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CHRISTOPHER
CALDWELL
MAGAZINE
INSIDE
PAGE 7
Plus
What David Cameron should say about Europe
Comment
|
Saturday January 5
/
Sunday January 6 2013
|
EUROPE
World Business Newspaper
Pakistani
girl leaves
UK hospital
News Briefing
Gold price
$ per troy ounce
1,700
1,680
Malala Yousafzai,
the 15­year­old
shot in the head by
the Taliban after
campaigning for
women’s education,
has been discharged
from hospital after
making “excellent
progress”.
1,660
1,640
28
Dec 2012
Jan
2013
4
Source: Thomson Reuters Datastream
Precious metal falls to a
4½­month low, Page 13
PE targets UK lenders
US buyout groups are
eyeing RBS branches in
UK banking foray.
Page 11
Sandy aid package
US lawmakers approve
partial aid package for
storm victims.
Page 2
www.ft.com/asia­pacific
Malala Yousafzai leaving the
Queen Elizabeth Hospital
Santander job losses
Spanish bank to seek a
deal with unions over
merger job losses.
Page 10
AP
China’s censors in media crackdown
UK recession fears
Data for UK services
sector raise “triple­dip”
recession fears.
Page 3
Magazine website run
by party liberals shut
Hopes of reform by
new leadership dashed
Chunqiu, a magazine run by lib-
eral senior members of the rul-
ing Communist party, a day
after the magazine published its
latest call for political reform.
Hours later, 35 journalists for-
merly affiliated with Southern
Weekend, known for its daring
investigative reporting, called
for the party’s chief propaganda
official in Guangdong province
to quit over what they called
“excessive” censorship.
Both media outlets had
demanded enforcement of
China’s constitution. The docu-
ment enshrines many demo-
cratic rights but it bears little
resemblance to political practice
in the one-party state.
“If we hold our constitution
against our reality, we discover
a huge gap between the consti-
tution and the behaviour of our
government created by the sys-
tem, the policies and the laws
currently in force,” Yanhuang
Chunqiu wrote in its issue of
December 31. “Our constitution
is basically void.”
A Southern Weekend journal-
ist penned a new year greeting
for the front page that echoed
this. Playing on the “Chinese
Dream” slogan touted by Xi Jin-
ping, the new Communist party
chief, it spoke of a “dream of
constitutionalism” and
demanded that the document be
used to empower citizens.
“Only thus will we be able to
build a strong and free nation,”
it said.
After a decade of political
inertia, Mr Xi’s first month in
power has prompted calls for
reform. The new leadership,
however, appears to have
responded with a crackdown.
Authorities cancelled Yan-
huang Chunqiu’s website
licence. Internet users visiting
the site were greeted by a car-
toon policeman and a message
that “the website you have vis-
ited has been shut down
because it failed to register”.
In another unusual move, Tuo
Zhen, head of party propaganda
in Guangdong, rewrote the draft
Southern Weekend article,
according to several journalists
at the paper.
Although strict censorship is
common in China, it is normally
enforced by senior editors who
practice self-censorship or act
on instructions from propa-
ganda officials.
In an open letter distributed
on Sina Weibo, China’s leading
Twitter equivalent, the report-
ers called Mr Tuo’s intervention
“an ignorant and excessive act”.
The censors’ stand-off with
the two publications came after
the rubber-stamp parliament
passed a new rule last month,
requiring internet users to regis-
ter their real names.
Although some journalists try
to push the envelope, media pro-
fessionals are more likely to oil
the censorship machine than
oppose it. Liu Yunshan, the
Communist party’s propaganda
chief, said yesterday that the
media must “better reflect the
messages of the party and the
government”.
Stranded rig probe
Shell’s stranded rig calls
Arctic exploration plan
into question.
Page 9
Anglo to sell stake
Mining group to offload
Brazilian iron ore stake
to Zamin Ferrous.
Page 10
By Kathrin Hille
in Beijing
Chinese journalists have
clashed openly with government
censors as the new political
leadership’s unexpectedly tough
political stance frustrates hopes
for reform.
The authorities yesterday
shut the website of Yanhuang
LCD makers fined
China joins crackdown
on liquid crystal display
panel makers.
Page 9
US economy shrugs off fears over
fiscal cliff and adds 155,000 jobs
By Robin Harding in Washington
and Stephen Foley in New York
above 2 per cent growth, but it
doesn’t show any great weak-
ness either.”
Economists expect the world’s
largest economy to continue its
recovery in 2013, but there is
little prospect for rapid growth
because of tax rises and spend-
ing cuts in the recent fiscal deal,
as well as uncertainty caused by
an imminent fight over the fed-
eral debt ceiling.
Jobs growth is still too slow to
bring unemployment down rap-
idly, highlighting the need to
extend unemployment benefits
as part of the fiscal cliff deal,
and the US Federal Reserve’s
continued efforts to stimulate
the economy.
The benchmark S&P 500 was
up 0.3 per cent by lunchtime,
putting it on course for a gain of
more than 4 per cent this week,
and there was continued selling
in the US Treasury market. The
yield on 10-year government
bonds was up 1 basis point to
1.93 per cent. Investors judged
that the minutes of the last Fed
policy meeting meant it might
end its programme of bond-buy-
ing earlier than expected. That
also sparked a sell-off in gold.
A number of details in the
jobs report pointed to some
health in the economy. Job crea-
tion was spread across a range
of industries, with healthcare
adding 45,000, construction
30,000 and manufacturing 25,000.
The rise in construction jobs
suggests signs of a recovery in
the housing market is creating
employment. The pick-up in
manufacturing is evidence that
a fall in business confidence late
in 2012 has not frozen hiring.
There was also a solid rise in
average weekly earnings by
about $4 to $673.30. That could
support consumption as the
expiry of a payroll tax break
will hit incomes in January.
A separate report showed ris-
ing confidence in the services
sector, with the ISM purchasing
managers’ index rising from 54.7
to 56.1 in December.
“The fact that the labour mar-
ket is doing as well as it’s doing
and the capital spending num-
bers have rebounded as well as
they have suggest the economy
has some momentum,” said
Joseph LaVorgna, chief US
economist at Deutsche Bank in
New York.
The US economy shrugged off
concerns about the fiscal cliff as
it started 2013 with 155,000 new
jobs and rising confidence in the
services sector.
Jobs growth was almost
exactly in line with market fore-
casts, while the unemployment
rate edged up from 7.7 to 7.8 per
cent, although a slight revision
to November’s data meant the
figure was unchanged.
The figures suggest that the
economy did not stall in Decem-
ber – widely feared because of
uncertainty about tax rises and
spending cuts – but it is still
locked into a pattern of sluggish
overall growth.
“The word for the economy is
‘resilient’,” said Eric Green,
chief US economist at TD Secu-
rities in New York. “It’s really a
status quo type of jobs report.
It’s not going to get us [the US]
Bardot seeks
a new habitat
A French furore over the
apparent departure into tax
exile by film actor Gérard
Depardieu lurched into farce
when Brigitte Bardot, 1960s
sex symbol, threatened to
follow him. Her concern was
not France’s tax regime but
her anger over Baby and
Nepal, two elephants in Lyon
zoo to be put down because
they have tuberculosis.
‘The word for the
economy is “resilient”.
It’s really a status quo
type of jobs report’
Report, Page 3
Dull US outlook, Page 2
Editorial Comment, Page 6
Markets, Page 12
The Long View, Page 22
Eric Green, TD Securities
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WORLD NEWS
Jobs figures point to dull US outlook
House
agrees
$9.7bn
Sandy
aid deal
Economists expect
only modest growth
Fiscal tightening
hits demand
The release of more so-so
payrolls figures yesterday –
155,000 extra jobs is respect-
able but suggests only slug-
gish growth of about 2 per
cent – confirms what most
economists now expect for
2013. Most have abandoned
their optimism. They expect
another year of mediocre
growth.
The reason is that they
can no longer see where the
demand is to support a
rapid expansion. From 2010
to 2012 government stimu-
lus was supporting the
economy, and so if consum-
ers slowed their debt repay-
ments there was the poten-
tial for speedy growth.
Now fiscal stimulus is
going into reverse – the fis-
cal cliff deal raises income
taxes and ends a temporary
2 percentage point reduc-
tion in payroll taxes – so a
solid recovery in the private
sector is needed merely to
keep the overall economy
on track.
“The main thing is really
the increase in fiscal drag,”
says Jan Hatzius, chief
economist of Goldman
Sachs in New York, who is
including more than a per-
centage point of fiscal tight-
ening in his overall 2013 US
growth forecast of 1.8 per
cent.
Ethan Harris, head of US
economics for Merrill
Lynch, comes to a similar
conclusion with his 2013
growth forecast of 1.6 per
cent. He expects weak
growth in the first half as
the shock of fiscal tighten-
ing takes effect and then a
pick-up later in the year.
“This is going to be
another one of those years
where you have a bit of a
dead spot in the economy
before you get back to nor-
mal growth,” he says.
