NEWS,14. AND 15.08.2013

China probe could target oil firms, banks

China's powerful price regulator could target the petroleum, telecommunications, banking and auto sectors next in its investigations into violations of the country's anti-trust laws, state media quoted a senior official as saying.
The National Development and Reform Commission (NDRC) would look at industries that have an impact on the lives of ordinary Chinese, China Central Television (CCTV) quoted Xu Kunlin, head of the anti-monopoly bureau at the NDRC, as saying on one of its programmes.
The NDRC has launched nearly 20 pricing-related probes into domestic and foreign firms in the last three years, according to official media reports and research published by law firms.
But the scope of its investigations in the world's second-biggest economy have gathered pace in recent months and coincide with criticism in official media about the price of goods such as milk powder, medicine, luxury cars and jewellery.
"When you look at activities around the world, regulators tend to investigate sectors where their investigations can have a direct impact on consumers and that will look good," said Sebastien Evrard, Beijing-based partner at law firm Jones Day, which specialises in anti-trust law.
Last week the NDRC fined six milk powder firms for anti-competitive behaviour. It is also investigating 60 foreign and local pharmaceutical companies over pricing and costs.
Companies in the petroleum, telecommunications, banking and auto sectors were on the NDRC's radar for future investigations, CCTV's official blog quoted Xu as saying.
Xu gave a hypothetical example, saying that if banks fixed deposit or lending rates if and when China liberalised its interest rate regime, such behaviour could prompt an investigation.
CCTV gave no other details and NDRC officials could not be reached for comment.
China has been taking incremental steps towards liberalising interest rates. Last month the central bank removed controls on bank lending rates, giving commercial banks the freedom to compete for borrowers.
Evrard said that while telecoms companies and fuel prices were often the target of regulators around the world, they would not be obvious choices in China because of the involvement of state-owned companies.
State-owned majors PetroChina , Sinopec Corp and CNOOC Ltd dominate China's oil and gas industry, both upstream and downstream.
Domestic fuel prices are also set by the NDRC.
The country's three biggest telecom firms  China Unicom Ltd , China Mobile Ltd and China Telecom Corp Ltd are state-owned.
Similarly, the top four banks are controlled by the state.
The China Automobile Dealers Association told earlier this week that its officials were collecting data on the price of all foreign cars sold in the country for the NDRC.
The State Administration for Industry and Commerce (SAIC), a regulator in charge of market supervision, kicked off a separate three-month investigation into bribery in the pharmaceutical and medical services sector on Thursday.
Foreign executives and bankers in China say the various investigations are a hot topic of discussion but many are still puzzled by the motivation behind the probes and whether they will impact their business.

Europe online sales seen doubling - poll

Online retail sales in Europe are seen doubling by 2018 to €323bn  ($428.51bn) with Amazon.com expected to grow even faster than that, market research firm Mintel said.
In a survey of 19 markets in Europe made exclusively available, Mintel predicted that online sales would grow to €188bn in 2013 from €166bn in 2012.
Mintel said Germany, Britain and France would remain by far the biggest markets for online retail by 2018, although the Netherlands, Spain and Poland should grow at a faster rate and Norway and Sweden have the highest online per-capita spend.
"There is a big North-South divide in e-commerce in Europe," said Mintel European retail analyst John Mercer, noting French participation levels lag Britain and Germany by five years and Spain, Greece, Portugal and Italy are even further behind.
Mintel said Amazon is extending its lead on the continent, growing market share to 9.8% in 2012 from 9.2% in 2011, while Germany's Otto, its next closest rival, saw its share slip to 3.3% from 3.9%.
Mintel predicted Amazon could double its Europe-wide market share in the next three to four years despite negative publicity in Britain over its low tax bills and in Germany prompted by strikes at its distribution centres.
Mercer said Amazon was performing strongly despite having only five dedicated country websites in Europe - in Britain, Germany, France, Spain and Italy.
"Italy is a tiny market. Perhaps it would be more worthwhile to have launched dedicated sites for the Nordics," he said. "In terms of spend per capita, the Nordics are much higher."
Mintel said it would still be 2021 before Amazon overtook Germany's Schwarz group, owner of Lidl discount stores, as Europe's biggest retailer, assuming current trends continue.
Amazon last month forecast disappointing income and revenue as it grapples with a weaker international market, overshadowing improving profitability and economic conditions in the United States.
British grocers are also well represented in Mintel's European top 10, with Tesco holding its market share steady at 2.3% and Walmart-owned Asda and Sainsbury on 1.1% and 0.9% respectively, reflecting the popularity of online grocery shopping in Britain.
"In mainland Europe, online shopping is largely non-grocery," Mercer said. "That is not going to change fast."
The Mintel report said Britain and France have the strongest demand for buying online and collecting in-store, a trend yet to take off for Germans, who prefer their goods to be delivered.

