in 1980 and is based in Oklahoma.Simmons said he hasn't heard of anyone getting less than 12.5%, and that's also the minimum rate set by law in Pennsylvania. Simmons knows of one contract in another state where the owner received 25% of production, but that's unusual.By comparison, a 10 to 25% range is similar to what a top recording artist might get in royalties from CD sales, while a novelist normally gets a 12.5% to 15% royalty on hardcover book sales.Simmons added that for oil and gas "there is no industry standard," since the royalty is often adjusted based on the per-acre signing bonus a landowner receives. While many people are lured by higher upfront bonuses, a higher royalty rate can generate more total income over the life of a well, which can stretch for 25 years.Before Range Resources drilled a well on the family property in 2012, Georgetti said, he was stuck using 30-year-old equipment, with no way to upgrade without going seriously into debt."You don't have that problem anymore. It's a lot more fun to farm," Georgetti said, since he has been able to buy newer equipment that's bigger, faster and more fuel-efficient. The drilling hasn't caused any problems for the farm, he said.Range spokesman Matt Pitzarella said the Fort Worth, Texas-based company has paid "well over" $1bn to Pennsylvania landowners, with most of that coming since 2008.One economist noted that the windfall payments from the natural gas boom are wonderful for individuals, but that they represent just a tiny portion of total economic activity.For example, the $1bn for Pennsylvania landowners sounds like a lot, but "it's just not going to have a big impact on the overall vitality of the overall economy," said Robert Inman, a professor of economics and public policy at the University of Pennsylvania's Wharton business school."I think the issue is, what difference does it make for the individual families? "Pennsylvania's total gross domestic product in 2011 was about $500bn, according to the US Department of Commerce.Inman noted that total gas industry hiring and investment can have a far bigger effect on a state or region, and companies have invested tens of billions of dollars just in Pennsylvania on pipelines, infrastructure, and drilling in recent years.For example, in North Dakota the shale oil and minerals boom contributed 2.8% of GDP growth to the entire state economy in 2011, according to Commerce Department data.Another variable in how much royalty owners actually receive is the wholesale price of gas. That has dropped significantly over the past two years even as production has boomed in Pennsylvania and many other states. Average wholesale prices went from about $4.50 per unit of gas in 2010 to about $3 in 2012. For many leaseholders, that meant a decline in royalties.The boom in natural gas royalties has even led to niche spinoff companies that look for lease heirs who don't even know they're owed money.Michael Zwick is president of Assets International, a Michigan company that searches for missing heirs."It was an underserved niche," Zwick said of oil and gas leases. When a company can't find an heir to lease royalties, the money often goes to state unclaimed property funds.Zwick said he has found a few dozen people whose gas lease money was being held in escrow, including one who was owed about $250 000 in drilling royalties. But the average amount, he said, is far lower.

Wall Street execs fret about talent drain

As the titans of Wall Street banks gathered to network, gossip and consider the future of their beleaguered industry in Davos over the past week, one common worry emerged: who is going to take over when we leave?Some of the most ambitious minds in finance are leaving the industry after years of losses, scandals, bad press - and perhaps most importantly new regulations that have curbed some previously free-wheeling ways. The issue, executives say, is not pay, but how much scope there is to innovate and build businesses, which is why more bankers and traders are leaving the big Wall Street firms for Silicon Valley, joining private investment partnerships like hedge funds and private equity funds, or going into energy and other industries. David Boehmer, head of financial services in the Americas for the recruiting firm Heidrick & Struggles, said he hears this message from Wall Street employees looking to leave the industry. "I get people saying, 'I'm bored and I need to do something about it - this isn't a challenge anymore,'" he said. The problem is particularly acute for big banks such as Goldman Sachs Group or JPMorgan Chase & Co, several senior bank chief executives, managers and consultants told Reuters in interviews at the World Economic Forum here. "There is a massive talent drain in our business," said a senior Wall Street executive, who declined to be identified. For some of Wall Street's harshest critics this is likely to be perceived as good news. Former US Federal Reserve chairperson Paul Volcker and other experts have argued for years that innovation has little place in the financial sector, and having more conservative bankers and fewer heavy risk takers running Wall Street will reduce the chances of another blow-up like the financial crisis. It will also help to increase wealth generation in more important parts of the economy, such as manufacturing and software, they argue. The financial implosion in 2008 was partly triggered by the best and the brightest on Wall Street engineering products that helped inflate a massive housing bubble, and then magnified the losses that resulted. The financial sector globally received trillions of dollars of government support during the worst of the crisis, and new regulations are designed to ensure that bailouts are not necessary in the future. But many of the biggest global banks have gotten only bigger, making them potentially even more dangerous to the financial system. And having talented executives who understand complicated financial products and know how to control risks will become even more important, executives say. "It will become more of a problem five or 10 years down the road, but ultimately someone is going to have to manage these beasts," the Wall Street executive said. It isn't difficult to find examples of the exodus from big banks. After nearly 15 years in finance- with stints at American International Group, Barclays Capital and PineBridge Investments- Jacques-Philippe Piverger left Wall Street in 2011 to launch a company called Micro Power Design, which makes solar-powered lamps. Piverger's ultimate goal is to get the devices into the hands of poor people in developing countries whose access to electricity is limited. "Isn't it cool?" he asked as one of the lamps was placed on the bar of the posh Belvedere Hotel in Davos. Piverger was well-paid in finance but said his career had left him wanting. His startup gives him the ability to "address business and societal and environmental imperatives from under one roof," he said. Another example is the Twitter-linked tech startup Dataminr, which is staffed by ex-employees from Wall Street firms, including Mark Dimont, who left Morgan Stanley last year to head a business development team there. Of course, there have been previous waves of departures to hedge funds as bankers and traders have sought to strike out on their own - or to make more money - but this time the departures appear to be broader in nature. The departure of employees may force Wall Street to consider a wider range of people for positions. Heidrick & Struggles' Boehmer gave a presentation to a group of young professionals in Davos about his biggest challenge recruiting for big banks these days: getting executives to think creatively when filling positions. In the presentation - called "Hiring an oddball" - Boehmer described how hard it is to get bank executives to hire creative and "quirky" leaders who do not "fit in" with the prototypical suited-up Wall Street mold, but who could help revolutionise the industry. Instead, those quirky types are sought by Silicon Valley, and they may be happier there. Many prefer the laid back atmosphere, not to mention the challenges of building a business, and the promise of lucrative rewards at companies like Google, Facebook and smaller startups, Boehmer said. "Banks are not getting top-level talent out of universities anymore, so in 10 to 15 years, there could be a big problem when it comes to leadership at the senior level of these firms," Boehmer said. "They're seeing big gaps in talent." Boehmer said he performed a search for a technology position at a major investment bank, calling on candidates from Silicon Valley who might be lured to New York with mega-paychecks. He was denied by everyone he approached, he said. On the flip side, Heidrick & Struggles also did a search for a mobile-payments company on the West Coast that was looking for someone with financial expertise but offered just one-quarter of the pay. In that case, "we got tons of applicants," said Boehmer. Jack Dunn, president and CEO of FTI Consulting, recalled a recent conversation with a friend's son who is about 35 years old and works at a major Wall Street bank. Despite having a lucrative pay package and senior title, all the son talked about was finding an exit strategy, Dunn said. "When I was young and didn't know any better, I would have thought it was a dream job," said Dunn, a former investment banker. "It's a problem because we're going to need someone to pick up the pieces, and a lot of the best people are leaving these firms."

