Monthly Archives: April 2013

Gideon Rachman

Activists of the Indian right-wing Hindu organisation Shiv Sena burn a China national flag in protest against Chinese troops moving onto disputed territory on April 25 (NARINDER NANU/AFP/Getty Images)

Activists of the Indian right-wing Hindu organisation Shiv Sena burn a Chinese flag in protest against troops moving into Indian-controlled territory on April 25 (NARINDER NANU/AFP/Getty Images)

Rising tensions with Japan are evidently not enough to keep China busy. The People’s Liberation Army has now also pitched tents in a bit of disputed territory, controlled by India, creating an embarrassing security dilemma for the Delhi government. Official India’s initial reaction has been to play the incident down. I encountered an Indian diplomat in Beijing last week, who speculated that the whole thing was probably an initiative by an over-zealous local Chinese commander – and assured me that it would all be smoothed over. But that was five days ago, now – and the Chinese are still there.

As a result, the Indian government is increasingly open to charges of weakness – or even appeasement. Brahma Chellaney, one of India’s most hawkish commentators, fumes that “China is encroaching little by little on Indian land” and accuses the government of Manmohan Singh of “bending over backward at a time of aggression”. Read more

More on the Great Tax Race
Luxembourg is set to share currently confidential information about multinationals’ bank accounts, showing how much it wants to shed its image as a tax haven at a time of a political and popular backlash against tax avoidance.
♦ One of the biggest hedge fund service businesses on the Cayman Islands has tried to block sweeping reforms to make the tax haven more transparent.
♦ Jeffrey Sachs writes about how austerity has exposed the threat of global tax havens: “In the new world of austerity following the 2008 crash… they are increasingly seen as a cancer on the global financial system that must be excised.”
The rest of the world
Despite Dutch politics being roiled by waves of populist anger and anti-elitism, Willem-Alexander ascends to the throne amid an outpouring of popular enthusiasm – polls show support for preserving the Dutch monarchy running as high as 85 per cent.
♦ President Hamid Karzai acknowledges that the Central Intelligence Agency has been dropping off bags of cash at his office for a decade: “Not a big amount. A small amount, which has been used for various purposes.”
♦ Reuters takes a look through the confidential report prepared for the Cypriot central bank, which found that the Bank of Cyprus had been willing to invest in risky, high-yield Greek debt in its efforts to offset an erosion of its balance sheet from non-performing loans. The report also alleges that 28,000 files, containing emails from a crucial period during which the Bank of Cyprus spent billions of euros buying Greek bonds, were erased before investigators could copy them.
♦ A singer’s lament for Syria, broadcast on “Arab Idol”, has become a hit in the Arab world.
♦ Bangalore, once an advertisement for a new, confident India, is losing some of its sheen.
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Barack Obama is meant to be the most powerful man in the world. But it looks increasingly as though he may be dragged into a conflict in Syria, against his own better judgment.

In at number one: Joan Roca of El Celler de Can Roca (Getty)

Natalie Whittle, of FT Weekend, reports that a gastronomic boom in emerging economies has propelled restaurants from Peru, Brazil and Mexico up the rankings in a prestigious annual list of the best places to eat in the world.

The highest riser in the latest S. Pellegrino World’s 50 Best Restaurants list, compiled by Restaurant magazine, is Astrid y Gaston from Lima, which jumped 21 paces to number 14. And if you’d never thought of Lima as a gastro-paradise, think on this: it now has the same number of eateries on the list as London.

As for top spot, Copenhagen’s Noma, which has been at number one for three years running, was finally knocked off its perch by the Spanish restaurant El Celler de Can Roca, self-styled purveyor of “emotional cuisine” run by the Roca brothers.

Since many of The World’s readers are the jet-setting type – and, dare we say it, the type that likes to chalk off another long lunch at the planet’s finest restaurants – we supply the top 50 below. Bon appétit… Read more

Esther Bintliff

On Friday, South Korea advised the 175 workers left at the Kaesong industrial park in North Korea to leave for their own safety. Photographer Chung Sung-Jun captured part of the journey for Getty Images. In a set of striking photos, cars and vans are shown piled high with factory goods, to the extent that some of the drivers appear to have had no clear view through their windscreens. The workers joined compatriots who have left the zone since work was suspended earlier this month as a result of the escalating tension between Pyongyang and Seoul.