Solar tax angers Spaniards

Two weeks after Spain's government slapped a series of levies on green energy, Inaki Alonso hired two workmen to remove the solar panels he had put on his roof only six months earlier.
Alonso, an architect who specialises in ecological projects, calculated the cost of generating his own power under a new energy law and decided the numbers no longer added up.
Neither was it possible to leave the panels on his Madrid home without connecting them to the electricity grid; that would have risked an astronomical fine of between €6m and €30m ($8m to $40m).
"The new law makes it unviable to produce my own clean energy," Alonso said.
Spain's conservative government announced a reform of the energy system last month, including the "support levy" on solar power in a country blessed with abundant sunlight.
Imposed by decree, the reform aims to raise money for tackling a €26bn debt to power producers which the state has built up over the years in regulating energy costs and prices. The solar levy was fixed at 6 euro cents per kilowatt-hour.
Under the constitution, the government can impose emergency measures by decree and has done so repeatedly since it came into office in late 2011.
With Spain in economic crisis, power consumption is falling but the energy debt will continue growing by €4bn to €5bn a year unless the government takes action.
Utilities such as Iberdrola, Endesa and Gas Natural have attacked other revenue-raising measures in the reform.
However, Spaniards who have generated power independently for their own homes under a system known as "autoconsumo" are among the hardest hit by policies which they say punish, rather than encourage, energy efficiency.
Industry Minister Jose Manuel Soria accepts the measures are painful but says they are needed to plug the energy deficit.
"I support 'autoconsumo' ... but the power system has infrastructure, grids that the rest of us Spaniards who are in the system have to pay for. And we pay for it through our electricity bill," said Soria.
As a decree law, the measures are unlikely to undergo much scrutiny in parliament where the ruling People's Party has an outright majority, meaning the opposition cannot force a debate.
Green savings crack-down
Spain imports over 80% of its energy needs, spending more than €40bn - or about 4.5% of gross domestic product - a year.
Supporters of solar power says the government ought to be supporting the industry to cut this bill and achieve renewable energy targets set by the European Union.
Soria announced the measures just as home-produced solar power had become increasingly attractive compared with electricity supplied over the grid by traditional utilities.
In the past, the high cost of solar panels discouraged many consumers from taking the plunge, but prices have more than halved in the last three years.
A 240-watt solar panel kit, enough to power household appliances, is now available on the Internet for as little as 500 euros.
Under the old regime, Spanish consumers could recover a typical €1 600 to €2 100 investment in solar panels through savings on their utility bills in about five years.
According to FENIE, an association for solar panel installations, this will jump to 17 years when the levies are imposed under the new law.
Moreover, the law does not allow homeowners to sell electricity they do not need back to the grid, a common practice in other countries such as Germany.
Spain's climate offers huge potential for solar power. In Germany, a four-person household can cut its consumption of power from the grid by 30% by using panels.
In Spain, which has among the highest electricity prices in Europe, the figure is three times that - offering big savings for consumers hit by the recession and 26% unemployment.
Solar rebels
In the end, Alonso moved his solar panels to a friend's house deep in the Spanish countryside. This was far enough from the nearest mains supply to be exempt from the stipulation that panels must be hitched up to the grid.
Apart from people in isolated communities, Spaniards must connect their panels to the grid within two months. This allows their solar power production to be metered remotely - and taxed.
However, some panel owners plan to rebel by ignoring the government's deadline, confident the courts would hesitate to uphold the huge fines. These were laid down in an old 1997 energy law and, while possibly appropriate for a large corporation, no private individual could ever pay them.
"If I spend €600 to install solar panels and get fined €6m, let the judge decide," said Sergio Pomar, chief executive of energy-efficient installation firm INEL.
Courts already expect a series of legal challenges to other elements of the reforms, which investors in renewable energy says renege on the terms of their investment.
Teresa Ribera, senior adviser to the Paris-based Institute for Sustainable Development and International Relations (IDDRI), said the law could provoke civil disobedience.
"This law is illogical in terms of energy efficiency and costs ... and is a serious invitation by the government for citizens to become anti-system," she said.
She dismissed the idea that independent solar power producers should pay for costs such as running the grid and subsidising other energy forms. "It's like asking cyclists to pay a levy to keep open the petrol stations they don't use," said Ribera, who served as secretary of state for the environment under the former Socialist administration.
Backtracking on renewables
Ribera said the law is a setback for Spain in the competitive renewable energy industry, where it was once a frontrunner.
It also threatens to prevent Spain from meeting an EU goal of producing 20% of its energy from renewable sources by 2020.
"If we continue burning more coal and stop installing renewables capacity, the targets are at risk," said renewable energy advocate Mario Sanchez.
Javier Garcia Breva, chairman of Spain's renewable energy foundation, said the country had to cut its energy import bill. "Failing to support energy efficiency will only make these costs go up," he said.

China targets many sectors in price probe

China's powerful price regulator could target the petroleum, telecommunications, banking and auto sectors next in its investigations into violations of the country's anti-trust laws, state media quoted a senior official as saying.
The National Development and Reform Commission (NDRC) would look at industries that have an impact on the lives of ordinary Chinese, China Central Television (CCTV) quoted Xu Kunlin, head of the anti-monopoly bureau at the NDRC, as saying on one of its programmes.
The NDRC has launched nearly 20 pricing-related probes into domestic and foreign firms in the last three years, according to official media reports and research published by law firms.
But the scope of its investigations in the world's second biggest economy have gathered pace in recent months and coincide with criticism in official media about the price of goods such as milk powder, medicine, luxury cars and jewellery.
"When you look at activities around the world, regulators tend to investigate sectors where their investigations can have a direct impact on consumers, and that will look good," said Sebastien Evrard, Beijing-based partner at law firm Jones Day, which specialises in anti-trust law.
Last week the NDRC fined six milk powder firms for anti-competitive behaviour. It is also investigating 60 foreign and local pharmaceutical companies over pricing and costs.
Companies in the petroleum, telecommunications, banking and auto sectors were on the NDRC's radar for future investigations, CCTV's official blog quoted Xu as saying.
Xu gave a hypothetical example, saying that if banks fixed deposit or lending rates if and when China liberalised its interest rate regime, such behaviour could prompt an investigation.
CCTV gave no other details and NDRC officials could not be reached for comment.
China has been taking incremental steps towards liberalising interest rates. Last month the central bank removed controls on bank lending rates, giving commercial banks the freedom to compete for borrowers.
Evrard said that while telecoms companies and fuel prices were often the target of regulators around the world, they would not be obvious choices in China because of the involvement of state-owned companies.
The country's three biggest telecom firms China Unicom Ltd , China Mobile and China Telecom  are state owned.
Similarly, the top four banks are controlled by the state. And the price of oil in China is set by the government.
The China Automobile Dealers Association told earlier this week that its officials were collecting data on the price of all foreign cars sold in the country for the NDRC.
The State Administration for Industry and Commerce (SAIC), a regulator in charge of market supervision, kicked off a separate three-month investigation into bribery in the pharmaceutical and medical services sector on Thursday.
Foreign executives and bankers in China say the various investigations are a hot topic of discussion but many are still puzzled by the motivation behind the probes and whether they will impact their business.