Japan forecasts 2.5% growth in 2013

Japan on Monday said the world's number three economy was on track to expand 2.5 percent in the fiscal year starting in April, thanks to fresh stimulus and a recovery in overseas markets.Prime Minister Shinzo Abe's cabinet approved the forecast higher than an estimate of one-percent growth for the current year to March on Monday morning, government officials said.The estimate is slightly higher than those from economists who have also upped their outlook on the back of a weaker yen and new stimulus measures, Dow Jones Newswires reported."We are forecasting that the economy will recover as the global economy is expected to pick up gradually, while we're also expecting a steady recovery in demand and an increase in jobs" at home, Chief Cabinet Secretary Yoshihide Suga told a press briefing.The government's top spokesman warned that several factors could impact the final growth figure, including swelling public debt and fluctuations in the yen, a key factor for the country's trade picture.But Economic revitalisation minister Akira Amari said he was confident the new target would be hit, telling Jiji Press: "Overseas risks are decreasing."Last week, the Bank of Japan raised its growth forecast for the same fiscal year to 2.3 percent from a previous 1.6 percent estimate, as it announced an open-ended asset buying programme and new inflation target aimed at ending the deflation that has haunted the economy for years.Abe, who took office late December after a landslide national election victory, unveiled a 20.2 trillion yen ($222 billion) stimulus package this month in the latest bid to stoke growth in the limp economy. The figure also includes local government and private-sector spending.Tokyo's new forecast will be used to produce a fresh budget, with Abe's cabinet set to endorse 92.6 trillion yen in spending on Tuesday, Japanese media reported.

NEWS,27.01.2013

Brazil Nightclub Fire Kills At Least 230 People

Flames raced through a crowded nightclub in southern Brazil early Sunday, killing more than 230 people as panicked partygoers gasped for breath in the smoke-filled air, stampeding toward a single exit partially blocked by those already dead. It appeared to be the world's deadliest nightclub fire in more than a decade.Witnesses said a flare or firework lit by band members may have started the blaze in Santa Maria, a major university city of about 225,000 people.Television images showed smoke pouring out of the Kiss nightclub as shirtless young men who had attended a university party joined firefighters using axes and sledgehammers to pound at windows and walls to free those trapped inside.Guido Pedroso Melo, commander of the city's fire department, told the O Globo newspaper that firefighters had a hard time getting inside the club because "there was a barrier of bodies blocking the entrance."Teenagers sprinted from the scene desperately seeking help. Others carried injured and burned friends away in their arms."There was so much smoke and fire, it was complete panic, and it took a long time for people to get out, there were so many dead," survivor Luana Santos Silva told the Globo TV network.The fire spread so fast inside the packed club that firefighters and ambulances could do little to stop it, Silva said.Another survivor, Michele Pereira, told the Folha de S. Paulo newspaper that she was near the stage when members of the band lit flares that started the conflagration."The band that was onstage began to use flares and, suddenly, they stopped the show and pointed them upward," she said. "At that point, the ceiling caught fire. It was really weak, but in a matter of seconds it spread."Guitarist Rodrigo Martins told Radio Gaucha that the band, Gurizada Fandangueira, started playing at 2:15 a.m. "and we had played around five songs when I looked up and noticed the roof was burning""It might have happened because of the Sputnik, the machine we use to create a luminous effect with sparks. It's harmless, we never had any trouble with it."When the fire started, a guard passed us a fire extinguisher, the singer tried to use it but it wasn't working"He confirmed that accordion player Danilo Jacques, 28, died, while the five other members made it out safely.Police Maj. Cleberson Braida Bastianello said by telephone that the toll had risen to 233 with the death of a hospitalized victim. Officials counted 232 bodies that had been brought for identification to a gymnasium in Santa Maria, which is located at the southern tip of Brazil, near the borders with Argentina and Uruguay.An earlier count put the number of dead at 245.Federal Health Minister Alexandre Padhilha told a news conference that most of the 117 people treated in hospitals had been poisoned by gases they breathed during the fire. Only a few suffered serious burns, he said.Brazil President Dilma Roussef arrived to visit the injured after cutting short her trip to a Latin American-European summit in Chile."It is a tragedy for all of us," Roussef said.Most of the dead apparently suffocated, according to Dr. Paulo Afonso Beltrame, a professor at the medical school of the Federal University of Santa Maria who went to the city's Caridade Hospital to help victims.Beltrame said he was told the club had been filled far beyond its capacity during a party for students at the university's agronomy department.Survivors, police and firefighters gave the same account of a band member setting the ceiling's soundproofing ablaze, he said."Large amounts of toxic smoke quickly filled the room, and I would say that at least 90 percent of the victims died of asphyxiation," Beltrame told The Associated Press by telephone."The toxic smoke made people lose their sense of direction so they were unable to find their way to the exit. At least 50 bodies were found inside a bathroom. Apparently they confused the bathroom door with the exit door."In the hospital, the doctor "saw desperate friends and relatives walking and running down the corridors looking for information," he said, calling it "one of the saddest scenes I have ever witnessed."Rodrigo Moura, identified by the newspaper Diario de Santa Maria as a security guard at the club, said it was at its maximum capacity of between 1,000 and 2,000, and partygoers were pushing and shoving to escape.Santa Maria Mayor Cezar Schirmer declared a 30-day mourning period, and Tarso Genro, the governor of the southern state of Rio Grande do Sul, said officials were investigating the cause of the disaster.The blaze was the deadliest in Brazil since at least 1961, when a fire that swept through a circus killed 503 people in Niteroi, Rio de Janeiro.Sunday's fire also appeared to be the worst at a nightclub since December 2000, when a welding accident reportedly set off a fire at a club in Luoyang, China, killing 309.In 2004, at least 194 people died in a fire at an overcrowded nightclub in Buenos Aires, Argentina. Seven members of a band were sentenced to prison for starting the flames.Several years later, in December 2009, a blaze at the Lame Horse nightclub in Perm, Russia, killed 152 people after an indoor fireworks display ignited a plastic ceiling decorated with branches.Similar circumstances led to a 2003 nightclub fire that killed 100 people in the United States. Pyrotechnics used as a stage prop by the 1980s rock band Great White set ablaze cheap soundproofing foam on the walls and ceiling of a Rhode Island music venue.The band performing in Santa Maria, Gurizada Fandangueira, plays a driving mixture of local Brazilian country music styles. Guitarist Martin told Radio Gaucha the musicians are already seeing hostile messages."People on the social networks are saying we have to pay for what happened," he said. "I'm afraid there could be retaliation".