Compounding the squeeze
is the fact that the fiscal
cliff deal did not raise the
federal debt limit and only
delayed big “sequester”
cuts to spending until the
end of February. “They
haven’t eliminated uncer-
tainty about fiscal policy,”
says Mr Harris.
This dreary outlook per-
sists despite signs that the
fundamentals of the econ-
omy are healing. The hous-
ing market appears to have
bottomed and most analysts
are pencilling in a decent
rise in construction this
year. The trouble is, with so
little building activity going
on, it would take a huge
percentage rise to make
much difference to the over-
all outlook.
Joseph LaVorgna, the
chief US economist at Deut-
sche Bank in New York,
includes this fundamental
improvement in his more
optimistic outlook of 2.3 per
cent growth from the fourth
quarter of 2012 to the fourth
quarter of 2013.
“You kind of get the self-
sustaining aspect of the
recovery to really take
hold,” he says, referring to
a recovering housing mar-
ket, more jobs, greater
consumer spending and bet-
ter availability of bank
credit.
Consumer spending – by
far the largest part of
overall demand – is crucial
to the prospects for growth.
Households have reduced
their debt burden a lot in
the past five years. If they
stop paying down debts,
then in theory they could
increase consumption by at
least as much as the growth
in their incomes, if not
more.
In practice, though, a
debt-fuelled consumer exp-
ansion is unlikely to drive
the economy forward as it
did 10 years ago – even if
that were desirable.
Consumers may dip into
their savings a little, to
make up for the loss of the
payroll tax cut, but barring
a surge in house prices that
makes them feel rich again
the world’s largest economy
is set to plod forward in
2013.
By Robin Harding
in Washington
By Shahien Nasiripour
in Washington
In every year since the US
recovery began in 2009
economists have been wait-
ing for a big surge in the
economy, and it was always
due to arrive next year.
At the end of 2009, the
end of 2010 and the end of
2011 there were forecasts of
3 or 4 per cent growth in
the year ahead. It never
happened. Growth has been
stuck at about 2 per cent.
‘This is going to
be another year
where you have
a bit of a dead spot
in the economy’
The US House of Represent-
atives has approved a par-
tial aid package for victims
of superstorm Sandy.
The $9.7bn measure will
be used to pay flood insur-
ance claims for affected
homeowners. The National
Flood Insurance Program,
the US government scheme,
has been running out of
money to pay on claims
submitted by households
who had paid premiums for
coverage. The bill will allow
the scheme to borrow more
money to pay the more than
100,000 claims.
The bill is expected to
become law shortly, while
on January 15 the House is
expected to pass the
remainder of the $60bn in
aid the Senate agreed in the
previous session of Con-
gress.
Michael Grimm, a New
York Republican, said yes-
terday that he feared the
delay in aid will lead to
many business closures.
“Every day you’re not open
you’re losing revenue and
your ability to reopen,” he
said. The loss of businesses
in his area as a result of
Congressional
Gun control: 30 years in the making
During a presidential debate
in 2007, Joseph Biden was
asked to respond to a
member of the public who
posed a question on gun
control while brandishing a
semi­automatic gun. “This
is my baby,” the questioner
said of his rifle. “I tell you
what, if that’s his baby, he
needs help,” the Democratic
candidate replied.
Mr Biden, a six­time
Delaware senator, has been
an advocate of greater gun
controls for more than 30
years.
In 1984, he helped pass
the Comprehensive Crime
Control Act, which included
provisions for longer prison
sentences for repeat
offenders who used
firearms in their crimes –
although a ban on assault
weapons he wrote around
the same time failed in
Congress.
In 1994, Mr Biden helped
push through the Violent
Crime Control and Law
Enforcement Act, which
became known as the Biden
Crime Law and included a
ban on assault weapons
written by Democrat Dianne
Feinstein of California.
Mr Biden was reportedly
worried the inclusion of the
ban would scupper the
crime bill but fought for its
inclusion, and won. But that
demanded compromise. By
the time it was enacted by
President Bill Clinton after
six years of wrangling, the
law defined an assault
weapon as a rifle that could
take a magazine and two
add­ons such as a bayonet
lug or grenade launcher –
guns with none or one of
these remained legal.
The law also banned
magazines of more than 10
rounds and manufacture of
19 types of semi­automatic
firearms, but any made
before 1994 were exempt.
The bill, which had a
“sunset clause” of 10 years,
was allowed to elapse in
2004 by the then
Republican­led
Congress.
Carolyn McCarthy, a
New York Democrat, and
Mark Kirk, a Republican of
Illinois, tried to reinstate the
ban, to no avail.
delay
is
“untenable”, he added.
Sandy hit the northeast-
ern areas of the US more
than two months ago, dam-
aging hundreds of thou-
sands of homes, closing
businesses and wreaking
extensive damage to the
coastal areas of New York
and New Jersey.
Since then, lawmakers
from the affected areas
have pleaded for federal
government aid. But the
Republican-led House has
been slow to respond, citing
federal debt levels as a rea-
son to decrease government
expenditures.
Frustrations reached boil-
ing point this week after
the House failed to pass the
Senate version of the meas-
ure before adjourning for
the new session. Staunch
Republicans criticised John
Boehner, the House
Speaker, for not bringing
the measure to a vote.
“It’s why the American
people hate Congress,” said
Chris Christie, the Republi-
can governor of New Jersey.
House Republicans from
New York also participated
in the barrage against Mr
Boehner and Republican
leaders in Congress.
“What they did . . . was
put a knife in the back of
New Yorkers and New Jer-
seyans. It was an absolute
disgrace,” said Peter King, a
Republican lawmaker from
New York. Mr King had
urged political donors to
stop funding Republican
lawmakers’ campaigns.
The political fallout
forced Mr Boehner and
Republican House leaders
to hold a vote this week,
which passed yesterday
with 354 votes. All 67 votes
against the measure were
cast by Republicans. Eight
lawmakers did not vote.
Republican senator Tim Scott practises his swearing­in ceremony with Joe Biden, vice­president, in Washington this week
Reuters
Biden still going strong as president’s Capitol Hill fixer
your pecs, man, give me a
call,” said the 70-year-old
Mr Biden, who spent 36
years in the Senate.
On being shown a video
of his father uttering some
earthier phrases to the hus-
band of incoming Democrat
Heidi Heitkamp, Beau
Biden said: “He’s the same
person at home, at Home
Depot and in Congress.”
Indeed, this is vintage
Biden – the down-to-earth
blue-collar Joe who puts
people at ease in even the
most formal of settings, but
who can never be relied
upon to keep his foot out of
his mouth.
After four years as Presi-
dent Barack Obama’s dep-
uty, a revitalised Mr Biden
is set to play an increas-
ingly prominent role in the
administration’s
with him,” said Norman
Ornstein, a veteran political
analyst who has known the
vice-president for decades.
Mr Biden’s long experi-
ence in the Senate – stretch-
ing back to the time when
“bipartisan” was not a slan-
derous term – has made
him Mr Obama’s go-to guy
when he needs someone to
bang heads together on
Capitol Hill.
During their first term,
Mr Biden was called in to
help broker deals on the
contentious healthcare
reforms – which he had ini-
tially advised Mr Obama
against pushing – and
extending the Bush-era tax
cuts in 2010.
As the US teetered on the
edge of the fiscal precipice
last week, it was Mr Biden
who was dispatched to the
Hill to work out a deal with
Mitch McConnell, the
Republican leader in the
Senate, after majority
leader Harry Reid’s efforts
came to nothing.
“The vice-president and I
have worked together on
solutions before, and I
believe we can again,” Mr
McConnell said.
Analysts say that this
McConnell-Biden arrange-
ment is likely to become the
cornerstone of dealmaking
over the next few years.
After the deal was passed
by the House, Mr Biden
stood at Mr Obama’s side in
the White House close to
midnight as the president
said: “I want to thank the
work that was done by
my
to yield to Republican
pressure when an assault
weapon ban was tacked on
to it.
He has already started
pushing for the president’s
other top legislative priority
– comprehensive immigra-
tion reform.
“In one sense, we have a
long way to go, bringing 11
million Hispanics out of the
shadows and into the light
of day,” Mr Biden told Con-
gressional Hispanic Caucus
Institute this week. “What’s
different today is that the
rest of the nation, the rest
of America, recognises it’s
time. It’s your time.”
The role that Mr Biden
will play over the next year
will be a chance for him to
overcome perceptions that
he is not just easy-going,
but is an “amiable buffoon”.
Countering such percep-
tions will be important
because Mr Biden has not
ruled out making another
run for the presidency in
2016.
Although he will be 74 by
then, he is in good shape
and works out in the House
gym regularly.
His performances of the
past week stand in stark
contrast to photos of the
other top candidate for the
Democratic nomination in
2016 – Hillary Clinton.
A tired-looking Mrs Clin-
ton left a New York hospi-
tal this week after undergo-
ing treatment for a blood-
clot in her head. (Mr Biden
suffered two brain aneu-
rysms in the late 1980s.)