Smartphones top mobile sales - poll

Smartphones took a majority of mobile phone sales worldwide for the first time in the April-June quarter, a survey showed on Wednesday.
The report by the research firm Gartner found smartphone sales totaled 225 million in the second quarter, or 51.8% of all mobile phones sold in the period.
It was the first time smartphone sales exceeded those of feature phones, which are more basic phones with limited or no access to the Internet and applications.
The survey found Samsung remained the leading vendor of smartphones and all mobile phones, and that the Google Android system solidified its position with a 79% share of smartphones sold.
Gartner said Windows Phone, the mobile operating system from Microsoft, moved into third place with a 3.3% share, ahead of troubled BlackBerry, whose share slid to 2.7%.
"While Microsoft has managed to increase share and volume in the quarter, Microsoft should continue to focus on growing interest from app developers to help grow its appeal among users," said Anshul Gupta, a Gartner analyst.
Apple's iOS, the operating system for the iPhone, remained second with a 14.2% share, down from 18.8% a year earlier.
Gartner said Apple's average prices dropped because many of its phones sold were older, discounted models of the iPhone. This "demonstrates the need for a new flagship model," Gupta said, but added that "it is risky for Apple to introduce a new lower-priced model too."
Gartner's data showed Samsung sold 71.3 million smartphones in the quarter, representing a market share of 31.7%.
Apple was second with 31.9 million, followed by South Korea's LG, with 11.4 million and a share of 5.1%, and China's Lenovo and ZTE.
Samsung was also the top seller of all mobile phones, with a total of 107 million in the period, or 24.7%. Finland-based Nokia was second with a market share of 14% and 60.9 million phones sold, Gartner said.

UK flirts with a new house price bubble

Britain is flirting with another runaway rise in house prices, according to a poll of economists, with a firm majority putting the chances at 50-50 or higher over the next five years.
Despite those concerns, there was a clear consensus that the recent improvement in data heralds a sustainable economic recovery for the UK, which has struggled over the last three years to escape recession.
A clear pick-up in Britain's housing market, accelerated by the government's "Help to Buy" programme introduced in this year's Budget and other measures to boost lending, is a sign of rising confidence in the economy.
But with the last housing boom of 1997-2007 still fresh in the mind, there are concerns that Britain is falling back into the same mentality that led to a tripling of the average house price in 10 years.
Only nine out of 29 economists surveyed since Friday said the prospect of another house price bubble - whereby prices rise so fast they would be vulnerable to a sharp correction - is small. The other 20 were split between seven describing the risk as even, 11 as likely, and two as very likely.
The sample comprises economists working for major banks, and research institutions and consultancies.
Danny Gabay, economist at Fathom Financial Consulting, said media talk of a new housing bubble wasn't very helpful, and that rising house prices are not intrinsically a bad thing.
"We're not concerned about a new housing bubble, we're concerned about the fact we never worked off the last one before they began to re-inflate it," he said.
"We've stopped any attempt at any of the repair work that is essential for this economy to be able to heal properly."
Sustainable economic recovery
A July survey from the Royal Institution of Chartered Surveyors showed the fastest growth in house prices since 2006. Official data showed house prices in London, which typically lead the rest of the country, jumped 8.1% in June compared with the same month a year ago.
Despite declining sharply in 2008 and 2009 after Britain and other advanced economies plunged into severe recession, UK house prices have remained overvalued compared to economic fundamentals, according to every quarterly UK housing market poll since then.
Gabay argues that not only have the government and the Bank of England stopped the process of deleveraging, they're now encouraging homebuyers to take on more debt.
British Finance Minister George Osborne said last month that the "Help to Buy" programme - which provides government-backed equity loans to first-time buyers and people moving to new-build houses worth up to £600 000 pounds ($927 700) - was a targeted response to a malfunctioning mortgage market. He dismissed concerns property prices had become a one-way bet.
"I don't think in the current environment a house price bubble is going to emerge in 18 months or three years," Osborne told parliament.
Bank of England Governor Mark Carney, asked last week at a press conference about the prospect of another housing bubble, did not address whether or not that was a risk for the economy. He said the market should be put into context: mortgage applications are still well below historic averages.
Rising house prices would support economic recovery as they make homeowners feel wealthier and more likely to spend.
The poll showed the UK economy is likely to improve further from here over the next 18 months at least.
The vast majority of respondents, 30 of 35, said upbeat purchasing managers indexes, burgeoning consumer confidence and an improving retail outlook all pointed to the battered economy getting back on track.
Britain's economy is expected to grow by between 0.4 and 0.5% per quarter from here through to the end of next year, with the consensus barely changed from last month's poll, although the outlook is not without risks.
"Though sustainable, the prospective recovery is likely to face headwinds from the euro zone, a weak UK credit system and the economy's structural problems - over-reliance on finance, lack of skills," said Stephen Lewis, chief economist of Monument Securities.

NEWS,24.07.2013

US bill threatens government shutdown

The US senate on Tuesday advanced a $54bn measure that increases funding for transportation and housing projects, setting up a spending clash with Republicans in the House of Representatives that threatens a government shutdown on October 1.
The senate voted 73-26 to clear a procedural hurdle that allows for consideration of amendments and a simple majority vote on the funding bill, drawing the support of 19 Republican senators.
The funding measure for basic infrastructure projects, block grants for cities and public housing draws a sharp contrast between the spending paths laid out by Senate Democrats and House Republicans, who are considering a $44bn measure.
The House Republicans are passing their 12 appropriations bills for the new fiscal year under a discretionary spending cap of $967bn in an effort to keep savings from the automatic "sequester" spending cuts in place.
They want to divert a larger share of that reduced spending pie to defence and security agencies, subjecting domestic programmes to bigger cuts.
Senate Democrats, meanwhile, assume that the sequester cuts will be replaced by tax hikes and savings elsewhere and are applying a $1.058trn cap to their bills - $91bn more than the House.
There is little chance of that difference being resolved as the September 30 fiscal year-end approaches, so Congress would need to pass a stop-gap funding measure to avoid a government shutdown on October 1.
The senate measure would mark an increase of $2.3bn in spending on transportation and housing  mostly urban  over the 2013 level. The House measure would cut it by $7.7bn.
Democrats argued that delaying needed work on airports, roads and public housing will simply cost more in the future, and say such projects help the economy.
"Steel rusts, asphalt wears out, buildings need to be repaired and maintained," said Senate Appropriations Committee Chairperson Barbara Mikulski, a Maryland Democrat. "It's not politics, it's physics. We have to make investments today so that our nation can grow."
Both Tuesday's procedural vote and an Appropriations Committee vote drew significant Republican support, indicating that the party's appetite for continuing the deep spending cuts may be waning in the Senate.
But top senate Republican Mitch McConnell said any spending deal must maintain savings from the sequester about $1.2trn over 10 years  which were set in motion by a budget deal two years ago. He dismissed Democratic demands for additional revenue.
"I have no interest in reopening the subject of additional taxes. The government in my view doesn't need more revenue," McConnell told reporters after the senate procedural vote.