 

Bangladesh factory fire concerns groups

International labour rights groups called on Sunday for global clothing retailers to ensure adequate safety measures for garment workers in Bangladesh after a blaze killed seven employees at a small factory.Saturday's fire gutted Smart Exports Garment Ltd, just two months after Bangladesh's worst ever factory blaze killed 112 workers and injured 150 at Tazreen Fashions Ltd, a multi-storey garment workshop in Dhaka's Ashulia suburb.In a joint statement issued after the latest blaze, three organisations asked retailers and brands to sign a fire safety agreement with Bangladesh."After more than two decades of the apparel industry knowing about the risks to these workers, nothing substantial has changed," the executive director of the International Labour Rights Forum, Judy Gearhart, said in the statement."Brands still keep their audit results secret. They still walk away when it suits them and trade unions are still marginalised, weakening workers' ability to speak up when they are at risk," she added. The Worker Rights Consortium (WRC) and the Clean Clothes Campaign (CCC) also signed the statement.Another rights group, the Institute for Global Labour and Human Rights (ILGHR), said on its website it had gained access to the gutted factory and found seven women workers had been crushed to death as employees tried to escape the fire.Firefighters and police said the cause of the latest blaze was not yet known. Survivors said it could have been caused by an electrical short circuit at the factory on the upper floor of a two-storey building in the crowded Mohammadpur area.Kalpona Akter, Executive Director of the Bangladesh Center for Workers Solidarity told Reuters that two garment factories had subcontracted orders to the factory's owner, Smart Export Garments Ltd. She said the company was not a member of the Bangladesh Garments Manufacturers and Exporters Association and had no license from fire prevention or labour bodies.An official report into the Tazreen blaze in November concluded it was the result of both sabotage and negligence. Bangladesh has about 4 500 garment factories and is the world's biggest exporter of clothing after China. Clothing makes up 80% of its $24bn annual exports.

Davos warns on global economic crisis

The world's political and business elite headed home on Sunday from this year's Davos forum with warnings that while the worst of the financial crisis seems over there is still much to be done.International Monetary Fund chief Christine Lagarde said in the closing moments of the annual gathering in the snowy Swiss ski resort on Saturday that she recommended the "do not relax principle" for the coming year.Where for the two previous years a sense of crisis had hung over the World Economic Forum, the mood was sunnier at the 2013 edition as speaker after speaker said they were now cautiously optimistic."I feel the circumstances in which I'm addressing you today are very different than 12 months ago," said Italian Prime Minister Mario Monti in his opening speech, following a torrid year dominated by the euro crisis.European central banker Mario Draghi meanwhile hailed 2012 as the year that the troubled single currency was "relaunched", even as others were hailing him as the man who had saved the eurozone from catastrophe.The Chinese economy's slowdown seemed less serious than a year ago to the participants while the step back from the fiscal cliff in the United States also eased minds.But as the 2 500 world leaders, financial officials, tycoons and journalists departed the picture-postcard Alpine resort, they may have felt a chill that was not just down to the subzero temperatures.Lagarde said the IMF's forecast of a "very fragile and timid recovery for 2013" was based on "eurozone leaders, the US authorities on the other hand and the Japanese authorities making the right decisions".She added: "And that's what I mean by 'do not relax' because some good policy decisions have been made in various parts of the world. In 2013, they have to keep the momentum."The head of the Organisation for Economic Cooperation and Development (OECD), Angel Gurria, warned meanwhile that countries had exhausted most room for manoeuvre in terms of fiscal and monetary policy."We should be very worried because the lack of room for some of the more traditional tools has gone and we are left with very few of these tools," he said.As in previous years the Davos forum was partly hijacked by external events, particularly after British Prime Minister David Cameron vowed to hold a referendum on European Union membership by the end of 2017.The move threatened to cause a stir, with Cameron's European counterparts worried about the effect the uncertainty would have on the euro's already fragile recovery, but they left any rows for another day.The turmoil in the Arab world also took centre stage for a time as officials including Jordan's King Abdullah II urged "desperately needed" action over Syria's civil war, though none came.Amid the cocktail parties and lavish luncheons at Davos this year there was sometimes a "mood of complacency", said Axel Weber, the chairman of Swiss bank UBS and former head of Germany's Bundesbank."My biggest fear is that 2013 could be a replay of 2012, another lost year," he said. "We shouldn't be complacent, we haven't really fundamentally improved that much."Many were still worried by the euro. The Deloitte financial group's global chief executive Barry Salzberg told AFP he was "reasonably comfortable, with one exception - and that is what's the impact on the US from Europe."Other officials expressed fears that governments would increasingly lean on central banks, which have often been the heroes of the fragile global recovery in the past two years, instead of taking action themselves.But in many ways it was business as usual at Davos, with world leaders huddling in private and corporate deals sewn up on the sidelines, such as a $10bn shale gas deal between Ukraine and oil giant Royal Dutch Shell.Even a noisy protest on Sunday by three topless, pink-flare-waving women from a Ukrainian feminist group failed to shock - they had targeted Davos the previous year too.

