Iceland on brink of bankruptcy

Sweden lends $701m to bail out the country; US, Europe cut interest rates; IMF says crisis to be lengthy; Indian stocks tumble

Star Report

Protesters applaud at a rally yesterday in Reykjavik about the Icelandic government's handling of the financial crisis. Photo: AP

As the domino effect of the financial meltdown on Wall Street sends shock waves through Europe with Iceland teetering on the brink of bankruptcy for the first time since the advent of economic globalisation, governments rushed to salvage whatever they could yesterday.

In an extraordinary move that reflects the gravity of the financial turmoil, the world's central banks yesterday announced coordinated interest rate cuts as they try to restore confidence in the economy.

Meanwhile, following the footsteps of the US, Britain also announced a three-part multibillion-dollar bailout for its beleaguered banks yesterday, and Spain moved to mount a separate rescue of its own banking sector.

As a part of the bailout package, Britain's eight main banks will be part-nationalised.

The Federal Reserve Bank of US reduced its key rate from 2 percent to 1.5 percent.

In Europe, the Bank of England cut its rate by half a point to 4.5 percent, while the European Central Bank sliced its rate to 3.75 percent.

Other central banks also taking part in the interest rate cut include the banks of Canada, Sweden, and Switzerland.

China also cut its key interest rates yesterday for a second time in less than one month to stimulate slowing economic growth amid the global credit crisis, while Indian stocks fell to a two-year low amid fears that the credit crunch could lead to a global recession.

Sveriges Riksbank, and the Swiss National Bank also reduced their respective policy interest rates.

In the meantime, Sweden's central bank said it will loan up to five billion kronor (514 million euros or 701 million dollars) to the Swedish branch of Iceland's biggest bank Kaupthing to provide liquidity.

The central bank, Riksbank, also announced that Kaupthing Sweden was up for sale.

Russia also agreed to negotiate a four billion euro (5.4 billion dollar) emergency loan to help Iceland fight against national bankruptcy.

The world economy is entering a major downturn in the biggest financial crisis since the 1930s, said the International Monetary Fund (IMF).

In a hard-hitting report, IMF warned the global economy is facing its most dangerous crisis for 70 years.

World economic growth will slow substantially this year, and only pick up modestly later in 2009, it said.

At the same time the impact of surging oil and food prices had led to rates of inflation not seen for 10 years, it warned.

It warned the challenge for governments will be to stabilise economies while keeping a lid on inflation.

In its latest bi-annual World Economic Outlook report, IMF said global economic growth will slow to 3.9 percent this year and then to just 3 percent in 2009 -- its lowest level since 2002.

Growth in emerging and developing countries will still be 6.9 percent this year, and 6.1 percent in 2009 -- while growth in China will still be an impressive 9.3 percent next year -- IMF forecast.

It urged global policy makers to coordinate a response to the spreading financial crisis.

US President George W Bush yesterday discussed the global economic meltdown with the leaders of Britain, France, and Italy, seeking a common strategy ahead of the scheduled meeting of the finance ministers from the Group of Seven rich democracies on Friday in Washington.

Another tainted Chinese milk product found in Philippines

A third Chinese-made milk product sold in the Philippines has tested positive for melamine, officials said Wednesday.
The health secretary, Francisco Duque, said tests showed ‘Jolly Cow Slender High Calcium Low-fat Milk,’ tested positive and ordered its removal from store shelves.
So far, three milk products from China out of 52 so far tested in the Philippines, have proven positive for melamine, Duque said.
On Tuesday the president, Gloria Arroyo, ordered government agencies to close any store found selling tainted milk products. Duque said China had voluntarily given the Philippines a list of 22 products which had tested positive for melamine.