US opens probe into steel pipe imports

The US commerce department on Tuesday launched one of its biggest trade investigations in years into charges that manufacturers in South Korea, India and seven other countries are selling steel pipe used by oil and natural gas producers at unfairly low prices in the United States.
Imports of oil country tubular goods (OCTG) from the nine countries totalled nearly $1.8bn in 2012, more than double their total in 2010, as rising US oil and natural gas production have increased demand for the pipe.
In 2010, the United States slapped duties on imports of OCTG from China after they hit about $2.8bn in 2008. The duties slapped on imports from China created an opening for the other foreign suppliers.
The latest case targets South Korea, which exported about $831m worth of the pipe to the United States last year, as well as India, Vietnam, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey and Ukraine.
US producers are asking for anti-dumping duties as high as 240% on India, 158%t on South Korea, 118% on Thailand and 111% on Vietnam to offset what they say is below market pricing, and lesser but still hefty duties on the other five countries.
For two countries, Turkey and India, US producers are seeking additional countervailing duties to offset alleged government subsidies.

3G lack hampers West Bank smartphones

Like many young Palestinians, Amir was excited to get his first smartphone, despite the heavy price tag. But he did not keep it long after realising the lack of 3G network meant its applications were largely unusable.
"I sold my iPhone because I just couldn't use it when I was out and about," said the internet cafe worker, who asked to be given a pseudonym.
"It's expensive to buy a smartphone, so without the full benefits there's no point having one," he added.
With the latest Samsung Galaxy or iPhone costing $400 (€300) it is a considerable investment, but for those keeping pace with developments on Twitter and Facebook, a smartphone has become the tool of choice.
As telecom companies in the Middle East prepare to launch the next generation of high-speed mobile phone internet services, commonly known as 4G, the Palestinian territories still have no access to 3G, meaning they are unable to fully use their smartphones on the go.
As a result, most mobile phone owners simply do not use 3G. And many feel the cost of a smartphone is hardly worthwhile.
"I can't get 3G with a Palestinian provider, so I have to have two contracts, one Palestinian and one Israeli, which is cumbersome and expensive," said 27-year-old Jeryes, who runs a bookshop in Ramallah.
Israel's refusal to give Palestinian mobile companies access to the necessary frequencies for 3G means West Bank residents must sign up with an Israeli company to get mobile internet, but calling rates are more expensive in the territories.
Palestinian mobile operators do not include the price of a phone in their monthly packages, adding to the expense.
Sabri Saidam, telecommunications adviser to Palestinian president Mahmud Abbas, said Israel had repeatedly refused to grant 3G access to Palestinian phone companies for "security" reasons.
"Over the past few years several requests have been made and have been denied" to import the technology and get access to the frequencies needed for 3G, he said.
"Israel persistently refuses the application for 3G on the basis of security," Saidam told AFP.
"This is even though there are Israeli companies illegally operating in the Palestinian territories providing 3G for their customers," he said, referring to the more than 500 000 Israeli settlers living in the West Bank and annexed east Jerusalem.
'If you're disconnected you're half dead'
But despite being a nuisance for those who want to use 3G, the issue for most Palestinians is primarily political.
Mobile phone shop worker Alaa Qawasmi, 27, said he was more angry about what the Israeli stranglehold on 3G represented.
"The main reason we don't have 3G is because of the occupation," he said. "Meanwhile, the technology Israeli phone users have is far better, and there are so many services we can't use."
But the obstacle can be overcome, thanks to wireless technology.
"It doesn't affect me much," said Omar, an IT worker in hospitals who did not wish to give his real name.
"Almost everywhere has wireless internet."
Mobile users can sit in cafes or at home, using connections there to have full access to their smartphone features - though some such as digital maps are not updated for West Bank residents, meaning the usefulness of the smartphone is limited, said Omar.
3G "would be nice to have, but we have more important problems here", he said.
A campaign launched by an IT expert during a visit by US President Barack Obama in March to draw attention to the lack of 3G in Ramallah was dismissed by some commentators as potentially overshadowing more crucial political issues.
Ruba Abu Roqqti, visiting her local phone shop, said what was more important was having internet access at all, let alone on the move.
"If you're disconnected from the Web it means you're half dead," she jested - before asking what 3G actually was.
"If it were available, that would be good," she said, "but it's not a big problem, I hadn't even heard of it."
Hamdi Awad, a teenage student, said it could be "good for flirting with girls" in real time.
"You could add them on Facebook and go from there," he laughed.
Though the 3G issue looks far from being sorted, the Palestinians did celebrate a more significant Web-based victory in May, as internet giant Google recognised their upgraded United Nations status, placing the name "Palestine" on its search engine instead of "Palestinian Territories".
Posters on the way into Ramallah from the Israeli-controlled Qalandia checkpoint in the West Bank urged internet users to "log on" to Google.ps and support the Palestinian cause of achieving full independent statehood.

FDA tightening rules on menthol smokes

Shares of US tobacco companies fell on Tuesday after the US Food and Drug Administration (FDA) said it is considering tightening regulations on menthol cigarettes following a scientific review that showed the products are likely to be more addictive than regular cigarettes.
Shares of Lorillard, which makes the Newport brand of menthol cigarettes, fell as much as much as 5% while shares of Altria Group, which makes a menthol version of its Marlboro brand, fell as much as 3%.
The FDA published preliminary results from a study it conducted that suggest "menthol cigarettes pose a public health risk above that seen with non-menthol cigarettes."
The report found that while menthol cigarettes are no more or less toxic than regular cigarettes, menthol's cooling and anesthetic properties can reduce the harshness of cigarette smoke, increasing their appeal to new smokers.
Still, at least some tobacco company analysts see the tone of the report as positive for the industry in so far as it did not recommend an outright ban.
"We believe it's unlikely that menthol will be banned," said Bonnie Herzog, an analyst at Wells Fargo Securities, in a research report.
"We see this as a buying opportunity as we expect the stock to recover as investors digest this report," she said, referring to Lorillard shares.
The FDA's move comes during a trade dispute in which Indonesia charges that the United States illegally allowed menthol cigarettes to remain on the market while banning the import of clove-flavored cigarettes from Indonesia.
In 2012, the World Trade Organization ruled that the United States should either end its ban on Indonesia's imports or impose a ban on US menthol cigarettes. So far the United States has stopped short of a ban.
"The United States has been clear that it would comply with the WTO findings in a way that is appropriate for the public health," said a statement from Andrea Mead, a spokesperson for the Office of the United States Trade Representative, which negotiates with foreign governments to create trade agreements and resolve disputes.
The FDA is seeking public comment on whether a limit could be set on the amount of menthol in cigarettes. It is also seeking information on how menthol cigarettes are marketed to the young and minority communities.
Lorillard Chief Executive Murray Kessler said in a statement that the company is "encouraged" by the FDA's "science-based approach."
"It is Lorillard's long-held belief that the best available science demonstrates that menthol cigarettes have the same health effects as non-menthol cigarettes and should be treated no differently," he said.
A spokesman for Altria, David Sylvia, said the company had only just received the FDA's report and was reviewing the information.
Lorillard's shares were trading down 4.2% at $44.23 in afternoon trading on the New York Stock Exchange. Earlier they fell as low as $43.77. Altria's shares were down 2.5% to $35.94, after dropping as low as $35.73.