Gun control: Listen more, Obama says

President Barack Obama urged gun control advocates to listen to views of rural Americans who use guns for hunting and said bridging a cultural divide in attitudes to gun ownership would be critical to his administration's push to curb gun violence. "If you grew up and your dad gave you a hunting rifle when you were 10, and you went out and spent the day with him and your uncles, and that became part of your family's traditions, you can see why you'd be pretty protective of that," Obama said in an interview with The New Republic magazine published on Sunday.Obama made gun control a top priority for his second term after 20 children and six adults were killed by a gunman at a school in Newtown, Connecticut in December. Obama spoke with The New Republic on 16 January, the same day he announced he would put the full weight of his office behind urging Congress to approve an assault weapons ban and background checks for all gun buyers."Part of being able to move this forward is understanding the reality of guns in urban areas are very different from the realities of guns in rural areas," Obama said."So it's trying to bridge those gaps that I think is going to be part of the biggest task over the next several months...and that means that advocates of gun control have to do a little more listening than they do sometimes," he said.Vice President Joe Biden is leading the White House effort to talk to Americans about gun control proposals and galvanise public support to pressure Congress to act. e addressed the issue in Virginia on Friday. Gun ownership rights are enshrined in the US Constitution and past efforts to restrict gun ownership have been blocked by gun owners, the National Rifle Association and their supporters in Congress.

NEWS,26.01.2013

France: U.S. Support In Mali Intervention Not Enough, Urgency Stressed To Obama Administration

 

France's military intervention in Mali has revived trans-Atlantic tensions over security issues, this time involving a key counterterrorism battlefield, along with dismay from critics who see U.S. President Barack Obama as too reluctant to use military force.According to interviews with officials from both sides, the French have privately complained about what they see as paltry and belated American military support for their troop deployment, aimed at stopping the advance of militants allied with Al Qaeda in the Islamic Maghreb (AQIM).The Americans question whether French President Francois Hollande's armed intervention, which is entering its third week, was coupled with a thought-through exit strategy.Hollande called Obama on Thursday, Jan. 10, and in a brief conversation about Mali, told the U.S. leader that France was about to mount a major military operation in the north African country.Hollande was in a hurry and called Obama to inform, not to consult, according to French and U.S. officials. France's ambassador to Mali had sent an urgent message to Paris, warning that if the strategic city of Mopti fell to armed Islamic militants, there would be nothing to stop them from capturing the capital, Bamako, and controlling the entire country.France launched its military operation on Jan. 11."Had we not intervened, the whole region would have become a new 'Sahelistan'," said a senior French official, referring to the Sahel region of Africa south of the Sahara Desert.But France's sense of urgency ran headlong into American concerns about whether Paris had a long-term plan for Mali, and about getting the U.S. military deeply involved in a new foreign conflict as Obama begins his second term in office, the officials said.The United States has given what U.S. officials say is significant intelligence support to French forces in Mali, and has helped to airlift French troops and equipment into the country.France wants more U.S. and European help to move its soldiers and materiel. More urgently, it wants U.S. aerial refueling capability for its planes, French officials said. That would help France conduct airstrikes to relieve pressure on French troops should they encounter trouble in northern Mali, they said.A U.S. official said France's refueling request is under active consideration.U.S. support has been "minimal" in practice, one U.S. official acknowledged on condition of anonymity. Washington, this official said, gave France a "hard time" when they asked for increased support, and the French will "remember us for that."Obama, who took office when the United States was mired in two costly wars, has shown himself to be cautious - too cautious, mostly Republican critics say - about foreign military interventions. He limited the U.S. role in the campaign that helped oust Libya's Muammar Gaddafi and has resisted months of pressure for more muscular support for rebels fighting to oust Syrian President Bashar al-Assad.There are disagreements within the White House and Congress about U.S. support for the Mali mission, said Republican Representative Mike Rogers, chairman of the House Intelligence Committee."This is not new ... We're seeing an ongoing debate about our participation level in Syria. We saw that same level of debate about our participation in Libya, and now we're having that exact same philosophical stalemate and debate on what we do with the French in Mali," Rogers said in an interview.Obama and his aides "don't want their hand forced by French action," said Todd Moss, vice president of the Center for Global Development think tank and a former top official in the State Department's Africa bureau."There is very little, if any, political support in the U.S. for military action in a place like Mali," Moss said.Obama spoke to Hollande by phone on Friday and "expressed his support for France's leadership of the international community's efforts to deny terrorists a safe haven in Mali," the White House said in a statement.The White House said Hollande thanked Obama for the "significant support" provided by the United States.France has 2,500 soldiers in Mali, which it sent to block a southward advance on the Malian capital by Islamists occupying Mali's north. While French and Malian troops have appeared to make progress in recent days, the Islamists have proven to be better trained and equipped than France anticipated.The U.N. Security Council last month authorized deployment of a 3,300-member African military force, known as AFISMA, to Mali. The full force was originally not expected to be ready until at least September. It now appears that the Africans will be contributing many more troops with a sharply accelerated deployment schedule, although there are questions about how well trained and equipped they are.Even before Hollande acted, the United States had been reluctant for months about supporting international intervention in Mali, causing French-U.S. frictions at the United Nations.Remembering that it took the Americans weeks to decide on their level of support for the aerial mission over Libya in 2011, France decided to act immediately when Islamist forces in Mali began moving south, the French officials said.One French official described Obama's policy as almost "isolationist" - very reluctant to intervene, especially without a clear, easily sellable U.S. strategic interest at stake.The Obama administration has said it will do whatever it can to ensure France is successful in disrupting the militants' progress.Tommy Vietor, a White House spokesman, said, "We continue to share the French goal of denying terrorists a safe haven in the region, and we support the French operation."The United States, Vietor noted, is working to accelerate the deployment, training and equipping of the African force.Privately, U.S. officials are more skeptical, suggesting that Paris has developed its plans on the fly, and has no clear exit strategy."I don't think it's a secret that the French military effort has evolved and developed over time, and as that's happened we've worked with them to get the clearest-possible picture of not just their short term planning but also how they view this operation looking in three months or three years," an Obama administration official said.France has not specified how long its troops will stay in Mali, where they hope to split local Tuareg rebels away from AQIM militants and into talks with the Malian government."The longer we stay, the bigger the risks," the senior French official said.

