The Economist August 3rd 2013

The world this week

Politics

A military judge found Bra­dley Manning, an American soldier, guilty of violating the Espionage Act for releasing hundreds of thousands of classified documents to Wild-Leaks in 2010, though not of «aiding the enemy». Mr Man­ning could be sentenced to 136 years behind bars for his role in the largest leak in American military history.

The Obama administration declassified a number of docu­ments connected with its electronic-surveillance programmes, in the «interest of increased transparency». The move was eclipsed by the Guardian, a British newspaper, which published secret docu­ments providing more detail about xKeyscore, a system which helps American spies glean information from e-mail and web traffic.

Eight women accused San Diego’s mayor, Bob Filner, of sexual harassment. The city council has refused to cover his legal defence costs, and instead voted to file a suit of its own against Mr Filner, if it ever has to incur any damages for his conduct.

Anthony Weiner, the dis­graced New York mayoral candidate, owned up to send­ing explicit pictures of himself to ten women, including to three after he resigned from Congress over the original «sexting» scandal in 2011. He has nevertheless vowed to stay in the race.

Judge not

Pope Francis wrapped up a successful trip to Brazil with a Mass on Copacabana beach attended by over a million people. Speaking to journalists during his flight back to Rome, he made conciliatory remarks about homosexuality, saying that «If a person is gay and seeks God and has goodwill, who am I to judge?»

Uruguay took a big step to­wards becoming the first coun­try in Latin America to legalise and regulate the production and sale of marijuana when the lower house of its Con­gress passed a bill to do so. The Senate is expected to approve the measure.

Jack Warner, the disgraced former boss of Caribbean football, staged a political comeback, winning a by-election in Trinidad & Tobago in his old seat, just three months after he resigned as a minister and mp.

One of the highest-ranking officers in Mexico ‘s navy, Vice-Admiral Carlos Miguel Salazar, was ambushed and killed, apparently by members of the Knights Templar, a drug gang, in the western state of Michoacan.

Ballots and no bullets

Voters in Zimbabwe and Mali went to the polls to elect new leaders. Polling day in both countries passed without reports of widespread vio­lence.

Israeli and Palestinian peace negotiators met for the first time in three years on July 30th in Washington, DC. American officials said they hope the two sides can reach an agreement in nine months.

The Nigeria Extractive In­dustries Transparency Initia­tive, a watchdog, published a report in which it calculated that Nigeria lost revenues worth $10.9 billion to oil theft in 2009-11.

An attack on a prison, accom­panied by protests, in the Libyan city of Benghazi by extremist militiamen freed hundreds of inmates.

On July 27th Egyptian security forces killed scores of suppor­ters of the Muslim Brothers, who were marching in Cairo to protest against the ousting of the government of Muham­mad Morsi. Later, the military-backed government issued police with orders to clear the protesters from their encamp­ments in the city.

Road toll

Thousands of Italians congre­gated in a sports hall in the southern city of Pozzuoli to commemorate 38 people who died on July 28th when a coach plunged 25 metres (80 feet) off a motorway viaduct in Italy’s worst road accident in de­cades. Enrico Letta, the prime minister, attended the service, held on a day of national mourning.

Investigators found that the driver of the train that crashed in Spain in late July, killing 79 people, was talking to railway officials by phone in the mo­ments before the accident. The train was travelling at 19okph (118mph) on a stretch with a limit of 8okph, before coming off the tracks outside Santiago de Compostela.

A pilot scheme to use vans with advertisements urging illegal immigrants in Britain to «go home or face arrest» came to an end on July 28th. A spokesman for the Conserva­tive prime minister, David Cameron, said the tactic was working. The Tories are think­ing of extending it. The Liberal Democrats, their junior co­alition partner, called it «stupid and offensive».

A lone robber wearing gloves, a cap and a scarf to mask his face held up the staff of a diamond exhibition at the Carlton, a luxury hotel in the French resort of Cannes. He made off with gems, jewellery and diamond-encrusted watches worth €103m ($137m).

State of discontent

India ‘s ruling Congress party announced the formation of a new state, to be called Te-langana. It would be carved from Andhra Pradesh ( AP ), a big state in the south-east of the country. Protesters against the move ransacked Congress offices in one district of AP.

The opposition fared surpris­ingly well in Cambodia ‘s general election. The prime minister, Hun Sen, declared victory for his ruling Cambo­dian People’s Party, claiming it had secured 68 seats. The opposition leader, Sam Rainsy, countered that his Cambodia National Rescue Party had won a majority of 63 seats and called for an independent commission to investigate voting irregularities.

