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,12.08.2013

Investors see riches in luxury US homes

Jan Brzeski stands in a sun-filled, beautifully refurbished living room high in the Hollywood Hills, looking out at a swimming pool and, miles (km) below, stunning views of Los Angeles.
Brzeski is a private money lender running an investment firm in Los Angeles that provides loans to house flippers investors who buy a home, refurbish it, and sell it at a profit. Many flippers turn to money lenders because they cannot get banks to provide such short-term, quick financing.
Standing with Brzeski is Scott Ryan, the realtor who bought this four-bedroom, five-bathroom house in December 2012 for $1.5m  with money lent by Brzeski and has transformed it with another $600 000. This week the property will go on the market at $3.295m.
"People will come in here and fall in love," Ryan said, with a house flipper's standard issue optimism. "This is an emotional sale. If it takes a week to sell, I will be surprised. There are a lot of young, wealthy people here, and a lot of money out there."
Eighteen months ago Brzeski and his firm, Arixa Capital Advisors, were lending investor money to flippers on very different properties: $250 000 single family homes in southern California's up-and-coming lower- to middle-class blue-collar neighborhoods. Most of the deals involved foreclosed homes that were totally refurbished, and then sold quickly.
No more. Brzeski now focuses on developers working on high-end flips of mansions and townhouses in exclusive neighborhoods, such as the Hollywood Hills and Bel Air.
And he is not alone. There has been a surge in high-end and luxury flipping nationwide. Between 2011 and today, flips of homes valued at $1m or more have risen almost 40% across the United States, according to RealtyTrac, the housing data company.
Between 2011 and 2012, high-end flipping soared 456% in Phoenix (150 properties from 27); 867% in Orlando (29 homes from 3); and to 73 properties from 10 in Las Vegas, according to RealtyTrac. To qualify as a flip for the figures, a home has to be bought and sold within six months.
Brzeski says two main factors combined to send him upmarket in the projects he lends on.
Newly flush Wall Street investors moved into the mid-market with so much money that they bought nearly every foreclosure in sight, mostly to rent.
The Blackstone Group, for example, spent $5.5bn on 32 000 homes across America, according to the firm.
American Homes 4 Rent, the California-based real estate investment trust founded by self-storage billionaire Wayne Hughes, spent $3.3bn, on more than 19 000 houses.
"These Wall Street guys employed huge dollars," Brzeski said. "These firms came to the courthouse steps and bought everything in sight. So the low- to mid-market dried up."
Brzeski said he had originally been wary of the high-end market, because of the much bigger sums involved and thus greater risk. But then in 2011 he financed the purchase of a house in West Hollywood for $1.425m. Another $1.175m was spent on a total refurbishment.
"When the developer put it on the market, they had multiple, all-cash offers," he said. "There was a line out the door to buy it. It sold for $3.5m. This was an incredibly profitable project. This really opened my eyes."
The house was bought by actress Sarah Gilbert, who became famous on the television sitcom "Roseanne."
Daren Blomquist, RealtyTrac's vice president, said: "Flippers are getting more confident that the market is really recovering, and therefore are more willing to go high-end, even though it's more risky."
Blomquist said with the stock market doing so well, there is a lot of investor cash out there, and a huge amount of wealth and pent-up demand at the high-end of the market. When a beautifully refurbished mansion hits the market, they are snapped up, often with all-cash offers, he said.
Foreign investors are also spending billions on the US property market. Last year, Chinese investors spent $12bn on US real estate, making the country the second-biggest foreign investor, just behind Canada, according to the National Association of Realtors.
Blomquist also sounded a warning for anyone who thinks flipping is easy. Many who try, suffer catastrophic losses.
"It's 10 times as risky doing high-end flips. Unfortunately what happens a lot of times, flippers have a property, then they can't find a buyer to purchase it."
Brzeski's business model is simple. Using a fund of investor money he lends 75 percent of a project's "hard costs" - that is money used for the purchase and refurbishment - and collects interest at an annual rate of approximately 10%.
Usually the loan is repaid within six to 12 months. He does not share in the profit made by the flip. Brzeski loans between $1m and $4m on each project.
Another factor, unique to California, helps him fund luxury flips, said Brzeski. Because of a 1978 voter initiative law knows as Proposition 13, the tax assessments of California houses have increased dramatically less than home values since the law was enacted, as long as the home has remained unsold.
Now, owners who had been reluctant to part with their large homes since the early 1970s because of "Prop 13" are dying, or are finally ready to downsize.
"Almost all our homes in these A and A-plus neighborhoods have something in common. You look at the appliances in the kitchen. If they are from the 1960s or 1970s, that's the house to flip," Brzeski said.
Across the country, close to Washington, DC, Chris Haddon works for Hard Money Bankers. They provide money for investment deals on "fix and flip" projects in Washington, Maryland and Virginia.
Haddon says he, too, has seen a surge in deals involving high-end properties.
"A few years ago, you would look at a $2m property and have no idea how long it would take to sell. The high-end market is always the last to rebound. But it's now rebounded and DC is hot."
In Miami, Mark Black, a realtor, said people with cash have been moving into the high end of the market in the past year.
"The market has gone through the roof. You see people buying properties one year ago and selling them at 20, 30% profit. Some of these are no more than paint jobs. The ones that are doing big rehabs are making huge profits."
In Manhattan, Tim Desmond, a realtor with luxury realtors Stribling, said high-end flips in New York are not for the faint of heart, but the profits can be huge.
He cited a 12 000-square-foot (1 115-square-meter) home on Manhattan's East 56th Street that was bought by an investment group for $10m. It took two years to convert it into two, three-story, 6 000-square-foot (557-square-meter) condominiums. The first is now on the market with a $17m price tag.

