Editorial
Analysis
Negotiations at the World Trade Organisation to shape an agreement on the Doha round of trade talks collapsed when the United States, India and China failed to resolve differences over protection for agricultural goods in developing countries. There seems to be no chance of finishing the round this year, if at all.
America’s Congress passed a housing bill that includes measures to shore up Fannie Mae and Freddie Mac, two troubled mortgage giants. The bill also allows some 400,000 homeowners to refinance their bank mortgages with loans backed by the government. Supporters of the legislation say it will help stem foreclosures and provide a boost to a moribund housing market. Opponents argue the legislation is a taxpayer-funded bail-out of reckless borrowers.
Steady as she goes
Citing “continued fragile circumstances” in the markets, the Federal Reserve took measures “to enhance the effectiveness of its existing liquidity facilities”. This included extending the period during which Wall Street banks can take advantage of the Fed’s discount rate (normally reserved for retail banks) until the end of January.
The Securities and Exchange Commission extended a rule that halts short-selling the shares of 19 financial companies until August 12th (after which it will not be renewed). The rule came in amid fears that false rumours were dragging stocks down in a bout of market turmoil in mid-July.
Kohlberg Kravis Roberts unveiled its long-awaited plan to turn itself into a public company. Rather than selling shares, the famed private-equity firm will base its listing on the New York Stock Exchange on the acquisition of its European affiliate, KKR Private Equity Investors. Estimates of KKR’s market value now range between $16 billion and $19 billion, a lot lower than when the firm first mooted going public last year. Even that may be optimistic.
Merrill Lynch took more steps to repair its balance sheet by selling $30.6 billion in distressed mortgage-related assets (at a huge discount) and raising $8.6 billion in capital through a share offering.
Not what the markets needed
Russian stockmarkets took fright when Vladimir Putin, the prime minister, attacked the tax record and export practices of Mechel, a big mining company. Observers noted similarities with the tactics that eventually sank Yukos, an oil company which underwent a lengthy campaign of state harassment. Separately, the boss of BP urged foreign investors to tread carefully in Russia. His warning came after the chief executive of TNK-BP, the British oil firm’s Russian joint venture, left Moscow over a dispute with Russian shareholders.
In a move that is extraordinary for corporate Germany, Siemens said it would sue 11 former members of its executive board for allegedly breaching their supervisory responsibilities in a bribery scandal. One of the 11 is Klaus Kleinfeld, a former chief executive, who is now the boss of Alcoa, the world’s leading producer of aluminium.
Both the chairman and chief executive of Alcatel-Lucent resigned as it reported its sixth consecutive quarterly net loss. The merger in 2006 of France’s Alcatel and America’s Lucent formed one of the world’s biggest suppliers of telecoms infrastructure. Since then its market value has fallen by half, thanks to difficulties with integrating the company.
Spain’s Gas Natural launched a takeover bid for Union Fenosa, a domestic rival. It is Gas Natural’s third attempt to hook up with a big partner in Spain’s rapidly consolidating power industry, having been rebuffed by Endesa in 2005 and Iberdrola in 2003. More consolidation beckoned in the airline industry as British Airways and Spain’s Iberia said they were holding talks about a merger.
Ryanair’s share price fell by 23% after the airline reported a quarterly loss and forecast that it might make an annual loss, which would be the first since its flotation in 1997. With other carriers, Europe’s biggest low-cost airline has been hit by high fuel prices. Michael O’Leary, Ryanair’s combative boss, promised to continue slashing prices, though some routes will be curtailed.
Some Sirius news
Sirius completed its merger with XM, 17 months after the combination of the satellite-radio networks was first proposed. The deal was delayed amid intense scrutiny from antitrust regulators.
Nintendo’s quarterly profit rose by a third compared with a year earlier, boosted by worldwide sales of its Wii video-game console, which soared by just over 50%. The firm also sold 3.4m “Wii Fit” games, a wildly popular interactive exercise programme.
back to headlines
Tanzania is yet to benefit from fish export revenues
By Timothy Kitundu, Dar es Salaam
While countries that are endowed with ocean, lakes, rives reap much from the revenue resulting from marine and its products, Tanzania still earns very little from this treasure whereas those who harvest marine products are the ones benefiting.
The records that were revealed by the opposition Members of Parliament during the ongoing budget speech do not only indicate that Tanzania loses a lot through minerals but also the fisheries sector does not benefit the country.
But a critical analysis of the whole issue could only disclose that the government has failed to put in place strong regulations that could pin down investors either in mining and fishing sectors to pay all the revenues supposed to be paid.
