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Qantas and Emirates launch their alliance

31 March 2013

Pictures of the Sydney flypast are here.

Qantas and Emirates marked the official launch of their partnership today with two A380s flying in tandem over the Sydney Harbour Bridge.

The planes flew over the bridge at about 1,500 feet (450 metres).

The planning was complex and included seeking approval from safety regulators in both Australia and the United Arab Emirates."

Pilots from both airlines completed dozens of special simulator training sessions since January.

The aircraft took off from Sydney airport early Sunday, flying north along the coast, then south and slightly out to sea, before turning and cruising over the city, passing the Opera House and flying over the Harbour Bridge.

Qantas says that it has moved its hub for European flights from Singapore to Dubai, ending a decades-long partnership with British Airways on the London route.

But it is not really a Qantas hub. Two planes a day fly from Australia to Dubai and continue to London. What the alliance does offer is one stop travel via Dubai to multiple points in the Middle East, Europe and Africa; but this will be a Qantas codeshare using Emirates hardware and crews.

The impact  has been significant already. Qantas says bookings for trips to Europe have gone up six-fold.

The tie up should be worth about $90 million a year before tax to Qantas, as it fills more seats on combined flights to Europe, New Zealand and Southeast Asia and drops the unprofitable Frankfurt service, according to an analyst at Goldman Sachs.

The upside for Emirates is the increased passenger flow to its worldwide network.

The airlines describe this as a seismic shift for the industry. It is not. It is a recognition of the strength of the middle east carriers and their geographical hubs.

And despite all the rumours running around the Dubai HQ of Emirates it is just two airplanes a day from Australia. And no, there will not be QF staff on EK flights or vice versa.

Dubai Gears Up For Next, More Modest Boom

30 March 2013 Reuters

Four kilometres off the coast of Dubai, more than 200 tiny, man-made islands bake under the sun. Built five years ago, they were to be one of the emirate’s most spectacular projects, an archipelago of resorts and luxury housing laid out in the shape of a world map.

Apart from a few facilities such as a villa and a beach club, the islands are empty. After creating them at a cost of hundreds of millions of dollars, state-owned property firm Nakheel sold about 70 per cent of the land. But most of the buyers have lacked the cash or the will to go ahead with development plans.

A little over three years after a corporate debt crisis drove it to the brink of default, Dubai is still littered with relics of the disaster, in the form of unfinished real estate projects and battered balance sheets.

But it is laying the groundwork for another economic boom, based on its role as a tourism and business hub for the surrounding region, and a haven for money from India, China and fast-growing countries in Africa.

The next boom is likely to be more gradual, partly because financing will not be as cheap and plentiful as it was during the excesses of the last decade. Growth will depend more directly on services that Dubai provides, rather than on the ability of its real estate market to suck up money.

But in some ways, the next boom could rival the last one, boosting Dubai’s population about 50 per cent by the end of this decade and pushing it deeper into a range of industries, from food processing to diamond trading.

Florence Eid, chief executive of London-based research and advisory firm Arabia Monitor, said some aspects of Dubai, such as its role as a relatively safe financial centre, were set back by the crisis and shown to be weaker than assumed.

“But some have actually been strengthened in the last few years, including its role as an operating base for businessmen from around the region and as a centre for entrepot trade, which it has enjoyed since the pearl fishing and spice trading days of the Arabian Gulf,” she said.

“The economy now appears to be embarking on another wave of growth during which it will serve similar functions as Hong Kong and Singapore in Asia, supporting and profiting from growth in industry and trade in a large region surrounding it.”

Dubai’s expansion plans are striking in that they are being announced while the emirate is still many years away from working through the debt pile it accumulated during last decade’s boom and bust.

Standard Chartered estimates $48 billion of bonds and loans will mature between 2014 and 2016, including about $10 billion of restructured debt at state-owned Dubai World and Nakheel. Some of this debt might have to be restructured a second time, the bank said in a research report.

In December, Moody’s Investors Service downgraded its credit ratings of three Dubai banks, including the largest, Emirates NBD. It cited concern about problem loans and said it was prepared to cut the ratings further.

But Dubai’s ruler, Sheikh Mohammed bin Rashid al-Maktoum, signalled a push for growth in November, announcing plans for a huge tourism and retail development including the world’s largest shopping mall, over 100 hotels, and a park 30 per cent bigger than London’s Hyde Park.

Since then a string of state-owned and private firms have said they are reviving projects mothballed during the crash or launching new ones. Plans even include more man-made islands: last month state-backed Meraas Holding said it would spend $1.6 billion to build an island housing the world’s largest ferris wheel, just a few kilometres from Nakheel’s archipelago.

Hotel industry consultancy STR Global estimates, based on its contacts with companies in the industry, that Dubai hoteliers plan to add 19,000 new hotel rooms in the next few years – almost a third of the current number of about 63,000.

The government’s central projection is for the population to rise above 3 million people by 2020 from just over 2 million at present. Under an “aggressive” growth scenario, the population could be near 4 million by the end of the decade, it estimates.

Since fewer than 20 per cent of Dubai’s population are local citizens – the vast majority are expatriate workers – such growth would mean an influx of hundreds of thousands of people.

Construction work to accommodate them would require billions of dollars of fresh financing that may be hard to obtain in the wake of the global financial crisis. If growth does accelerate, it could produce the same kind of boom-and-bust cycle that plagued Dubai a few years ago.

“There are certainly legitimate questions to be asked about investment risk in Dubai, given the wild swings in the property market and the boom period’s long record of broken promises, which extend to the highest levels,” said Jim Krane, author of the book “City of Gold: Dubai and the Dream of Capitalism”.

But there are grounds to think Dubai’s ambitions are feasible – or at least a large part of them. One of the emirate’s advantages is its geographical location, which lets it serve as an air transport hub between Asia, Europe and Africa; Dubai overtook Hong Kong to become the world’s third-busiest airport for international passenger traffic last year.

Double-digit annual increases in this traffic, which hit 58 million passengers last year, are helping Dubai attract growing numbers of tourists and investors. About a fifth of passengers leave the airport and come into the city; local industries are lobbying the government to raise this ratio with changes to visa arrangements and other steps.

“The way Dubai has worked in the past few years, they’ll create enough demand generators to make sure they have customers for the new hotel rooms,” said Naureen Ahmed, manager of analysis at STR Global.

Taxes in Dubai are lower than in many European and Asian cities. This helped boost foreign direct investment flows into the emirate by 17 per cent last year – a rapid rate during a period of global economic weakness.

The more difficult financing environment since the global crisis could also benefit Dubai in a way, by preventing the wild investment that characterised the last boom.

With loans harder to obtain, real estate developers are likely to be forced to build their projects in stages, ensuring each stage is viable before moving to the next one.

This may mean some of the projects announced in the last several months are delayed for many years, or never built at all – but the overall effect could be to support Dubai’s growth by making the economy more stable.

Loic Pelichet, assistant vice president for research at regional investment firm NBK Capital, said one factor in Dubai’s investment decisions would be whether its bid to host the World Expo 2020 is successful. A decision on which country will host the fair is expected this year; local officials have estimated the event could draw 25 million visitors to Dubai.

Iyad Malas, chief executive of local shopping mall and hotel operator Majid Al Futtaim, said Dubai’s development would depend on two things: tourist numbers and population growth.

At some point, growth in the air travel industry will slow, affecting the whole economy through the retail and hospitality industries. But the emirate is not close to reaching that point, so its ambitions are reasonable, Malas said.

“You have to have a vision that is ambitious. If I set the target high and I hit 75 percent of it, I’m happy. If I set it low and achieve it year after year, I will never have strong growth.”

Thailand's spoiled rice

30 March 2013 Reuters

Thailand is set to sell 500,000 metric tons of rice on world markets at a loss as it scrambles to offload a record stockpile deteriorating in warehouses filled with grain bought under a government program.

The two-year-old policy of paying farmers more for rice than it is worth on international markets is straining the country’s finances, has cost Thailand its spot as world’s top exporter of the grain and has provoked concern at the World Trade Organization.

Although officials publicly deny that the politically sensitive effort is in a crisis, the government is looking at measures to stem ballooning losses that so far are estimated at $6 billion.

A Thai official also said this month that the government might cut the price it pays to a level closer to the value of rice in international markets, prompting an angry response from farmers. Bangkok may also stop buying lower-quality strains of the crop.

Rival producers like India and Vietnam, which have stepped into the vacuum caused by the exit of Thai exporters from the market, are watching closely in case Thailand dumps millions of tons of rice onto well-supplied world markets, causing prices to slump.

In questions brought before a World Trade Organization committee this week, the United States again challenged Thailand to explain how it planned to dispose of the rice.

Government stockpiles are estimated at a record 17 million metric tons of milled rice, nearly twice what Thailand used to export each year before the program was implemented two years ago.

An unraveling would be politically costly for Prime Minister Yingluck Shinawatra, given that the program helped her win millions of rural votes when she was elected in 2011.

Farmers say payments have been delayed, with the state bank running the program complaining that it has received only a fraction of the funds needed.

“The government might have run out of money. I’ve had to wait for two months,” said Prasert Chamsopa, 66, a farmer in the rice-growing province of Suphan Buri who had sold 35 tons from his paddy to the government.

According to the agricultural cooperative in the province, which is north of Bangkok, more than 1,000 farmers have experienced similar problems and were getting ready to stage coordinated protests with farmers in other provinces.

That leaves the government in a bind: It is committed to buying yet more rice, which it has no room to store and which it is unable to sell without suffering a huge loss.

One grade of Thai rice was offered at $545 per metric ton this week, down from $570 early this year but still above offers for the same grade from India of as much as $450 per ton and from Vietnam of about $400 a ton.

A Commerce Ministry official said that Thailand planned to release as much as 500,000 metric tons from older crops onto the market by April, and that the sale would be based on market prices.

“We accept that some of the rice is from the previous crop, which is quite old and the quality is not very good, so it’s impossible to ask for very high prices,” said Thikumporn Nartworathus, deputy director of the foreign trade department of the Commerce Ministry, adding that it would be sold via a tender or government-to-government deals.

Traders and industry officials say the government will suffer big losses if it sells now with plentiful supplies available from India and Vietnam and with the baht hitting a 16-year high this month, making Thai rice more expensive in dollar terms.

The intervention program, criticized by academics, economists and the International Monetary Fund, is coming under increasing global scrutiny.

At the WTO’s agriculture committee meeting this week, Washington asked Thailand to say whether stocks were being exported or used domestically.

In questions seen by Reuters, the U.S. delegation said Thailand had previously said that data on the program, including figures on rice exports, were on government Web sites, but that the data had been discontinued.

A potential trade complaint is unlikely until Thailand responds formally, but Australia, Canada and the United States urged Bangkok to reply promptly. The European Union also said that it was concerned and that Bangkok needed to say clearly how it would release stocks.

The Thai government is paying 15,000 baht, or $513, per metric ton, so export prices are as much as a third higher than those for equivalent grades from India or Vietnam. That explains why, for the first time in three decades, Thailand was not the world’s biggest rice exporter in 2012.

In early March, the Thai Commerce Ministry tested the waters by suggesting that the government could stop paying the high price for rice.

The reaction in the countryside was immediate and angry. The Thai Farmers Association threatened to take thousands of farmers to Bangkok to protest.

The Commerce Ministry said the government might also consider no longer buying 18 varieties of fast-growing rice of lower quality, which farmers have used to squeeze in more crops to cash in on the intervention program.

The government is running short of properly equipped warehouses, and even if the rice is stored in good conditions, its quality could start deteriorating after a year or two.

Commerce Minister Boonsong Teriyapirom said in October that 7.3 million metric tons had been sold in government-to-government deals, but the foreign countries he named have not confirmed that, and exporters have seen no port activity to back it up.

Samarendu Mohanty, a senior economist at the International Rice Research Institute, based in Manila, said that while rice consumption in 2013 should remain strong, global rice prices would fall if Thailand unloaded its stocks.

Kiattisak Kalayasirivat of Novel Agritrade warned that prices could drop by $20 to $30 per metric ton if Thailand sold stocks, although demand from Africa or China would probably provide support.

Industry officials say something will have to give.

“The government can’t go on with this scheme, and it needs to adjust things, otherwise it could mean a collapse of our fiscal stability, affecting each and every taxpayer,” said Vichai Sriprasert, honorary president of the Thai Rice Exporters Association.


The rebirth of Don Muang

28 March 2013

Bizarre. The Airport of Thailand public company has announced that it will allow all airlines to use Don Muang international airport again.

This is the airport that was closed in 2008 when the new Suvarnabhumi airport was opened.

First it was Close down DM

Then it was open DM to budget airlines

Now it is open DM to anyone including international Airlines.

The decision was made by the airport company's board of directors, and will have to be approved by the Cabinet, as 70 per cent of the company's shares are still owned by the government.

The company has revealed that airlines in the One World group, led by Hong Kong-based Cathay Pacific airway, has expressed interest in using Don Muang airport.

The airlines group also suggested that Don Muang airport be expanded to allow for giant Airbus A380 aircrafts to land and take off from there. Now that would be a sight. A trip to the golf course would be so much more entertaining that watching a few AirAsia A320s.

Don Muang airport is currently operating as an airport for budget airlines. The decision will turn it into a full-service airport.

Bangkok's main international airport, Suvarnabhumi, has the capacity of 45 million passengers per year. Now it is handling over 51 million passengers per year.

The Airport of Thailand expects Don Muang airport to ease the crowding problem at Suvarnabhumi while the country's number one airport is being expanded to allow it to handle 60 million passengers by 2017.

Of course what they should have done is expand Suvarnabhumi to three runways and at least 70 million passenger capacity. The problem was that the new airport opened with only a fraction more capacity than the old airport that it replaced.

Qantas Emirates alliance gets approval but hardly a ringing endorsement

27 March 2013

The Australian Competition and Consumer Commission has given the final go-ahead to Qantas's global alliance with Emirates, and ACCC chairman Rod Sims has imposed only one condition - the airlines must maintain the services they are currently running across the Tasman Sea to New Zealand. They account for about two thirds of the total passenger capacity on the route, and Mr Sims wants to ensure that services are not cut back.

The ACCC press release is here.

The alliance also has just a five year initial approval. But both airlines will look different in five years so will likely welcome the opportunity to re-assess the relationship.