US clown with Obama mask draws criticism

A clown wearing a President Barack Obama mask appeared at a Missouri State Fair event this weekend, and the announcer asked the enthusiastic spectators if they wanted to see "Obama run down by a bull".

The state's second highest-ranking official, Lieutenant Governor Peter Kinder, denounced the performance in a tweet on Sunday. He said it was "disrespectful" to the president.

"We are better than this," the Republican tweeted.

State Fair officials on Sunday said the show was "inappropriate" and "does not reflect the opinions or standards" of the fair.

It wasn't clear if any action will be taken against the performers.

Perry Beam, who was among the spectators, said "everybody screamed" and "just went wild" as the announcer talked about having the bull run down the clown with the Obama mask.

'Klan rally'

"It was at that point I began to feel a sense of fear. It was that level of enthusiasm," Beam said.

He said another clown ran up to the one wearing the Obama mask, pretended to tickle him and played with the lips on the mask. About 15 minutes into the performance, the masked clown had to leave after a bull got too close, Beam said.

"They mentioned the president's name, I don't know, 100 times. It was sickening," Beam said. "It was feeling like some kind of Klan rally you'd see on TV," he said, referring to the Klu Klux Klan, which terrorised African-Americans for decades.

Officials with the Missouri Rodeo Cowboy Association, the organisation that co-ordinated the rodeo, did not return phone calls seeking comment on Sunday.

After Beam and his family returned home, he posted a photo of the clown in the Obama mask on his Facebook page. The photo and the posting were then promoted online by a blog, Showmegrogress.com, which elicited a huge response Sunday on Twitter.

Scott Holste, spokesperson for Missouri's Democratic Governor Jay Nixon, said on Sunday in an e-mail that Nixon "agrees that the performance was disrespectful and offensive, and does not reflect the values of Missourians or the State Fair".

Gibraltar: UK mulling action against Spain

The British government is considering taking legal action against Spain over stringent border checks imposed at the border with Gibraltar, a spokesperson for Prime Minister David Cameron said on Monday.

The spokesperson said the checks by Spanish guards, which have caused tailbacks of several hours at the border of the British-held territory, were "politically motivated and totally disproportionate".

"Clearly the prime minister is disappointed by the failure of Spain to remove the additional border checks this weekend," the spokesperson told reporters.

"We are now considering what legal action is open to us.

"This would be an unprecedented step so we want to consider it carefully before a making a decision to pursue."

Britain and Spain are embroiled in an increasingly tense diplomatic spat over Gibraltar, a tiny self-governing British territory at the southern tip of Spain.

Gibraltar has accused Madrid of imposing the checks in retaliation for its construction of an artificial concrete reef off its coast, which it says is aimed at stopping alleged incursions by Spanish fishing boats.

Madrid claims the border checks are necessary to combat smuggling and that the reef is a deliberate impediment to Spanish fishing vessels in a dispute over territorial waters.