Seven South Koreans were held back on Monday, according to the BBC:

“Officials said the North insisted that some South Korean staff remain to negotiate unpaid wages. They did not believe the seven would be at risk.”

APRIL 27: South Korean workers arriving from the Kaesong joint industrial complex in North Korea at the inter-Korean transit office on April 27, 2013 in Paju, South Korea. (Photo by Chung Sung-Jun/Getty Images)

The FT’s Song Jung-a reported on the start of the exodus a few weeks ago:

“Long lines of cars and trucks loaded with heavy luggage crossed the border gate into South Korea this week as South Korean workers brought raw material and half-finished products back to minimise losses.”

APRIL 27: South Korean workers arriving from the Kaesong joint industrial complex in North Korea at the inter-Korean transit office on April 27, 2013 in Paju, South Korea. (Photo by Chung Sung-Jun/Getty Images)
Kaesong began operating in 2004 – the product of the first inter-Korean summit in 2000, and a symbol of the potential for economic cooperation between the two Koreas.

According to a US congressional research note from 2011, products manufactured in the industrial park include “clothing and textiles (71 firms), kitchen utensils (4 firms), auto parts (4 firms), semiconductor parts (2 firms), and toner cartridges (1 firm).” Read more

♦ In the first installment of our Great Tax Race series, Vanessa Houlder examines how the Netherlands and Luxembourg managed to book more foreign direct investment than the US, UK and Germany together. Exploitation of cracks in the international tax system has ignited intense anger from an austerity-weary public. Matt Steinglass looks at how the Netherlands wants to change its tax haven image, but is wary of scaring businesses away.
♦ Italy has a new government and it has already been met with mayhem.
♦ Just after winning the most votes in Iceland’s parliamentary elections, the head of the centre-right Independence party has said the government needs to focus on restoring growth.
♦ Anne-Marie Slaughter thinks President Obama should keep the Rwandan genocide in mind when weighing up action in Syria.
♦ The 26-year-old Chinese entrepreneur who was kidnapped by the Tsarnaev brothers describes his harrowing experience. The Boston Globe has also pulled together a timeline of the hunt for the bombing suspects.
♦ William Zinsser, author of “On Writing Well”, is still counselling people on the subject at the age of 90. He holds one-to-one sessions with people who read their writing out to him, as he cannot see, and only accepts sandwiches as payment.
♦ Maryam Sharif takes to the street to canvass for her father who is likely to become Pakistan’s PM for a third time: “It’s a beautiful feeling to be loved”.
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(DOMINIQUE FAGET/AFP/Getty)Austerity appears to be an increasingly dirty word in Europe. The past week alone has seen European Commission President José Manuel Barroso, Bill Gross of Pimco and Italy’s new prime minister Enrico Letta calling for an easing of austerity.

Spain’s surpassing of the 6m unemployed mark on Thursday added fuel to the debate. But even in Germany, the austerity police of the eurozone, cracks are beginning to show ahead of the elections with the emergence of an anti-euro party.

a) Are there any austerians left? Yes. Here are some of them.

- UK: Chancellor George Osborne hit back at criticism over his apparent excessive austerity by claiming there is no other alternative. And after a tough week when he was criticised by the IMF over the excessive pace of his austerity programme, this week has brought better fortunes for his stance as figures showed a lower deficit and the economy expanded 0.3 per cent in the first quarter.

- Germany: Chancellor Angela Merkel’s view as articulated this week couldn’t be clearer: “I call it balancing the budget. Everyone else is using this term austerity. That makes it sound like something truly evil.” Germany is the only eurozone country with a 2012 budget surplus.

- US: The situation here is different because of sequestration, which triggered automatic spending cuts and tax rises. And the White House faces a July deadline to raise the borrowing limit or default on its debt.

- Latvia: The tiny Baltic state is emerging from a state of uber austerity – part of its bid to join the euro later this year – and it could end up being seen as a poster child for successful deficit cutting implementation, with real growth of more than 5 per cent in 2011 and 2012, despite the broader recession in Europe.

- Spain: The push by Europe’s fourth-largest economy to cut spending and raise taxes has led to record unemployment topping 6m for the first time in its recent history. The government of Mariano Rajoy announced economic reforms and structural measures on Friday.