The thing to remember here is that the ACCC exists to protect the Australian consumer; it does not exist to protect Qantas or to safeguard jobs in the airline. The ACCC has acted to ensure competitive choice. It is not responsible for Qantas imploding on the routes to Europe by giving away customers to Emirates.

The ACCC says that the deal offers "material but not substantial" public benefits, including increased access to flights and destinations, improved connectivity and flight times and a merged frequent flyer programme.

Not exactly a ringing endorsement. Mr Sims said while the watchdog believed travellers would benefit from the airlines' alliance, it dismissed Qantas' claim that its international arm would suffer if the tie-up with Emirates was not allowed to go ahead.

So what does it all mean? Qantas immediately expands the number of destinations it offers. Except that you will be flying on an Emirates jet.

Travellers to Europe from Brisbane, Adelaide and Perth will all fly on Emirates to Europe. Qantas has effectively given up on those routes to focus on Asia. But this is a deal which means that from Sunday Australians who used to choose Qantas to fly to London from Brisbane, Adelaide and Perth by changing between Qantas flights at Singapore’s Changi Airport are now being ‘expected’ to fly Emirates all the way.

This is a huge giveaway by Qantas, and may be seen as a slap in the face for loyal customers not readily served by the remaining Qantas flights to London via Dubai from Sydney or Melbourne, which will both have a daily QF A380 each way.

As the ACCC has noted on several occasions since the deal was proposed, there are amply competitive alternatives to Qantas and Emirates on the routes to London and Europe, and, to summarise, it is a competition authority, not a Qantas preservation agency.

Qantas will fly a daily A380 from Melbourne and Sydney to Dubai. These flights connect to Emirates flights to the Middle East, Africa and Europe. The airplanes both continue onto London. For now. I can see that changing in future. Seven A380s a day from Dubai to LHR is a lot of seats.

Qantas argues that the benefits of the deal are already clear. Early booking data suggests bookings into Milan are 17 times higher than they were a year ago; bookings into Barcelona are 12 times higher and Manchester has come from nowhere to be the second-biggest destination in the expanded European destination schedule.

Qantas's domestic airline is also getting a boost from booking onto domestic flights by Emirates. In the past month Emirates has booked more than 5000 sectors. Qantas's old alliance partner, British Airways, booked 1600 Qantas sectors in all of last year.

Though the ACCC does not have a responsibility for the success of Qantas the company is aiming to get the international business into profit by 2015. It may happen quicker.

On Sunday 31st a celebration flight jets out to Dubai along with journalists and VIP guests including Transport Minister Anthony Albanese, Emirates president Tim Clark and infrastructure and transport department secretary Mike Mrdak. Four flights are scheduled - one from Melbourne, one from Sydney and two from London. All arriving in Dubai on 1 April.

Don't kiss, don't swear: rules of a Dubai stopover

27 March 2013 The Melbourne Age

If you really want to know how others see the city that we live in here is a example. With Qansta starting its flights thorugh Dubai on 1 Aprili the Melbourne Age gives a rather austere view (IGuess they have never been here) of what may and may not be done in Duabi.

But don't just read the article - head online and look at the comments that have been generated!

"Australians travelling through Dubai have been warned they are at risk of fines or jail for cultural misdemeanours as simple as holding hands in public, swearing, harassing women with a prolonged stare or wearing inappropriate clothing.

''Just one person needs to take offence and to make a complaint and you can be in serious trouble and be held in custody for a long time if you challenge the charge,'' said Radha Stirling, founder of the non-profit organisation Detained in Dubai, which helps people in legal difficulty in the United Arab Emirates.

Qantas will enter a partnership with Emirates this Sunday that will result in its flights to Europe being routed through Dubai instead of Singapore.

The Department of Foreign Affairs and Trade warns on its website that de facto relationships, homosexual relationships and acts of adultery and prostitution are subject to severe punishment.

''It is also against the law in the UAE to share the same hotel room with someone of the opposite sex to whom you are not married or closely related,'' DFAT cautions. ''These laws apply to residents as well as visitors.''

Drinking in public or being drunk in public is another offence that can land travellers in strife. Australian travellers of Jewish background who are Israeli passport holders can only transit through Dubai and are not allowed to leave the airport because the UAE is a participant in the Arab League boycott of Israel.

"Qantas has said that Jewish and Israeli passengers will be safe transiting through Dubai, provided they don't leave the airport,'' Ms Stirling said. ''But what happens in the event of a catastrophe or severe weather when airport hotels are full?''

The partnership with Qantas and Emirates comes into effect on March 31, and will result in more Australians in Dubai than ever before, adding to the 50 million people -- including 2 million Aussies -- who already pass through there each year.

''While this is a new hub for Qantas, many Australians are already familiar with it,'' a Qantas spokesman said.

''Different rules apply in many of the countries we fly to, which is the very nature of international travel.

''We encourage all our passengers - whether they are travelling to Asia or the US or the UAE - to check the Australian government's Smart Traveller website so they are fully informed of local laws and customs before they board our aircraft,'' the spokesman said.

Qantas has been providing cultural training for its staff before the alliance with Emirates, advising that customer issues with UAE passengers may be best solved by a man.

''Don't take offence, don't continue to try and sort something out, simply hand it over to a male colleague. It doesn't matter whether you are the manager or supervisor, the fact that he is male will make all the difference,'' is the advice.

Laurent Chaudet, the general manager of the Pullman Mall of Emirates hotel, said: ''Australians might think of Dubai as an ultra-modern destination, but they need to remember that it is a Muslim country with traditional values.

''The simple advice would be to wear respectful clothing, avoid drunkenness and use of foul language, and respect the culture of the people here.''

Paul McGrath, the managing director of Australia's largest independent travel company Creative Holidays, is enthusiastic about Dubai coming on to the radar with the Qantas/Emirates alliance.

He said 40 per cent of people booking Europe trips with the company already stop over in Dubai for an average of four days on the way back.

Mr McGrath rates Dubai for its diversity, from shopping to desert experiences.

''I'd say that people just have to be conscious and mindful of the cultural differences. Be aware and be informed and there really isn't that much of a problem. They are lovely people, gracious and gentle ...''

Several tourists and expatriates have run afoul of conservative rules in the UAE in recent years.

In 2010, a British couple were arrested and sentenced to a month in jail for kissing in public in Dubai.

In 2009, an Australian man was arrested for allegedly saying “What the f---?” to a plainclothes police officer who grabbed his arm at Dubai Airport. He was forced to remain in Dubai for months before being let go with a fine.

In the most prominent case, a British couple were jailed for three months in 2008 after having drunken sex on a public beach.

Two Emirati women started an online campaign last year, called UAE Dress Code, urging foreigners to respect local sensitivities and not dress provocatively.

DUBAI RULES
The drinking age is 21. Drinking in public or being drunk in public are not tolerated.
Offensive language, spitting, aggressive behaviour and smoking outside designated areas are not tolerated.
Public displays of affection such as holding hands or kissing are not tolerated.
It is customary for men to shake hands however Emirati women tend not to offer their hands to men.
Men should avoid staring at local women or attempting to make eye contact.
During Ramadan while Muslims are fasting from dawn to dusk, non-Muslims can only eat and drink in screened-off areas in many hotels and restaurants.
Wear respectful clothing. Swimwear is appropriate by the pool or on the beach but frowned on elsewhere. Low-cut dresses or tops, short skirts and short dresses are not recommended in public.
Men should wear a T-shirt or shirt at all times.

*Source: Dubai Department of Tourism and Commerce Marketing."

Why the Cyprus bail-out will fail

26 March 2013

The Economist below describes the Cyprus bail-out as better but painful.

But what the commentary misses is that the country has been left in a near - impossible situation by the terms of its rescue, and is likely to require another bailout.

Jeroen Dijsselbloem, who chairs meetings of eurozone finance ministers said publicly that Cyprus was not such a special case after all. In interviews with the FT and Reuters Dijsselbloem said Cyprus would be used as the model for future bailouts.

Though many suspect that Dijsselbloem's ideas on financial management depend on telephoned instructions from Angela Merkel.

Dijsselbloem's comments were an open invitation to any investor with more than €100,000 in a eurozone bank to remove it without delay, which some then did.

Here is the problem: the €10bn (£8.5bn) loan from the European Union, the European Central Bank and the International Monetary Fund means Cyprus will have a debt-to-GDP ratio of 140% and an economy that is on course to shrink by at least 20% in the next two or three years. In those circumstances an already unsustainable debt ratio will continue to increase. Ultimately the country's creditors will either write down a good chunk of the debts or Cyprus will leave the euro.

In truth, leaving the single currency looks the better option. Cyprus previously had a flawed economic model; now it has no economic model at all. The financial services industry will be wiped out and membership of the euro means there can be no boost to the only alternative source of revenue – tourism – through a cheaper currency.

Cyprus was, in many respects, the eastern Med's version of Iceland, another small island that allowed its banks to balloon in size. But Iceland is not a member of the euro, and its recovery from financial crisis has been aided by devaluation.

For the time being, though, Cyprus remains shackled to the eurozone.

Dijsselbloem has a point when he says it is unfair that Europe's taxpayers should be continually asked to foot the bill for bank losses, and Cyprus has certainly been used as the laboratory mouse for a different approach.

But the botched rescue has done nothing to draw a line in the sand. On the contrary, investors big and small now have the sneaking feeling that their savings could be at risk in the event of a future crisis.

A better deal, but still painful

25 March 2013 The Economist on the Cyprus bail-out

It WAS an appalling way to reach a decision, but in the end the euro zone’s €10 billion ($13 billion) bail-out package for Cyprus, agreed in the early hours of March 25th, was something approaching a reasonable compromise. At any rate, it dealt with the most egregious errors of the previous all-night deal.

It keeps Cyprus in the euro zone. And it restores the promise to protect bank deposits covered by the EU-mandated €100,000 deposit guarantee.

Cyprus is the fourth euro-zone country to receive a full bail-out after Greece, Ireland and Portugal (or the fifth, if one counts the partial bail-out for Spain’s banks). But unlike previous rescues, the package for Cyprus left a large part of the island’s financing needing to be found from its outsized banking sector—in particular from depositors, many of them Russian businessmen.

On March 16th Cyprus’s president, Nicos Anastasiades, desperate to protect Cyprus’s status as an offshore banking model for Russians, had decided to save the two biggest banks and thus to spread the pain thinly. He would have applied a hefty tax to all depositors: 9.9% for those too big to be covered by the EU-mandated €100,000 deposit guarantee, and 6.75% for the smaller depositors.

But after a week of brinkmanship—including protests by Cypriots, the extended closure of banks to avoid the outrush of money, a failed attempt by Cyprus to throw itself at Russia’s feet, an ultimatum by the European Central Bank and an eleventh-hour threat by Cyprus to leave the euro zone—a different decision was made: to apply the pain much more intensely, but on a smaller number of large depositors.

The country’s second-biggest bank, Laiki, would be wound down. Viable assets and insured deposits would be put into a “good bank”. Another €4.2 billion worth of uninsured deposits would be placed into a “bad bank”, to be disposed of, with no certainty that big depositors will get any money back.

The treatment of the biggest bank, Bank of Cyprus, was a bit less harsh. It is to be restructured severely by wiping out shareholders and bailing in bondholders, both junior and senior. Uninsured depositors would probably incur haircuts of the order of 35%, said senior sources involved in the negotiation. The “good bank” emerging from Laiki would be merged with Bank of Cyprus.

Jeroen Dijsselbloem (rubbing his eyes in the picture above), who chairs the euro zone’s group of finance ministers, said the deal was better than the previous one in several respects. To begin with, it concentrated on the cause of Cyprus’s woe—the crippling of its two largest banks, which were heavily exposed to Greece. Moreover it would restore the protection of guaranteed deposits. And it would establish a sensible hierarchy of creditors when banks have to be wound up or restructured. Under the previous agreement, senior bondholders (who, admittedly, account for a relatively small sum) would have been spared while even small depositors would have been hit.

After the upheavals of the past week, and months of earlier negotiations, the euro zone has ended up with a deal that is similar to the solution first proposed by the IMF, which was backed by Germany but rejected by Cyprus (and to some extent by the European Commission). The IMF had suggested winding down both Laiki and Bank of Cyprus and splitting them into good and bad banks. Now Mr Anastasiades has salvaged the shell of the Bank of Cyprus, but at the cost of encumbering it with bad assets. The scale of the bail-in that will be required to bring it to the target capital-ratio of 9% remains unclear.

It took a popular protest, and a threat by the European Central Bank to cut off liquidity to Cyprus by March 25th if a deal were not reached, to change Mr Anastasiades’s mind about trying to protect those big foreign depositors at the expense of small domestic savers.

When he travelled to Cyprus to try to agree a new package on March 24th, the Cypriot president tried to push the issue out of the hands of finance ministers in the "euro group" and onto the lap of the leaders who would be called for a special summit. At one point, participants said, Mr Anastasiades threatened to resign, even to pull Cyprus out of the euro zone.

In the end, he relented. The European leaders, fed up with Cyprus’s tactics, had refused to yield. Their confidence was increased by the fact that depositors did not start bank runs in other troubled parts of the euro zone, and the market's initial nervousness soon abated. Germany and other creditor states are growing weary of successive bail-outs. Even France, usually the champion of “solidarity”, could not summon the will to bail out Cyprus’s “casino” banking, as Pierre Moscovici, the French finance minister, put it.

So as well as exacting their bail-in, they declined to offer any more money, even though the Cypriot economy has been further weakened by the upheavals of recent days. The creditors were helped by the IMF’s view that too big a loan would simply make Cyprus’s debt unsustainable.

The immediate question is whether Mr Anastasiades can get his recalcitrant parliament, which had rejected the previous package by a vote of 36-0, to support the effective dismantling of Cyprus’s offshore banking system.

A further question is when Cypriot banks will able to reopen, and when “temporary” restrictions on the movement of capital—the first time any have been imposed during the euro-zone crisis—will be lifted. Big deposits in Bank of Cyprus will be frozen until their fate is settled.

Then another point of uncertainty is to do with Russia's reaction. The euro zone hopes that it, too, will contribute to their effort by rescheduling its €2.5 billion loan to Cyprus. But now that its own citizens are being stung for billions of euros' worth of deposits, the Kremlin may not be so sympathetic.

Nobody doubts that, after such a severe blow to its lucrative banking sector, Cyprus will be pushed into a harsh recession. Some sources in the troika tentatively estimate that GDP will shrink by about 10% before any hope of recovery.