Obama's Drug War: After Medical Marijuana Mess, Feds Face Big Decision On Pot

OAKLAND, Calif. In the summer of 2007, the owners of Harborside Health Center, then and now the most prominent medical marijuana dispensary in the U.S., were reflecting on their rapid rise. Steve DeAngelo had opened the center with his business partner in October 2006, on a day when federal agents raided three other clubs in the San Francisco Bay Area. "We had to decide in that moment whether or not we were really serious about this and whether we were willing to risk arrest for it," DeAngelo said. "And we decided we were going to open our doors. And we did, and we haven’t looked back since. The only way I’ll stop doing what I’m doing is if they drag me away in chains. And as soon as they let me out, I’ll be back doing it again." DeAngelo, looking at his desktop computer during an interview that summer, threw his hands up and shouted, "Yes!" Hillary Clinton, campaigning for president in New Hampshire, had just told a video-camera-wielding marijuana-policy activist that, if elected, she would end federal raids on pot clubs in California. That meant that all three leading Democratic candidates including the ultimate winner had vowed as president to leave DeAngelo and his business alone. Within a year of opening, the shop was bringing in $1 million a month in sales. President Barack Obama made good on his campaign promise shortly after taking office. "What the president said during the campaign, you'll be surprised to know, will be consistent with what we'll be doing in law enforcement," Attorney General Eric Holder said in March 2009. "What he said during the campaign is now American policy."In October, the Department of Justice followed up with what became known as the "Ogden memo" a missive from Deputy Attorney General David Ogden telling federal law enforcers that they should not focus federal resources "on individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana."Steph Sherer, the head of Americans for Safe Access, a California-based medical marijuana group, was thrilled when she saw the Ogden memo. The group quickly put out a press release touting it."We were so beside ourselves in so many ways that we were finally recognized by a government agency, that our press release was victorious," Sherer said. "What our nuance was, we said, 'Great, we have an administration that will have a dialogue with us, this is a major step forward.'"Some members of the medical marijuana industry, however, took a less nuanced view. "Instead, the reaction [from cannabis industry people] was, 'OK, we're all in the clear, it's time to expand our businesses and bring in outside investors,'" Sherer said. Encouraged by the Ogden memo and DeAngelo's public assertions of his million-dollar monthly revenue, medical pot shops flooded Montana, Washington, and other states. Legislatures in 18 states, plus the District of Columbia, have now approved marijuana for medical purposes. Twelve, including DC, have laws allowing dispensaries. Local officials in California's Mendocino County and in towns like Chico moved forward with plans to regulate medical marijuana as well. Before 2009, there were roughly 1,000 pot shops across the country. Today, there are 2,000 to 2,500, according to Kris Hermes, a spokesman for Americans for Safe Access."Nobody can argue that the number of medical marijuana shops in California and Colorado didn't grow at an exponential rate directly because of this" Ogden memo, said a former senior White House official who worked on drug policy and, like other former and current members of the Obama administration, requested anonymity in order to speak about internal debates. The Ogden memo, however, was not the beginning of the end of the war on pot. Instead, it kicked off a new battle that still rages. Since the memo, the Department of Justice has cracked down hard on medical marijuana, raiding hundreds of dispensaries, while the IRS and other federal law enforcement officials have gone after banks and landlords who do business with them. Fours years after promising not to make medical marijuana a priority, the government continues to target it aggressively.The war has played out not just between federal authorities and the pot industry, but between competing factions within the federal government, as well as between local and state officials and the more aggressive federal prosecutors and drug warriors. As officials in Washington fought over whether and how to continue the war on pot, U.S. attorneys in the states helped beat back local efforts to regulate the medical marijuana industry, going so far as to threaten elected officials with jail. The willingness of elements within the Department of Justice, including its top prosecutors, to use their power in brazenly political ways is, in many ways, the untold story of Obama's first-term approach to drug policy. As president, Obama did his best to laugh off questions about marijuana. His own experience with weed had been positive, having spent his high school years hanging out with the "Choom Gang," a bunch of his stoner buddies in Hawaii. A young Obama coined the term "roof hits" to describe the act of sucking in pot smoke floating near a car roof, and was known to hog extra hits from a joint by jumping around a circle of smokers, snatching the weed and saying, "Intercepted!" The Drug Enforcement Administration and federal prosecutors, however, found nothing funny about it. "I believe there's this notion out there that the marijuana industry is just full of organic farmers who are peacefully growing an organic natural plant and that there's no harm associated with that," U.S. Attorney Melinda Haag told San Francisco public radio station KQED last March. "And what I hear from people in the community is that there is harm." Marijuana, Haag said, could stunt brain development in children and act as a gateway drug to other substances. It may also, she warned, lead to armed robberies at dispensaries and grow operations, putting innocent bystanders at risk.Federal authorities were determined to keep up the fight against pot legalization in any form, medical or recreational. Fighting that political battle often meant carrying out high-profile raids in the midst of legislative debates. In March 2011, agents swept through Montana, seizing property and arresting owners as part of a nationwide crackdown on medical marijuana. They timed the Montana raids to coincide with a legislative debate and votes in the state legislature over the future of medical marijuana, using law enforcement to shift the debate in their favor. The raids led to images on the evening news of guns, drugs, and men in handcuffs. It imbued medical marijuana with a sense of criminality even though it was legal under state law  and soured the political climate against it. Before the raids, state lawmakers had been debating two approaches: Repeal the voter-passed medical marijuana law altogether, or create a system of state-regulated and controlled dispensaries. The raids disabused Montanans of the notion that the federal government would allow states to regulate marijuana policy as they saw fit. The bill to sanction dispensaries was a casualty of the crackdown.Instead, the Montana legislature voted to repeal the law, but the governor refused to sign it. Lawmakers sent him a new bill leaving the law in place, but strictly curtailing it, and disallowing dispensaries. He signed it.People who felt they'd been baited into the business by the federal government cried foul and began fighting to stay out of prison. The team defending Chris Williams, a Montana medical marijuana provider who was arrested and charged with drug trafficking, reached out to a Huffington Post reporter, who had broken the news of Holder's announcement that he would lay off medical marijuana, asking him to testify. "Case law in our circuit indicates we may be able to introduce evidence concerning entrapment, such as quotes by govt. officials in news articles, if the writer of the article can testify to the authenticity of the statements," said an investigator.The judge in the case, however, ruled that defense attorneys could in no way mention the federal policy either Holder's statement or the Ogden