But Mrs Clinton still has
plenty of time to rebound.
“If Hillary recharges her
batteries and does some
remarkable things around
the world for women, as
expected,” said Mr Orn-
stein, “she will be very hard
to beat.”
US politics
Obama’s deputy
still has the energy
at 70 to make a
run for presidency
in 2016, writes
Anna Fifield
extraordinary
vice-
president, Joe Biden.”
During their first term,
Mr Biden’s main areas of
responsibility in the White
House were Iraq and the
Recovery Act, both of
which have now come to an
end.
In their second term, Mr
Biden can be expected to
take on a leading – if some-
what behind the scenes –
role pushing the president’s
ambitious
When Joseph Biden was
taking new senators
through a practice run of
their swearing-in ceremony
this week, doubtless one of
the most adrenalin-inducing
experiences of their lives,
the vice-president could not
help but crack a string of
jokes.
“This guy looks like he
still plays for South Caro-
lina,” Mr Biden, who served
36 years in the Senate, said
of Tim Scott, 47, the newly
appointed Republican sena-
tor for South Carolina, as
he met the former football
player and his family in the
hallowed chamber this
week. “Need any help on
legislative
agenda.
First up is gun control,
one of the most politically
sensitive issues around. Mr
Obama has appointed his
vice-president head of a
task force to look for ways
to avoid recurrences of last
month’s Sandy Hook school
killings.
Mr Biden, after six years
of work, shepherded a gun
control bill through the
Senate in 1994, and refused
‘The vice­president
and I have worked
together before,
and can again’
Mitch McConnell
Republican Senate leader
second
PODCAST
The fiscal cliff agreement:
lasting solution or just a
respite?
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term.
“Biden is becoming a very
important player not just
because he knows the Sen-
ate and senators trust him,
but because Obama has a
very
www.ft.com/sandy
strong
relationship
Deadly outbreaks prompt
overhaul of food safety
Japan sends envoy to ease
South Korea tensions
Tribesmen claim drone
attacks are killing civilians
more than 400 illnesses and
as many as seven deaths,
according to the Centers for
Disease Control. The actual
number of those taken ill is
likely to be much higher.
The FDA’s proposed rules
would require farmers to
take new precautions
against contamination, to
include making sure work-
ers’ hands are washed, irri-
gation water is clean and
that animals stay out of
fields. Food manufacturers
will have to submit food
safety plans to the govern-
ment to show they are keep-
ing their operations clean.
Many food companies and
farmers are already follow-
ing the steps that the FDA
would now require of them.
But officials say the
requirements could have
saved lives in some of the
outbreaks that have hit the
US. In a 2011 outbreak of
listeria in cantaloupe that
killed 33, for example, FDA
inspectors found pools of
dirty water on the floor at
the Colorado farm where
the cantaloupes were grown.
AP, Washington
convey the message that
“South Korea is Japan’s
most important neighbour,
with which we share values
such as democracy and
market capitalism”, accord-
ing to Japanese media.
“Since both countries
have new governments, I
would like us to make a
good start to our relation-
ship”, Mr Abe said.
Relations between two of
Asia’s largest economies
became strained last sum-
mer after Lee Myung-bak,
South Korean president,
visited the disputed islands,
known as Dokdo in South
Korea and Takeshima in
Japan, an incident that led
Japan’s then Democratic
government to recall its
ambassador to Seoul.
Japan, South Korea and
North Korea claim sover-
eignty over the islands,
which are controlled by
South Korea.
Mr Lee’s visit also put
strains on the two coun-
tries’ increasing military
co-operation and financial
ties.
Michiyo Nakamoto, Tokyo
tribesmen usually do, but
no violence was reported.
Separately, an army
officer was kidnapped by
suspected drug traffickers
in the eastern region of
Hadramout, a local security
official told Reuters, declin-
ing to be identified.
The kidnapping, which
happened near the Saudi
border, was thought to be
revenge for an army opera-
tion against the drug trade
three days ago that forced a
group of traffickers to flee,
the source said.
Yemeni officials will not
say who carries out drone
attacks and on whose
orders. President Abd-
Rabbu Mansour Hadi spoke
in favour of them on a trip
to the US in September.
Praised by the US ambassa-
dor in Sana'a as being more
effective against al-Qaeda
than his predecessor, Mr
Hadi was quoted as saying
he approved every attack.
Al-Qaeda in the Arabian
Peninsula is seen in the
west as the most dangerous
wing of the global network.
Reuters, Sana'a/Aden
FDA proposal
Disputed islands
Yemeni protest
The US Food and Drug
Administration has pro-
posed the most sweeping
food safety rules in decades,
requiring farmers and food
companies to be more vigi-
lant in the wake of deadly
outbreaks in peanuts, can-
taloupe and leafy greens.
The long-overdue regula-
tions, announced yesterday,
are aimed at reducing the
estimated 3,000 deaths a
year from foodborne illness.
Since last summer out-
breaks of listeria in cheese
and salmonella in peanut
butter, mangoes and canta-
loupe have been linked to
Shinzo Abe, Japan’s prime
minister, has sent a special
envoy to South Korea in an
effort to improve bilateral
ties that had become
strained over disputed
islands in the Sea of Japan.
Fukushiro Nukaga, a law-
maker in the ruling Liberal
Democratic party and secre-
tary-general of the Japan-
South Korea lawmakers’
league, met Park Geun Hye,
incoming South Korean
president, in Seoul yester-
day and handed her a letter
from the Japanese premier.
Mr Abe told Mr Nukaga, a
former finance minister, to
Dozens of tribesmen took to
the streets in southern
Yemen yesterday to protest
against drone strikes they
say have killed civilians
and increased anger against
the US.
A drone killed at least
three suspected al-Qaeda
militants, including a local
commander, in the town of
Redaa on Thursday, the
fifth strike by a pilotless
plane in the area in 10 days.
One tribesman at a sit-in
in front of the government
administration building in
Redaa told Reuters by tele-
phone that at least seven
innocent civilians had been
killed in recent raids.
“If the authorities don’t
stop the American attacks
then we will occupy the
government institutions in
the town,” he said.
Another said: “The gov-
ernment has opened up the
country to the Americans
so that they can kill Mus-
lims.” The protesters were
carrying rifles, as Yemeni
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3,000
Estimated number of deaths
a year from food illness
33
The number who died from
a listeria outbreak in 2011
Shinzo Abe: wants to make
‘a good start’ with Seoul
 FINANCIAL TIMES
JANUARY 5/JANUARY 6 2013
★
3
WORLD NEWS
Bardot stars in Depardieu drama
UK data
raise
fears of
triple­dip
recession
have tuberculosis. A long-
time campaigner for animal
rights – and sometime sup-
porter of the far-right
National Front party – Ms
Bardot announced in a com-
muniqué that if the beasts
were not saved, “I have
taken the decision to
request Russian nationality
to flee a country that has
become nothing but an ani-
mal graveyard”.
There was no immediate
word from Moscow on
whether President Vladimir
Putin would accord her the
same welcome that he
extended to Mr Depardieu
on Thursday. Then, he
issued a decree bestowing
citizenship on the actor
who has become the symbol
of opposition to Mr Hol-
lande’s tax policy.
Never mind that France’s
constitutional council last
weekend threw out the
president’s plan to impose a
75 per cent marginal rate on
incomes above €1m a year:
Mr Depardieu, in whose
ample shadow a good
number of financiers, entre-
preneurs and other wealthy
French citizens have also
fled the country, defiantly
accepted Mr Putin’s offer.
The question now is
whether Mr Putin has
helped Mr Depardieu, a
prominent supporter of the
former president, Nicolas
Sarkozy, deal a blow to Mr
Hollande or whether he has
inadvertently eased the
French leader out of the
hole in which he has found
himself over his big
increases in income, wealth
and capital gains taxes.
The Depardieu affair
developed into an embar-
rassing wrangle with a
monument français
when
the prime minister, Jean-
Marc Ayrault, labelled the
actor’s initial intention to
take up residence in Bel-
gium as
assez minable,
or
pretty pathetic.
It entered a different
dimension when Mr Depar-
dieu, who has long had
close ties to Russia and its
Caucasian allies, declared
to Russian journalists: “I
love your president Vlad-
imir Putin and that’s recip-
rocated. I told [Hollande]
that Russia was a great
democracy where the prime
minister did not treat citi-
zens as pathetic . . . Glory to
Russia!”
In the Twittersphere yes-
terday, condemnation of Mr
Depardieu – and Ms Bardot
– flowed freely. “Thanks
Putin for recycling our rub-
bish”, ran one tweet. Jean-
Claude Mailly, head of the
FO trade union, said on tel-
evision, “I prefer Pussy Riot
to Gérard Depardieu in the
current circumstances”, in
a reference to the Russian
punk bank whose members
were jailed for offending
Orthodox Church.
Dominique Moïsi, senior
adviser at the French Insti-
tute for International Rela-
tions, said: “Putin has
helped Hollande indirectly.