More than 250 Taliban mil­itants escaped from a prison in north-west Pakistan after gunmen blasted down the walls of a jail in the town of Dera Ismail Khan. A gun battle ensued. Within 24 hours, though, nearly 50 of the pris­oners had been recaptured.

Japan ‘s finance minister and deputy prime minister, Taro Aso, retracted comments he had made suggesting that Japan could learn from consti­tutional reform in Nazi Ger­many. China and South Korea had criticised his remarks.

Large parts of China have registered record high tempera­tures. In Shanghai at least ten people have died from heat­stroke during the hottest July in 140 years.

Business

The American economy grew at an annualised rate of 1.7% in the three months to June, compared with 1.1% in the previous quarter. Companies restocked their inventories faster than expected, offsetting government spending cuts imposed by the «sequester». The Federal Reserve said it expects growth to pick up further despite the fiscal drag.

Rewriting history

The latest numbers reflect a change in how American GDP is calculated. From now on the figures, revised all the way back to 1929, will include intangibles like K&D spending. The method, meant to capture the shape of mod­ern economies, swelled output by 3.6%. It also reduced federal spending as a share of GDP.

The recovery in American other economic data and news can be found on pages house prices continued apace The S&P/Case-Shiller index for the 20 biggest cities rose by 12% year on year in May, the big­gest rise since March 2006.

The unemployment rate in the euro zone stood at 12.1% in June, with 24,000 fewer job­less than in May; the first dip since April 2011- Around 19,3m people remain out of work.

The imf warned that Greece may need an additional €10,9 billion ($14.5 billion) in bail-out loans from euro-zone partners by The end of 2015, Paulo Nogueira Batista, a Brazilian who represents 11 Latin American countries on the IMF’s board, abstained from approving a new €1,7 billion ($2,3 billion) tranche of rescue loans to the country, Mr Batista argued that the fund’s outlook for Athens is too rosy and that the debt may not be repaid.

Mad Men

Publics, a French advertising giant, and Omnicom, an American one, announced a $35 billion «merger of equals». The combined firm, which will pip Britain’s WWP to become the industry’s biggest, hopes size will give it an edge in the growing market for data-dri­ven digital ads, Investors were cautious: transatlantic consoli­dation is likely to throw up a host of problems, not least keeping PepsiCo and Coca-Cola sweet under one roof.

Perrigo, an American pharma­ceutical company, said it would buy Elan, an Irish biotechnology firm, for $8.6 billion. The deal will allow Perrigo, which makes private-label remedies for Walmart, among others, to lower its tax burden by benefiting from Ireland’s low corporate rate.

Saudi Arabia awarded infra­structure contracts worth $22.5 billion to three Western led consortiums. They will build a metro system in the capital, Riyadh.

Peter Loscher resigned as boss of Siemens after the German engineering giant had to issue a surprise profit warning in late July. Joe Kaeser, hitherto the chief financial officer, takes the helm. The firm’s second-quarter revenues fell year on year, though by less than analysts had feared.

TheEU and China averted a trade war by settling an anti­dumping spat over solar panels. The European Commis­sion put a floor on the price of Chinese panels that was much lower than expected. In return, the Chinese withdrew their threat to retaliate against wine and polysilicon imports from Europe.

Power failure

JPMorgan Chase agreed to pay $410m to settle allegations by America’s Federal Energy Regulatory Commission that the bank had manipulated power markets in parts of the United States. Days earlier the bank said it would leave the business of trading physical commodities altogether.

American authorities brought criminal charges against SAC Capital, a hedge fund at the centre of an insider-trading probe. The move came days after its boss, Steven Cohen, was charged in a civil case for failing to supervise employees, some of whom already await criminal trials. Mr Cohen has not been named in the in­dictment, which makes refer­ences only to SAC’s «owner». Both Mr Cohen and SAC deny the charges against them.

Barclays, a bank, announced a £5.8 billion ($8.9 billion) rights issue to help plug a £12.8 billion capital hole and meet a 3% leverage ratio set by its British regulator. Deutsche Bank said it plans to re duce leverage by shedding assets worth €250 billion ($330 billion).

In America a judge ruled that the Federal Reserve’s cap on «interchange fees» that retail­ers pay on debit-card transac­tions is too high and must be lowered. The American Bank­ers Association said the deci­sion would have «disastrous consequences» for banks, for which the fees are an impor­tant source of revenue.

Uralkali, a Russian producer of potash, pulled out of the Belarus Potash Corporation, one of two cartels that control exports of the stuff, which is used to make fertiliser. Uralkali suggests that the unravelling of the arrangement could send potash prices tumbling by 25%.

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