memo. Williams was convicted and faces a mandatory minimum of more than eight decades in prison, though the judge has ordered mediation on the sentence overseen by a different judge, an unusual step.In a separate case now in court, former University of Montana quarterback Jason Washington, a hometown hero, was fingerprinted by the FBI while in the process of setting up a dispensary, apparently as part of an effort to rationalize the growing industry. Washington's lawyers hoped the FBI's documented cooperation with the establishment of the business would undermine the effort to imprison its owner. Last week, however, Washington was convicted, and faces two mandatory minimum sentences of five years each. ederal officials in Washington state ran the same play that had worked to such effect in Montana. As state lawmakers debated legislation to license dispensaries, federal prosecutors said they felt excluded. "There didn’t seem to be a recognition that the use and sale of marijuana is against federal law," Michael Ormsby, U.S. attorney for the Eastern District of Washington, complained to The New York Times. "No one [in the legislature] consulted with me about what I thought of what they were going to do and did I think it ran afoul of federal law."In early April, Democratic Gov. Christine Gregoire, anticipating the bill's passage, wrote a letter to the Justice Department asking what the federal response to the law would be. Ormsby and the other U.S. attorney with jurisdiction in Washington sent back a fire-breathing letter threatening to prosecute anyone involved with the dispensaries, asserting -- falsely -- that the Ogden memo was strictly limited to "seriously ill individuals," when in fact it referenced any individual who followed state law.A week after the legislature passed the bill and sent it to Gregoire to sign, the DEA carried out coordinated raids on dispensaries in eastern Washington.The next day, on April 29, Gregoire vetoed the licensing bill. “The landscape has changed,” she explained. "I cannot disregard federal law on the chance that state employees will not be prosecuted." In Rhode Island, a U.S. attorney fired off a similar letter to Independent Gov. Lincoln Chafee that same month, as the governor considered whether to create state-run medical marijuana dispensaries, which the state legislature had authorized in 2009, before Chafee took office. the governor scrapped the planned "compassion centers.""Federal injunctions, seizures, forfeitures, arrests and prosecutions will only hurt the patients and caregivers that our law was designed to protect," Chafee said.Similar scenarios played out in Arizona and Hawaii, with raids and federal intervention followed by state officials backing off attempts to regulate dispensaries. The New York Times, rarely quick to ascribe motives to law enforcement on the news side, noted federal authorities' timing."As some states seek to increase regulation but also further protect and institutionalize medical marijuana, federal prosecutors are suddenly asserting themselves," the newspaper wrote that May.For federal officials, the crackdown was necessary because things had accidentally gotten out of their control, said a former White House official. "If you read the memo, with the exception of a few words you maybe could've worded better, it's really not that different from current law," he said. "It took us by surprise, I will tell you, the way it was received in the beginning, and then the media ran with that narrative, that this was a change in policy and Obama's gonna allow medical marijuana shops. The smart legalizers ran with that too, even though the really smart ones knew, when you read that memo, there really wasn't much of a change from the Bush administration. All of a sudden, it took on a life of its own."Another official contended pro-marijuana legalization groups “distorted” the Ogden memo, a characterization the groups dispute.“The distortion certainly wasn't on our side,” Steve Fox, director of government relations for the Marijuana Policy Project, told “The Ogden memo said it wasn't going to be a priority of the Department of Justice to prosecute individuals who were acting in compliance with state law. It was pretty straightforward, and a lot of people invested a lot of money based on that guidance and put their necks on the line, and some of those people are now being sent to prison by the Department of Justice after that memo had been issued in 2009.”Still, the consequences of the Ogden memo were unequivocal. Sherer traveled to Montana just before the crackdown to train owners on "raid preparedness." She asked rooms full of pot shop owners how many had opened their doors because of the Ogden memo. Nearly all raised their hands, she recalled. Pushing the memo, she thought, as she stared out at the crowd now in dire legal jeopardy, had been a mistake. The Ogden memo, despite the press coverage  including here at held loopholes an aggressive prosecutor could drive a battering ram through. "Nor does this guidance preclude investigation or prosecution," it reads at one point, "even when there is clear and unambiguous compliance with existing state law, in particular circumstances where investigation or prosecution otherwise serves important federal interests."One of those federal interests was the continuation of current pot laws. Pushed by political appointees, the Ogden memo, even with its loopholes, faced stiff internal resistance from career Justice Department prosecutors. "That's just not what they do,” said a former Justice official. “They prosecute people." “One of the challenges is that condoning lawlessness is not okay,” another former DOJ official involved the medical marijuana discussions told. “On the other hand, you’ve got the reality of resources and priorities. You just don’t go off and make cases just to make a point.”With the 2011 crackdown underway, federal prosecutors needed some legal justification, some clarification to the Ogden memo. “Their argument was, look, anytime we go to anyone and try to say we’re going to crack down on you, they say, ‘Well, look at the Ogden memo. You can’t.’ They’d get that thrown back in their face,” one former Justice official told.Even supporters of the Ogden memo acknowledged it wasn’t a permanent fix, given the contradiction between state and local laws. But federal officials were surprised by how quickly states moved, writing laws around the Ogden memo.U.S. attorneys led the rebellion with support from the DEA. Benjamin B. Wagner, a U.S. attorney in Sacramento, Calif., who is currently prosecuting medical marijuana distributor Matthew R. Davies, was particularly pushy, according to officials involved in the discussions. Ogden’s memo, the federal prosecutors argued, created uncertainty. They wanted a memo they could use to push state officials to crack down on their own. The Ogden memo, or at least the public perception of it, stood in the way."There was a fight to get a clarification," said one White House official.Despite its name, the key players behind the Ogden memo were then-Associate Deputy Attorney General Ed Siskel and then-Principal Associate Deputy Attorney General Kathy Ruemmler, according to two people involved in the discussions. As two of Ogden’s top associates, they took the lead in drafting the memo.By the time the push for second memo started, both had already been promoted to the White House. Working in the White House Counsel’s office, they had no say as their replacements at DOJ drafted a memo many contend undermined the Ogden memo. "There was nowhere to hide. They had to get on the bandwagon," said the White House official involved in the process.The politics around drug policy do not move in a linear, upward direction like, say, civil rights issues. As civil rights are expanded, the politics become reinforcing, as people become normalized to the new equality and reject the old intolerance as immoral. It's by no means a smooth transition, but, for instance, the more gay weddings that are held, the more people come to accept the concept of gay marriage as uncontroversial.But drug politics move in both directions. Drugs of all kinds cocaine, heroin, speed were fully legal at the turn of the 20th century, then banned over the next