As long as Depardieu was
going to Belgium a majority
of French people were sup-
portive. But the move to
Russia doesn’t play well for
him. When he is seen prais-
ing the vitality of Russian
democracy, it seems there
is something wrong with
the man.”
But that is not how it is
seen by Jacques Séguéla,
vice-president of the Havas
advertising group and
friend of Mr Sarkozy. What
he regards as Mr Hollande’s
ill-considered campaign
pledge to impose the 75 per
cent tax has built up into a
“tsunami” of bad publicity
culminating in the confron-
tation with the popular Mr
Depardieu, he said.
“It is serious. It is a scar
that can put in danger his
whole
from the tax issue. Mr
Putin’s intervention came
on the day his government
was trying to relaunch its
policies, overshadowing its
insistence that it was com-
mitted to reforming the
flagging economy.
Less noticed than the
Depardieu case, but poten-
tially just as significant,
was the emergence this
week of the fact that Jean-
Michel Jarre, the musician,
had been in talks with the
office of David Cameron,
the British prime minister,
over a potential business
investment in London.
Mr Cameron pointedly
remarked months ago that
he would “roll out the red
carpet” to French busi-
nesses seeking refuge from
the Hollande tax regime.
Meanwhile, it remains to
be seen whether Mr Depar-
dieu really will depart for
Russia.
French furore
The animal rights
activist threatens
to join exodus to
Russia in protest at
Lyon zoo’s policy,
says
Hugh Carnegy
By Claire Jones and
Sarah O’Connor in London
A French furore over the
apparent departure into tax
exile in Russia by flamboy-
ant film actor Gérard Dep-
ardieu lurched into French
farce yesterday when Bri-
gitte Bardot, silver-screen
sex symbol of the 1960s,
threatened to follow him
into the bear’s embrace.
Ms Bardot’s concern was
not President François Hol-
lande’s eye-watering tax
regime but her anger at the
fate of Baby and Nepal, two
elephants in Lyon zoo set to
be put down because they
Activity in the UK’s domi-
nant services sector shrank
at the fastest pace for more
than three-and-a-half years
in December, according to
an influential poll.
The findings added to
fears that UK output con-
tracted in the final quarter
of 2012 and raised the pros-
pect of a “triple-dip” reces-
sion if the economy’s poor
performance continued.
The purchasing manag-
ers’ index for the services
sector, compiled by Markit
and the Chartered Institute
of Purchasing and Supply,
registered a worse than
expected figure of 48.9 in
December, the lowest since
April 2009.
It is the first time since
December 2010 – when the
UK experienced a bout of
severely cold weather – that
the PMI for the sector has
fallen below 50, the level
that signals a decline in
activity.
Philip Shaw, of Investec,
an asset manager, said:
“Today’s news has re-
opened the question of a
contraction in the UK econ-
omy during the final quar-
ter of 2012, and whether
there is a serious risk of a
‘triple dip’. We place a cer-
tain degree of faith in this
index and are unwilling to
dismiss it until we see any
official evidence to the con-
trary.”
The Office for National
Statistics releases its first
estimate of output for the
final quarter of 2012 on Jan-
uary 25.
The poor figure for serv-
ices PMI follows Thursday’s
worse than forecast con-
presidency,”
Mr
Séguéla said.
Mr Hollande could cer-
tainly do with some relief
Brigitte Bardot: angry at the
fate of to two ill elephants
Merkel and
Steinbrück
kick off poll
campaign
(FDP). Stephan Weil, former
lord mayor of Hanover and
SPD candidate for the job of
state premier, said yester-
day that the “red-green”
combination would win. “A
majority in Lower Saxony
wants a red-green major-
ity,” he declared at a press
conference in Berlin.
Local issues, above all
education, would decide the
outcome, he said. But a vic-
tory would also show that
“red-green” was a realistic
national choice and give the
two parties a clear majority
in the Bundesrat, the states’
assembly in Berlin, with
blocking power over gov-
ernment initiatives in the
coming months.
The latest opinion poll in
Lower Saxony puts the
CDU on 40 per cent, the
SPD on 34, and the Greens
on 13, with the FDP below
the 5 per cent minimum
needed to win any seats.
Mr Steinbrück, the sharp-
tongued former finance
minister who served under
Ms Merkel when she headed
a “grand coalition” of CDU
and SPD from 2005-09, needs
a “red-green” victory in
Hanover to revive his own
fortunes for the general
election. He is trailing far
behind the popular chancel-
lor in national opinion polls
after a series of gaffes,
including his recent call to
increase the €250,000 pay
package for Germany’s top
political post when most
public pay has been frozen.
Ms Merkel needs a vic-
tory, too. She is attending
eight big rallies to support
David McAllister, the popu-
lar, half-Scottish CDU state
premier in Hanover, who is
a rising star in her party.
He plays on his Scottish
heritage – from his father
who was a British soldier
stationed in Germany – to
Lower Saxony
Rivals take to the
hustings for a state
vote that is seen as
a dry run for the
general election,
says
Quentin Peel
Nine months of campaign-
ing in Germany kicked off
yesterday as Angela Merkel,
German chancellor, and
Peer Steinbrück, her princi-
pal challenger, took to the
hustings to drum up sup-
port for their party candi-
dates in a state poll that is
seen as a dry run for the
general election next Sep-
tember.
Speaking at rival rallies
on the windswept German
North Sea coast – Ms Mer-
kel in the naval port of Wil-
helmshaven, Mr Steinbrück
50 miles away in Emden –
they sought to galvanise
their supporters to vote in
the first of three polls – two
for new state governments
in Bavaria and Lower Sax-
ony and one for the
national government in Ber-
lin.
Bavaria’s poll is in Sep-
tember, one week before the
national vote. But with just
16 days to go before election
day in Lower Saxony, Ger-
many’s second-largest and
fourth-most-populous state,
political analysts said the
outcome was still too close
to call.
Mr Steinbrück’s centre-
left Social Democratic party
(SPD) is looking for a clear
victory with its Green party
allies in Hanover, the state
capital, over the centre-
right alliance of Ms Mer-
kel’s Christian Democratic
Union (CDU) and the liberal
Free
‘This reopens
the question of a
contraction during
the final quarter
of 2012’
struction PMI for Decem-
ber. But the reading for
manufacturing, released on
Wednesday, beat expecta-
tions.
The December PMI for
the entire UK economy reg-
istered 49.9, signalling a
slight contraction in activ-
ity.
Services, which account
for more than three-quar-
ters of the UK economy, are
showing signs of poor per-
formance in the months
ahead. The PMI reading for
new business orders has
fallen to its lowest level for
two years. If economic out-
put contracted in both the
fourth quarter of 2012 and
the first quarter of this
year, then the UK would
enter a triple-dip recession.
In the eurozone, services
activity continued to shrink
in December albeit at a
slower pace than in previ-
ous months, according to
the final estimate of PMI for
the region. The PMI reading
for the bloc registered 47.8,
in line with the flash esti-
mate and analysts’ expecta-
tions.
A survey of US managers
working in the construction
and services sectors indi-
cated activity in the world’s
largest economy expanded
at the fastest pace in 10
months in December. The
non-manufacturing ISM,
compiled by the Institute of
Supply Management, regis-
tered 56.1 in December –
beating economists’ fore-
casts.
Paul Ashworth, of Capital
Economics, said: “The
pick-up [from 54.7 in
November] suggests, like
the earlier payroll report,
that the looming fiscal cliff
had only a limited impact
on activity in the tail-end of
last year.”
Separately, official data
from the Bank of England
yesterday showed little sign
of a recovery in UK lending
in November, despite an
upbeat survey of lenders
published on Thursday.
The signals from the data
were mixed. The number of
mortgage approvals for
house purchases rose to the
highest level since last Jan-
uary, while net lending to
consumers
Angela Merkel joins children during a reception for carol singers from all over Germany at the chancellery in Berlin
AP
underline his commitment
to a balanced budget. What
Ms Merkel cannot do is
breathe new life into her
liberal partners in the FDP.
The party has regularly
slumped in recent state
polls to below 5 per cent,
having hit a high point of
almost 15 per cent at the
last general election in 2009.
A new humiliation in
Hanover could deal a fatal
blow to Philipp Rösler, FDP
leader and Ms Merkel’s
vice-chancellor. Lower Sax-
ony is his home state. A
party conference in Stutt-
gart tomorrow is likely to
see his rivals manoeuvring
to replace him, less than
two years after he took over
from Guido Westerwelle,
foreign minister.
“FDP voters have to make
up their minds: do they
want to kill Philipp
Rösler?” said Andreas
Busch, politics professor at
Göttingen university. “That
could be harmful to the
FDP as a whole.”
Liberal support in Lower
Saxony stands at 4 per cent
in the latest infratest dimap
opinion poll, up one point
on the December figure but
still short of the magic 5 per
cent minimum. The far-left
Linke party, and the liber-
tarian Pirates, campaigners
for internet freedom, are
both on 3 per cent.