Perhaps the biggest question is this: once the banks have been cleaned up and shrunk, where will Cyprus find economic growth? The promise of offshore gas deposits is still too uncertain, and tourism may well decline if Russians suddenly find the island to be less hospitable to their money.

Whether the euro zone has gained any credibility for this round of clear-eyed decision-making is a different matter altogether.

Multinational Watford look to top flight and a solid financial future

25 March 2013

"In a bitingly cold, otherwise empty Vicarage Road this week on Wednesday, Gianfranco Zola, former Chelsea, Napoli and Italy playing legend turned Watford manager, watched with hands clasped behind his back as his eclectic squad of nationalities skipped through a nine-a-side training joust. The goals were squeezed into less than half the pitch, but the players were relishing the game, exhibiting an intricacy of skills.

Matej Vydra, the 20-year-old striker who has scored 20 times in Watford's eye-catching ascent to third place in the Championship, was away on international duty with the Czech Republic, but several of his seven fellow loan players from the Italian club Udinese were in the session. Joel Ekstrand, the Swedish central defender, was passing the ball unruffled; Fernando Forestieri, the Argentinian forward whose loan from Udinese was converted to a permanent signing in January, prowled constantly for a goal past Jack Bonham, the 19-year-old Watford academy graduate. Geoffrey Mujangi Bia, on loan from Standard Liège, crossed high and looping, and as the ball came down, Alex Geijo, another Udinese loanee, smacked a clean left-foot volley meatily into the net.

Sudden arrivals after Watford were bought in June last year by the Pozzo family – the Italians who own Udinese, and the Spanish club Granada, from whom two more loan players were imported – these loan stars have played Zola into sight of a remarkable promotion to the Premier League. However, Watford's rise this season has attracted insistent criticism around the Football League.

Watford's critics argue that while they may not be breaking the rules by importing so many loan players, they are in breach of the spirit of them. Clubs are limited to just five loan players in a matchday squad of 18, a measure designed to protect clubs' identities and prevent them being swallowed up as feeders. Watford are seen as having taken advantage of a loophole, that loan players from clubs in other countries must sign until the end of a season, so are officially classed as permanent transfers. Watford under the Pozzos have brought in 14 loan players: nine from Udinese until Forestieri signed permanently; defender Daniel Pudil and midfielder Ikechi Anya from Granada, Mujangi Bia from Liège, as well as Matthew Briggs from Fulham and Chelsea's England Under-21 international defender Nathaniel Chalobah.

Fielding so many loanees has created the impression that the famous old Hornets have become a subsidiary training operation for Udinese, peopled by a temporary squad. Most outspoken has been the Crystal Palace manager, Ian Holloway, who described what is happening at Watford as "ludicrous".

The League appear to agree, and have recommended change which will be voted on at their AGM this summer – to include international loan players within the five permitted, and a maximum of four from any one club. After those proposed changes, Watford would not be able to field so many on-loan players.

Around football and among fans, there is also a worry that the time-served Watford youth system has been undermined by the club's decision to maintain it only at category three, not to upgrade to category one in football's new Elite Player Performance Plan (EPPP) system.

Watford have grown a little tired of having to defend themselves, and after training, Zola himself pointed out, legitimately and a touch wearily: "We did not break any rules."

When you go to Vicarage Road, they give an arrestingly different and more positive account of the club's future. The chief executive, Scott Duxbury, emphasises that the Italian owners, independently wealthy after selling the family company to Bosch, have owned Udinese for 27 years and made a notable success of it. From 1986, when Giampolo Pozzo bought the club, Udinese were built up gradually until they are now solidly established in Serie A. They developed a strategy, after early, lavish spending brought poor results, of investing in young players, selling them on and reinvesting – Alexis Sánchez to Barcelona for €26m last summer being the most recent outstanding example. Gino Pozzo, son of the family business's founder, Giampaolo, stated on taking over that they are interested in investing in their English club for similar measured progress, not a rapid sprint to the Premier League's crock of gold, fortified by loan deals.

"We are here for the long term," he promised. "This is not a case of a foreign owner with an injection of money looking for a quick return. We wish to establish Watford as a Premier League club … self-sufficient over time. Longevity to us is key to success. It is only over many years that success can be judged."

Pozzo pledged that they plan a similar strategy to that at Udinese, basing it, after an initial boost with loans from their other clubs, on their extensive scouting network and youth development. Duxbury argues that the decision not to run the highest EPPP category is because Watford trust their existing academy, and consider the new U21 league played by category one clubs to be a comfort zone for young players, not the finishing school the Premier League intends.

Duxbury and Pozzo have committed that when the club has settled, progress will be based on permanent signings, and Duxbury said that when the league's loan rules change this summer, they will look to sign permanently several of those imports currently on loan. English football's prominence, and the windfall millions paid to clubs winning promotion to the Premier League – much more than in Serie A where TV rights are sold by clubs individually – spurred the Pozzos to buy a club here. They contacted Gianluca Nani, now the technical director, who was at West Ham with Duxbury and Zola; Pozzo said he is considering Watford the family's main football venture, and certainly not a nursery club for Udinese. Supporting Duxbury's argument that the club are lucky to have the Pozzos is Watford's difficult recent history. "They are the benchmark of ownership in European football," Duxbury told the Observer. "They are long-term, sensible, reliable businessmen, who are involved in football not to make a profit – they invest all money back into their clubs. They are competitive; they want to win."

With the 1980s heyday under the ownership of Elton John long over, Watford struggled after their season in the Premier League of 2006-07 and suffered a traumatic year before the Pozzos took over. Then owned by Laurence Bassini, a Londoner who cited his business as property development, the club ran up a £2.6m loss in 2011-12 and sailed close to administration before the Pozzos bought Bassini out and took on the £13m debt. According to Watford's accounts, Bassini's company charged the club £242,000 in consultancy fees. The accounts also allege that Bassini's company owed the club £2m, which he denies. An independent football disciplinary commission had been investigating the Hertfordshire club, with the alleged misconduct charges arising from the handling of two financial transactions in 2011 which occurred during Bassini's tenure as owner and director – one of which related to the transfer of striker Danny Graham to Swansea in June 2011.

This week, the commission banned Bassini from involvement in football for three years after finding him guilty of "deception" and "misconduct". Watford emerged without a fine or points deduction because the misconduct, borrowing millions against future income without informing the League as required, was found to be Bassini's own work. Watford have instead received a transfer embargo of sorts which runs until 31 August and requires League approval for all signings. Bassini is appealing and says he will fight to clear his name but there was, on a grey afternoon, a palpable sense of relief around Vicarage Road.

In his little office, Zola smiled his winning smile, and said he is happy. There was a congratulations note resting on the table – from Barry Fry, on Zola's February Championship manager of the month award – and the Italian explained: "We have so many on loan because the club was bought very soon before the beginning of the season; we assembled the team at the last minute. This was the best way, to see how good they are, and if they want to stay with us."

The Italian said he is surprised by how well the team came together after losing four of the first six matches of the season, including a 5-1 defeat at Derby: "It was a very big challenge, to have so many players, 37 or 38, and so many foreign players, to mould them into a team and train them also."

Then he smiled again: "But we are working it out quite well. And we hope now for a good ending to this season. The project is good."

Pozzo has pointed out that Granada, who were also in financial trouble when the family bought the club in 2009, were similarly stocked with Udinese loans initially, but now, two promotions later and in La Liga, are buying their own players. Watford have a £9m budget for football, including wages, and Duxbury stressed he has to develop the club commercially, and attract more fans, if he is to have more money to invest in the team.

In the Premier League, contrary to some misconceptions, international loan players are classed as transfers and so permitted in match squads without limit, but Duxbury says Watford wants to sign most of the players permanently whether they go up or not.

All of this is a first for English football, and unsettling for many. But in the game's ownership landscape, which increasingly features investors from overseas with no previous connection to football, the Pozzos bring experience, proven success, and a much more coherent plan than most."

Hong Kong's top court legalises selective discrimination

25 March 2013

Hong Kong's top court has ruled against two Filipino domestic workers seeking permanent residency, the final decision in a case that affects tens of thousands of other foreign maids in the city.

The Court of Final Appeal was unanimous in its ruling on Monday, siding with the government's position that tight restrictions on domestic helpers mean they do not have the same status as other foreign residents.

Lawyers for the two had argued that an immigration provision barring domestic workers from permanent residency was unconstitutional.

The decision means Evangeline Banao Vallejos and Daniel Domingo are not allowed to apply to settle permanently after living at least seven years in Hong Kong. Vallejos has worked in Hong Kong since 1986 and Domingo since 1985. Neither appeared at court.

"We are very disappointed," said Mark Daly, a lawyer for the pair. He said Vallejos was speechless after learning about the decision.

"While we respect the judgement we disagree with it," Daly said. He added that the ruling is "not a good reflection of the values we should be teaching youngsters and people in our society."

The case has split the city, home to nearly 300,000 maids from mainly Southeast Asian countries. Some argue that barring maids from applying for residency amounts to ethnic discrimination.

But other groups have raised fears that the case would result in a massive influx of maids' family members arriving in Hong Kong, straining the densely populated city's social services, health and education systems. Supporters of the maids say those fears are overblown.

Members of an activist group chanted "We are workers, not slaves" and other slogans on the courthouse's front steps after the ruling was released.

"Today is a very sad day for migrant workers in Hong Kong," said Eman Villanueva, secretary-general of United Filipinos in Hong Kong. "The message from the Court of Final Appeal is very unfair and discriminatory."

Hong Kong is a special administrative region of China and permanent residency is the closest thing it has to citizenship.

Foreigners who work in other professions are eligible for permanent residency after living in Hong Kong for seven years. Those who have it can vote and work without needing a visa.

Government figures cited by a lower court in this case said an estimated 117,000 foreign maids had been in Hong Kong for that length of time as of 2010

Cyprus deal done; now for the fall-out

25 March 2013

It is a holiday in Cyprus today. So there is only a limited reaction to the deal that has been to solve Cyprus' financial crisis.

The deal is done but leaves no one happy and sets a worrying precedent.

A meeting of eurozone finance ministers that started six hours late reached an agreement in the early hours of Monday morning to agree the fine print of the deal. Savers with deposits of less than €100,000 (£85,000) will be spared but there will be heavy losses inflicted on the deposits of the wealthy. Since when has Euro100,000 in savings defined someone as wealthy.

Laiki, or Cyprus Popular Bank, is to be closed, with its good assets transferred to Bank of Cyprus, the country's biggest bank. This will include substantial job losses.

A €100 limit was imposed on ATM withdrawals, with more stringent capital controls to follow when the deal is finalised.

The agreement outlined early on Monday came close to what the IMF and Eurozone had demanded a week ago and which had been rebuffed by the Cypriot parliament. A few variables have been changed (such as the protection of smaller savers' deposits) but little else has changed.

There are few details yet on the precise details of the agreement but the assumptions are that it includes:

• A €10bn bailout that will shut down Cyprus' second largest bank and inflict heavy losses on uninsured depositors, including wealthy Russians.

• The deal will spare the country a financial meltdown by winding down Popular Bank of Cyprus, also known as Laiki, and shifting deposits below €100,000 to the Bank of Cyprus to create a "good bank".

• Deposits above €100,000, which under EU law are not guaranteed, will be frozen and used to resolve debts, and Laiki will effectively be shuttered, with thousands of job losses.

The Cypriot President Nicos Anastasiades, who has been in the job for less than a month, looks finished. And if you look at what's happened to leaders of other peripheral euro countries who've accepted the Troika's structural-adjustment programmes, they've nearly all been toast. The one major exception is Madrid's Rajoy.

But should it have come to this; the farce of eleventh-hour negotiations where it has appeared that the fate of the 17-member currency area hung in the balance.

The biggest anomaly of all is that Cyprus will introduce capital controls in an economic area whose main purposes is to facilitate the free flow of capital.

Two other precedents:

1. The EU apparently sanctioning theft from the life savings of small savers. Anyone living in another small, weak, euro member state should take note.

2. And you've also had a euro member turning away from its 16 fellow members and towards a non-EU country for help and political support. Just imagine if Cyprus had been dealing with a serious partner, rather than Russia?

Cyprus now faces a Greek-style depression and years of austerity. The national business model (based on offshore funds) has been curshed - the hot money's already fled to Latvia; and it won't be coming back to Cyprus).

The general tenor of this week's communications from the troika of the European commission, the European Central Bank and the IMF has been that Cyprus is a tiny economy with some idiosyncratic problems that cannot be read into the rest of the euro area. The Cypriot economy is worth only 0.2% of the euro area's GDP.

As officials in Cyprus will tell you, the island's problems only really took off after their banks were hit by massive write-offs on holdings of Greek bonds. Those write-offs were negotiated by Athens with the troika and the problems they would pose for Cyprus were evident. Yet, amazingly, European officials did next to nothing to shore up the island's financial system. There was ample time to protect savers with Cypriot banks and to restructure the institutions.

The troika has treated Nicosia with a toughness and a thoughtlessness that it would not apply to bigger and less peripheral nations. This is not a new trend – Madrid's Mariano Rajoy was treated more respectfully in his bailout dealings than Athens's George Papandreou – but it was massively extended last weekend, in the initial agreement to raid the bank accounts of ordinary Cypriots.

For all its so called unity the EU does not manage on a collective basis. It deals with one crisis at a time without evaluating the fallout that can impact other EU members.

Worse, those European politicians and bureaucrats who condemned Cyprus's outsize banking sector were cheering it into the euro just five years ago.

The essential design flaw in the eurozone is that it is not really a monetary union; it is just a common currency area, lacking the essential feature that ensures financial integration, namely a banking union. The latest piece of mismanagement over Cyprus makes the attainment of a banking union, on which progress has been negligible, even more difficult.

Levies or taxes on deposits in banks are now a genuine threat. It is not just the citizens of the EU that should be concerned.

Qantas flight times from Dubai

24 March 2013

The Emirates Qantas alliance starts on 31 March 2013.

The major impact at DXB will be the two daily Qantas flights to and from London that will now route through Dubai rather than through Singapore.

This means that between the two airlines there will be seven (yes seven) daily A380 flights from London to Dubai and vice versa.

The first flights from London to Dubai are on 31 March leaving Dubai for Australia on 1 April.

The first flights from Dubai to London are on 1 April; they leave Australia on 31 March and fly overnight to Dubai.