A handful of British warships began setting sail for the Mediterranean on Monday on what the defence ministry stresses is a routine exercise that was planned months ago.

But one of the ships is set to dock in Gibraltar later this week in a move that is being seen by Spanish media as an act of intimidation.

Cultural Revolution: Ageing Chinese sorry

As a teenager radicalised by China's Cultural Revolution, Zhang Hongbing denounced his mother to the authorities. Two months later a firing squad shot her dead.

Now after more than 40 years of mounting guilt, Zhang has ruffled the silence that cloaks China's decade of turmoil with a public confession.

Such rare apologies have been welcomed as a potential gateway to the collective soul-searching that could bring healing  but is blocked by a ruling Communist Party whose critics say is unwilling to confront its own responsibility.

"Back then everyone was swept up and you couldn't escape even if you wanted to. Any kindness or beauty in me was thoroughly, irretrievably 'formatted'," Zhang told the Beijing News last week.

"I hope that from my self-reflection other people can understand what the situation was like at that time."

The 1966-76 Cultural Revolution, unleashed by then-leader Mao Zedong to reassert power after the famines caused by his disastrous Great Leap Forward, inflicted myriad personal tragedies and threw society into chaos.

Winds of change

"Red Guard" youths abused their elders - officials, intellectuals, neighbours, relatives - dragging them into "struggle sessions", ransacking their homes and driving some to suicide.

Many targets were jailed or killed, and while no official figure has been issued, one Western historian estimated half a million people died in 1967 alone.

Zhang reported his mother in 1970 for criticising Mao, and military officials came to their home, assaulted her and took her away.

But as the political winds changed - a few years after the Cultural Revolution ended, a court in his native central Anhui province recanted his mother's sentence - Zhang began to rethink as well.

"I will never forgive myself," he said.

Only a handful of public confessions have appeared, mostly in recent years as the Revolution's once-heady teenagers enter their 60s.

Embracing apologies

Wen Qingfu from the central province of Hunan cited age as a spur for admitting in an essay in June that, following orders, he once led a mob to storm the home of a teacher whose son he often played with.

"When people get old they look back and reflect," he told a provincial newspaper. "If I didn't apologise now we would both get too old."

Wen acted in time to see his victim's daughter reply in a public letter on behalf of her frail mother: "You can let go of your guilt."

Many Chinese have embraced these apologies, even though wide airing of past wrongs might invite a spate of legal action, said Ding Xueliang, a Cultural Revolution expert at Hong Kong University of Science and Technology.

In a rare trial stemming from the era, a court in Zhejiang province in April sentenced a man in his 80s to 42 months in prison for a 1967 murder.

Still, Ding said, "the positive consequences would go far beyond the negative ones... to collective soul-searching, to build a more law-based society".

Basics

But China's ruling party prohibits such discussion, which would inevitably broach the question of its own ugly role. Any trial or apology tends to skirt around this central issue, say academics.

"Individual responsibility is one part of this," said Xu Youyu, a researcher at the Chinese Academy of Social Sciences.

"Some things are basic, for example, you can't hit people or humiliate or persecute them."

But the confessions "have not touched on the more important or fundamental issues", he said, and if they did, "there might be a question of whether the discussion could continue".

Shortly after Mao died in 1976 the campaign was ended, and the authorities hung blame on the controversial Gang of Four leaders headed by Mao's wife Jiang Qing, jailing them in 1980.

The following year the official party line declared that the Cultural Revolution had dealt China "the most severe setback and the heaviest losses" since the founding of the People's Republic in 1949.

No museums

Mao was deemed to have been 70% right and 30% wrong, having made "gross mistakes" but far greater contributions.

And with that a curtain over the matter was drawn.

Former premier Wen Jiabao briefly referenced the period last year, warning that China should never retread such "historical tragedies".

The remark - seen as a rebuke to the recently disgraced leader Bo Xilai who had championed "red revival" - heartened those who support freer discussion of the decade, but the impact of Wen's words ended there.

Virtually no museums, memorials or films in China explore the Revolution, except for little-known private efforts such as one museum in southwestern Sichuan province that refers discreetly to a "Red era".

In a public apology published in June, Liu Boqin of Shandong province in the east detailed his crimes and listed his victims, but only vaguely referenced the political directives that drove him.

Instead he cited "youth and ignorance, being incited, wicked, not distinguishing right and wrong" for having hounded teachers and vandalised homes.

