Tag Archives: fraud

Five Stories You Might Have Missed

It’s been an interesting week for the U.S. economy. According to figures released on Thursday, the U.S. trade deficit jumped by 16.3 percent to $32 billion in June, a figure sharply higher than the $27 billion that had been forecast. The dramatic increase in imports was fueled by the “Cash for Clunkers” program, which led to a dramatic increase in auto imports. Meanwhile, the Commerce Department reported that the poverty rate had increased from 12.5 percent in 2007 to 13.2 percent in 2008. The poverty rate, which is defined as the number of people with an annual income of less than $11,200 (or less than $22,000 for a family of four), increased as a result of the global economic downturn. Home foreclosures also remain near their record high level. The troubled status of the U.S. economy led the Federal Reserve to indicate that it would be unlikely to raise interest rates in the first half of next year.

In news from outside the U.S. economy last week:

1. A trade dispute between the United States and China may be headed to the World Trade Organization for resolution. The United States last week imposed a new duty on tires manufactured in China, less than one week after it also imposed higher tariffs on Chinese steel piping. A spokesperson for the Chinese government condemned the move as protectionism, warning that “a chain reaction of trade protectionist measures that could slow the current pace of revival in the world economy.” Observers fear that the Chinese could respond with higher tariffs on U.S. agricultural and automotive exports, potentially sparking a trade war. But in an interesting editorial in the Financial Times, Clyde Prestowiz argued that the imposition of higher tariffs on Chinese exports to the Untied States could potentially help the push for free trade.

2. With the German election just a couple of weeks away, campaigning is in full force, and observers are already working through the numerous possible coalition arrangements. But in perhaps the most interesting development to date, German Finance Minister Peer Steinbrück last week called for the imposition of a new global tax on international financial transaction, the proceeds of which would be used to repay governments for the cost of fiscal stimulus packages and bank rescue operations. While not dismissing the idea out of hand, German Chancellor Angela Merkel called the proposal “electioneering.” Steinbrück’s call follows a similar proposal made by the Chair of the British Financial Services Authority, Lord Turner, and could make for interesting discussions at the upcoming G20 summit.

3. The counting process in the Afghan elections continues to drag on. Although incumbent President Hamid Karzai now has enough votes to win the disputed presidential election outright, according to the most recent results of the Independent Election Commission, widespread irregularities have led to calls for partial recounts. On Sunday, the IEC agreed to move forward with discussions on a recount, but it stopped short of spelling out precisely what votes would or would not be included. The Electoral Complains Commission, a body established by the United Nations to observe elections and investigate allegations of fraud, noted “clear and convincing” evidence of fraud and vote rigging in southern provinces which went heavily towards Karzai.

4. The first high-level contact between the government of Zimbabwe and the west took place on Sunday, as the European Union’s Commissioner for Humanitarian Aid and Development and the Swedish Prime Minister (who also holds the European Union’s rotating presidency) met with representatives of the Zimbabwean government in Harare. The meeting is the first high-level contact since the European Union imposed sanctions against Zimbabwe in 2002. While the European Union delegation remained noncommittal regarding the future direction of contact with the Zimbabwean government, stating only that “We’re entering a new phase. The [power-sharing agreement in Zimbabwe] was an important step forward, but much more needs to be done. The key to re-engagement is the full implementation of the political agreement.” The status of the power sharing arrangement in Zimbabwe remains uncertain, as President Robert Mugabe and his rival, Prime Minister Morgan Tsvangirai, continue to struggle over the distribution of political authority within the country.

5. The government of Guatemala last week declared a “state of calamity” in response to the widespread hunger gripping the country. The World Food Programme estimated that the country would require an immediate shipment of 20 tons of food the worst affected areas in order to stave off starvation. Alvar Colom, Guatemala’s president, said that global climate change was affecting the El Niño, causing a massive drought in the northeastern portion of the country. But Colom was also critical of the high level of inequality in the country, observing that “There is food, but those who go hungry have no money to buy it.” Critics also note that poorly defined land rights, narcoviolence, and alleged corruption have also undermined food production. According to the World Food Programme, half of all children under five in Guatemala suffer from malnutrition.

And in a bonus story for this week:

6. After more than three months since the general election, the political situation in Lebanon remains cloudy. On Thursday, Saad Hariri, the leader of Lebanon’s pro-Western majority, resigned as prime minister designee, despite performing well-above expectations in June’s elections. According to Hariri, the country’s parliamentary minority blocked efforts to develop a coalition government, leaving the country in a period of political uncertainty.

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Five Stories You Might Have Missed

It’s been a weekend of high-profile political resignations in the United States and China. On Sunday Morning, President Barack Obama’s top environmental policy adviser, Van Jones, reigned after it became public he had signed a petition alleging U.S. government involvement in the September 11th attacks. Jones had also been a key player in the Color of Change group, which has spent considerable money trying to influence the tenor of the health care debate in the United States. His resignation comes at a poor time for the administration, which is simultaneously trying to salvage passage of health insurance reform legislation in the U.S. Congress, address the ongoing economic downturn, and beginning to consider efforts to address climate change and green jobs, Jones’ area of expertise.