QF 001/002

QF 009/010

Sydney dep

17.05

Melbourne dep

16.25

Dubai arr

00.35 (next day)

23.25

Dubai dep

02.05

01.00 (next day)

London arr

07.30

05.30

London dep

21.30

22.30

Dubai arr

07.20

08.20

Dubai dep

09.20

09.50

Sydney arr

06.00 (second day)

Melbourne arr

06.15 (second day)

The strange thing about this schedule is how much time the QF A380s sit in London going no where. EK uses its fleet so much more efficiently.

Emirates founder retires

23 March 2013

Words well said as an aviation legend takes a very belated retirement.

"After more than 60 enterprising years in aviation, including 35 years in the Emirates Group, Sir Maurice Flanagan, Executive Vice Chairman, Emirates Airline & Group, has decided to retire in April.

Maurice joined dnata in 1978, after 25 years of stellar service in British Airways. Tasked with launching Emirates in 1985 with a small, enthusiastic team of experts, he led from the front as Managing Director of the fledgling airline.

By then, Maurice was already an influential aviation veteran, while I had recently graduated from university. Since those early days, he has been a mentor and guide, and I will always cherish the instant chemistry we shared and the subsequent friendship we forged through the years.

He has played a strategic role in the phenomenal growth and agility of the Emirates Group and influenced Dubai's significant standing on the global stage.

In the aviation industry, he is a legend. To us, he will always be a founder, a visionary, an exceptional leader, and above all, an empathetic and generous human being.

We will all miss him. I bid farewell to this extraordinary trailblazer and wish him a well-earned and richly deserved retirement."

Ahmed bin Saeed Al Maktoum
Chairman & Chief Executive Emirates Airline & Group


President Obama Addresses Israeli People – “I Believe Your Future Is Bound to Ours”

21 March 2013

Below are the remarks, as prepared for delivery, made by President Barack Obama in Israel during his first presidential visit to the nation.

But the fear is that this is Obama the cheerleader - standing on the sidelines - never taking a risk by becoming a part of the fight.

The trouble with Obama's great speeches (and this like Cairo before is one of them) is they raise such an expectation that he can deliver change. History suggests that change will not happen - leaving him as full of sound and fury, meaning nothing.
--------------------------------------------------------------------------------

Shalom. It is an honor to be here with you in Jerusalem, and I am so grateful for the welcome that I have received from the people of Israel. I bring with me the support of the American people, and the friendship that binds us together.

Over the last two days, I have reaffirmed the bonds between our countries with Prime Minister Netanyahu and President Peres. I have borne witness to the ancient history of the Jewish people at the Shrine of the Book, and I have seen Israel’s shining future in your scientists and entrepreneurs. This is a nation of museums and patents, timeless holy sites and ground-breaking innovation. Only in Israel could you see the Dead Sea Scrolls and the place where the technology on board the Mars Rover originated. But what I’ve looked forward to the most is the ability to speak directly to you, the Israeli people – especially so many young people – about the history that brought us here today, and the future that you will make in the years to come.

Now I know that in Israel’s vibrant democracy, every word and gesture is carefully scrutinized. But just so you know, any drama between me and my friend Bibi over the years was just a plot to create material for Eretz Nehederet.

I also know that I come to Israel on the eve of a sacred holiday – the celebration of Passover. And that is where I would like to begin today. Just a few days from now, Jews here in Israel and around the world will sit with family and friends at the Seder table, and celebrate with songs, wine and symbolic foods. After enjoying Seders with family and friends in Chicago and on the campaign trail, I’m proud to have brought this tradition into the White House. I did so because I wanted my daughters to experience the Haggadah, and the story at the center of Passover that makes this time of year so powerful.

It is a story of centuries of slavery, and years of wandering in the desert; a story of perseverance amidst persecution, and faith in God and the Torah. It is a story about finding freedom in your own land. For the Jewish people, this story is central to who you have become. But it is also a story that holds within it the universal human experience, with all of its suffering and salvation. It is a part of the three great religions – Judaism, Christianity, and Islam – that trace their origins to Abraham, and see Jerusalem as sacred. And it is a story that has inspired communities around the globe, including me and my fellow Americans.

In the United States – a nation made up of people who crossed oceans to start anew – we are naturally drawn to the idea of finding freedom in our land. To African-Americans, the story of the Exodus told a powerful tale about emerging from the grip of bondage to reach for liberty and human dignity – a tale that was carried from slavery through the civil rights movement. For generations, this promise helped people weather poverty and persecution, while holding on to the hope that a better day was on the horizon. For me personally, growing up in far-flung parts of the world and without firm roots, it spoke to a yearning within every human being for a home.

Of course, even as we draw strength from the story of God’s will and His gift of freedom expressed on Passover, we know that here on Earth we must bear our responsibilities in an imperfect world. That means accepting our measure of sacrifice and struggle, and working – through generation after generation – on behalf of that ideal of freedom. As Dr. Martin Luther King said on the day before he was killed – “I may not get there with you. But I want you to know that… we, as a people, will get to the promised land.” So just as Joshua carried on after Moses, the work goes on – for justice and dignity; for opportunity and freedom.

For the Jewish people, the journey to the promise of the State of Israel wound through countless generations. It involved centuries of suffering and exile, prejudice, pogroms and even genocide. Through it all, the Jewish people sustained their unique identity and traditions, as well as a longing to return home. And while Jews achieved extraordinary success in many parts of the world, the dream of true freedom finally found its full expression in the Zionist idea – to be a free people in your homeland.

That is why I believe that Israel is rooted not just in history and tradition, but also in a simple and profound idea: the idea that people deserve to be free in a land of their own. And over the last 65 years, when Israel has been at its best, Israelis have demonstrated that responsibility does not end when you reach the promised land, it only begins.

And so Israel has been a refuge for the diaspora – welcoming Jews from Europe to the former Soviet Union; from Ethiopia to North Africa.

Israel has built a prosperous nation – through kibbutzeem that made the desert bloom, business that broadened the middle class, and innovators who reached new frontiers – from the smallest microchip to the orbits of space.

Israel has established a thriving democracy – with a spirited civil society, proud political parties, a tireless free press, and a lively public debate – lively may even be an understatement.

And Israel has achieved this even as it has overcome relentless threats to its security – through the courage of the Israel Defense Forces, and a citizenry that is resilient in the face of terror.

This is the story of Israel. This is the work that has brought the dreams of so many generations to life. And every step of the way, Israel has built unbreakable bonds of friendship with the United States of America.

Those ties began only eleven minutes after Israeli independence, when the United States was the first nation to recognize the State of Israel. As President Truman said in explaining his decision to recognize Israel, “I believe it has a glorious future before it not just as another sovereign nation, but as an embodiment of the great ideals of our civilization”

Since then, we have built a friendship that advances our shared interests. Together, we share a commitment to security for our citizens and the stability of the Middle East and North Africa. Together, we share a focus on advancing economic growth around the globe, and strengthening the middle class within our countries. Together, we share a stake in the success of democracy.

But the source of our friendship extends beyond interests, just as it has transcended political parties and individual leaders. America is a nation of immigrants. We are strengthened by diversity. We are enriched by faith. We are governed not simply by men and women, but by laws. We are fueled by entrepreneurship and innovation. And we are defined by a democratic discourse that allows each generation to reimagine and renew our union once more. So in Israel, we see values that we share, even as we recognize what makes us different.

Yet I stand here today mindful that for both our nations, these are complicated times. We have difficult issues to work through within our own countries, and we face danger and upheaval in the world. When I look at young people within the United States, I think about the choices that they must make in their lives to define who we will be as a nation in this 21st century, particularly as we emerge from two wars and a painful recession. No matter how great the challenges are, their idealism, their energy, and their ambition always gives me hope.

I see the same spirit in the young people here today. And given the ties between our countries, I believe your future is bound to ours. So I’d like to focus on how we can work together to make progress in three areas that will define our times: security, peace, and prosperity.

I will begin with security. I am proud that the security relationship between the United States and Israel has never been stronger: more exercises between our militaries, and more exchanges among our political, military and intelligence officials than ever before; the largest program to date to help you retain your qualitative military edge. Those are the facts. But to me, this is not simply measured on the balance sheet. I know that here, in Israel, security is something personal. So let me tell you what I think about when I consider these issues.

When I consider Israel’s security, I think about children like Osher Twito, who I met in Sderot – children, the same age as my own daughters, who went to bed at night fearful that a rocket would land in their bedroom simply because of who they are and where they live. That’s why we’ve invested in the Iron Dome system to save countless lives – because those children deserve to sleep better at night. That’s why we have made it clear, time and again, that Israel cannot accept rocket attacks from Gaza, and have stood up for Israel’s right to defend itself. And that’s why Israel has a right to expect Hamas to renounce violence and recognize Israel’s right to exist.

I think about five Israelis who boarded a bus in Bulgaria, who were blown up because of where they came from; who were robbed of the ability to live, and love, and raise families. That’s why every country that values justice should call Hizbollah what it truly is – a terrorist organization. Because the world cannot tolerate an organization that murders innocent civilians, stockpiles rockets to shoot at cities, and supports the massacre of men, women and children in Syria.

The fact that Hizbollah’s ally – the Assad regime – has stockpiles of chemical weapons only heightens the urgency. We will continue to cooperate closely to guard against that danger. And I have made it clear to Bashar al-Assad and all who follow his orders: we will not tolerate the use of chemical weapons against the Syrian people or the transfer of these weapons to terrorists. The world is watching, and we will hold you accountable.

America will also insist that the Syrian people have the right to be freed from the grip of a dictator who would rather kill his own people than relinquish power. Assad must go so that Syria’s future can begin. Because true stability in Syria depends upon establishing a government that is responsive to its people – one that protects all communities within its borders, while making peace with countries beyond them.

When I consider Israel’s security, I also think about a people who have a living memory of the Holocaust, faced with the prospect of a nuclear-armed Iranian government that has called for Israel’s destruction. It’s no wonder Israelis view this as an existential threat. But this is not simply a challenge for Israel – it is a danger for the entire world, including the United States. It would raise the risk of nuclear terrorism, undermine the non-proliferation regime, spark an arms race in a volatile region, and embolden a government that has shown no respect for the rights of its own people or the responsibilities of nations.

That is why America has built a coalition to increase the cost to Iran of failing to meet their obligations. The Iranian government is now under more pressure than ever before, and that pressure is increasing. It is isolated. Its economy is in a dire condition. Its leadership is divided. And its position – in the region, and the world – has only grown weaker.

All of us have an interest in resolving this issue peacefully. Strong and principled diplomacy is the best way to ensure that the Iranian government forsakes nuclear weapons. Moreover, peace is far more preferable to war, and the inevitable costs – and unintended consequences – that would come with it. Because of the cooperation between our governments, we know that there remains time to pursue a diplomatic resolution. That is what America will do – with clear eyes – working with a world that is united, and with the sense of urgency that is required.

But Iran must know this time is not unlimited. And I have made the position of the United States of America clear: Iran must not get a nuclear weapon. This is not a danger that can be contained. As President, I have said to the world that all options are on the table for achieving our objectives. America will do what we must to prevent a nuclear-armed Iran.

For young Israelis, I know that these issues of security are rooted in an experience that is even more fundamental than the pressing threat of the day. You live in a neighborhood where many of your neighbors have rejected your right to exist. Your grandparents had to risk their lives and all they had to make a place for themselves in this world. Your parents lived through war after war to ensure the survival of the Jewish state. Your children grow up knowing that people they have never met hate them because of who they are, in a region that is changing underneath your feet.

So that is what I think about when Israel is faced with these challenges – that sense of an Israel that is surrounded by many in this region who reject it, and many in the world who refuse to accept it. That is why the security of the Jewish people in Israel is so important – because it can never be taken for granted. But make no mistake: those who adhere to the ideology of rejecting Israel’s right to exist might as well reject the earth beneath them and the sky above, because Israel is not going anywhere. Today, I want to tell you – particularly the young people – that so long as there is a United States of America, Ah-tem lo lah-vahd.

The question, then, is what kind of future Israel will look forward to. And that brings me to the subject of peace.

I know Israel has taken risks for peace. Brave leaders – Menachem Begin and Yitzhak Rabin -reached treaties with two of your neighbors. You made credible proposals to the Palestinians at Annapolis. You withdrew from Gaza and Lebanon, and then faced terror and rockets. Across the region, you have extended a hand of friendship, and too often have been confronted with the ugly reality of anti-Semitism. So I believe that the Israeli people do want peace, and you have every right to be skeptical that it can be achieved.

But today, Israel is at a crossroads. It can be tempting to put aside the frustrations and sacrifices that come with the pursuit of peace – particularly when an Iron Dome repels rockets, barriers keep out suicide bombers, and so many other pressing issues demand your attention. And I know that only Israelis can make the fundamental decisions about your country’s future.

I also know that not everyone in this hall will agree with what I have to say about peace. I recognize that there are those who are not simply skeptical about peace, but question its underlying premise, and that’s a part of democracy and the discourse between our two countries. But it is important to be open and honest with one another. Politically, given the strong bipartisan support for Israel in America, the easiest thing for me to do would be to put this issue aside, and express unconditional support for whatever Israel decides to do. But I want you to know that I speak to you as a friend who is deeply concerned and committed to your future, and I ask you to consider three points.

First, peace is necessary. Indeed, it is the only path to true security. You can be the generation that permanently secures the Zionist dream, or you can face a growing challenge to its future. Given the demographics west of the Jordan River, the only way for Israel to endure and thrive as a Jewish and democratic state is through the realization of an independent and viable Palestine. Given the frustration in the international community, Israel must reverse an undertow of isolation. And given the march of technology, the only way to truly protect the Israeli people is through the absence of war – because no wall is high enough, and no Iron Dome is strong enough, to stop every enemy from inflicting harm.

This truth is more pronounced given the changes sweeping the Arab World. I recognize that with the uncertainty in the region – people in the streets, changes in leadership, the rise of non-secular parties in politics -it is tempting to turn inward. But this is precisely the time to respond to the wave of revolution with a resolve for peace. As more governments respond to popular will, the days when Israel could seek peace with a handful of autocratic leaders are over. Peace must be made among peoples, not just governments. No one step can change overnight what lies in the hearts and minds of millions. But progress with the Palestinians is a powerful way to begin, while sidelining extremists who thrive on conflict and division.