If none of the three small
parties wins 5 per cent, Mr
Weil will easily form a red-
green coalition with less
than half the votes, Prof
Busch said. But the poll-
sters’ normal margin of
error could see all three
cross that threshold on poll-
ing day, denying red-green
an outright majority, and
giving Mr McAllister a
chance to form an alterna-
tive alliance as the largest
party, with either the SPD
or Greens. The same could
well be true for Ms Merkel.
Too close to call
North Sea
Opinion polling, Lower Saxony
(%)
Emden
Hamburg
Hamburg
Ham
m rg
rg
CDU
SPD
Wilhelmshaven
Bremen
LOWER SAXONY
NETHER-
LANDS
Greens
FDP
Hanover
Linke
Pirates
GERMANY
BEL.
LUX.
Others
0 0 0 0 0
FRANCE
Source: NDR television Jan 3
100 km
Democratic
party
Dutch finance minister takes pole position in eurogroup race
and going slow on banking
union, while eschewing the
combative tone of his prede-
cessor, Jan Kees de Jager.
“People were, by and
large, quite surprised by his
performance,” said Tom de
Bruijn, former Dutch
ambassador to the EU. “The
delicate but still firm way
he deals with issues has
made an impression.”
The chairmanship of the
eurogroup has grown
increasingly important in
talks to resolve the euro-
zone crisis. Debates over
measures such as aid for
Greece make a diplomatic
chairman essential. But if
Mr Dijsselbloem does get
the role, it will be largely
due to his representing the
right country, and the right
party, at the right time.
The Netherlands, with its
triple A credit rating and
tough budget discipline, has
been a close ally of Ger-
many throughout the crisis.
But the country’s smaller
size makes Mr Dijsselbloem
less threatening to other
eurozone members than the
German finance minister,
Wolfgang Schaeuble.
“There is much to be said
for having a finance minis-
ter from a smaller country
take the job,” Mr Schaeuble
said last week in expressing
his support for Mr Dijssel-
bloem. Departing chairman
Jean-Claude Juncker, pre-
mier of Luxembourg, would
no doubt agree.
Meanwhile, as a member
of a social-democratic party,
Mr Dijsselbloem is more
acceptable to Socialist-led
France than a candidate
from a conservative party
would be. The confronta-
tional Mr de Jager, a Chris-
tian Democrat in a right-
wing government, would
probably not have been con-
sidered for the job.
The new Dutch govern-
ment is a coalition between
centre-left Labour and cen-
tre-right Liberals. But any
expectation that a social
democrat such as Mr Dijs-
selbloem might go soft on
austerity would be mis-
guided. He has cast himself
in a Dutch tradition of fru-
gal Labour governance that
goes back to Willem Drees,
a
chimes with assessments of
Mr Dijsselbloem in parlia-
ment, where he was seen by
allies and opponents as
content-oriented and non-
ideological. In the increas-
ingly polarised atmosphere
of Dutch politics, Mr Dijs-
selbloem commands respect
from all sides.
“He’s just a very proper
man, really,” said Eddy van
Hijum, financial spokesman
for the opposition Christian
Democrats. “He doesn’t
polarise people or seek out
conflict.”
When Mr Dijsselbloem
has been controversial, it
has often been at his own
party’s expense. His most
visible moment in parlia-
ment came as leader of a
blistering 2008 commission
report on government edu-
cation policy over the previ-
ous two decades, during
much of which Labour was
in power. He is also known
as a stern moralist. While
fronting Labour’s social pol-
icy portfolio in the mid-
2000s,
attacked the media for glo-
rifying a “ghetto culture” of
drugs and violence.
In the Netherlands, some
have questioned whether
Mr Dijsselbloem has the
right background to repre-
sent the country in macr-
oeconomic issues. He
trained as an agricultural
economist and worked at
the government department
for spatial planning before
entering politics.
But in an interview in the
Volkskrant daily, Mr Dijs-
selbloem waved such con-
cerns away. “As a minister,
you shouldn’t imagine you
know better than the tech-
nical experts in your minis-
try,” he said. “You’re there
to apply the political stamp
of approval.”
Indeed, Dutch economists
say the Netherlands’ euro-
zone policies are largely set
by the permanent staff of
the Ministry of Finance.
While Mr Dijsselbloem’s
tone is a change from that
of Mr de Jager, the policy
remains aligned with Ger-
many on most issues. Mr
Dijsselbloem has not yet
confirmed that he would
take the eurogroup chair-
manship if it is offered.
Mr van Hijum and others
have said they are con-
cerned that the Nether-
lands’ precarious fiscal situ-
ation
Juncker successor
Dijsselbloem is in
the right place at
the right time to
become the next
chairman, writes
Matt Steinglass
penny-pinching
prime
minister in the 1950s.
Mark Rutte, the Liberal
prime minister, has praised
Mr Dijsselbloem as a cen-
trist who recognises that
there is “nothing leftist
about budget deficits”. That
required
his
full
attention.
But José Manuel Barosso,
chairman of the European
Commission, said in an
interview in late December
that the Netherlands would
soon get “a very important
top European position”,
suggesting that Mr Dijssel-
bloem is likely to get the
nod.
“The only reason why [Mr
Dijsselbloem] may have
doubts is that he already
has a demanding job and a
family,” said Wouter Bos, a
former Labour leader who
acted as a mediator during
the coalition negotiations
this autumn.
Just four months ago,
Jeroen Dijsselbloem was an
international unknown, a
Dutch Labour party MP
who had never held a cabi-
net post.
One election and an EU
summit later, Mr Dijssel-
bloem is the Netherlands’
finance minister and the
leading candidate to be next
chairman of the eurogroup,
the guiding body of the
European monetary union.
Mr Dijsselbloem owes this
position partly to his politi-
cal skills. At a meeting of
European finance ministers
in December, he defended
the Netherlands’ positions
on cutting the EU budget
increased
by
about £100m.
But net mortgage lending
contracted after two months
of growth. The annual rate
at which business lending
was contracting also steep-
ened to 4.1 per cent.
Jeroen Dijsselbloem:
respected by all sides
Videos and reports,
www.ft.com/bankunion
Mr
Dijsselbloem
 4
★
FINANCIAL TIMES
JANUARY 5/JANUARY 6 2013
WORLD NEWS
Pound’sfall
putsEgypt
prospects
on hold
US expansion puts more critical eyes on Al Jazeera
progress of the Arab upris-
ing itself, the 16-year-old
Doha-based broadcaster’s
Cairo triumph has since
given way to a more compli-
cated life as it seeks to
extend its international
influence by buying into
the US television market.
While Al Jazeera is cele-
brating its purchase this
week of former US vice-
president Al Gore’s Current
TV network, it faces tough
questions about its cover-
age – and whether it is as
independent of Qatar’s
autocratic ruling monarchy
as it claims to be. The
broadcaster is partly funded
by the Qatar government,
whose prominent political
role in the regional turmoil
has intensified scrutiny of
its coverage.
“With the Arab spring, Al
Jazeera’s reach and credi-
bility have grown in the
west,” said Jane Kinnin-
mont, a senior research fel-
low in the Middle East divi-
sion of Chatham House, the
London-based think-tank.
“But certainly, it has
become more criticised in
the Arab world – or, at
least, become seen as more
politicised.”
Long recognised in the
Middle East for its daring
reporting in a repressive
region, Al Jazeera has
described its US acquisition
as a “historic development”
in a market where it has
long coveted expansion.
The station, which has a
respected English language
arm and is already seen in
more than 260m homes in
130 countries, plans to start
a US-based news channel
available to 40m American
households.
But while the popular
revolts have presented Al
Jazeera with an extraordi-
nary opportunity to expand
its audience, they have
thrown up growing prob-
lems of perception.
While the English chan-
nel is seen as enjoying a
high degree of leeway, some
analysts say Doha’s foreign
policy positions – including
support for armed rebels in
Libya and Syria – are
reflected in the tone of cov-
erage, particularly on the
flagship Arabic channel.
Critics say Islamist move-
ments with which Qatar
has tried to achieve good
relations have received
over-sympathetic attention,
with airtime given to wild
allegations that opponents
of Mohamed Morsi, Egypt’s
Muslim Brotherhood presi-
dent, are foreign agents.
Some observers say Al
Jazeera is cautious about
reporting sensitive stories
in Qatar, such as the fire at
a Doha nursery last year
that killed 19 people, includ-
ing 13 children, although
the channel denies it was
slow to cover the tragedy.
“Al Jazeera is generally a
free network but it works
within the political con-
straints as understood in
Qatar,” said Michael
Stephens, a researcher at
the Royal United Services
Institute Qatar think-tank.
Al Jazeera dismisses sug-
gestions its coverage shows
any bias. The broadcaster
says that, far from follow-
ing official agendas, it often
sets them. “We were cover-
ing Syria, for example, long
before outside governments
took great interest,” it said.