On Saturday, the Chinese government fired the top party official in Urumqi, where ethnic unrest has been raging between ethnic Uighurs and the majority Han. Li Zhi, the Chinese Community Party Secretary for the city of Urumqi, was replaced by Zhu Jailun, who had previously served as the head of the regional law-and-order committee. Li’s firing has also raised speculation that regional party boss, Wang Lequan, may also be forced from office. In firing Li, the Chinese government is hoping to quell unrest and prevent another outbreak of violence like that of July, when almost 200 people were killed in ethnic violence.

And on Friday, the head of Google’s China operations, Lee Kai-Fu, resigned. Lee was responsible for the launch of Google.cn, Google’s Chinese-language search engine. But Google’s operations in China have been marred by tensions with the Chinese government and debates over the degree to which the company should allow the Chinese government to censor search results. Lee’s resignation came amid a new round of tensions, with some inside Google arguing that the company should reconsider its efforts to break into the Chinese market.

In other news from the last week:

1. The G20 concluded two days of meetings in London on Saturday with a preliminary outline for tougher regulations on financial institutions. While the final statement stopped short of imposing limits on financial bonuses, it would increase the size of capital reserves and require the development of “living wills” for banks, and require that banks retain a portion of loans they sell as asset-backed securities. But the G20 avoided dealing with some of the most controversial elements of banking reform, choosing instead to forward those issues to the Financial Stability Board, an institution comprised of central bank governors and treasury secretaries from around the world. 

2. The situation in Afghanistan continues to be marred by uncertainty. On Friday, a NATO airstrike against two fuel tankers hijacked by the Taliban killed an estimated 90 people, nearly all of whom were civilians, according to local village elders. The airstrike provoked an angry response among Afghans, and represented yet another setback for the U.S. mission in Afghanistan. On Sunday it became apparent that the NATO airstrike was ordered by German commanders on the ground, a fact which will likely play an important role in upcoming German elections. The European Union issued a statement criticizing the airstrike on Saturday, one day before EU foreign ministers were scheduled to meet to consider efforts to improve stabilization efforts in Afghanistan.

Meanwhile, results from the Afghan election continue to trickle in. By Sunday, the Independent Electoral Commission had tabulated returns from just almost ¾ of country’s polling stations. So far, incumbent President Hamid Karzai leads his closest challenger, Abdullah Abdullah 48.6% to 31.7%. Under Afghan law, the winner must receive an absolute majority of votes cast, so if Karzai is unable to secure at least 50% of the vote, a runoff election would be held in October. But accusations of voting rigging continue to be raised, particularly by Abdullah, who contends that the vote was characterized by widespread fraud. The IEC announced that it had excluded an unknown number of votes from 447 polling stations in which suspicious returns had been found. But the scope of electoral fraud remains unknown.

3. The World Trade Organization issued its preliminary ruling in the U.S. dispute against EU assistance to aircraft manufacturer Airbus. Although the report is still confidential and the final report will not be issued for several months, the WTO panel found that some of the estimated €3 billion offered by the EU to Airbus was an unfair subsidy. Nevertheless, both sides are claiming victory. The WTO panel dismissed 70% of the U.S. claims against the EU and several of its member states, including France, Germany, Spain, and the United Kingdom, which the U.S. had claimed offered as much as $15 billion in illegal loans since the 1970s. Although the United States is celebrating the decision, the European Union is withholding its formal reaction until its case against U.S. subsidies to Boeing is resolved. In a case filed at the WTO several years ago, the European Union accused the United States of offering more than $27 billion in illegal assistance in the form of tax breaks, research contracts, and defense spending. A ruling on that case is expected within the next few months. 

4. Israeli Prime Minister Benjamin Netanyahu is moving forward with a plan to expand settlement activity in the West Bank, offering approval for the construction of hundreds of new homes. The United States government was quick to condemn the move, asserting, according to White House spokesperson Robert Gibbs, “The U.S. does not accept the legitimacy of continued settlement expansion and we urge that it stop.” Netanyahu is under pressure from rightwing member of his coalition to remove restrictions on new settlements in the West Bank. But the status of settlements in the West Bank remains a key stumbling block in negotiations between Israel and Palestine, and Israel’s decision to increase settlement activity will likely undermine hopes for progress in rekindling stalled peace talks when President Obama’s Middle East Envoy, George Mitchell, visits Israel next week.

5. Last week’s presidential elections in the West African state of Gabon sparked violence after the ruling party candidate, Ali Ben Bongo, claimed victory. Bongo’s father, Omar Bongo, had been Africa’s longest serving ruler, presiding over Gabon since 1967. Under his rule, Gabon’s oil and wood resources were used to expand his personal wealth.  At the time of his death, he was under investigation by the French government, which had identified 39 properties, 9 cars, and more than 70 bank accounts owned by the dictator in France alone. Sunday’s announcement that Ali Ben Bongo had won a plurality of the vote to win the presidency sparked unrest by the supporters of his two rivals, former interior minister Andre Mba Obame and opposition figure Pierre Mamboundou, each of whom received approximately 25 percent of the vote. Supporters of Obame and Mamboundou targeted the French embassy and facilities owned by foreign oil companies. But according to the French government, the election “took place in acceptable conditions.”