"Although being swept up in the environment of the Cultural Revolution was one reason," he wrote, "I as an individual bear responsibility for my evil actions."

Chilly reception for Kerry?

US Secretary of State John Kerry's trip to Colombia and Brazil this week builds on efforts to deepen relations with Latin America, but he can expect a curt reception from the two US allies after reports that an American spy programme widely targeted data in emails and telephone calls across the region.

On Kerry's first visit to South America as the Obama administration's chief diplomat, the disclosures by National Security Agency leaker Edward Snowden could chill talks on trade and energy, and even discussions about the 23 October state dinner that President Barack Obama is hosting for Brazil's president, Dilma Rousseff.

"I don't think this is going to be a warm 'abrazo'," said Michael Shifter, president of the Washington-based Inter-American Dialogue, using the Spanish word for "hug". ''I think it will be businesslike."

Kerry arrived late on Sunday in Bogota, the Colombian capital. The country is holding peace talks to end a half century-old conflict with the Western Hemisphere's most potent rebel army, a rebel force diminished in strength thanks in considerable measure to US military and intelligence support.

The US wants to show its support for the peace talks between the Colombian government and the Revolutionary Armed Forces of Colombia, or Farc, which are taking place in Cuba.

Colombia is one of the United States' closest allies in the region, but the reports about the spying programme have rankled Colombian officials.

Clarification on intelligence-gathering

Brazil's O Globo newspaper reported last month that citizens of Colombia, Mexico, Brazil and other countries were among the targets of a massive NSA operation to secretly gather information about phone calls and Internet communications worldwide. The reports were based on information provided by Snowden.

Colombia's president, Juan Manuel Santos, said on Thursday that he wanted clarification from Washington on whether US intelligence-gathering in Colombia had overstepped the countries' joint operations against drug traffickers and illegal armed groups. The US has supplied Colombia with eavesdropping equipment, technicians and aerial surveillance.

Santos said in an interview with The Associated Press that Vice President Joe Biden called him about the issue following revelations by Snowden that US digital snooping has targeted allies as well as foes. Santos said Biden offered a series of technical explanations. Asked if he was satisfied with them, Santos replied, "We are in that process."

Biden also called Rousseff to express what Brazil's communications minister, Helena Chagas, said was "his regret over the negative repercussions caused by the disclosures". Biden invited Brazilian officials to Washington to get details about the spy programme.

Rousseff told Biden that the privacy of Brazilian citizens and the country's sovereignty cannot be infringed upon in the name of security, and that Brazil wanted the US to change its security policies and practices.

Last week, Brazil's Foreign Minister Antonio Patriota was at the United Nations with counterparts from other South American nations to express their indignation about the spy programme to UN Secretary-General Ban Ki-moon.

Anti-government protests

The Obama administration has worked to forge stronger ties with Latin America. In May, Obama took a three-day trip to Mexico and Costa Rica. Biden has visited Colombia and Brazil, where he said stronger trade ties and closer cooperation in education, science and other fields should usher in a new era of US-Brazil relations this year.

Brazil has received much attention in recent months because of Pope Francis' visit and preparations for the 2014 World Cup and the 2016 Olympics to be held in Rio de Janeiro.

Thousands of demonstrators have staged anti-government protests since June demanding better public services in return for high taxes they pay. Under considerable domestic pressure, Rousseff announced a $4bn programme to improve transportation, sewage and public housing in Sao Paulo, Brazil's largest city.

The protests have weakened her domestic support, but she can bolster her poll numbers with a strong stand against the US over the spying allegations, said Carl Meacham, former Latin America adviser on the Senate Foreign Relations Committee and director of the Americas Programme at the Centre for Strategic and International Studies in Washington.

"I think the tone of the visit will be a bit tense because of these issues raised by the surveillance [programme] and I think Secretary Kerry will have to speak to that," he said.