It says that while it takes
a “good portion” of its fund-
ing from the Qatari state, it
is a private not-for-profit
company with other sources
of income, such as advertis-
ing. While Sheikh Ahmed
bin Jassim al Thani, Al
Jazeera’s director-general,
is a member of Qatar’s rul-
ing clan, the broadcaster
says he has “no definable
relationship” to the coun-
try’s emir and is part of a
“professional management
who have steered Al
Jazeera to success regard-
less of their nationalities or
surnames”.
Perhaps the most unpre-
dictable tension now facing
Al Jazeera springs from
Qatar’s political scene,
which appears increasingly
at odds with the broad-
caster’s preferred image as
a fearless network “dedi-
cated to telling the real sto-
ries from the Arab street”.
The Qatari authorities sen-
tenced a poet to life impris-
onment in November for
insulting the emir in a
widely
TV station
The Qatar network
has won plaudits
but some observers
question its
impartiality, writes
Michael Peel
Qatar’s Al Jazeera televi-
sion station provided a
great ringside seat for the
“day of rage” in Cairo
almost two years ago that
offered the first clear sign
of the threat to the rule of
Hosni Mubarak, Egyptian
president.
While many western
media organisations were
scrambling to ramp up their
coverage of Egypt’s nascent
revolution, Al Jazeera had
gripping reports of an
extraordinary protest that
ended with the ruling party
headquarters ablaze and the
army on the streets.
Yet,
have increased prices for
green beans by 33 per cent,
tomatoes by 50 per cent and
courgettes and bananas by
100 per cent. Imported cof-
fee prices have risen more
than 20 per cent. The price
of bread, an Egyptian sta-
ple, has gone up 20 per cent
in poor districts and by
more in well-to-do areas.
“The risk is even greater
for extra protests, extra
frustrations,” said Ahmed
Shabany, chief executive of
the online pharmacy Agza-
khana, which has increased
its prices by at least 10 per
cent. “People who can’t
afford to get their father
and mother medication are
going to be extra angry.”
Some Egyptians blame
President Mohamed Morsi,
after he and his opponents
became distracted by a tus-
sling over the new constitu-
tion. “The government is
definitely to blame because
they have not acted fast,
they have been incompe-
tent, and are focusing on
less important issues,” said
Mostafa Mahmoud, a baker
from the poor Cairo district
of Imbaba.
Most observers say the
price increases are not big
enough to trigger street pro-
tests. “It is still too early to
blame anyone because it is
too soon to tell what will
happen,” said Hassan
Mohammed, a manager at a
central Cairo supermarket.
State-mandated prices for
certain goods may stave off
social unrest. Prices for
domestically produced med-
icines are tightly regulated,
hurting manufacturers who
rely on expensive imports.
“The pharmaceutical
companies don’t have the
liberty to raise prices,” said
Makram Mehany, chairman
of the Egyptian Pharmaceu-
ticals Association and chief
executive of Global Napi, an
Egyptian drug manufac-
turer. “If you look at the
Egyptian pharmaceutical
market we have about 22
per cent of the portfolios
making a loss.”
The weakening currency
discourages action. “Most of
the importers are waiting to
see what is going on with
the pound,” said Sharif
Gamrah, the owner of
United Egypt, which
imports water pump motors
from Europe and Asia. “The
situation in Egypt is not
stable, so most of the trad-
ers will stop dealing until
the market is stable.”
Eventually, Egypt may be
able to weather the pound’s
fall, which could help
exports and stimulate
domestic production, ana-
lysts say. “You need this
adjustment to retain com-
petitiveness,” said Neil
Shearing, chief emerging
markets economist at Capi-
tal Economics.
“In the long run, it’s diffi-
cult to see how the post-
revolutionary economy can
grow without devaluation.”
Additional reporting by
Leyla Doss
Economic strains
Importers strive to
absorb higher costs
as consumers bridle
at rising food prices
in the market, says
Borzou Daragahi
‘With the Arab
spring, Al Jazeera’s
reach and
credibility have
grown in the west’
circulated
work
about the Arab spring.
But Al Jazeera says: “Our
journalists have never been
told to cover or not cover a
story due to pressure from
outside this organisation.”
Additional reporting by
Abeer Allam in Cairo
A plunge in the value of the
Egyptian pound has forced
businesses such as al-Dahe-
bya, a distributor of house-
hold products, to spend
more on what it imports
from abroad. But because
cash-strapped Egyptian con-
sumers cannot pay more,
its prices have not risen to
match its expenses.
“We’re paying from 6 to 7
per cent more but the new
prices are not increasing as
much, because if we raise
our prices dramatically it
will be a problem,” said
Yosra Sorour at al-Dahebya.
“What
mirroring
the
Fatah rally in
Gaza signals
Hamas thaw
suffers
is
our
By John Reed in Jerusalem
profits.”
The fall of the pound to
record lows against the dol-
lar in recent days has
imposed a new round of
hardship on consumers and
businesses still struggling
to emerge from the eco-
nomic devastation of the
2011 revolution.
Shops and businesses
report rises in the prices of
everything from fruit and
Fatah allowed Hamas to
hold rallies last month in
the West Bank cities of
Ramallah,
Palestinian president Mah-
moud Abbas’s Fatah group
staged a mass rally in the
Gaza Strip yesterday, the
largest such gathering since
its rival Hamas took over
the territory in 2007.
The rally marked a fur-
ther sign of a thaw in rela-
tions between the estranged
Palestinian factions and
was organised under a rec-
iprocal agreement that saw
Hamas stage demonstra-
tions last month in the
West Bank, which is ruled
by Fatah.
News agencies reported
that Palestinians living out-
side the capital began gath-
ering in a central Gaza City
square overnight, bearing
yellow Fatah flags. Esti-
mates of the size of the
crowd ranged from tens to
hundreds of thousands.
Top Fatah officials came
from the West Bank to
attend the event, at which
Mr Abbas predicted that the
group’s five-year-old split
with Hamas would end.
“Soon we will regain our
unity,” the Palestinian pres-
ident told the crowd in a
televised speech.
“People are optimistic that
there will be a reconcilia-
tion,” Muhammed Shtayyeh,
a senior adviser to Mr
Abbas and a member of
Fatah’s central committee,
told the Financial Times.
“It shows that people in
Gaza, the moment they are
free to express themselves,
are loyal to Abu Mazen and
Fatah,” he added, referring
to Mr Abbas by his honor-
ific name.
The two largest Palestin-
ian political groups have
drawn closer since last
November’s war in Gaza,
which ended in a ceasefire
brokered by President
Mohamed Morsi of Egypt.
Nablus
and
Hebron.
Mr Abbas will visit Cairo
on January 9 as a prelude
to a meeting officials hope
to hold later this month
aimed at uniting the occu-
pied territories’ fractious
political groups.
“We are closer to unity,”
said Mustafa Barghouti,
leader of the Palestinian
National Initiative, a smaller
party. “The ground is get-
ting more mature for recon-
ciliation and bringing back
democracy.”
However, predictions of a
lasting truce between the
factions, whose historical
differences run deep, have
proved premature. In 2011
they signed an Egyptian-
brokered unity agreement
aimed at paving the way to
jointly held elections but
failed to implement it.
Israel, which withdrew
from Gaza in 2005 and does
not recognise Hamas, wor-
ries that it could take over
the West Bank as well.
President Benjamin Netan-
yahu warned on Thursday
that the group could seize
control of the West Bank
“any day”.
Analysts said the gather-
ing attested to the popular-
ity of Fatah in Gaza, whose
1.7m residents have been
squeezed by an Israeli eco-
nomic blockade and
Hamas’s strict Islamist rule.
“Having a big crowd take
part in such a rally is an
indicator of the popularity
of Fatah in Gaza, which
doesn’t necessarily say any-
thing about the position of
President Abbas himself,”
said Ghassan Khatib, a lec-
turer at Birzeit University.
“It has to do with the grow-
ing . . . criticism of Hamas
government in Gaza.”
E£6.42
Price of the US dollar at
Egypt’s money changers
vegetables to vitamin pills
and from iPads to high-end
industrial goods, stirring
fears of public anger and
more political instability.
Long pegged to about six
to the dollar, the pound fell
sharply this week to about
6.42, with some currency
exchangers selling the dol-
lar for as much as E£6.60.
The drop, precipitated by
the Central Bank’s decision
to auction dollar reserves to
meet
budget
gaps,
has
spread economic gloom.
“Because prices have
become so high, sometimes
I just look around and do
not even buy anything,”
said Bassam Mohamed el-
Nagar, a driver. “I think to
myself that I might alter-
nate my buying schedule
and buy next week.”
Experts predict the cur-
rency will weaken further,
even if the fragmented new
political elite manages to
cut a long-awaited deal with
the International Monetary
Fund that injects fresh for-
eign currency into Egypt’s
reserves and paves the way
for other aid agencies. Capi-
tal Economics, a London
research group, suggests
the pound could fall to 7.5
to the dollar by year’s end.
The currency plunge –
and resultant high prices –
could also prompt a politi-
cal backlash. At a central
Cairo food market, traders
Palestinians aim for the highest vantage point at a rally in Gaza to mark Fatah’s 48th anniversary yesterday
Epa
Political prisoner turns to art in quest for change in ‘jail’ Iran
Plunging pound...