McCain hits hard but debate lacks game-changer

Agence France-Presse . Nashville, Tennessee

John McCain hammered away at unruffled front-runner Barack Obama in Tuesday’s second presidential debate but failed to land the cutting blow likely to revive his sliding poll numbers.
The under-pressure Republican White House hopeful came armed with an ambitious 300-billion dollar surprise plan to buy up the bad American mortgages that helped tip the global economy into crisis.
The Obama camp later claimed the proposal was part of the rescue plan signed into law late last week and that ‘it was Obama, not McCain, who called for this move two weeks ago.’
The initiative, an apparent bid by McCain to twist Obama’s advantage on the economy in his favour, made few ripples during a sometimes muted debate that got most heated in clashes on the financial crisis, Pakistan and Iraq.
McCain was under intense pressure to throw his sliding campaign a lifeline, as he trails Democrat Obama by widening margins in national polls and in battleground states with time running out before the November 4 election.
Snap polls by US television networks awarded the debate, the second of a trio of presidential clashes, to Obama, who seemed as comfortable as his rival in the ‘town-hall’ format which McCain loves.
After days of nasty campaign trail rhetoric, the two senators strolled onto the stage in Nashville, Tennessee, smiling broadly, and shook hands, but tension soon bubbled to the surface.
McCain, criticised for rarely looking at Obama during their first debate two weeks ago, let his dislike of his opponent show again, when he referred to him as ‘that one’ in a tense exchange over energy.
In another swipe, early in the debate, which saw the rivals roam a red carpeted stage with microphones taking questions from undecided voters, McCain mocked Obama on taxes.
‘Nailing down senator Obama’s various tax proposals is like nailing jell-o to the wall,’ he said.
Obama repeatedly made a show of ‘correcting’ McCain’s interpretation of his record and proposals, and hit his top talking point of tying the Republican to the unpopular economic legacy of president George W Bush.
‘I believe this is a final verdict on the failed economic policies of the past eight years promoted by President Bush and supported by John McCain,’ Obama said.
Temperatures rose again when the debate veered into national security.
McCain cited the maxim that the United States should ‘talk softly, but carry a big stick,’ and slammed his rival who he said ‘likes to talk aloud.’
‘He has announced that he will attack Pakistan,’ McCain said, in a misrepresentation of Obama’s vow to hit al-Qaeda targets on the soil of the US anti-terror ally if Islamabad would not.
‘I am not going to telegraph my punches, which is what (Obama) did.’
Obama hit straight back, citing a YouTube video which showed a McCain joke misfiring when he sang ‘bomb, bomb Iran’ to the tune of an old Beach Boys hit.
‘Senator McCain suggests that somehow, you know, I’m green behind the ears and I’m just spouting off and he’s somber and responsible,’ Obama said.
‘This is a guy who sang, bomb, bomb, bomb Iran, who called for the annihilation of North Korea. That I don’t think is an example of speaking softly.’
A CNN national poll after the debate found that 54 percent of those asked thought Obama won and 30 per cent said McCain was victorious.
A CBS survey also gave the debate to Obama — 40 per cent to 26 per cent.

Bangladesh a global whale, dolphin hotspot: study

Staff Correspondent

Bangladesh’s 120km-wide belt of coastal and deep-sea waters could be one of the richest global hotspots of whales and dolphin activity, research by the US-based Wildlife Conservation Society and the local Bangladesh Cetacean Diversity Project reveals.
The study findings were disclosed at a briefing at the Dhaka Reporter’s Unity on Wednesday.
The two organisations are holding a four-day interactive exhibition and film show on whales and dolphins, ‘Introducing whales and dolphins of Bangladesh,’ beginning today at the Bangladesh Shishu Academy in Dhaka.
‘We have been conducting our study since 2002 and over this long period, we have identified that the estuarine and coastal areas and deep-sea are safe places for around 8,000 dolphins of different species,’ Rubaiyat Mansur, the principal researcher, said at the briefing.
‘The species ranged from Ganges River dolphins or Shushuks, Irrawaddy dolphins, finless porpoises to spinners, as well as Pantropical spotted dolphin,’ he said.
The briefing was also addressed by Benazir Ahmed, project supervisor and professor of zoology at Chittagong University, Brian D Smith, project director, Elisabeth Fahrni Mansur, education and training coordinator, Tanjilur Rahman,
a filmmaker, and Zahangir
Alom, project coordinator.
Benazir Ahmed said, ‘The diversity of cetaceans and abundance we have recorded is remarkable and indicates that a large population of these species remain in our waters.’
The Irrawaddy dolphin population in Bangladesh is probably the world’s largest, possibly by an order of magnitude, he observed.
The prime cetacean habitat extends across the world’s largest contiguous mangrove forest in Sundarban National Park and offshore to a 900-plus-meter deep undersea canyon known as the Swatch-of-No-Ground.
Benazir Ahmed opined, having this biggest habitat of dolphins and whales, Bangladesh can be one of the most important destinations for tourists if the possibility of this resource can be explored and utilised properly.
He, however, expressed his concerns about the ecological dangers to whales and dolphins, saying, ‘The long-term prospects of these special animals in these waters is endangered by increasing threats, both natural and manmade, and that includes incidental killing in gillnet fisheries, depletion of prey due to loss of fish and crustacean spawning habitat and toxic contamination from large, upstream human population centres.’
Brian said an additional threat was declining freshwater flows from upstream extraction in the River Ganges and sea-level rise resulting from global climate change.
The experts, both local and foreign, urged the government to take immediate initiatives to conserve cetaceans — the scientific grouping of whales and dolphins — forming a protected area network, transforming it into a resource which earns foreign exchange.
The exhibition which runs during October 9-12 is targeted towards creating awareness of the wealth of marine diversity the country has and emphasising the importance of its conservation, the organisers said.