Second, peace is just. There is no question that Israel has faced Palestinian factions who turned to terror, and leaders who missed historic opportunities. That is why security must be at the center of any agreement. And there is no question that the only path to peace is through negotiation. That is why, despite the criticism we’ve received, the United States will oppose unilateral efforts to bypass negotiations through the United Nations.

But the Palestinian people’s right to self-determination and justice must also be recognized. Put yourself in their shoes – look at the world through their eyes. It is not fair that a Palestinian child cannot grow up in a state of her own, and lives with the presence of a foreign army that controls the movements of her parents every single day. It is not just when settler violence against Palestinians goes unpunished. It is not right to prevent Palestinians from farming their lands; to restrict a student’s ability to move around the West Bank; or to displace Palestinian families from their home. Neither occupation nor expulsion is the answer. Just as Israelis built a state in their homeland, Palestinians have a right to be a free people in their own land.

Only you can determine what kind of democracy you will have. But remember that as you make these decisions, you will define not simply the future of your relationship with the Palestinians – you will define the future of Israel as well. As Ariel Sharon said, “It is impossible to have a Jewish, democratic state and at the same time to control all of Eretz Israel. If we insist on fulfilling the dream in its entirety, we are liable to lose it all.” Or, from a different perspective, think of what David Grossman said shortly after losing his son, as he described the necessity of peace – “a peace of no choice” he said, “must be approached with the same determination and creativity as one approaches a war of no choice.”

Of course, Israel cannot be expected to negotiate with anyone who is dedicated to its destruction. But while I know you have had differences with the Palestinian Authority, I believe that you do have a true partner in President Abbas and Prime Minister Fayyad. Over the last few years, they have built institutions and maintained security on the West Bank in ways that few would have imagined a decade ago. So many Palestinians – including young people – have rejected violence as a means of achieving their aspirations.

Which leads to my third point: peace is possible. I know it doesn’t seem that way. There will always be a reason to avoid risk, and there’s a cost for failure. There will always be extremists who provide an excuse to not act. And there is something exhausting about endless talks about talks; the daily controversies, and grinding status quo.

Negotiations will be necessary, but there is little secret about where they must lead – two states for two peoples. There will be differences about how to get there, and hard choices along the way. Arab States must adapt to a world that has changed. The days when they could condemn Israel to distract their people from a lack of opportunity are over. Now is the time for the Arab World to take steps toward normalized relations with Israel. Meanwhile, Palestinians must recognize that Israel will be a Jewish state, and that Israelis have the right to insist upon their security. Israelis must recognize that continued settlement activity is counterproductive to the cause of peace, and that an independent Palestine must be viable- that real borders will have to be drawn. I’ve suggested principles on territory and security that I believe can be the basis for talks. But for the moment, put aside the plans and process. I ask you, instead, to think about what can be done to build trust between people.

Four years ago, I stood in Cairo in front of an audience of young people. Politically, religiously, they must seem a world away. But the things they want – they’re not so different from you. The ability to make their own decisions; to get an education and a good job; to worship God in their own way; to get married and have a family. The same is true of the young Palestinians that I met in Ramallah this morning, and of young Palestinians who yearn for a better life in Gaza.

That is where peace begins – not just in the plans of leaders, but in the hearts of people; not just in a carefully designed process, but in the daily connections that take place among those who live together in this land, and in this sacred city of Jerusalem. Speaking as a politician, I can promise you this: political leaders will not take risks if the people do not demand that they do. You must create the change that you want to see.

I know this is possible. Look to the bridges being built in business and civil society by some of you here today. Look at young people who have not yet learned a reason to mistrust, and those who have learned to overcome a legacy of mistrust that they inherited from their parents because of the simple recognition that we hold more hopes in common than the fear that drives us apart. Your voices must be louder than the extremists who would drown them out. Your hopes must light the way forward. Look to a future in which Jews, Muslims and Christians can all live in peace and greater prosperity in this Holy Land. Look to the future that you want for your own children – a future in which a Jewish, democratic state is protected and accepted, for this time and for all time.

There will be many voices that say this change is not possible. But remember this: Israel is the most powerful country in this region. Israel has the unshakeable support of the most powerful country in the world. Israel has the wisdom to see the world as it is, but also the courage to see the world as it should be. Ben Gurion once said, “In Israel, in order to be a realist you must believe in miracles.” Sometimes, the greatest miracle is recognizing that the world can change. After all, that is a lesson that the world learned from the Jewish people.

That brings me to the final area I will focus on: prosperity, and Israel’s broader role in the world. I know that all the talk about security and peace can seem distant from other concerns that you have in your daily lives. And every day, even amidst the threats you face, Israelis are defining themselves by the opportunities you create.

Through talent and hard work, Israelis have put this small country at the forefront of the global economy. Israelis understand the value of education, and have produced 10 Nobel laureates. Israelis understand the power of invention, and your universities educate engineers and inventors. That spirit has led to economic growth and human progress: solar power and electric cars; bandages and prosthetic limbs that save lives; stem cell research and new drugs that treat disease; cell phones and computer technology that change the way we live. If people want to see the future of the world economy, they should look at Tel Aviv: home to hundreds of start-ups and research centers. And Israelis are so active on social media that every day seemed to bring a different Facebook campaign about where I should give this speech.

That innovation is just as important to the relationship between the United States and Israel as our security cooperation. Our first free trade agreement in the world was reached with Israel nearly three decades ago, and today the trade between our two countries is at 40 billion dollars each year. More importantly, that partnership is creating new products and medical treatments, and pushing new frontiers of science and exploration.

That is the kind of relationship that Israel should have – and could have – with every country in the world. Already, we see how that innovation could reshape this region. One program here in Jerusalem brings together young Israelis and Palestinians to learn vital skills in technology and business. An Israeli and Palestinian have started a venture capital fund to finance Palestinian start-ups. Over 100 high-tech companies have found a home on the West Bank, which speaks to the talent and entrepreneurial spirit of the Palestinian people.

One of the great ironies of what is happening in the broader region is that so much of what people are yearning for – education and entrepreneurship; the ability to start a business without paying a bribe, to connect to the global economy – those things can be found in Israel. This should be a hub for thriving regional trade, and an engine of opportunity. And this is already a center for innovation that helps power the global economy. I believe that all of that potential for prosperity can be enhanced with greater security, and a lasting peace.

Here, in this small strip of land that has been the center of so much tragedy and triumph, Israelis have built something that few could imagine sixty-five years ago. Tomorrow, I will pay tribute to that history – at the grave of Herzl, a man who had the foresight to see that the future of the Jewish people had to be reconnected to their past; at the grave of Rabin, who understood that Israel’s victories in war had to be followed by battles for peace; and at Yad Vashem, where the world is reminded of the cloud of evil that can descend on the Jewish people and all of humanity if we fail to remain ever vigilant.

We bear that history on our shoulders, and we carry it in our hearts. Today, as we face the twilight of Israel’s founding generation, you – the young people of Israel – must now claim the future. It falls to you to write the next chapter in the story of this great nation.

As the President of a country that you can count on as your greatest friend, I am confident that you can help us find the promise in the days that lie ahead. And as a man who has been inspired in my own life by that timeless calling within the Jewish experience – tikkun olam – I am hopeful that we can draw upon what’s best in ourselves to meet the challenges that will come; to win the battles for peace in the wake of so much war; and to do the work of repairing this world. May God bless you, and may God bless Israel and the United States of America. Toda raba.

EU bullies set Cyprus deadline

21 March 2013

The European Central Bank has announced that it has agreed to continue supplying emergency funding to Cyprus's banks until next Monday.

But if the bailout hasn't been agreed by then, the ECB would step away. It's quite an ultimatum.

Here's the statement:

"The Governing Council of the European Central Bank decided to maintain the current level of Emergency Liquidity Assistance (ELA) until Monday, 25 March 2013

Thereafter, Emergency Liquidity Assistance (ELA) could only be considered if an EU/IMF programme is in place that would ensure the solvency of the concerned banks."


That sets Nicosia a clear deadline -- find €6bn by next week, in a way that satisfies the IMF and the European Union, or your banks collapse. The ECB statement makes it clear the Cyprus has to make a deal with EU/IMF. So Russian money might still result in a withdrawal of liquidity.

31 PAD leaders indicted over 2008 Bangkok airports occupation

21 March 2013

Over four years after the event thirty-one core members of the People's Alliance for Democracy, including co-founders Sonthi Limthongkul and Chamlong Srimuang, were officially indicted last week for besieging Suvarnabhumi and Don Mueang airports>

Another 83 people who are either PAD members or security guards who reportedly took part in the occupation of both airports and Government House during the PAD-led protests await the next round of indictments.

Of the 31 members indicted yesterday, only 17 showed up at Criminal Court before they were released on bail at a Bt800,000 guarantee each.

The PAD's satellite television channel, ASTV (Thailand), which broadcast the leaders calling on people to take part in protests during the PAD-led political gatherings, was also indicted as an entity.

A hearing is set on April 29 to hear the pleas.

The indictments were filed as a combination of offences against all PAD members, either for the first 31, and 83 others, for their illegal entry into and occupations of both airports.

The 31 PAD members have been indicted for terrorism; forceful entry; criminal conspiracy in violation of emergency rule; destruction and obstruction of facilities at an airport; affecting safety; causing traffic jams at public places; disrupting communications; causing others' properties to depreciate; criminal conspiracy; obstructing officials' duties; intimidating officials on duty; intimidating others and withholding freedom.

The PAD occupation of both Bangkok airports lasted eight traumatic days. The PAD were attempting to create conditions for a military coup and protesting against the government of Somchai Wongsawat. In the end, they didn’t get a military coup; instead they got a military mutiny against the government and a judicial coup. The result was the deal cobbled together by palace, military and the so-called Democrat Party that put Abhisit Vejjajiva in the premier’s seat.

Wary of causing further unrest the legal system still treats the PAD leadership differently. They seem to have near immunity. It has taken four years to even bring indictments. Then only 17 of the 31 bothered to show up at Criminal Court.

The 31 included Sondhi Limthongkul and Chamlong Srimuang.

Reality check - indicted for terrorism and released on bail of baht800,000. Farcical. Plenty of red shirts were jailed on similar charges and some remain in jail, having been incarcerated almost three years ago.

flydubai expands Russian links

21 March 2013

A quick walk around Dubai Mall will tell you just how many Russians are now in Dubai: so flydubai's new expansion plans are timely:

In April and September 2013 respectively the airline will be expanding operations to Russia and Ukraine. From 16APR13, the airline will launch service to Mineralnye Vody with 2 weekly service. From mid-September 2013, the airline will launch 5 new destinations, including Rostov-on-Don, Volgograd, Dniepropetrovsk, Odessa and Krasnodar.

All of these flights can be operated as turnarounds - although there will be some long overnight duties for flyDubai crews.

Dubai – Mineralnye Vody eff 16APR13 2 weekly
FZ977 DXB2330 – 0310+1MRV 73H 25
FZ978 MRV0410 – 0735DXB 73H 36

Mineralnye Vody is a town in Stavropol Krai, Russia, located along the Kuma River and the main rail line between Rostov-on-Don and Baku (Azerbaijan). Population: 76,728 (2010 Census);

Operational schedule varies after 17MAY13

Dubai – Rostov eff 13SEP13 2 weekly
FZ981 DXB2310 – 0330+1ROV 73H 25
FZ982 ROV0430 – 0840DXB 73H 36

Rostov-on-Don is a port city and the administrative center of Rostov Oblast and the Southern Federal District of Russia. It lies on the Don River, 32 kilometers (20 mi) from the Sea of Azov. Population: 1,089,261 (2010 Census).

Dubai – Volgograd eff 13SEP13 2 weekly
FZ975 DXB2250 – 0300+1VOG 73H 25
FZ976 VOG0400 – 0805DXB 73H 36

Volgograd, formerly called Tsaritsyn, and known as Stalingrad from 1925 to 1961, is an important industrial city and the administrative center of Volgograd Oblast, Russia. It is 80-kilometer (50 mi) long, north to south, situated on the western bank of the Volga River. Population: 1,021,215 (2010 Census).

The city became famous for its resistance, as well as the extensive physical damage and death toll it suffered during the Battle of Stalingrad against the German Army in World War II. Since February 2013, the city's name is to be commemorated as Stalingrad six days each year.

Dubai – Dniepropetrovsk eff 18SEP13 2 weekly
FZ737 DXB1025 – 1410DNK 73H 36
FZ738 DNK1515 – 2045DXB 73H 36

Dnipropetrovsk, formerly Yekaterinoslav, is Ukraine's fourth largest city, with about one million inhabitants. It is located southeast of Ukraine's capital Kiev on the Dnieper River, in the south-central part of the country. Dnipropetrovsk is the administrative centre of the Dnipropetrovsk Oblast.

A vital industrial centre of Ukraine, Dnipropetrovsk was one of the key centres of the nuclear, arms, and space industries of the former Soviet Union. In particular, it is home to Yuzhmash, a major space and ballistic missile design bureau and manufacturer. Because of its military industry, Dnipropetrovsk was a closed city until the 1990s.

Dubai – Odessa eff 20SEP13 2 weekly
FZ723 DXB1000 – 1355ODS 73H 25
FZ724 ODS1455 – 2020DXB 73H 25

Odessa is the third largest city in Ukraine, with a population of 1,003,705. The city is a major seaport located on the northwestern shore of the Black Sea and the administrative center of the Odessa Oblast.

Dubai – Krasnodar eff 20SEP13 2 weekly
FZ983 DXB2340 – 0350+1KRR 73H 25
FZ984 KRR0450 – 0845DXB 73H 36

Krasnodar is a city and the administrative center of Krasnodar Krai, Russia, located on the Kuban River about 148 kilometers (92 mi) northeast of the Black Sea port of Novorossiysk. Population: 744,995 (2010 Census).

Cyprus update

21 March 2013

Score one for this web site: as advised yesterday Cyprus has ordered its banks to remain closed until next week.

Cyprus has yet to find a new plan that will let it access an EU bailout to stop its banks failing.

The country's eurozone partners and the International Monetary Fund (IMF) are ready to provide €11bn in an emergency bailout if Cyprus comes up with an extra €6bn itself. Most of the bailout money is needed to shore up the country's oversized banking sector, with the rest for government finances.

Banks in Cyprus will now not open until Tuesday at the earliest, because Monday is a bank holiday. They have been shut since last week to prevent a run on deposits.