...and rising yields
Egyptian pound against the dollar
(E£ per $)
Egyptian government bonds, 2020
maturity yield (%)
she says art can help bring
about social change in the
“bigger
past the iron bars of a
prison cell window, to give
an olive branch to a dove.
In another, an unarmed per-
son presses a finger into the
mouth of a gun.
“I started my paintings
with a dream of freedom
and breathing in an atmos-
phere in which there is no
fighting because both sides
[the regime and the opposi-
tion] have been losers,” she
says.
Clad in a top-to-toe black
chador, strict Islamic dress,
from under which show her
turquoise scarf and crisp
white shirt, Ms Shahidi
says she has almost recov-
ered from post-traumatic
stress disorder caused by
the four months spent in
solitary confinement and,
she says, torture.
Her interrogators wanted
Ms Shahidi to say she had
affairs with politicians
Mehdi Karroubi and
Mohammad Khatami, the
former reformist president –
scandalous and dangerous
claims in a country as con-
servative as Iran.
Little is done to help
political prisoners, she said.
Threats of execution, deten-
tion or exclusion from uni-
versity education have
deterred many from voicing
their concern.
Economic hardships, with
inflation reaching 26 per
cent as international sanc-
tions over Iran’s nuclear
programme take hold, have
also overshadowed the
plight of the prisoners.
Hunger strikes and the sus-
picious death of Sattar
Beheshti – a 35-year-old
blogger who died in jail
amid opposition allegations
that he was tortured to
death – have hardly stirred
ordinary Iranians.
Lasting political change
could only be brought about
through a cultural shift,
such as greater awareness
of individual rights, Ms
Shahidi said.
“Iranian people are not
familiar with their legal
and social rights, which
makes them retreat under
pressure and leave intellec-
tuals alone to [face the]
high costs [of protests],”
she said.
Of more immediate con-
cern to Ms Shahidi, a
divorced mother of a 17-
year-old girl, is her health.
Brutal beatings have left
her in need of surgery. If
she does not receive treat-
ment abroad, the artist
fears she may end up in a
wheelchair but she is for-
bidden from leaving Iran.
Each month, Ms Shahidi
must attend court to have
her medical leave con-
firmed. If the judiciary
refuses to renew it, she may
have to rejoin about 30
political prisoners in Evin’s
ward for women. Condi-
tions are basic, there are 20
bunk beds, one kitchen,
three toilets and a shower.
But she will have high-
profile company. The pris-
oners include Nasrin Sotou-
deh, a prominent lawyer for
women’s rights, Faezeh
Hashemi, a daughter of
former conservative presi-
dent Akbar Hashemi Raf-
sanjani and members of
Mujahedin-e-Khalq, or
MEK, an exiled opposition
group.
Still, Ms Shahidi wants to
fight for a democratic Iran.
“If the regime one day
decides to let reformists
come back to the political
scene – which I doubt
would happen in the com-
ing years – I will be active
again even if I am impris-
oned again.”
5.8
Human rights
Paintings aim to
highlight the plight
of inmates jailed
for public protests,
reports
Najmeh
Bozorgmehr
6.0
jail
than
Evin,
6.1
which is Iran”.
Ms Shahidi, 37, was one of
hundreds imprisoned for
fomenting unrest during
protests after the disputed
2009 presidential election.
More than 100 people were
killed in the biggest pro-
tests yet against the Islamic
regime.
Activists fear that this
year’s June election to
choose Mahmoud Ahmadi-
Nejad’s successor as presi-
dent may also be violent.
Ms Shahidi was sentenced
to six years in jail for back-
ing the opposition Green
movement, which said the
2009 election was rigged.
Two years later, she was
released on health grounds
because of an injury to her
spinal cord – allegedly
caused during detention.
Tehran denies that
torture takes place in its
prisons.
An exhibition of her work
opened yesterday in Shok-
ouh gallery in northeast
Tehran. Her paintings
reflect her desire for peace
and freedom. One shows a
prisoner’s hand stretching
5.6
6.2
5.4
6.3
5.2
6.4
After two years in prison
for protesting against
rigged elections, Hengameh
Shahidi, an Iranian journal-
ist and human rights activ-
ist, picked up a paintbrush
for the first time.
Freed from Evin prison –
where she was held in soli-
tary confinement and alleg-
edly tortured – art offered
her a release.
“I still do not understand
how a violent atmosphere
has woken up a delicate
part of me,” she says.
Now Ms Shahidi hopes
her paintings will help raise
awareness about the plight
of about 200 political prison-
ers still in Iranian jails,
many forgotten or ignored
by a population afraid to
speak out.
Weary of political protest
that seems to achieve little,
6.5
5.0
Jun
2012
Jan
2013
Dec
2012
Jan
2013
Source: Thomson Reuters Datastream
Hengameh Shahidi and Mohammad Khatami at her exhibition
 FINANCIAL TIMES
JANUARY 5/JANUARY 6 2013
★
5
ANALYSIS
A flicker of hope
India
I
n November 2010, two female
Protests against
last month’s fatal
sex attack have
forced Delhi to
respond to growing
anger at a culture
of male violence –
though some fear
moves to increase
not freedom but
surveillance.
By Amy Kazmin
employees of Convergys, one of
India’s largest back-office process
companies, were dropped off by a
cab near their home in New Delhi
after a night shift. As the car sped off,
three men, one carrying a pistol,
jumped from a truck and forced one
woman inside. They drove the 30-year-
old to an isolated area, where they
took turns raping her. Afterwards,
they tossed her Rs150 ($2.8) – for a
ride home – and sped away.
The attack in the heart of the capi-
tal triggered a public furore and a
manhunt, during which police said
they analysed 105 similar cases in the
region. Eventually, they arrested five
illiterate men from a village about
55km from the capital. Two had been
arrested in two previous gang rape
cases. But with the suspects caught,
interest soon faded. The charges are
still pending in a Delhi court.
Two years later, India has been
shaken by another attack in the capi-
tal: the December 16 gang-rape of a
23-year-old paramedical student
returning home with a male friend
after watching
Life of Pi
. Lured
aboard a private bus carrying a driver
and five drunken companions, the
unnamed woman was raped repeat-
edly before being thrown naked on to
the side of the road and left for dead.
After 13 days in hospital, where she
gave accounts of the attack to the
police, she died.
In a country where youths are often
deeply cynical about politics, tens of
thousands from across the economic
spectrum took to the streets of Delhi
and other Indian cities to express
their outrage, catching the govern-
ment off-guard and forcing an official
acknowledgment of violence against
women as a national challenge.
The rapes are a symptom of what
one Indian professional describes as a
“clash of centuries” now occurring in
big cities. For years, the government
has promoted girls’ education, helping
to propel more women into work, with
the greater autonomy that brings. But
many men, raised with a sense of enti-
tlement simply for being male, still
believe women should be restricted to
roles as wives and mothers.
In the country’s crowded cities, peo-
ple with these world views are now
colliding – often violently.
“A certain class of men is deeply
uncomfortable with women displaying
their independence, receiving educa-
tion and joining the workforce,” Kish-
war Desai, author of an upcoming
novel about rape, wrote in The Indian
Express newspaper this week. “The
gang rape becomes a form of subduing
women, collectively and establishing
their male superiority.”
Professor Ratna Kapur of Jindal
Global University in the northern
state of Haryana says harassment of
women is symptomatic of a failure to
adapt a conservative and deeply patri-
archal society to the changes wrought
by the economic liberalisation of the
past two decades.
“We’ve seen the production of a cul-
ture of violence,” she says. “There
was an exclusive focus on economic
development without attending to the
educational curriculum, to preparing
society for the changes that would be
brought about. The consequences for
women were never considered.”
Today, just 25 per cent of Indian
women – including 30 per cent of
those with a university education –
participate in the workforce, com-
pared with 70 per cent of Chinese
women. Men’s expectations that wives
will stay at home, and families’ con-
cern for safety, are factors. But the
bus rape victim – an airport luggage
loader’s daughter who dreamt of
working as a healthcare professional –
exemplified shifting aspirations.
Until now, India has largely
brushed violence against women
under the carpet, aided by the fact
that victims often feel shame at being
attacked. In a culture that believes
“good” women never allow them-
selves to be vulnerable to attack by
men, police and families often suc-
cessfully press survivors to refrain
from registering complaints.
As a result, such crimes are under-
reported, with just over 24,000 rapes
registered in 2011. Though that repre-
sents an 870 per cent increase since
1971, the relatively low absolute
number for a country of 1.2bn people
(compared with 83,000 reported rapes
in the US in 2011 in a population
almost one-quarter the size) has ena-
bled politicians to treat such attacks
as personal tragedies for the victims
rather a pressing social problem.
But the unprecedented protests gen-
erated by the bus attack have laid
bare the pent-up frustration of a gen-
eration of young urban women,
aggrieved not just at this incident but
by a culture of male aggression and
the state’s failure to stop it. Their
slogans and placards asserted their
right to participate in India’s 21st cen-
tury economy, and to move in public
spaces as fearlessly as men.