Is China ripe for unrest?

RECENTLY, it seems no developing country is safe from sudden, unexpected protests.

In Brazil and Turkey, empowered middle classes pushed back against perceived governmental injustice; protests erupted, and leaders’ approval ratings dropped precipitously.

In Egypt, the economic picture was as ugly as the political one, and the military’s ouster of president Mursi has fomented conflict and instability.

China may look like a candidate for the type of protests currently sweeping the developing world. Not only is a newly empowered middle class demanding better services and more accountability from government, growth has also tapered off in recent quarters.

Don’t hold your breath. At least for the time being, China is well-positioned to navigate such challenges far better than its emerging market competitors.

Let’s start with the economy. For years pundits, and many Chinese government officials, thought that if China’s gross domestic product growth rate ever fell below 8%, it would set off an unemployment crisis that would raise the risk of social and political instability in the country.

Well, China’s finance minister was in Washington last week and said that the Chinese economy could handle 7% or even 6.5% growth a lower rate than China has experienced in 23 years.

But unlike many other emerging markets, China views slower growth as a manageable challenge. The government actually recognises that a slowdown is necessary to meet its reform and rebalancing goals, and is working now to score political points among the population by arguing that it’s doing so.

In particular, Beijing hopes that the slowdown will force industrial consolidation and less resource consumption, which could slow environmental degradation which has been a major point of political vulnerability for the government.

Slower growth should also calm the real estate sector, where rising prices have been a major sore point for urban Chinese. China’s new leadership is betting that progress on these fronts will outweigh the downside risks they’ll face as job losses tick up in the face of slower growth.

From a global perspective, there is a strong case to be made that China’s slowing growth rate is actually a good sign.

Bubbles allowed to shrink

The fact that Beijing hasn’t just reflexively pumped capital into the system to keep growth rates up shows that it is willing to begin undertaking modest economic reforms; it is, in effect, letting bubbles shrink rather than grow until they pop.

This approach is characteristic of the new leadership that took charge in March of this year: they are less risk averse and they have a more long-sighted handle on the necessary economic changes that China will have to undertake.

The new president himself is a cause for optimism. Xi Jinping has a more assertive, off-the-cuff style; he is a more spontaneous, charismatic leader than his predecessors, and early reviews in China’s blogosphere suggest a favourable first impression.

Xi is using this boldness to work to consolidate his support within the Communist Party. And the extent to which he is successful will mean even more capacity for even more reform over time.

All of this doesn’t mean that China’s stability should be taken for granted, or that there aren’t looming problems on the horizon. The very fact that China doesn’t face significant near-term instability could lead to complacency and give it wiggle room to delay necessary reforms.

China still needs long-term and significant economic and political transformations to get it from “developing” to “developed.” It has too many changes coming to its demographics, manufacturing costs, and environmental needs to get away with ignoring them in perpetuity. (The US can sympathise.)

While it’s a good sign that the current leadership is allowing lower growth rates in order to implement some economic reform, thus far, all changes are happening inside the system, not to the system itself. Easy growth was the low-hanging fruit for China over the past thirty years.

Now the government is reaching a bit further up the tree. But they still have a very long way to go to get to the upper branches.

China’s other major threat is the stratification that any developing country has to navigate. As I’ve written about in the past, the growth of the Chinese economy has created a new middle class that has different demands from the largely rural population that China is still trying to lift out of poverty.

In the near term the new government’s tolerance for slower growth is actually positive for helping to address some of these concerns. But eventually, Beijing will have to reconcile two increasingly divergent populations.

This, again, is a long-term issue. But as these issues go unaddressed, and as more Chinese become rich enough to prioritise new sorts of rights and privileges, the chances of unrest will rise.

Don’t believe the idea that China is a ripe victim for this wave of developing world protests, or that China’s slowing growth rate is a sign of an imminent hard landing. China’s near-term picture looks surprisingly bright.

But after that, the larger question still looms: can Xi Jinping and his government handle the looming storm clouds while they are still a good way off?

NEWS,09.06.2013

Edward Snowden: the whistleblower behind revelations of NSA surveillance

The 29-year-old source behind the biggest intelligence leak in the NSA's history explains his motives, his uncertain future and why he never intended on hiding in the shadows.

The individual responsible for one of the most significant leaks in US political history is Edward Snowden, a 29-year-old former technical assistant for the CIA and current employee of the defence contractor Booz Allen Hamilton. Snowden has been working at the National Security Agency for the last four years as an employee of various outside contractors, including Booz Allen and Dell.
The Guardian, after several days of interviews, is revealing his identity at his request. From the moment he decided to disclose numerous top-secret documents to the public, he was determined not to opt for the protection of anonymity. "I have no intention of hiding who I am because I know I have done nothing wrong," he said.
Snowden will go down in history as one of America's most consequential whistleblowers, alongside Daniel Ellsberg and Bradley Manning. He is responsible for handing over material from one of the world's most secretive organisations  the NSA..
In a note accompanying the first set of documents he provided, he wrote: "I understand that I will be made to suffer for my actions," but "I will be satisfied if the federation of secret law, unequal pardon and irresistible executive powers that rule the world that I love are revealed even for an instant."
Despite his determination to be publicly unveiled, he repeatedly insisted that he wants to avoid the media spotlight. "I don't want public attention because I don't want the story to be about me. I want it to be about what the US government is doing."
He does not fear the consequences of going public, he said, only that doing so will distract attention from the issues raised by his disclosures. "I know the media likes to personalise political debates, and I know the government will demonise me."
Despite these fears, he remained hopeful his outing will not divert attention from the substance of his disclosures. "I really want the focus to be on these documents and the debate which I hope this will trigger among citizens around the globe about what kind of world we want to live in." He added: "My sole motive is to inform the public as to that which is done in their name and that which is done against them."
He has had "a very comfortable life" that included a salary of roughly $200,000, a girlfriend with whom he shared a home in Hawaii, a stable career, and a family he loves. "I'm willing to sacrifice all of that because I can't in good conscience allow the US government to destroy privacy, internet freedom and basic liberties for people around the world with this massive surveillance machine they're secretly building."