The country's two main banks – Laiki and the Bank of Cyprus – face potential failure if a bailout is not secured.

The Cypriot government was said to be considering the possibility of imposing capital controls amid fears that money would flood out of the country once its banks were reopened.

With the EU deal uncertain, Cyprus was set to launch a second day of talks with its ally Russia in Moscow on Thursday over a multibillion-dollar loan. Replacing debt with debt does not appear to be much of a solution.

But Russians are exposed - they is an estimated $31bn (£21bn) held in Cypriot banks by Russian banks, businesses and individuals, as well as up to $40bn in loans to Cyprus-registered firms.

One small ray of hope: Cyprus's Orthodox church said it was willing to mortgage its assets to invest in government bonds. The church has considerable wealth, including property, stakes in a bank and a brewery. This could be taking the vow of poverty a little too literally.

Incidentally I have no sympathy for the EU in this.

Cyprus got themselves into a mess that needs to be fixed.

But the EU bullying is shameless and offensive.

The EU grand plan was that Cyprus should simply grab money from the bank accounts of its citizens to pay for its bailouts.

How naive. You simply do not ask a country to rob its own citizens overnight.

Cyprus is a nation of small scale savers - and a few over rich Russian oligarchs. The deal was a political non starter.

Rich fat EU bankers robbing brave Cypriot shopkeepers, farmers and families. What were they thinking?

The upshot is that Cyprus has become a cautionary tale in the European Union's most failed and yet most consistent negotiation policy: bullying.

Cyprus is small and largely unable to fight back, either politically or financially. Its shabby treatment is consistent with how the EU has treated other countries when it perceives it has the upper hand, Greece, Portugal, Ireland.

It is the lack of upfront oversight that is so disappointing. The German intelligence agency reportedly informed leaders that Cyprus was a haven for money-laundering, which was trotted out as a bizarre reason last week that taking money from Cypriot bank accounts was a perfectly legitimate option. Cyprus's banks have high interest rates on savings, and it is a tax haven, which has attracted "hot money" from Russia and other countries.

But no one in Europe complained about that when it was helping the Cypriot economy, but now that a bailout is required, the equation has changed.

As I said a couple of days ago. What next? At this stage it may be time for one or more countries to set a tone by leaving the EU. They may be better standing alone in the world that being the bullied, unwanted sibling.

And where are the Russians - well here is a thought: is a prospective Russian deal with Cyprus an indication that the Russians may be about to lose their port access, listening stations etc. in Syria? It is probably that the prospect of a warm-water Russian naval base in Cyprus is keeping more than one Eurocrat up at night.

The cold war may be over but it is still lukewarm.

Leaving the west behind - now Chengdu gets a new airport

20 March 2103

Plans for Chengdu's new airport have been mostly confirmed, according to a Chengdu Commercial Daily report.

The latest Chinese mega airport will have five runways, three more than the current number of Shuangliu Airport, and a passenger capacity of 80 million per year (more than double the current annual number of passengers through Shuangliu), making the new airport the largest in west China.

The site of the new airport, Lujia in Jianyang county, is approximately 50 km from the Shuangliu airport, and plans include construction of a "seamlessly integrated" transportation to the airport encompassing high-speed rail, subway and highways.

"No matter which method of transportation you choose, you'll be able to reach the new airport from Chengdu within half an hour more or less," claimed Tang Limin, Sichuan representative at the National People's Congress and head of the Sichuan National Development for Reform Commission.

Sichuan representatives appealed for support of the new airport among the Congress because Chengdu's Shuangliu Airport is among several other airports in China, including Beijing's, Guangzhou's, and Shanghai's to have surpassed an annual passenger rate of 30 million.

Construction is expected to start in the first half of next year and finish in late 2017, and the airport is expected to be in operation by 2018.

In the 5 years that it will take to build the new Chengu Airport the UK will not see a single new runway opened for London and will still be debating options for expanding Gatwick and Stansted or opening a third runway at Heathrow.

Such is the speed of progress in the New World and the moribund state of the west.

Chengdu is not the only new large airport project; not surprisingly they are all in the near and far east.

A six-runway hub will be constructed on 77 million square metres of land near Istanbul, and will have a capacity of 150 million passengers a year – 60 million more than Hartsfield-Jackson Atlanta International Airport, currently the busiest in the world.

The airport will be built in four stages. The first will be completed in 2017, after which it will be operational with an annual capacity of 90 million, according to Turkey’s transport minister, Binali Yildirim.

Currently Istanbul has two airports, Ataturk, which handles around 45 million passengers a year, and Sabiha, which handles 15 million.

Dubai’s Maktoum International Airport, now already operating for cargo only, is expected to open for private jets later this year and will host the Dubai Airshow. In the future the airport will become the new hub for Emirates Airline, the rapidly expanding state-owned Dubai carrier but will serve as a base for charter flights and executive jets until then.

Do not expect Emirates to move until at least 2025 as funding has been an issue for the new airport and associated infrastructure.

Beijing will see its new airport fast tracked. Construction of the airport in the Daxing district will begin as early as this year. It is due to open by the end of 2018.

There will be six runways for civilian aircraft and a seventh for military use.

The Beijing Capital International Airport, ranked the world's second-biggest for three years, handled 81.8 million passengers in 2012.

The new airport will be able to handle 45 million passengers each year after the opening and it will handle up to 70 million passengers by 2025," said Zhu Wenxin, vice head of the office set up for building the airport.

A rail line will also be built to connect the airport with the city center.

More chaos in Cyprus as MPs court popularity

20 March 2013

The Cypriot parliament has thrown out a controversial plan to skim €5.8bn (£5bn) from savers' bank accounts.

So the MPs who oversaw this mess in the first place have now decided that it is better to be popular than to take the hard decisions.

Cyprus has just 24 hours to find a solution to its funding gap before its banks are due to reopen following the dramatic no vote on Tuesday night.

They could of course further delay re-opening the banks. But it looks likely that Cyprus will go cap in hand to the Russians for a bail out.

The total bail out is Euro17 billion; the IMF and Eurozone are putting up Euro11.2 billion leaving Cyprus still to raise the remaining €5.8 bn.

The banks have been shut since Friday and electronic transactions halted, although cash machines are still working.

There were also reports that the banking arm of the Russian energy company Gazprom might pump cash into Laiki, Cyprus's second largest bank, which is in urgent need of a capital injection. Gazprom officials insisted this was not being planned.

Russia has already lent €2.5bn to Cyprus and has close ties to the country after its nationals flooded the island's banks with cash to take advantage of high interest rates and a lax approach to account vetting.

The 56-member Cypriot parliament rejected the bank tax by 36 votes with 19 abstentions (one MP was absent) even after the proposal had been tweaked during the day to remove any levy on savings below €20,000.

Accounts holding €20,000 to €100,000 still faced a 6.75% levy, and any account with more than €100,000 a tax of 9.9%, despite calls by Cyprus's eurozone partners not to tax accounts below €100,000 – the level at which a European Union-wide guarantee kicks in if an EU bank goes bust.

In return for the levy, savers would be given shares in Cyprus's banks and possibly a share in the nation's gas reserves – once the country is back on its feet.

The no vote looks especially bad for the Cyprus president, Nicos Anastasiades. A new election may be needed once this issue has been resolved.

Marios Mavrides, a government MP and former finance minister, raised the prospect of the country becoming the first to leave the euro. He told BBC2's Newsnight: "If we cannot come up with the €5.8bn in a few days then I think we will go to the Cyprus pound. That will be the end of Cyprus in the eurozone. We're going to exhaust all other possibilities but what can we do? If we have no other solution we cannot leave the people without money."

Russia has expressed its anger about the levy, which would hit its nationals, 30 of whom are reported to have been granted Cypriot citizenship after either depositing at least €17m into local banks, making investments of €30m or registering businesses on the island.

The ratings agency Moody's estimated that Russian banks had extended up to $40bn in loans to companies in Cyprus.

So another Euro 5.8 billion is pocket money to the Russians whose influence in this Mediterranean island could grow significantly.

Yields – a measure of the cost of borrowing – on Italian government bonds edged above 5% on Tuesday, a sign of potential tensions in the eurozone while yields on British government bonds, gilts, fell to their lowest levels in 2013 of 1.82% as the UK appeared a relative safehaven. Brent crude dropped by $2 to €107.45.

What next ? The Russians are making noise but see this as an EU problem. The EU/IMF will end up having to put up the full Euro17 billion with longer term repayments.

To avoid any run on the backs when they eventually reopen this deal will need to be put in place first (so banks may not open tomorrow) and the Cypriot government will need to definitively state that depositors funds are safe and will not be taxed.

Cyprus closes banks and delays vote on deposit theft

19 March 2013

Yesterday Cyprus decided to close its banks until Thursday as officials scrambled to renegotiate the terms of a controversial bailout that threatens to force savers to take a €5.8bn (£5bn) hit to their deposits.

Closing the banks simply means that depositors cannot access their funds.

Finance ministers from the 17-country eurozone in emergency discussions agreed that small depositors should not be hit as hard as others. They said the Cypriot authorities could stagger the deposit seizures, but remained firm in demanding that the overall sum of money raised remained the same. Cyprus state media said accounts with less than €20,000 may be spared.

The Russians remain outraged - a spokesman for Vladimir Putin attacked the plan as "unfair, unprofessional and dangerous". This rather omits the simple fact that the Russians had a major role in precipitating this crisis.

Thousands of Russians have bank accounts in Cyprus, which has styled itself as a tax haven to attract international deposits into a banking system now at least eight times the size of the island's €17bn economy. Russia hinted that a separate but crucial €2.5bn loan to Cyprus could now be in doubt.

Yesterday on a day of mounting uncertainty about the punitive conditions of the bailout and the impact on the banking sector:

• Britain temporarily withheld pension payments to more than 12,000 citizens who have retired to Cyprus amid concerns about the safety of the banking system. Up to 60,000 British people are thought to be affected by the seizures.

• A vote on the aid package in the Cyprus parliament was delayed for a second day, until Tuesday, as it became clear that the bailout plan of the newly elected president, Nicos Anastasiades, faced defeat. There were reports on Monday night that he was preparing to tell eurozone ministers that he did have the votes to get the plan through.

• Stock markets fell – the FTSE 100 lost more than 100 points in early trading – before regaining losses amid speculation that the raid on savings would be scaled down. On the currency market, the euro hit a three-month low.

• European officials raced to defuse criticism that they had imposed the bank levy on a desperate nation.

• The US urged a resolution that was "responsible and fair and ensures financial stability".

The terms of the bailout – €10bn of which comes from the eurozone and €7bn from Cyprus through the bank levy and austerity measures – have led to concerns that the €100,000 of savings guaranteed across the EU under an agreement reached in the wake of the 2008 banking crisis is being undermined.

Europe's banking authorities are on high alert for signs of Spanish and Italian savers moving their cash out of national banks for fear of a similar raid. However, officials insisted there was no need for alarm because the Cyprus bailout terms were a one-off that would not be repeated.

The European Central Bank's Jörg Asmussen, who had played a part in negotiating the terms, insisted it was up to Cyprus to alter the way the €5.8bn was raised from bank accounts. The levy was initially set at 6.75% on accounts under €100,000 and 9.9% on any deposit above that sum but this could be altered to 3% on the smaller deposits and up to 15% on deposits above €500,000. In return, savers will be given shares in the banks and, potentially, returns from the country's gas reserves. "The important thing is that the financial contribution of €5.8bn remains," Asmussen said. He also denied responsibility for designing the levy. "I want to emphasise that it wasn't the ECB that pushed for this special structure of the contribution which has now been chosen," he said.

Senior Cypriot officials told the Guardian that Wolfgang Schäuble, the German finance minister, had been the strongest advocate of the savers' tax, but he insisted responsibility lay elsewhere. It had been the Cypriot government, the European commission and the ECB that had pushed for the bank levy, he said.

The terms of the bailout are crucial to Russia as, according to Reuters, nearly half of the €70bn worth of deposits in Cyprus' banks is held by foreigners, and the vast majority are believed to be from Russian officials and oligarchs who have flocked to Cypriot banks seeking the secrecy they are unable to find at home.

And also enjoying up to 7% interest rates; higher rewards - higher risk. That should have been self-evident.

Russia's finance minister, Anton Siluanov, warned that Europe's failure to consult with Russia could affect its own decision on maintaining a €2.5bn loan granted to Cyprus last year.

Cyprus has faced criticism that it has become a money-laundering haven for hot Russian cash and this is thought to have motivated the levy on bank accounts.

"Concerns about lax money-laundering regulations have made it politically difficult for a full bailout to be provided, given the worries that rich Russians would be among the main beneficiaries," said Jennifer McKeown, senior European economist at Capital Economics.

Worries about contagion also grew in the day: Marchel Alexandrovich, at the brokers Jefferies, said: "What is also plainly obvious to anyone observing the current mess is that what should really worry European policymakers is not the €5.6bn in money which is being saved in Cyprus, but the €2,754bn of deposits in the Spanish banking system, of which €182bn comes from deposits outside the euro area."

Cyprus bail out creates more Euro chaos

18 March 2012

Cyprus is the latest Euro mess.

But it was a mess waiting to happen - and it is a mess brought about by its tax haven status; the volume of money laundering; a banking sector that had grown to eight times its gross domestic product on inflows of Russian money and aggressive expansion in Greece and was technically bust. As much as half of the country’s €68 billion in deposits is held by Russians and Ukrainians, and some of this money is thought to be black money laundered through Cyprus.

Add to that a significant exposure to the Greek economy, Greek government debt and Cyprus’s own burst property bubble.

Nicosia’s euro zone partners made it clear that there was no time to waste. The Cypriot president said the European Central Bank was threatening to cut off liquidity Tuesday if there was no deal. The banking system would collapsed without a bail out.

In total, Cyprus requires €17 billion — almost 100 percent of G.D.P. — to rescue its banks and deal with the government’s own bills. If Nicosia had borrowed all that cash on top of its existing debt, it would have been carrying an unsustainable burden. It would have been only a matter of time before the debt needed restructuring.

Cyprus’ euro zone partners and the International Monetary Fund decided to limit the bailout to €10 billion. The problem was where to find the extra €7 billion. Because Germany and other northern European countries were not prepared to give a handout, there were two options: force the government’s own bondholders to take a loss, or hit bank creditors.

Moreover the Germans (leading the EU finance ministers) did not want to be bailing out some questionable foreign (lets agree - mainly Russian) money that is deposited into Cypriot banks.