NEWS,05.08.2013

U.S. Embassy Closings: State Department Says Posts In 19 Countries To Remain Closed

U.S. diplomatic posts in 19 cities in the Mideast and Africa will remain closed for the rest of the week amid intercepted "chatter" about terror threats, which lawmakers briefed on the information likened to intelligence picked up before the Sept. 11, 2001 attacks.
One lawmaker said the chatter was specific as to certain dates and the scope of the operation; others said it suggested that a major terrorist attack, akin to 9/11, was being planned by the al-Qaida affiliate in Yemen.
Diplomatic facilities will remain closed in Egypt, Jordan, Libya, Yemen, Saudi Arabia and Kuwait, among other countries, through Saturday, Aug. 10. The State Department announcement Sunday added closures of four African sites, in Madagascar, Burundi, Rwanda and Mauritius. The U.S. reopened some posts on Monday, including those in Kabul, Afghanistan and Baghdad.
Last week the State Department announced a global travel alert, warning that al-Qaida or its allies might target either U.S. government or private American interests. It said Americans should take extra precautions overseas and cited potential dangers involved with public transportation systems and other prime sites for tourists.
Spokeswoman Jen Psaki said the decision to keep certain embassies and consulates shuttered throughout the week was done out of an "abundance of caution" and to "protect our employees, including local employees, and visitors to our facilities."
Sen. Richard Blumenthal, D-Conn., a member of the Senate Judiciary Committee, said Monday the briefings he has received "certainly emphasize these threats are specific and credible, equal if not more serious to the kind of chatter, as the intelligence called it, that was heard prior to 9/11."
But he added: "The average American should continue to be alert and vigilant and cautious but certainly not unduly alarmed or panicky." He spoke on MSNBC.
The intercepted intelligence foreshadowing an attack on U.S. or Western interests is evidence of one of the gravest threats to the United States in years, said several lawmakers said Sunday.
Sen. Saxby Chambliss of Georgia told NBC's "Meet the Press" that the conversation was "very reminiscent of what we saw pre-9/11." Chambliss, the top Republican on the Senate Intelligence Committee, said it was that chatter that prompted the Obama administration to order the closures and issue the travel warning.
Rep. C.A. Dutch Ruppersberger of Maryland, the top Democrat on the House Intelligence Committee, told ABC's "This Week" that the threat intercepted from "high-level people in al-Qaida in the Arabian Peninsula" was about a "major attack."
Yemen is home to al-Qaida's most dangerous affiliate, blamed for several notable terrorist plots on the United States. They include the foiled Christmas Day 2009 effort to bomb an airliner over Detroit and the explosives-laden parcels intercepted the following year aboard cargo flights.
Rep. Peter King, the New York Republican who leads the House Homeland Security subcommittee on counterterrorism and intelligence, told ABC that the threat "was specific as to how enormous it was going to be and also that certain dates were given."
The Obama administration's decision to close the embassies and the lawmakers' general discussion about the threats and the related intelligence discoveries come at a sensitive time as the government tries to defend recently disclosed surveillance programs that have stirred deep privacy concerns and raised the potential of the first serious retrenchment in terrorism-fighting efforts since Sept. 11.
Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., has scoffed at the assertion by the head of the National Security Agency that government methods used to collect telephone and email data have helped foil 54 terror plots.
Rep. Adam Schiff, D-Calif., a House Intelligence Committee member, said while he takes the threat seriously he hasn't seen any evidence linking the latest warnings to that agency's collection of "vast amounts of domestic data."
Other lawmakers defended the administration's response and promoted the work of the NSA in unearthing the intelligence that led to the security warnings.
King, a frequent critic of President Barack Obama, said: "Whether or not there was any controversy over the NSA at all, all these actions would have been taken."
The State Department noted that previous terrorist attacks have centered on subway and rail networks as well as airplanes and boats. It suggested travelers sign up for State Department alerts and register with U.S. consulates in the countries they visit. The alert expires Aug. 31.
The intelligence intercepts also prompted Britain and Germany to close their embassies in Yemen on Sunday and Monday. British authorities said some embassy staff in Yemen had been withdrawn "due to security concerns." France said Monday it would keep its embassy in the Yemeni capital closed through Wednesday.
Interpol, the French-based international policy agency, has also issued a global security alert in connection with suspected al-Qaida involvement in recent prison escapes including those in Iraq, Libya and Pakistan.