several decades. The pendulum swung back in the 1970s, with more than a dozen states decriminalizing marijuana. Then back again toward criminalization. Drugs are not like gay or interracial couples, where familiarity breeds acceptance. More drugs can lead, instead, to a public backlash.Nearly everywhere that medical marijuana shops have proliferated, beginning in San Francisco in the early 1990s, there has been some negative public reaction. In the early communities, the public outcry was followed by a moratorium on new dispensaries and tight regulations on how they could operate. Well regulated shops have by and large been accepted where they have been allowed. It's that pregnant moment in between that the shops are most vulnerable. After 2009, the shops expanded faster than cannabis movement and industry organizers could keep up with. "People were telling themselves what they wanted to hear," namely that the Ogden memo provided immunity from raids, said Sherer. "The proliferation got really out ahead of advocates." She watched the tragedy unfold. In the 1990s and 2000s, her group organized patients and others sympathetic to marijuana, and as soon as a shop was raided, the owner would immediately notify Americans for Safe Access, which would then send text messages to all its nearby activists. Before the evening news trucks could get to the scene, a throng of protesters would be outside the shop, often joined by local officials, denouncing the DEA. The resulting images in the media were a major blow to the feds. The DEA, Sherer said, signed up for Americans for Safe Access text alerts and would begin leaving the scene of a raid as soon as one went out. But that momentum was broken when the industry exploded. The way to guard against a raid, said Sherer, had been to talk with neighbors, attend city council meetings, respond to complaints, and generally become a part of the community. "Make sure your community wanted you," Sherer said she advised businesses. "I've been training people for 10 years that the number one reason people get raided is community complaints. The telltale sign of federal activity is the local community rejecting the dispensary."Medical marijuana shops' protection had never been the law, it had been public opinion. With the perception in some local communities that the pot industry had gotten out of control, the DEA and U.S. attorneys were left with an opening. The drug warriors who had dug in at the DEA and Justice Department won their rear-guard action. The result was a new memo, issued by Deputy Attorney General James M. Cole, in June 2011."The second [memo] was kind of like The Empire Strikes Back," a former DOJ official told . "All the people who had been beaten the first time worked for several years to win one, and they won a round in the second one." Officially, DOJ took the position they were only further clarifying the Odgen memo, rather than throwing the guidance overboard. Its subject line promised it was merely "Guidance Regarding the Ogden Memo."Practically, however, the Cole memo gave U.S. attorneys more cover to go after medical marijuana distributors. The U.S. attorneys, "in unison, were saying, 'We're going to shut these down, this is the law.' Holder could've said stop, but he didn't," said the White House official.In August 2011, Justice officials told their local government leaders in the town of Chico, Calif., that they could personally be jailed if they went forward with legislation to regulate medical cannabis. Under criminal conspiracy laws, “all parties involved would be considered, including city officials,” city manager David Burkland wrote in a report on their meeting with U.S. Attorney Benjamin Wagner. “Staff and Council's involvement in implementing the marijuana ordinance could be interpreted as facilitating illegal activity associated with marijuana,” Burkland wrote. “U.S Attorney Wagner also stated that although the DOJ may lack the resources to prosecute every case, it intends to prosecute more significant cases to deter the activity of marijuana cultivation and unlawful distribution. In those cases, staff or elected officials will not be immune from prosecution under conspiracy or money laundering laws.”In October 2011, four California-based U.S. attorneys held a remarkable joint press conference effectively declaring war on medical marijuana. "We were all experiencing the same thing, which is that everyone was saying … the U.S. attorneys are not going to take any actions with respect to marijuana in California because of the 2009 Ogden memo," U.S. Attorney Haag told KQED. "So it's fair game. We can have grow operations, we can have dispensaries, we can do anything we want with respect to marijuana. … That was incorrect." Haag said she launched her crackdown because she heard Oakland officials were preparing to license and regulate the industry, and allow large-scale growing operations in warehouses, which she opposed."What was described to me was that they were going to be quote 'Walmart-sized.' And I was hearing that everyone believed that would be okay, and that my office would not take any action. And I knew it isn't okay. It is a violation of federal law," Haag said. "If you actually read the so-called Ogden memo from 2009 from the Department of Justice, what it says is that U.S. attorneys will not ordinarily use their limited resources to bring actions against seriously ill individuals or their caregivers. That's the direction we were given."Whatever the authors of the Ogden memo had in mind, the actual words they used said that resources should not be used to target "individuals whose actions are in clear and unambiguous compliance with existing state laws." "I didn't think it was fair to stand by, be silent, let people pull licenses in Oakland, put millions of dollars into setting up a grow operation in a warehouse and then come in and take an enforcement action," Haag said.The prosecutor's pursuit of fairness also took her to Mendocino County, where local officials had established an effective "zip tie program" to regulate its medical marijuana trade. Growers, after paying a licensing fee and submitting to police inspection, were given zip ties by the sheriff. Police officers who found bags of pot cinched by those ties then had reason to believe the product had been grown legally.Just before the county board of supervisors planned to vote on making the program official and permanent, Haag traveled to the county and, in a meeting with county counsel Jeanine Nadel, threatened the supervisors with legal action if they moved forward, according to a report by California Watch.The board decided to squash the program, but Haag's pursuit continued. She empaneled a grand jury and subpoenaed information from the county about its program, looking for the names of people who had registered as growers, as well as all financial information related to it. Mendocino has so far refused to provide the information and is fighting the subpoena in court.Dan Hamburg, a former member of Congress who's now a Mendocino supervisor, said that his fellow board members were well aware that if they created an ordinance, they'd be putting themselves at legal risk. "The Board of Supervisors knew the possibility that we could be charged by the U.S. attorney with aiding and abetting criminal behavior, or even a criminal conspiracy," he said. "However, my worry was, and remains, the possibility of forfeiture." Under forfeiture laws, the federal government can seize money and valuables connected with criminal activity. The feds have demanded to know how much money the county has made registering cannabis growers, which Hamburg and others suspect means they have their eye on it. Hamburg said it was just short of a million dollars, far more of a hit than the county budget, with "deteriorating finances," could withstand. "Our county doesn’t have a million dollars to turn over to the feds," Hamburg said. Hamburg had opposed the initiative, and opposed publicizing it, arguing that it would put a target on Mendocino and draw the ire of the federal government. Now that he's been proven right, he's backing his colleagues in defending it.Just as pot policy split the Justice Department into factions, it pitted local cops against