- Italy: The technocrat government of Mario Monti has been steadfast in carrying out fiscal consolidation. All eyes will be on Mr Letta, who has already said: “Europe’s policy of austerity is no longer sufficient”. Read more

Across the world, the ability of multinationals to exploit cracks in the international tax system has angered an austerity-weary public. But as policy makers draw up plans to close such gaps, the spotlight has fallen on the countries that help them pay less tax. Does it really make financial sense for Ireland to have a corporate tax rate of 12.5 per cent? Why are some American states looking to cut their corporate tax rates even as they struggle to pay for basic services? Why do countries compete instead of collaborate on tax?

As part of a new Financial Times’ series, the Great Tax Race, the FT’s taxation correspondent Vanessa Houlder was online on The World Blog on Tuesday and answered your questions about tax avoidance. Please see the comments section for her answers.

Here is a sample of some of the pieces in the series: Read more

♦ The collapse of Rana Plaza this week and the fire at Tazreen Fashions last year have raised questions about the Bangladeshi government’s ability to regulate its garment industry, and the intimate ties between this industry and the country’s political elite.
♦ President Obama is pushing to overhaul the US immigration system, giving some of the 11m unauthorised residents legal rights and the economy a much needed boost.
♦ A growing sense among Guantánamo prisoners that they will never go home, has led to a revolt: a hunger strike is now in its third month with more than half the inmates participating. Read more

Esther Bintliff

Fire at Albion Mill, Blackfriars Bridge, London, March 1791. Painting by T. Rowlandson

Fire at Albion Mill, Blackfriars, London,1791. Painting by T. Rowlandson

The history of mass manufacturing is stitched through with accidents and peril. The first factories, which powered the industrial revolution in 18th century Britain, brought death and injury to many workers, including children. Mill fires in the UK were so common that some industrialists bought their own steam fire-engines in an effort to bring down insurance premiums.

The factory model spread fast. By the 19th century, the word ‘sweatshop’ had begun to enter popular parlance, with Charles Kingsley referring to ‘sweaters’ – or garment workers – in his 1850 tract ‘Cheap Clothes & Nasty’ (“Men ought to know the condition of those by whose labour they live”, he warned). Meanwhile, in the US:

“The term ‘sweatshop’… was meant to describe “sweated labor,” work that a big clothing manufacturer contracts out to a smaller firm… The labor was “sweated” because of the conditions of the factories – cramped, crowded, and full of damp heat from the steam-driven pressers.” – Bill Buford, ‘Sweat is Good’, The New Yorker

How did things get better? Safety standards encoded in law, industrial design improvements, the growth of unions, and public outrage helped bring change to the factories of western economies. But all too often, the impetus for reform seemed to require the catalyst of a terrible accident.

Today, the majority of factory accidents (though not all) take place in the developing and newly industrialized world – places like Bangladesh, Pakistan, China and India. The death of more than 200 people this week in a factory on the outskirts of Daka is a challenge both to the Bangladeshi government, and to western retailers.

The cost of change, to some observers, seems prohibitive – but if passed on to western consumers, it might actually be tiny. Jason Motlagh and Susie Taylor report: “An analysis by WRC estimates the garment industry would have to spend some $3 billion over five years to bring Bangladesh’s roughly 4,500 factories up to Western standards. That amounts to less than 10 cents a garment.”

*****

Here are five of the worst factory accidents. There are many, many more. You will notice that we’ve focused on recent decades, but only because these were the best documented online. You may also notice that there are certain factors that the worst incidents have in common. The most frequent is locked doors.

1) May 25, 1911: The Triangle Shirtwaist Factory Fire, New York

Firefighters at the Triangle Shirtwaist Factory, March 25, 1911. Photographer: Brown BrothersDeath toll: 146 people, mostly Jewish and Italian immigrants, mostly women.

The owners of Triangle Shirtwaist, Isaac Harris and Max Blanck, were indicted by a grand jury on charges of manslaughter a few weeks after the fire. You can read a transcript of the proceedings of the case via Cornell University. The chief prosecutor, Assistant District Attorney Charles S. Bostwick, pulled no punches.

“Others ran to the Washington place door. One of these was Margaret Schwartz, now dead. And it is for her death that these defendants are now on trial.

Gentlemen of the jury, that door was locked. Those who ran to that door cried out ‘That door is locked. My God, we are lost.’ They were lost. That locked door barred their escape.”

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