Turkey's Ergenekon Trial: Alleged 2002 Coup Plotters Convicted, Including Former Military Chief Ilker Basbug

In a landmark trial, scores of people including Turkey's former military chief, politicians and journalists were convicted on Monday of plotting to overthrow Prime Minister Recep Tayyip Erdogan's government soon after it came to power in 2002.
Retired Gen. Ilker Basbug was the most prominent defendant among some 250 people facing verdicts after a five-year trial that has become a central drama in tensions between the country's secular elite and Erdogan's Islamic-oriented Justice and Development Party.
The trial has sparked protests, and on Monday police blocked hundreds of demonstrators from reaching the High Criminal Court in Silivri, 40 kilometers (25 miles) west of Istanbul, in a show of solidarity with the defendants.
But Monday's verdicts were not expected to set off the kind of violent anti-government demonstrations that were recently sparked by a government plan to build a replica Ottoman-era barracks at a park near Istanbul's central Taksim Square.
In addition to Basbug, at least 18 other defendants were sentenced to life in prison, including 10 retired military officers and Dogu Perincek, leader of the left-wing and nationalist Workers Party. At least 64 other defendants received sentences ranging from a year to 47 years, according to state-run TRT television news.
At least 21 people were acquitted. The fully tally of verdicts and sentences was not immediately available.
The defendants were accused of plotting high-profile attacks that prosecutors said were aimed at sowing chaos in Turkey to prepare the way for a military coup. The prosecutions already have helped Erdogan's government reshape Turkey's military and assert civilian control in a country that had seen three military coups since 1960.
The trial, which began in 2008, grew out of an investigation into the seizure of 27 hand grenades at the home of a noncommissioned officer in Istanbul in 2007.
The defendants were accused of being part of an alleged ultranationalist and pro-secular gang called Ergenekon, which takes its name from a legendary valley in Central Asia believed to be the ancestral homeland of Turks.
In thousands of pages of indictments, prosecutors maintained that the gang was behind a series of violent acts, including one in 2006 on a courthouse that killed a judge. Prosecutors say that the incidents were made to look as though they were carried out by Islamic militants, in a bid to create turmoil and provoke a military intervention.
Prosecutors say the gang also plotted to kill Erdogan, Nobel laureate author Orhan Pamuk and other high-profile figures.
The defendants have rejected the accusations, and they are expected to appeal Monday's verdicts and sentences to the Court of Appeals in Ankara.
Representatives of Turkey's main pro-secular opposition party lashed out against the verdicts, accusing the government of influencing the justice system.
"A verdict that was decided five years ago was made public today," said Akif Hamzacebi, a legislator from the opposition Republican People's Party. "All principles of rights, justice, human rights, fair trial were trampled on here."
Peter Stano, spokesman for the EU's Enlargement Commissioner Stefan Fuele, said he would not comment on the specific rulings, but noted that the European Union has expressed concern before about defendants' rights in Turkey and indictments that are too general.
Prosecutors demanded life prison terms for 64 of the defendants, mostly on terrorism charges. Others were charged with possession of firearms or merely membership in Ergenekon.
Mehmet Haberal, a surgeon and founder of a university in Ankara, and Mustafa Balbay, the Ankara representative of pro-secular Cumhuriyet newspaper, both faced life prison terms but received sentences of 12 years and 34 years, respectively. The two men were elected to Parliament in 2011, while in prison, but were not able to take their seats. The court ordered Haberal released on time served because of health considerations.
Tuncay Ozkan, a prominent journalist who helped organize a series of anti-government protests in 2007, was given a life sentence.
The case has polarized the country between those who see it as an opportunity to unravel a shadowy network of ultranationalists known as the "Deep State" that allegedly acted behind the scenes with impunity, and those who believe it is a government attempt to muzzle Erdogan's secular-minded foes and undermine Turkey's secular legacy.
In a separate case, more than 300 military officers, including Turkey's former air force and navy chiefs, were convicted last year of other plots to bring down the government in 2003 and some were sentenced to 20 years in prison. Those verdicts are being appealed.

 

Gibraltar Entrance Fee: Chief Minister Compares Spain To North Korea Over Exit Charge