'I am not afraid, because this is the choice I've made'

Three weeks ago, Snowden made final preparations that resulted in last week's series of blockbuster news stories. At the NSA office in Hawaii where he was working, he copied the last set of documents he intended to disclose.
He then advised his NSA supervisor that he needed to be away from work for "a couple of weeks" in order to receive treatment for epilepsy, a condition he learned he suffers from after a series of seizures last year.
As he packed his bags, he told his girlfriend that he had to be away for a few weeks, though he said he was vague about the reason. "That is not an uncommon occurrence for someone who has spent the last decade working in the intelligence world."
On May 20, he boarded a flight to Hong Kong, where he has remained ever since. He chose the city because "they have a spirited commitment to free speech and the right of political dissent", and because he believed that it was one of the few places in the world that both could and would resist the dictates of the US government.
In the three weeks since he arrived, he has been ensconced in a hotel room. "I've left the room maybe a total of three times during my entire stay," he said. It is a plush hotel and, what with eating meals in his room too, he has run up big bills.
He is deeply worried about being spied on. He lines the door of his hotel room with pillows to prevent eavesdropping. He puts a large red hood over his head and laptop when entering his passwords to prevent any hidden cameras from detecting them.
Though that may sound like paranoia to some, Snowden has good reason for such fears. He worked in the US intelligence world for almost a decade. He knows that the biggest and most secretive surveillance organisation in America, the NSA, along with the most powerful government on the planet, is looking for him.
Since the disclosures began to emerge, he has watched television and monitored the internet, hearing all the threats and vows of prosecution emanating from Washington.
And he knows only too well the sophisticated technology available to them and how easy it will be for them to find him. The NSA police and other law enforcement officers have twice visited his home in Hawaii and already contacted his girlfriend, though he believes that may have been prompted by his absence from work, and not because of suspicions of any connection to the leaks.
"All my options are bad," he said. The US could begin extradition proceedings against him, a potentially problematic, lengthy and unpredictable course for Washington. Or the Chinese government might whisk him away for questioning, viewing him as a useful source of information. Or he might end up being grabbed and bundled into a plane bound for US territory.
"Yes, I could be rendered by the CIA. I could have people come after me. Or any of the third-party partners. They work closely with a number of other nations. Or they could pay off the Triads. Any of their agents or assets," he said.
"We have got a CIA station just up the road – the consulate here in Hong Kong – and I am sure they are going to be busy for the next week. And that is a concern I will live with for the rest of my life, however long that happens to be."
Having watched the Obama administration prosecute whistleblowers at a historically unprecedented rate, he fully expects the US government to attempt to use all its weight to punish him. "I am not afraid," he said calmly, "because this is the choice I've made."
He predicts the government will launch an investigation and "say I have broken the Espionage Act and helped our enemies, but that can be used against anyone who points out how massive and invasive the system has become".
The only time he became emotional during the many hours of interviews was when he pondered the impact his choices would have on his family, many of whom work for the US government. "The only thing I fear is the harmful effects on my family, who I won't be able to help any more. That's what keeps me up at night," he said, his eyes welling up with tears.

'You can't wait around for someone else to act'

Snowden did not always believe the US government posed a threat to his political values. He was brought up originally in Elizabeth City, North Carolina. His family moved later to Maryland, near the NSA headquarters in Fort Meade.
By his own admission, he was not a stellar student. In order to get the credits necessary to obtain a high school diploma, he attended a community college in Maryland, studying computing, but never completed the coursework.
In 2003, he enlisted in the US army and began a training program to join the Special Forces. Invoking the same principles that he now cites to justify his leaks, he said: "I wanted to fight in the Iraq war because I felt like I had an obligation as a human being to help free people from oppression".
He recounted how his beliefs about the war's purpose were quickly dispelled. "Most of the people training us seemed pumped up about killing Arabs, not helping anyone," he said. After he broke both his legs in a training accident, he was discharged.
After that, he got his first job in an NSA facility, working as a security guard for one of the agency's covert facilities at the University of Maryland. From there, he went to the CIA, where he worked on IT security. His understanding of the internet and his talent for computer programming enabled him to rise fairly quickly for someone who lacked even a high school diploma.
By 2007, the CIA stationed him with diplomatic cover in Geneva, Switzerland. His responsibility for maintaining computer network security meant he had clearance to access a wide array of classified documents.
That access, along with the almost three years he spent around CIA officers, led him to begin seriously questioning the rightness of what he saw.
He described as formative an incident in which he claimed CIA operatives were attempting to recruit a Swiss banker to obtain secret banking information. Snowden said they achieved this by purposely getting the banker drunk and encouraging him to drive home in his car. When the banker was arrested for drunk driving, the undercover agent seeking to befriend him offered to help, and a bond was formed that led to successful recruitment.
"Much of what I saw in Geneva really disillusioned me about how my government functions and what its impact is in the world," he says. "I realised that I was part of something that was doing far more harm than good."
He said it was during his CIA stint in Geneva that he thought for the first time about exposing government secrets. But, at the time, he chose not to for two reasons.
First, he said: "Most of the secrets the CIA has are about people, not machines and systems, so I didn't feel comfortable with disclosures that I thought could endanger anyone". Secondly, the election of Barack Obama in 2008 gave him hope that there would be real reforms, rendering disclosures unnecessary.
He left the CIA in 2009 in order to take his first job working for a private contractor that assigned him to a functioning NSA facility, stationed on a military base in Japan. It was then, he said, that he "watched as Obama advanced the very policies that I thought would be reined in", and as a result, "I got hardened."
The primary lesson from this experience was that "you can't wait around for someone else to act. I had been looking for leaders, but I realised that leadership is about being the first to act."
Over the next three years, he learned just how all-consuming the NSA's surveillance activities were, claiming "they are intent on making every conversation and every form of behaviour in the world known to them".
He described how he once viewed the internet as "the most important invention in all of human history". As an adolescent, he spent days at a time "speaking to people with all sorts of views that I would never have encountered on my own".
But he believed that the value of the internet, along with basic privacy, is being rapidly destroyed by ubiquitous surveillance. "I don't see myself as a hero," he said, "because what I'm doing is self-interested: I don't want to live in a world where there's no privacy and therefore no room for intellectual exploration and creativity."
Once he reached the conclusion that the NSA's surveillance net would soon be irrevocable, he said it was just a matter of time before he chose to act. "What they're doing" poses "an existential threat to democracy", he said.