each other as well. The sheriff strongly supported the zip tie program, but some below him had a hard time countenancing what they saw as sanctioning criminal enterprise. Hamburg said that Haag saw there were local law enforcement concerns with the program and exploited those divisions.The tensions are evident in a 2011 county audit report. The zip tie program "is by far the program that causes the greatest chasm of disagreement within the department," reads the audit. Critics "believe the program is illegal, runs counter to overall crime prevention in Mendocino County, is potentially criminal friendly, reduces morale, and is poised to bring more crime to the County and potential corruption to the department."The U.S. and Mendocino are scheduled to go to court on Jan. 29. Hamburg said he's optimistic, but the fight is draining county resources."The president said he has bigger fish to fry than Washington and Colorado legalizing marijuana," Hamburg said. "But apparently his government doesn’t have bigger fish to fry than stopping Mendocino from attempting to regulate its marijuana situation."While the Justice Department escalates its fight against medical marijuana, the country is moving beyond it. In November, voters in Washington and Colorado approved initiatives legalizing the recreational use of marijuana. Recent polls show majority support for legalization of pot for any adult, sick or not. At a recent congressional hearing, DEA head Michele Leonhart was nearly laughed out of the room for refusing to say that marijuana was less dangerous than heroin. Having lost the public, where does the Justice Department go from here? Where will Obama let it go?"We have two states that legalized it for even recreational use. So you tell me what Obama's policy is,” John Pinches, of Mendocino's Board of Supervisors, told “It's a mumbo-jumbo mess. It's time for the federal government to come up with a reasonable policy."Complicating things further has been the Obama administration's mixed signals on recreational pot. In theory, it shouldn’t matter whether states want to legalize marijuana for medical purposes or recreational ones. But DOJ officials considered proposed recreational marijuana laws as fundamentally different from those regulating medical marijuana.States that passed medical marijuana laws were making a narrow judgement on medical use. DOJ officials believed, however, that states that legalized marijuana were declaring full-on war with federal law.Holder highlighted the contrast in 2010 as California voters prepared to vote on a ballot measure, Proposition 19, legalizing marijuana for recreational use. Just weeks before the election, Holder wrote a letter stating that the feds would “vigorously enforce” federal law “against those individuals and organizations that possess, manufacture or distribute marijuana for recreational use, even if such activities are permitted under state law.”Prosecuting medical marijuana wasn’t supposed to be a federal priority. Prosecuting recreational marijuana cases was. The public had supported Prop 19 for much of the race, but the measure ended up failing, 53 percent to 47 percent. Holder's intervention may very well have tipped the balance against it.It was a different story in 2012, when Holder kept quiet about legalization initiatives in Washington, Oregon and Colorado, a move one former Justice official said showed how quickly the politics were moving on marijuana legalization. An adviser at the White House at the time said that drug policy officials worried about tipping the electoral balance against Obama in Colorado, a swing state in 2012, and so declined to intervene in either Washington or the Mountain State's pot legalization initiatives, both of which passed by stronger margins than Obama won."He was not as active as in 2010," the official said of Holder. "People were genuinely worried about Colorado. And you couldn't talk about Washington without talking about Colorado."Walsh, the U.S. attorney in Colorado, was less concerned about the electoral stakes. His crackdown on medical marijuana shops that were fully compliant with state laws came in the heat of election season. Obama campaign officials feared a backlash would send likely Obama supporters into the camp of Libertarian candidate Gary Johnson. The Obama administration never publicly backed Walsh's effort, nor did it intervene in the election. Obama won Colorado handily -- though 50,000 more people voted to legalize pot than voted to reelect the president. The implications of that margin were lost on nobody.The feds elsewhere didn’t keep completely quiet. They just waited until after the election. Jenny Durkan, the U.S. attorney for the District of Washington, warned residents the day before her state’s law went into effect in early December that marijuana remains illegal under federal law.“Regardless of any changes in state law, including the change that will go into effect on December 6 in Washington State, growing, selling or possessing any amount of marijuana remains illegal under federal law,” she warned.California stands as an example of what may happen in other states if they continue with plans to legalize pot. In the spring of 2012, Richard Lee, Prop 19's primary funder, came under attack. The feds raided Oaksterdam University, a school he founded in Oakland, Calif., to teach industry skills, as well as his home. "This is one battle of a big war, and there's thousands of battles going on all over," Lee told after the raid. "Before he was elected, [Obama] promised to support medical marijuana and not waste federal resources on this. … About a year and a half ago, the policy seemed to change. They've been attacking many states, threatening governors of states to prevent them from signing legislation to allow medical marijuana. They've been attacking on many fronts."In July 2012, the hammer came down on Harborside. The Justice Department served Harborside's landlords with commercial property forfeiture proceedings on the grounds that it violates federal law. The city of Oakland backed Harborside, and the dispensary fought back in the court of public opinion, bringing forward sympathetic patients who would be harmed by the federal government's actions.One of them was Jayden David, now 6, who lives with a rare form of epilepsy. In his short life, he's taken two dozen different medicines and has been rushed to the hospital in an ambulance 45 times. The boy's condition, however, slowly began to improve when he started using medical cannabis to ease his chronic pain and seizures."He sings and smiles like a normal child now," DeAngelo told, claiming the child has seen an 80 percent reduction in his symptoms and can now spend twice as much time at school. Harborside helped develop a specialized cannabis tincture for Jayden that doesn't have the same "high" side effects marijuana is commonly known for, he said.Because DeAngelo is an activist first and a shop owner second, his willingness to go to prison has enabled a firmer stand against the feds. And he's winning. In December, a state Superior Court judge delivered a sharp rebuke to the federal government: It could not enlist landlords in its drug war.In January, in a second victory, a judge ruled that Harborside's landlords could not order it to stop selling pot. The city of Oakland, on the happy end of more than $1 million in tax revenue from Harborside last year, filed suit against the federal government, demanding that it cease its prosecution of Harborside. The Justice Department may respond to the legalization of recreational marijuana in Washington and Colorado in several ways. One option would be to go after low-level marijuana users as scapegoats and seek a court ruling that would declare federal law trumps state law. One of the more extreme options, which officials acknowledge is currently being weighed by the department's Civil Division, would be to preempt the laws by suing the states in the same way the feds sued Arizona over its harsh immigration law. Federal authorities could sue Washington and Colorado on the basis that any effort to regulate marijuana would violate the federal Controlled Substances Act.“The question is whether you want to pick that fight,” a former Justice official said.