The chief minister of Gibraltar on Monday accused Spain of acting like North Korea after suggesting it could impose steep new entry and exit fees for the British territory.
Spain has long laid claim to Gibraltar, and the British territory on the southern tip of the Iberian peninsula is the source of occasional diplomatic friction between Madrid and London.
The latest spat involves an artificial reef being built in Gibraltar that Spain says is hurting its fishermen. It has floated the idea of charging people entering and leaving Gibraltar 50 euros ($66) as compensation.
Gibraltar Chief Minister Fabian Picardo told BBC radio that such fees would violate European Union freedom of movement rules, and said "hell would freeze over" before the reef would be removed.
"What we have seen this weekend is saber-rattling of the sort that we haven't seen for some time," Picardo said, describing threats of border fees as "more reminiscent of the type of statement you'd hear from North Korea than from an EU partner."
Under Spain's former Socialist government, relations between Madrid, London and Gibraltar eased greatly.
But in an interview published Sunday in Spanish newspaper ABC, Spanish Foreign Minister Jose Manuel Garcia-Margallo said the "playtime" of that era was over.
Britain's Foreign Secretary said late Monday that he had spoken to Picardo to express solidarity with territory's residents.
"The U.K. stands shoulder to shoulder with the people of Gibraltar at this time of increasing Spanish pressure and rhetoric," William Hague said in a statement, repeating that the U.K. had pledged "not to compromise on British sovereignty over Gibraltar."
But he also nodded to the fact  so far the talk of sanctions had not amounted to real clampdown on the territory.
"We agreed that it was important to respond to actions, not rhetoric," he said.

North Korea Floods: Army Drills Cut Short To Provide Relief

North Korea has cut short summer military drills to mobilise troops for flood relief efforts after torrential rains left dozens killed and ravaged farmlands nationwide, according to a South Korean report.
The North's military ordered troops based in the country's west and southeast regions to hold "minimum" summer exercises and to instead focus on post-floods reconstruction, Yonhap news agency said.
It cited an unnamed Seoul government source.
"Many military units stopped the exercises and have mobilised troops for floods relief works," said the source quoted by Yonhap.
The communist state has staged summer military drills that partially coincided with the annual Ulchi Freedom Guardian exercise conducted by its rival South Korea and the United States, that usually takes place in August.
"But this year's summer drill in the North will be scaled back considerably because it needs to focus on repairing floods damages," the source was quoted as saying.
Floods caused by heavy rains that pummelled the North since early July have destroyed some 6,000 houses, displaced more than 23,000 people and washed away a large swathes of farmlands, the North's state media said late last month.
The death toll has reached 33 across the nation and some 13,300 hectares of farmlands have been damaged, the International Federation of the Red Cross and Red Crescent Societies (IFRC) said last week, warning of "longer-term impact" on the country's food security.
Decades of deforestation and decrepit infrastructure have left the impoverished North vulnerable to floods, which led to some 170 deaths last summer.

Berlusconi: 'I Am Innocent'

Former Premier Silvio Berlusconi pledged his support for Italy's fragile coalition government to a gathering of thousands of supporters on Sunday, but he remained defiant in the face of a supreme court ruling confirming his tax fraud conviction and four-year prison sentence, declaring: "I am innocent."
The three-time ex-premier and media mogul, who also faces a ban from public office, said he would not resist criticizing the verdict against him, nor the judges who passed it, calling Italian magistrates "irresponsible."
Berlusconi looked energized and appeared to speaking off the cuff throughout the 15-minute rally in front of his Rome residence, in contrast to his nine-minute video address after last week's ruling in which he appeared shaken and on the verge of tears as he read a prepared statement.
The crowd, many of whom arrived on buses during the day, waved flags and posters urging Berlusconi, 76, not to give up and declaring support from cities and regions throughout Italy. Supporters repeatedly chanted: "Silvio."
"I don't believe that anyone can come and say to us that this is a subversive demonstration, as many have said," Berlusconi said. "And no one can come and say, as they have, that we are irresponsible. Because we have said loud and clear that the government needs to continue to approve economic measures that we have requested."
The confirmation of Berlusconi's conviction on final appeal has put more stress on Premier Enrico Letta's uneasy cross-party coalition government, which requires the support of both Berlusconi's conservative forces and the center-left to pass urgent economic measures.
Berlusconi said the last few days were "the most anguished and painful of my life," and he thanked supporters for demonstrating their affection.
"I am here. I am staying here. I won't give up," Berlusconi said.
Italy's highest court on Thursday upheld Berlusconi's four-year prison sentence, the first time that the media mogul was definitively convicted and sentenced in two decades of trials and other criminal probes.
A law to reduce prison overcrowding slashes his sentence to one year and since he is over 70, he can choose home confinement or perform social services instead of going to prison.
He also faces a public office ban, which would deprive him of his Senate seat and prevent him from running in elections for the duration of the ban. Another appeals court in Milan has been ordered to decide its length.