A matter of principle

As strong as those beliefs are, there still remains the question: why did he do it? Giving up his freedom and a privileged lifestyle? "There are more important things than money. If I were motivated by money, I could have sold these documents to any number of countries and gotten very rich."
For him, it is a matter of principle. "The government has granted itself power it is not entitled to. There is no public oversight. The result is people like myself have the latitude to go further than they are allowed to," he said.
His allegiance to internet freedom is reflected in the stickers on his laptop: "I support Online Rights: Electronic Frontier Foundation," reads one. Another hails the online organisation offering anonymity, the Tor Project.
Asked by reporters to establish his authenticity to ensure he is not some fantasist, he laid bare, without hesitation, his personal details, from his social security number to his CIA ID and his expired diplomatic passport. There is no shiftiness. Ask him about anything in his personal life and he will answer.
He is quiet, smart, easy-going and self-effacing. A master on computers, he seemed happiest when talking about the technical side of surveillance, at a level of detail comprehensible probably only to fellow communication specialists. But he showed intense passion when talking about the value of privacy and how he felt it was being steadily eroded by the behaviour of the intelligence services.
His manner was calm and relaxed but he has been understandably twitchy since he went into hiding, waiting for the knock on the hotel door. A fire alarm goes off. "That has not happened before," he said, betraying anxiety wondering if was real, a test or a CIA ploy to get him out onto the street.
Strewn about the side of his bed are his suitcase, a plate with the remains of room-service breakfast, and a copy of Angler, the biography of former vice-president Dick Cheney.
Ever since last week's news stories began to appear in the Guardian, Snowden has vigilantly watched TV and read the internet to see the effects of his choices. He seemed satisfied that the debate he longed to provoke was finally taking place.
He lay, propped up against pillows, watching CNN's Wolf Blitzer ask a discussion panel about government intrusion if they had any idea who the leaker was. From 8,000 miles away, the leaker looked on impassively, not even indulging in a wry smile.
Snowden said that he admires both Ellsberg and Manning, but argues that there is one important distinction between himself and the army private, whose trial coincidentally began the week Snowden's leaks began to make news.
"I carefully evaluated every single document I disclosed to ensure that each was legitimately in the public interest," he said. "There are all sorts of documents that would have made a big impact that I didn't turn over, because harming people isn't my goal. Transparency is."
He purposely chose, he said, to give the documents to journalists whose judgment he trusted about what should be public and what should remain concealed.
As for his future, he is vague. He hoped the publicity the leaks have generated will offer him some protection, making it "harder for them to get dirty".
He views his best hope as the possibility of asylum, with Iceland with its reputation of a champion of internet freedom at the top of his list. He knows that may prove a wish unfulfilled.
But after the intense political controversy he has already created with just the first week's haul of stories, "I feel satisfied that this was all worth it. I have no regrets."

 

Experts surprised at Greece’s finances

The Hellenic statistical authority says the Greek economy's revised figure of 5.6% is slightly better than its prediction earlier that the figure would be 5.3%.

The authority said the economy contracted 5.6% in the first quarter compared with the first three months of 2012.

The figure was released shortly after the International Monetary Fund (IMF) said it had underestimated how much deeper austerity measures would push Greece's economy into recession.

The revised figure was slightly better than the 5.7% shrinkage seen in the fourth quarter, according to finance ministry data.

Weighing on first-quarter GDP was an 8.3% year-on-year drop in consumer spending and an 11.4% fall in capital spending, the body said.

Helping it was a 22.9% decrease in the trade deficit as exports fell 2.6% and imports fell 7.8%.

The IMF admitted last week that there had been "notable failures" in Greece's bailout about how much the austerity mandated of it as part of its international bailouts - the first of which was agreed on in May 2010 - would slow its economy.

Athens so far has received about €200bn in loans from a rescue programme totalling €240bn.

Repeated austerity measures, which include salary and pension cuts as well as tax hikes, have helped reduce the country's budget deficit, but at the same time left it deeper in recession than what the IMF and its European partners had initially forecast.

Unemployment has surged to more than 27%.

The government has predicted that Greece would return to growth and international bond markets by the end of 2014.