It is appalling to learn that Tanzania earned a total of Tsh. 7.58 billion last year from the export of fish and fish products, and that out of that amount; Nile perch exports fetched Tsh. 6.66 billion, indicating that Nile perch exports accounted for 87.8 per cent of Tanzania’s total fish exports.
This means that fish caught from the Indian Ocean contributed very little to the country’s fish exports. Another reason may be that the fishing companies which are said to have been given access to 200 nautical miles for fishing do not pay any other revenues other than license fees.
The alleged 140 fishing vessels that conduct their operations in the Indian ocean end up paying a mere US$ 18,000 in license fees, but the Opposition have asked the government to raise the license fees to US$ 50,000.
If the Opposition camp’s proposal is honoured, earnings from these licenses would reach Tsh. 9.5 billion from the current Tsh. 2.6 billion that the government gets. Additionally, Tanzania has been asked to fix a 10 per cent royalty on the value of fish being caught in the Indian Ocean.
According to the Opposition camp estimates, each ship catches an average tonnage of 2,000, and considering that the minimum price for a kilogram of fish is US$ 2.2, the 10 per cent royalty would bring some Tsh. 370 billion into government coffers annually.
Another good idea that came from the Opposition MPs was the establishment of fish ports and fish processing plants at Dar es Salaam, Tanga, Mtwara and Zanzibar.
Consequently, all ships that conduct fishing in the Indian Ocean will be required to have their requirements such as fuel, drinking water, and other vital products from fish ports.
The establishment of fish ports could serve another purpose since the fish values can be inspected at these points and the correct tax fixed. In this way, the country would be able to get more revenue from the fishing sector.
At this point, it is clear that Tanzania loses revenue from fish that are from the Indian Ocean and of which some are fished under the EEZ, where it is said, there is no monitoring of these trawlers – hence apart from over-fishing they destroy the environment.
It will also be good, apart from the establishing of the fishing ports, all fishing vessels should be monitored to ensure that they do not catch the fish species that they don’t need. This will also reduce the illegal fish caught in the Indian Ocean.
Once these are put in place, Tanzania will enjoy the revenue from 36,000 tonnes of fish that are illegally caught every year, costing the country an estimated Tsh. 45 billion. Definitely the revenue from the Indian Ocean fish would come more or less equivalent to Nile perch.
BAE and the Saudi arms deal: Timid justice
A ruling by the law lords ratifies one law for bullies and another for the rest
WITH the best of intentions justice is not always as blind as it should be. But seldom is it as downright astigmatic as it was on July 30th, when the law lords ruled that the Serious Fraud Office (SFO) was entitled to submit to blackmail and drop its investigation, in December 2006, into alleged bribery in a Saudi Arabian arms deal.
The SFO called off its gumshoes soon after they started circling the Swiss bank accounts of senior Saudi figures, and said figures squealed.
At issue was whether bribes had been paid in relation to Britain’s biggest-ever arms deal—a £43 billion contract between the governments of Britain and Saudi Arabia and BAE Systems, Britain’s largest defence firm, to provide the desert kingdom with fighter jets and training.
The SFO said it halted the investigation after receiving warnings from several sources that it could prompt Saudi Arabia to stop sharing anti-terrorist intelligence with Britain.
This week’s ruling overturns an earlier one by the High Court in April, which found that the director of the SFO at the time, Robert Wardle, should not have dropped the case.
Judges in the lower court had lambasted Mr Wardle for his “abject surrender” in the face of Saudi threats—arguing that had they been made by people subject to English criminal law they could have led to a charge of attempting to pervert the course of justice.
Yet the lords decided that, confronted with dark mutterings by British spies and diplomats about threats to “British lives on British streets” should Saudi Arabia withhold intelligence, Mr Wardle was lawfully entitled to drop it.
Dismayed campaigners against corruption (and, not a few of them, the arms trade) have been quick to warn that the ruling sets a dangerous precedent.
“It is a sad day for the rule of law when a senior prosecutor bows to threats from a foreign government and our most senior judges will do nothing to stop it,” says Eric Metcalfe of Justice, a human-rights group.
Just as worrying is the signal the ruling sends about a legal system that has long been criticised for its sloth in pursuing white-collar criminals in general.
It was fortuitous for the government, then, that eight men were arrested on July 29th in connection with a probe of insider trading—a crime more notable in Britain for its prevalence than for the vigour with which it is prosecuted.
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