Children of liberalisation, they have
made clear that unlike those who
came of age during the socialist-era
“licence raj”, they expect the state to
deliver basic functions, including law
and order, with the efficiency they
have grown accustomed to from pri-
vate companies.
“This case has cracked something
in everybody, which is why we’ve had
this upsurge,” says Madhu Mehra of
Partners for Law in Development, a
Delhi-based non-government organisa-
tion that works on women’s rights.
“Everyone sees themselves as a possi-
ble target and everyone has been
there . . . Women are fed up with being
told they are equal and can aim for
the sky but managing in such a hos-
tile environment. They are asking for
reforms
edge young women’s soaring aspira-
tions – and the difficult climate in
which they seek to realise them.
Since the attack, the ruling Con-
gress party has sought to prove its
commitment to improving women’s
safety. It has established a committee
to consider laws and procedures for
prosecuting crimes against women,
and another to examine women’s
safety in cities. All Delhi police sta-
tions will now have female officers.
Plans have been announced for
urgent “gender sensitivity” training
in secondary schools.
“There can be no meaningful devel-
opment without the active participa-
tion of half the population, and this
participation cannot take place if
their security and safety are not
assured,” Prime Minister Manmohan
Singh told chief ministers last week.
In a rare televised address after the
victim’s death, Sonia Gandhi, the
reclusive Congress party leader, prom-
ised to combat “the pervasive, shame-
ful social attitudes and mindset that
allow men to rape and molest women
and girls with such impunity”.
T
here has been a surge of com-
Dark moment: prayers in Calcutta for
an unnamed 23­year­old paramedical
student who died two weeks after
being raped last month. The victim
exemplified the changing aspirations
of young Indian women
harassment spring’,” says Mariam
Kirollos, co-founder of Tahrir: A Safe
Zone For Everyone, a campaign to
end sexual aggression at political
demonstrations. “India did it – not the
US or Europe.”
But veteran women’s rights activ-
ists in India remain cautious about
how the anti-rape outburst will play
out in the long term. In Delhi, the
public space is still overwhelmingly
male, with few women in the streets,
or on public transport, even in the
day time. On the gleaming new metro
system, trains have a designated car-
riage for women, while the others are
packed almost exclusively with men.
Many activists fear authorities will
place greater restrictions – even sur-
veillance – on women, ostensibly to
shield them from predators. Delhi has
just launched new all-female buses in
response to the case.
“The state apparatus has been
stirred, but the state has to now use a
new language,” says historian Nonica
Datta, who has written about violence
against women during the turmoil
that accompanied independence from
British colonial rule in 1947. “It’s not
about women’s protection but about
women’s freedom. They need to really
look at women’s rights in this new
India they are trying to create.”
Prof Kapur agrees there is “great
tension” between the impulse towards
greater protection and a “rights dis-
course” that would imply the need for
sweeping changes to traditional social
values. But she believes the clamour
for equality and freedom will intensify
– and prevail.
“Women are saying, ‘we are citi-
zens, we are entitled to rights not
because we are mothers and daugh-
ters, but because we are equals,” she
says. “Young people are not going to
be satisfied until they can get on the
bus at 9pm and feel comfortable.”
AFP
Speed read
●
Culture clash
The protests reveal
the frustration of young urban women
at widespread male aggression and the
state’s failure to stop it
plaints to police about rapes
and harassment – sometimes
lodged by the victims, some-
times by neighbours and bystanders.
Courts have also vowed to accelerate
stalled rape trials.
“The fact that these issues are now
front and centre of the political dis-
course – and it has been acknowl-
edged that violence against women is
not an individual personal issue but a
political issue – is a major shift,” says
Supreme Court lawyer Karuna Nundy.
The impact is also being felt over-
seas. In Egypt, where sexual harass-
ment is perceived to have increased
amid a breakdown of law and order
following the 2011 revolution, women
are looking to India for inspiration.
“The Indian example, as bad as it is,
makes me feel like it’s the ‘anti-sexual
●
Rapid response
Since the attack, the
ruling Congress party has sought to
prove its commitment to improving
women’s safety
●
Protection from predators
However,
many activists fear authorities will
place greater restrictions on women,
ostensibly to shield them from attackers
On the web
‘A certain class of men
is very uncomfortable
with women displaying
their independence and
joining the workforce’
at
every
level,
including
Video
Amy Kazmin on widespread
calls in India for a change in women’s
place in society
www.ft.com/indiaprotests
mindsets.”
Many women’s rights activists
believe the bus rape, and the public
response, are a turning point. Political
elites have been forced to acknowl-
Additional
reporting
by
Borzou
Daragahi in Cairo
Obituary
Interpreter who wove women’s rights into the fabric of Japan
had previously not possessed. Just as
remarkable was that her role
remained secret for almost 50 years
until one of her military superiors
began talking about it.
The disclosure made her something
of a heroine in Japan, recognised in
1998 with a state honour and
enjoying a status there equivalent to
that of Susan B. Anthony, the 19th
century American feminist. In one
respect, her achievement is even
greater; with the failure to ratify the
equal rights amendment in the 1970s,
there is no provision in the US
constitution guaranteeing women the
rights they enjoy in Japan.
Gordon had no formal training for
her task and took to referring to
herself as
shiroto
, the Japanese word
for amateur. Her job came about
when the colonel in charge of the
committee drafting the civil rights
clauses said: “You’re a woman, why
don’t you write the women’s rights
section?” That, she recalled, made
her feel “fabulous”.
Commandeering a Jeep in a
devastated Tokyo, Gordon toured
those libraries that remained
undamaged to obtain copies of other
constitutions and set to work in the
space of a week. A key phrase in
article 24 gives women protection in
“choice of spouse, property rights,
inheritance, choice of domicile,
divorce and other matters”. Article
14 prohibits discrimination because
of “race, creed, sex, social status or
family origin”.
She experienced harassment from
the powerful Maj Gen Charles
Willoughby, whom MacArthur called
“my lovable fascist” and who, as
Gordon recalled, “thought all
progressives were communists”. But,
she insisted, he never interfered with
her professional work.
Gordon went to Japan with the US
occupation essentially on a mission
to find her parents, Leo and
Augustine Sirota, who had taught
there since 1929 but with whom she
had no contact during the war. Born
in Vienna on October 25 1923, she
had lived with them mostly in Tokyo
until, at not quite 16, being sent to
Mills College in California, the pre-
eminent west coast school for
women. Already a formidable
linguist, she spoke German and
English at home but also French,
Russian and Spanish and picked up
Japanese from her schoolmates.
After Pearl Harbor, Mills allowed
Gordon to take examinations without
attending classes while she worked
at a US government facility in San
Francisco monitoring Japanese radio
broadcasts. Gordon acquired US
citizenship in 1945. On landing her
job on MacArthur’s staff, she arrived
in Tokyo that Christmas eve and
went to the old family house, finding
it destroyed. Later discovering her
parents malnourished and under
“village arrest” in rural Nagano
prefecture, she helped nurse them
back to health before immersing
herself in her work.
The constitution was published at
the start of 1947 and has stood the
test of time. Most challenges have
come from nationalists who object to
article 9, which renounces Japan’s
right to wage war, but it remains
popular.
A year later she married Joseph
Gordon, the chief interpreter for US
military intelligence in Japan, and in
the 1950s became director of
performing arts for the Japan Society
in New York, a job she also
performed for the Asia Society from
1970-91. She brought in Asian artists
of all stripes – singers, dancers,
printmakers – for tours of the US
and Canada. Her husband died last
year and she is survived by a son
and a daughter.
Japan’s constitution remained close
to her heart, though she never spoke
about it in public until Charles
Kades, the military lawyer whom
MacArthur had put in charge of its
drafting, revealed her role in 1994.
She said she had remained silent
because she did not want her youth
and nationality to provide
ammunition to those intent on
amending it, a theme she returned to
whenever another wave of Japanese
nationalism surfaced.
Such sentiments may come back to
the fore under the new government
in Tokyo of Prime Minister Shinzo
Abe, in which case her distinctive
voice and experience will be missed.
Beate Sirota Gordon
Constitutionalist,
1923­2012
D
ouglas MacArthur
assembled a fair-sized
galaxy of talent after the
second world war to help
reshape a defeated Japan, and that
included giving the country a
constitution for its post-feudal
existence. But the US general could
not have imagined that one of the
most important contributors to the
process would be a 22-year-old female
interpreter on his staff.
She was Beate Sirota Gordon, who
has died in New York aged 89. The
daughter of a Ukrainian-born concert
pianist of some renown had grown
up partly in Japan and, as expressed
in the title of her autobiography, was
“the only woman in the room”
among two dozen men on the
constitutional committee. Almost
single-handedly she drafted articles
14 and 24 of the document, giving
Japanese women the civil rights they
The old family house
was destroyed. Later
she discovered her
parents malnourished
and under ‘village arrest’
Jurek Martin
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