Koreas hold first talks in two years

North and South Korea held their first official talks for more than two years on Sunday, seeking to set up a high-level meeting in Seoul after months of tensions and threats of nuclear war.
The working-level discussions - weighed down, as always, by decades of mutual distrust - were held in the border truce village of Panmunjom where the armistice ending the 1950-53 Korean War was signed.
"The overall atmosphere was... calm and the discussion proceeded with no major debate," the South's Unification Ministry spokesperson Kim Hyung-Seok said after the morning session between the two delegations, each comprising three representatives.
The talks moved into a fourth session in the evening as the two sides sought to agree a framework for what would be their first ministerial-level meeting since 2007 - tentatively scheduled in Seoul on Wednesday.
The agenda will focus on restoring suspended commercial links, including the Kaesong joint industrial complex that the North effectively shut down in April as tensions between the historic rivals peaked.
Seoul said it would be represented by Unification Minister Ryoo Kihl-jae as chief negotiator and has asked the North to send Kim Yang-on, head of the United Front Department of the ruling Workers Party of Korea, as its top negotiator, according to Yonhap news agency.
"Today's talks were purely preparatory, so there was little room for dispute," said Yang Moo-Jin, a professor at the University of North Korean Studies in Seoul.
"We'll get a better sense of where things really stand on Wednesday," Yang told AFP.
Sunday's talks came about after an unexpected reversal on Thursday from North Korea, which suddenly dropped its default tone of high-decibel belligerence and proposed opening a dialogue.
South Korea responded swiftly with its offer of a ministerial meeting in Seoul, the North countered with a request for lower-level talks first and, after some relatively benign to-and-fro about the best venue, Sunday's meet in Panmunjom was agreed.
In a further signal of intent, North Korea on Friday restored its official hotline with the South, which it had severed in March.
The move towards dialogue has been broadly welcomed - given the threats of nuclear war that were being flung around in April and May - but there is sizeable scepticism about Pyongyang's intentions.
"The North Korean offer has all of the hallmarks of Pyongyang's diplomacy," said Stephan Haggard, a North Korea expert at the Peterson Institute for International Economics.
"Pyongyang is 'sincerely' and 'magnanimously' inviting the South to fix, and pay for, problems of the North's own creation," Haggard said.
It was the North's decision to withdraw its 53 000 workers in early April that closed Kaesong.
The North also wants to discuss resuming tours by South Koreans to its Mount Kumgang resort. These were suspended after a North Korean soldier shot dead a South Korean tourist there in July 2008.
Kaesong and Mount Kumgang were both significant sources of scarce foreign currency for North Korea, which is squeezed by UN sanctions imposed over its nuclear weapons programme.
There are also suggestions that Pyongyang was playing to a specific audience by proposing talks just before US President Barack Obama and Chinese President Xi Jinping sat down for their crucial summit in California.
China, the North's sole major ally and economic benefactor, has been under US pressure to restrain its neighbour and has pushed Pyongyang to drop its destabilising strategy of confrontation.
On Saturday, Obama and Xi closely consulted on North Korea's recent nuclear brinkmanship, and agreed to work together on the "denuclearisation" of the Korean peninsula, US National Security Advisor Tom Donilon said.
Analysts say South Korea will approach talks with Pyongyang with a caution born of long experience.
President Park Geun-Hye, who took office in February with a promise of greater engagement with Pyongyang, has welcomed the initiative.
But she remains adamant that any substantive dialogue can only take place if the North shows some tangible commitment to abandoning its nuclear weapons programme.
North Korea has been equally emphatic in declaring its nuclear deterrent is not up for negotiation.
It was the North's nuclear test in February, and subsequent UN sanctions, that triggered the recent crisis, which saw Pyongyang threaten both the South and the United States with pre-emptive nuclear strikes.

Turkey's Social Media And Smartphones Key To 'Occupy Gezi' Protests

In between the boisterous chants calling for Prime Minister Recep Tayyip Erdogan's resignation, the protestors at this city's Gezi Park glance at their Smartphones to quickly browse Twitter for reliable, uncensored news.
The social media stream has become an important means of communication within the Turkish uprising that began in late May as part of efforts to stop the cutting down of trees at the park and replacing them with a mall.
Ayca Malpoc has been camped out in a small tent at the back of the park, near the towering Intercontinental Hotel since almost the beginning of the demonstrations, when getting the real facts about them was practically impossible.
"It was very hard," she told The Media Line. "I have a friend in London and he always texted me. And I learned the news from him."
The Turkish television channels have shown almost none of the protests in their country. At one of the most intense moments, when police forces clashed with protesters here, cars were overturned and buildings torched, one Turkish TV news channel continued to show a documentary on penguins. Those protests now appear to be among the most significant events in modern Turkish history.
Erdogan's opponents also accused other TV channels and newspapers of either neglecting to seriously cover the protests or downplaying them.
"Our professional responsibility is to report everything as in the way it happens,” Cem Aydin, the CEO of Turkish media conglomerate Doğuş, which owns the television channel NTV, told reporters at a staff meeting. “The pursuit of balance within the imbalanced environment affected us as it did the other media outlets. Aydin also reportedly added the channel has "an opportunity to refresh our relationship with our audience."
The behavior of the country's print and electronic media was in keeping with the non-profit Committee to Protest Journalist's (CPJ) labeling Turkey as a threat to independent journalism, imprisoning more journalists than any other country. The latest figures show from 2012 show that Turkey has 49 journalists behind bars. So for an alternative source of information, Turks turned to Twitter and other social media like Facebook, Ustream and Vine.
"Social media are the key to this movement. Because Turkish television didn't show anything," Melih, a protester who would only give his first name told The Media Line.
Protesters directed their anger over this poor coverage at TV news crews who did show up at protests, overturning the crews' cars and gathering outside their Istanbul offices.
Despite the calls for better coverage from the Turkish media, it's still hard to come by. At least six Turkish newspapers ran the same headline for a front page story backing Erdogan on June 7. The headline read “Democracy Demands Sacrifice.”
With little reliable, non-politicized coverage available from the usual media outlets, many Turks have embraced social media sources like Twitter.
"I wasn't very good at using Facebook or Twitter, but after this 'occupy' protest I've become very good at it," protester Burcu Atar told The Media Line
The Turkish protests have been a boon for Silicon Valley-based Anchor Free that sells the application "Hotspot Shield," allowing anonymous Internet surfing through a virtual private network. The ap basically hides your computer's information allowing you to sneak around internet]. Downloads of the software jumped 1,000% to almost 100,000 by the beginning of the month.
A company statement said that the application allows people to safely avoid what it called "government censorship" by enabling access to restricted Websites like Facebook and Twitter.
"When people are fighting for the right to freedom of information, Hotspot Shield is a clear enabler," AnchorFree CEO and Founder David Gorodyansky told The Media Line by e-mail.
Gorodyansky said the application was also instrumental in 2011's Arab Spring protests.
There were reports of access to sites like Twitter and Facebook being blocked within Istanbul, but they have been difficult to verify. The government denies the reports. Nevertheless, government leaders have been critical of social media coverage of the protests. Even Erdogan himself recently branded Twitter as a "menace."
Other government leaders, however, have worked to use social media to their advantage.
After European Union (EU)Commissioner Stefan Fule criticized the Turkish government's response to the Istanbul protesters, during a conference with Erdogan on June 7, Turkey's EU Minister Egemen Bakis fired back on Twitter, defending the government.
Other supporters of Erdogan, including what appears to be his party's official Twitter account for its "youth branch foreign affairs" have also been blasting Turkish and foreign journalists critical of the government's response to the demonstrations.
One response to a Turkish newspaper reporter read: "Taksim is not Tahrir. Erdogan is an elected prime minister, not a dictator.
Nonetheless there can be no denial that all sides in the current unrest have found the social media valuable allies. What's certain is that already is serving as a new catalyst for communications with millions of Turks hungry for information.