The option of a haircut on government debt — as Greece imposed last year — was rejected. Many of the bonds are held by Cypriot banks, so a haircut — a loss on investment — would just have increased the size of the holes in their balance sheets, meaning they would have needed an even bigger bailout. The Cypriot government’s credit would have been destroyed for little benefit.

So, pretty much by default, the banks’ creditors had to be tapped. Cypriot banks have hardly any bonds. Without this cushion the only option was to hit depositors, for €5.8 billion in total.

Holders of bank deposits are up in arms; but the country’s banks have been paying high interest rates in recent months — in some cases of as much as 7 percent on euro deposits. That was clearly danger money. Depositors should have known there were risks attached to such high rewards.

So who is being hit - the proposal has a deposit tax of 9.9% on uninsured deposits and a 6.75% tax on insured savers.

There is time to change the deal - as it was not voted on in Parliament today - one way would be to impose a bigger tax (15%) on uninsured deposits and not touch small savers.

It is a lousy deal for everyone. It is not meant to set a precedent but to reflect Cyprus' very different economy and banking system. It probably means the end of Cyprus status as  an offshore financial centre.

Across Europe there will be some concern though there is unlikely to be any immediate contagion to other crisis countries. Banking systems in Greece, Spain, Portugal and Ireland have recently been recapitalized. Meanwhile, the combination of Cyprus’s relatively huge banking sector and the fact that it is perhaps small enough to experiment with make it a special case.

Even so, citizens in the rest of the euro zone now know that if push comes to shove, their insured deposits could be grabbed too.

Makkasan - Bangkok's worst white elephant

18 March 2013

I took the airport express from BKK airport to the Makkasan terminal this morning.

I was one of five people on the train. And the train only runs once an hour. That is if you can find the train at BKK airport. And if you can find a timetable. There is no indication on the platform of when the next train would appear.

There are in fact two express train lines. One runs to the Makkasan station each hour. The other runs to Phayathai Station again one an hour.

The original plan was for the express link to depart--and check-in--only from the Makkasan station. Makkasan would serve as a city terminal like Hong Kong or Kuala Lumpur. Fail. Makkasan is not connected to the subway line or BTS and road access is dire. It is a hot long walk across a rail track and busy junctions to MRT Petchaburi.

THAI Airways remains the sole airline allowing passengers to check in from the train station. There was no one there when I looked this morning.

The Phayathau line opened on 1 June 2011.  This second line is due to a design flaw in the original laying of the rail which meant that the Express line track terminates at Makkasan and does not connect with the Cityline track further to Phayathai. The SRT allocated 17m baht in Feb 2012 to rectify this problem. Still no progress.

Bangkok Airways discontinued baggage check-in service at Makkasan on 13 June 2011.

There are as few as 20 or less passengers checking in at Makkasan per day.

The Makkasan terminal is masssive. It is also empty. A poorly thought out and ill conceived white elephant. Fix it or close it.

EK's cargo division off to JXB

16 March 2013

Emirates will transfer its cargo fleet from Dubai International Airport to Dubai World Central Airport (DWC), Emirates president Tim Clark told ATW on the sidelines of the ITB tourism fair in Berlin.

A truck system will be established between the two airports to handle Emirates’ belly cargo from its passenger aircraft and vice versa. “It is necessary that the current airport must provide that relief [from busy Dubai Airport to DWC],” he said.

Those trucks will have to use the 611 Outer Dubai by-pass road.

CEO Paul Griffiths told ATW that Dubai Airport has a limit of 100 million passengers. After that, airlines must move to DWC. “At a time when Emirates will handle around 80 million passengers, this would not be easy to move the carrier to the new airport,” Griffiths added.

Both Clark and Griffiths said Emirates could make a complete move to DWC in 2025.

DWC will open for first passenger operations in September. The plan is to create additional terminal infrastructure to handle about 20 million passengers. Emirates also expects to operate some charter services from there.

Emirates operates four Boeing 777Fs and three wet-leased 747Fs; it has six 777Fs on order.

The demise of Tweetdeck

6 March 2013

This is an announcement from the nice people at Tweetdeck - which is basically telling users like me  to get lost !

"TweetDeck is the most powerful Twitter tool for tracking real-time conversations. Its flexibility and customizable layout let you keep up with what’s happening on Twitter, across multiple topics and accounts, in real time. To continue to offer a great product that addresses your unique needs, we’re going to focus our development efforts on our modern, web-based versions of TweetDeck. To that end, we are discontinuing support for our older apps: TweetDeck AIR, TweetDeck for Android and TweetDeck for iPhone. They will be removed from their respective app stores in early May and will stop functioning shortly thereafter. We’ll also discontinue support for our Facebook integration.

Over the past 18 months, we’ve been focused on building a fast and feature-rich web application for modern browsers, and a Chrome app, which offers some unique features like notifications. We’ve recently introduced many enhancements to these apps –– a new look and feel, tools like search term autocomplete and search filters to help you find what you’re looking for more quickly, and automatically-updating Tweet streams so you immediately see the most recent Tweets. Our weekly web releases have been possible because we’ve nearly doubled the size of the TweetDeck team over the past six months (and we’re still hiring).

In many ways, doubling down on the TweetDeck web experience and discontinuing our app support is a reflection of where our TweetDeck power-users are going. Over the past few years, we’ve seen a steady trend towards people using TweetDeck on their computers and Twitter on their mobile devices. This trend coincides with an increased investment in Twitter for iPhone and Twitter for Android –– adding photo filters and other editing capabilities, revamping user profiles and enhancing search. That said, we know this applies to most of our users –– not all of them. And for those of you who are inconvenienced by this shift, our sincere apologies.

Additionally, TweetDeck AIR, TweetDeck for Android and TweetDeck for iPhone rely on v1.0 of Twitter’s API, which we are retiring starting this month. Leading up to that retirement, Twitter’s platform team will be performing occasional tests that will affect applications that rely on API v1.0. Over the next two months users of TweetDeck AIR, TweetDeck for Android and TweetDeck for iPhone may experience some outages with those apps before they are removed from their respective app stores in early May.

We think these web and Chrome apps provide the best TweetDeck experience yet, and that they are the apps in which you’ll want to see us add new capabilities first, followed closely by our Mac and PC apps.

From the whole TweetDeck team, we’re excited about what the future holds. We hope you are too."

No - not excited at all.

Middle East is new global travel crossroads

5 March 2013
Scott Mayerowitz, AP Airlines Writer

It's 1 a.m. and the sprawling airport in this desert city is bustling. Enough languages fill the air to make a United Nations translator's head spin.

Thousands of fliers arrive every hour from China, Australia, India and nearly everywhere else on the planet. Few venture outside the terminal, which spans the length of 24 football fields. They come instead to catch connecting flights to somewhere else.

If it weren't for three ambitious and rapidly expanding government-owned airlines — Emirates Airline, Etihad Airways and Qatar Airways — they might have never come to the Middle East.

For generations, international fliers have stopped over in London, Paris and Amsterdam. Now, they increasingly switch planes in Dubai, Doha and Abu Dhabi, making this region the new crossroads of global travel. The switch is driven by both the airports and airlines, all backed by governments that see aviation as the way to make their countries bigger players in the global economy.

Passengers are won over by their fancy new planes and top-notch service. But the real key to the airlines' incredible growth is geography. Their hubs in Qatar and the United Arab Emirates are an eight-hour flight away from two-thirds of the world's population, including a growing middle class in India, China and Southeast Asia that is eager to travel.

In the past five years, the annual number of passengers traveling through Dubai International Airport — home to Emirates — has jumped from 28.8 million to 51 million, a 77 percent increase. The airport now sees more passengers than New York's John F. Kennedy International Airport.

"Everybody accepts that the balance of global economic power is shifting to the east. The geographic position of the Gulf hubs makes them much more relevant today," says Willie Walsh, CEO of International Airlines Group, the parent company of British Airways and Iberia.

Persian Gulf carriers are already chipping away at some U.S. and European airlines' most lucrative business: long-haul international flights. But it's what's ahead that really has other airlines worried.

Gulf carriers hold one-third of the orders for the Boeing 777 and Airbus A380 — two of the world's largest and farthest-flying jets. That's enough planes to put 70,000 passengers in the air at any given moment.

"They're being very aggressive," says Adam Weissenberg, who heads the travel and hospitality consulting group at Deloitte. "These airlines are not going away."

Modern day air routes can be traced to the post-World War II era when airlines such as Pan Am and British Airways built the first global networks. Flights from New York would cross the Atlantic, stop in Europe's capital cities to refuel and then head on to Africa, India and eventually Asia. Two generations later, those routes mostly remain.

The Gulf carriers are trying to change that. And they have a lot going for them.

Their hubs are in warm climates with little air-travel congestion and cheap, non-union workers. That means runways never shut down because of snow, planes don't circle waiting for their turn to land and flights aren't canceled by labor strikes as they often are in Europe.

"These guys are making the connection as seamless as possible," says John Thomas of L.E.K. Consulting.

Top-paying passengers are given over-the-top service that bolsters the airlines' reputations. On some Emirates planes, first-class passengers get private suites with doors, a 23-inch television, minibar and a phone to call flight attendants. If that's not enough, a "Do Not Disturb" sign can be switched on.

There are spa-like restrooms with heated floors and a shower.

But what really makes these Persian Gulf airlines unique is their focus on direct flights to smaller cities. The hub system they are developing is similar to what U.S. airlines did a generation ago, which allowed passengers to fly from, say, Knoxville, Tenn. to Sacramento, Calif. with just one connection.

"Forget Mumbai and New Delhi. There's another 40 secondary cities in India that I can take advantage of," says Etihad CEO James Hogan.

Airlines and governments in North America and Europe have been fighting back where they can.

In Canada, the government has limited the number of planes that Etihad, Emirates and Qatar can land at its airports. The move protects Air Canada, and its partner Lufthansa, which have a good business flying Canadians to India, Africa and Asia.

Separately, Lufthansa has tried to block the Gulf carriers' access to German airports. Etihad responded by purchasing 29 percent of rival Air Berlin, gaining entry to key European cities. It also owns 40 percent of Air Seychelles and smaller stakes in Virgin Australia and Irish carrier Aer Lingus.

"Working against us or trying to isolate us will not succeed because there is a very clear vision behind these airlines and we will keep on expanding," says Qatar's CEO Akbar Al Baker.

There has been a recent thaw. Emirates struck a 10-year deal with Australian airline Qantas; Etihad partnered with Air France-KLM on some routes; and Qatar is joining a global airline marketing and frequent flier partnership headed up by American Airlines and British Airways.

Still, there is plenty of worry given the size of the Gulf airlines' jet orders and concerns that they are deeply subsidized by their governments.

European airlines have suggested that the Gulf carriers benefit from access to discounted oil, a favorable tax climate and non-union labor, particularly low-wage immigrant workers from India and Pakistan.

But the biggest perk comes from Middle East governments who are investing heavily in attractive, efficient airports.

The Qatari government is building a $15.5 billion airport in Doha, designed to handle 24 million people each year, nearly six times the capacity of the existing facility. In Abu Dhabi, the capital of the United Arab Emirates, the government is building a sprawling terminal twice the size of The Mall of America.

And construction was just completed in Dubai of a concourse designed exclusively for Emirates' fleet of Airbus A380s. The new building has entire floors dedicated to first and business class customers who board directly from lounges, never interacting with coach passengers.

"Governments here understand the power of connectivity to drive economies," Tony Tyler, CEO of the International Air Transport Association said in a recent speech in Abu Dhabi.

The airlines deny getting special treatment.

Emirates got $10 million in startup cash from the government in 1985. The airline's president, Tim Clark, says his airline has had no assistance since and benefits from economies of scale. The airline reported a net profit of $628 million in its last fiscal year.

"People keep saying we're cheats," he says. "What they can't understand is that something could be as good and profitable as it has been without subsidies. You know why? Because they've all had subsidies themselves and they still can't make it."

Clark says the U.S. government subsidizes airlines by allowing them to wipe out debt in bankruptcy court. All three of the largest U.S. airlines — American, Delta and United — have used the courts in the past decade to restructure.

European airlines stand to lose the most business because of their geography, but that doesn't mean that U.S. carriers aren't watching closely.

The three Gulf airlines already fly to Chicago, Dallas, Houston, Los Angles, New York, San Francisco, Seattle and Washington and are adding flights at breakneck pace. The airlines aren't just dipping their toes into these markets; they are diving in, in some cases with giant double-deck Airbus A380s that can seat 489 passengers.

"I think they are a clear threat, much more so to our European and Asian colleagues, but nonetheless a threat to U.S. airlines as well," Jeff Smisek, CEO of United Continental Holdings Inc., said at an investor conference last March. "They have a very good product. And they have the total and absolute support of their governments."

The airlines are not household names yet, but they will be soon, analysts say.

United was a key sponsor of the U.S. Open tennis tournament for more than a decade. But last year, Emirates took over with a seven-year deal reported to have cost $90 million.

Iraq ten years on - the slow road back

2 March 2013 - The Economist

Mesopotamia, the ancient name for Iraq, means “land between the rivers”. Today, though, the lines which divide the country, not those which circumscribe it, matter most. In the north and south people are emerging from the deepest of traumas into a world of possibilities. The virtually independent Kurdish region and the oil-rich Shia provinces already enjoy peace and a fair, or rising, degree of prosperity. Between them, though, the heart of the country is trapped in ethnic and sectarian strife, vicious political factionalism and foreign meddling. Iraq’s prime minister, Nuri al-Maliki, behaves like a mafia don; his bickering rivals look little better.

Ten years after the invasion grandly called Operation Iraqi Freedom, and barely 15 months after the last American troops left, the signs of their arrival and passing are scant. Aside from the giant new American embassy in the capital, Baghdad, the monuments of triumph are concrete barriers and checkpoints, fleets of discarded gas guzzlers and the jarring sight of Iraqi soldiers decked out like GIs with sunglasses over their eyes, night-vision gear strapped to their helmets, laser torches and M4 rifles by their sides. Less tangible but more pervasive are the dashed hopes and unfulfilled promises. “They spent a trillion dollars and didn’t leave us a single building,” sniffs an Iraqi politician who once cheered America’s presence.

That is a bit harsh. Even Iraqis with bitter memories of the invasion and occupation, the death toll from which has never been definitively established, accept that without foreign armies they could never have toppled Saddam Hussein, the tyrant who dragged the country from calamity to disaster over the three decades to 2003. “They lifted the lid on the tomb we lived in,” says Sarmand al-Taie, a newspaper columnist. “It’s not their fault we haven’t completely climbed out.” The Americans made terrible mistakes, yes, but so have we, is a common refrain.

Baghdad, where just under a fifth of Iraq’s 33m people now live, remains a maze of compounds and security cordons. On a recent Friday, getting from the city’s old bazaar to Firdos Square, just three kilometres (two miles) away, required a 21km detour. Iraqis endure endless checkpoint queues in return for a lower chance of being caught in a blast or shoot-out. The frequency of attacks has fallen drastically since the sectarian bloodletting of 2006-07, and seven of Iraq’s 18 provinces have murder rates lower than Canada’s. But in Baghdad and the provinces around it outrages still recur with numbing regularity. On February 17th a wave of car bombs in Shia parts of Baghdad killed at least 30 people.

The capital has some new buildings and fancy shop fronts. But they are rare, suggesting that private investment remains a timid trickle. Armies of street vendors plying their trade through the traffic jams reflect the fact that less than 40% of Iraqi adults have a job, and that a quarter of families live below the World Bank’s poverty line, statistics little improved since the dark days of crushing UN sanctions in the 1990s. Asked how many students Mustansiriya University has, one of them replies glumly that there are about 12,000, “which means we add 4,000 to the ranks of unemployed every year.”

Umm Wafa, who with three daughters shares space among 580 other families in an abandoned military hospital on the city’s tattered outskirts, reckons just 5% of her fellow squatters earn a steady income. The house she was forced to flee in the Dora district, occupied now by hostile Sunni neighbours, stands tauntingly close. She gets no state support, and has yet to win compensation for her property despite seven years of government promises. Some 370,000 other internal refugees crowd Baghdad, half in unserviced squatter settlements.

A dozen checkpoints and a 150km of potholed highway to the south the picture looks impressively different. New flyovers lit by solar-powered lamps, multi-storey car parks and flashy hotels ring the centre of Najaf, a focal point of Shia pilgrimage. The city’s biggest attraction, the shrine of Imam Ali, is getting new gilding on its dome. A $600m, 56,000 square metre extension, designed by Iranian architects, will triple its footprint. The chamber of commerce boasts of $7 billion of foreign investment. “I’m optimistic about the future of this city,” says Haidar Salman, a professor at the city’s Islamic University, “but not so much about Iraq.”

Najaf’s Shia seminaries, historically pre-eminent, were overshadowed during Saddam’s rule by those of the rival Iranian holy city of Qom. Now they have reclaimed their place, says Sheikh Fouad al-Torfi, a mullah imprisoned by both Saddam and the Americans. Najaf’s Grand Ayatollah Ali al-Sistani is accepted by nearly all the world’s 150m Shias as the brightest light of the age. Most Shia religious authorities, Iranians among them, have opened offices here, some attracted by greater freedom compared with Qom.

The Shia Mecca’s revival is fuelled by a dynamic private sector. The same is true of Kurdistan, which is also booming; it even enjoys power 24 hours a day. In the centre, though, creaky bureaucracy, bickering politicians and lingering insecurity stymie Iraq’s progress. The state employs 3.5m people—65% of the workforce—and accounts for 70% of GDP. It relies for its income almost entirely on oil revenues, which now average $8 billion a month. A recent survey by the International Energy Agency suggests exports could double by 2020, though this will not be easy (see box on next page).

In much of the country the private sector is shackled. The World Bank ranks Iraq 165th out of the 185 places rated in its latest index on the ease of doing business; it says that shipping a container in or out of Iraq takes four times as long, and costs three times as much, as it tends to elsewhere in the region. Worse, the bank reports no legislative attempts in the past five years to make access to credit easier or speed the procedures to start a business. Iraq’s lawmakers have been too busy fighting political battles and dividing spoils among parties to attend to such practicalities. The electricity in Baghdad seldom stays on more than a few hours at a time, though new plants are being built.

Najaf and the south are doing so much better than Baghdad largely because the Shia majority there feels satisfied with the post-war settlement. From 1546, when the port city of Basra was captured by the Ottoman empire, to the invasion of 2003, Sunni-led states held sway over the Tigris and Euphrates valleys, although the most thickly populated part of the country, south of Baghdad, is largely Shia (see map). The Shia sense of disenfranchisement peaked under Saddam and his mostly Sunni henchmen, whose notion of nation-building included genocide against Kurds and mass execution for members of Shia religious parties they thought allied to Iran. The regime’s previously indiscriminate brutality took a sectarian turn after a failed Shia uprising in 1991.

Understandably, Shias are tempted to regard their current dominance of Iraqi politics with righteous triumphalism. Since the first democratic elections in 2005, Shia-led parties, many of them with clerical or Islamist roots, have had a majority in Iraq’s parliament, as well as the prime minister’s office. They control local government in nine southern provinces. Ordinary Shias share the Najafi businessman’s contempt for Baghdad’s political logjam. Sunni claims of having become Iraq’s new, marginalised underclass fall on deaf ears.

Since mid-December mass protests in the style of the Arab spring have kicked off in Sunni-majority provinces to the north and west of Baghdad. The trigger was the arrest of more than 100 men in the entourage of Rafi Issawi, Mr Maliki’s Sunni minister of finance. A similar move by police units controlled by the prime minister forced Tariq al-Hashemi, a Sunni deputy prime minister, into exile in 2011. In Mr Issawi’s case all but nine bodyguards were soon released, but the arrests still raised simmering Sunni anger to its boiling point.

That should have come as no surprise. Diplomats reckon that Iraq’s myriad security services in recent months have held something like 10,000 people, disproportionately Sunnis, in custody on terrorism-related charges. This is similar to the number once held by American forces. The Baghdad government has suspended salaries the Americans paid to Sunni militiamen. The residents of some Sunni parts of Baghdad are subjected to humiliating searches when leaving their neighbourhoods; on Fridays, days of prayer and protest, they are not let out at all.

Mr Maliki has responded to Sunni protests with concessions, promises and veiled threats. A committee he formed to hear their demands says it has released more than 2,000 prisoners, and resumed or increased salaries for 74,000 militiamen. Despite one incident in January when police opened fire on a mob in Falluja, an ever-restive Sunni city, killing five, security forces have for the most part avoided confronting protesters.

Shia politicians warn that their own constituents are increasingly alarmed by the sight of Baathist slogans and jihadist banners in the Sunni protests. They are terrified that the increasingly sectarian civil war in Syria could create a hostile, Sunni-led post-Assad neighbour. Some speak of the need to rearm and prepare for another round of sectarian conflict.

Mr Maliki, who first came to power as a compromise prime minister in 2005 and then patched together a flimsy government in 2010, bears much of the blame for provoking these tensions. The move against Mr Issawi baffled Iraqi and foreign observers, who see Mr Maliki’s grudging response to the subsequent anger as foolishly inadequate. The grievances of the Sunnis who feel ignored go beyond salaries and harsh policing to a more general anger over rampant corruption and resentment of Mr Maliki’s dictatorial tendencies.

Yet most observers seem to think Iraq can avoid returning to mayhem. Few in Iraq’s political class relish the idea of renewed conflict, says a London-based analyst. He cites as positive signs that Sunni protests have remained peaceful so far, and that calls for the removal of Mr Maliki or scrapping the 2005 constitution, the drafting of which most Sunni politicians boycotted to their later regret, have failed to gain traction. Some Shia politicians, including Muqtada al-Sadr, a young cleric with a strong following who was long branded a dangerous firebrand, have even voiced sympathy with Sunni demands.

If there is no dire reason to fear things getting worse, though, there is not much hope for improvement either. Iraq’s politics are a mess of micro-parties in ever-shifting alliances. In the 2010 elections a centrist, secular-leaning bloc, Iraqiya, actually won more seats than Mr Maliki’s party, but fell to bickering amid the peculiar reluctance of its leader, Iyad Allawi, to visit parliament. The political class’s rejection of seemingly sensible reforms and proclivity for intrigue and factionalism have strengthened Mr Maliki as much as his determination to divide and rule.

Mr Maliki’s efforts to control military appointments, his use of state perks to woo defections from opposition blocs, his abuse of police power and his increasingly brazen appeals to Shia sentiment are all lamentable. Yet these may also be seen as natural responses to the pressures on him. “I’m not sure that anyone else would act much different, and it’s not as if the opposition are offering any alternative,” says a diplomat in Baghdad.

Western diplomats are often irked by the blind eye Mr Maliki turns to Iranian influence in the country—but they also understand that it is inevitable. The Islamic Republic sponsors several armed and virulently sectarian Shia factions. It also, to the annoyance of Western countries and Sunnis, flies regular cargoes over Iraqi airspace to bolster the flailing Assad regime in Syria. But this does not mean that Iraq is fully under Iranian sway. Very few of Iraq’s Shia leaders subscribe to Iran’s state ideology of velayat-e faqih, the guardianship of the jurist. And in increasing its oil exports Iraq is clearly pursuing its own interests, not its neighbour’s. The extent to which Iraqi exports have steadied oil prices vexes the cash-strapped and sanctions-crippled regime next door.

“We share Iran’s concerns about Syria, but not its strategic interests,” explains Naama Obaidi, a cleric who runs a Najaf think-tank. “And we respect that Iran, which fought a long war with us, and faces big threats, should exert lots of its intelligence effort here.” But while Iraq is willing to accommodate Iran, he says, it will not embrace it fully—unless pushed by fear of its Sunni neighbours.

One of those is Turkey, which has often appeared to consider Iraq’s Shia-dominated government as a catspaw for Iran and acted accordingly. Turkey’s prime minister, Recep Tayyip Erdogan, has repeatedly clashed with Mr Maliki. Iraqi officials contend that their neighbour to the north, which runs a thriving $17 billion trade with Iraq, has promoted both Kurdish and Sunni obstinacy in dealing with Baghdad. A Western official says that it would be hard to exaggerate Turkey’s recklessness.

Mr Maliki will probably serve out the rest of his current term, which ends in April 2014. That is not good news for Iraq, but not entirely bad, either. Just keeping a lid on things, as oil revenues grow and begin to percolate downwards, may be a realistic ambition for a country divided internally and surrounded by strife. Muwafaq al-Rubaie, a former national security adviser of courtly demeanour who displays the noose that hanged Saddam in his heavily guarded villa beside the Tigris, insists that Iraq’s trajectory is generally upwards, not steeply so but recognisably. “Compromise in Arabic is a bad word,” he says, “but reaching it at the eleventh hour is one thing we have learned.”


Bastakiya gets renamed

2 March 2013

Dubai has embarked on a series of renaming of streets and districts - all very confusing when you are just getting used to existing names. And it seems that shorter, simpler names that meant something are to be replaced by the names of UAE families or historical events.

Satwa's Al Diyafah Street has been renamed December 2nd Street (December 2nd being the UAE's National Day, marking the establishment of the Emirates in 1971), the Emirates Road is now Sheikh Mohammed Bin Zayed Road.

Business Bay Bridge was originally called the Ras Al Khor Crossing and, of course, the Burj Khalifa was long intended to be the Burj Dubai.

Now Bastakiya is to be renamed.

And it will be known as the rolls off the tongue Al Fahidi Historical and Cultural Area.

It is nice part of town. Some old style adobe buildings and paved walkways, barasti roofs, little bed and breakfast hotels, cafes and galleries.

Shame about the new name.

In other tourist news more than 1,000 animals and birds of Dubai Zoo will get a new home soon as the first phase of the eagerly awaited Dubai Safari will be ready by the end of March.

Dubai Municipality says that 80 per cent of the levelling, internal roads and parking works in the project have been completed, with the rest expected to be ready by the end of the first quarter.

The Dh150 million project is located in Al Warqa 5 on Aweer Road.

Stage one of Dubai Safari includes a Butterfly Park, entertainment and recreational facilities and covers 60 hectares.

The Safari will be divided into different sections — like African, Asian and Arabian — for animals coming from different geographical locations, with architecture and landscaping to match.

As the project completes animals from the old zoo will be moved to the new location.

Now it is The Emirates Old Trafford - Emot !?

28 February 2013

The football and cricket grounds of Old Trafford will officially be known by different names for the first time since 1936 as the result of a 10-year sponsorship deal struck by Lancashire with Emirates Airline to help the club pay for their stadium's substantial redevelopment.

The deal means that the Emirates name will be attached to two of this summer's five Ashes Test grounds, as the airline has held naming rights to Durham's ground in Chester-le-Street for the past
three years – so the third Test will be at Emirates Old Trafford, the fourth at the Emirates Durham International Cricket Ground, and the fifth at the Kia Oval.

Traditionalists will be relieved that the first two Tests are being staged at Trent Bridge – Nottinghamshire having insisted only this week that they have no intention of selling naming rights to their ground, which their chief executive Lisa Pursehouse likened to "selling our soul" – and Lord's, where the MCC seems highly unlikely ever to need to entertain the idea.

However Warwickshire are hoping to secure naming rights for Edgbaston before the end of the summer, and Yorkshire's ground has been officially known as Headingley Carnegie since 2006 under a deal between their Leeds rugby landlords and the city's Metropolitan University.

The bulk of the county grounds that do not stage international cricket have had naming rights for some time – Sussex will begin this season not at Hove, but at the brightonandhovejobs.com County Ground, so even Lancastrian diehards may feel they have had a lucky escape.

There have long been fears that the Manchester ground, which first staged Test cricket in 1884 – the second English cricket ground to do so, after The Oval – would be renamed Tesco Old Trafford, after the supermarket chain provided around two-thirds of the cost of a £32m redevelopment that will be completed with the opening of an expanded and substantially renovated pavilion this summer. But Emirates has instead expanded a cricket portfolio which includes support of umpires and other match officials as part of a partnership with the International Cricket Council – which is also based in Dubai.

"This association highlights our continued investment in Manchester and the surrounding region, a hub which we see as vital to our operations in the UK," said Sir Maurice Flanagan, the airline's executive vice-chairman – who was born in nearby Leigh, and once even sponsored that town's rugby league team.

Perhaps the presence in the city of Etihad, the Dubai airline's local rivals from Abu Dhabi which bought naming rights to the City of Manchester Stadium in July 2010 as part of its funding of Manchester City, also added to Lancashire's appeal.