Ctg mayor released on bail

Staff Correspondent

Chittagong mayor ABM Mohiuddin Chowdhury was on Wednesday released on bail from the prison cell of the Bangabandhu Sheikh Mujib Medical University Hospital after 19 months of his detainment.
Deputy inspector general (prisons) Shamsul Haider Siddiqui said, ‘We have withdrawn jail guards from the prison cell at around 3:20pm as the Chittagong mayor has secured bail from the higher court in all the cases against him.’
Mohiuddin, also the president of the Chittagong City Awami League, was apprehended from his Chashma Hill residence in the port city on March 7, 2007 as part of an anti-graft drive by the military-controlled interim government.
He is now accused in 15 cases although 22 cases were filed against him after his arrest. The police submitted final reports to the court in four of the cases while the High Court quashed three others.
Suffering from heart diseases, the Chittagong mayor had undergone a bypass surgery before his arrest. He had fallen ill in Bandarban Jail on May 14, 2007 and was taken to Chittagong Medical College Hospital with heart, respiratory and urinary complications.
He was shifted to the Intensive Care Unit of Sheikh Mujib Medical University Hospital on May 15, 2007. He has secured bail in all the cases filed against him and he had secured the latest bail in the Bijoy TV scam case with a Tk 80,000 bond on September 30.
The process of his release was delayed as most of his release orders were first sent to Chittagong and then to the jail authorities in Dhaka.

Maldives in landmark vote but opposition cries foul

Agence France-Presse . Male

Tourist paradise the Maldives voted Wednesday in its first multi-party presidential elections, which could see Asia’s longest-serving president ousted by a former political prisoner.
The polls on the Indian Ocean archipelago pit Maumoon Abdul Gayoom, aged 71 and the islands’ president for the past 30 years, against five bitter rivals.
But the election — a test for the Muslim nation’s often tense transition to democracy — was hit by allegations of rigging, with the main opposition party claiming some of its members had been removed from the electoral roll.
‘We had high hopes for today,’ said a furious Mariya Didi, chairwoman of the Maldivian Democratic Party, who was unable to vote. ‘We hoped that once in our lifetime we could vote freely, but today we are being denied our right.’
The MDP’s founder Mohamed ‘Anni’ Nasheed, one of the president’s fiercest critics and a former Amnesty International prisoner of conscience, is seen as Gayoom’s strongest rival.
Anni insisted he was on track to unseat Gayoom, saying ‘the writing is on the wall’ for the veteran leader who served six terms under a one-candidate election system before lifting a ban on political parties two years ago.
The ruling party acknowledged there were ‘teething problems’ with the islands’ first taste of democracy, and said some of its officials also had difficulties casting their ballots.
Nevertheless, turnout appeared to be high in the island capital Male — considered an opposition stronghold — with queues outside polling stations despite heavy rain.
‘Thirty years is really enough, and he should retire,’ said taxi driver Mohammad Nazir, who queued for two hours to cast a ballot for Gayoom’s main rival.
‘I laugh when I see his campaign promises — more hospitals and more houses. The reality is that he runs this place like he’s the king. People are tired of him.’
Gayoom has built South Asia’s richest nation, per capita, thanks to the opening of dozens of resorts on white sand beaches and crystal clear waters — where some rooms cost up to 15,000 dollars a night.
But while it may be a top spot for honeymooners, the local population complains of increasing drug abuse, worsening crime and a chronic housing shortage.
The opposition says half the top government jobs are held by Gayoom’s family and Anni has branded Gayoom as a ‘has-been sultan’.
The country has been rocked by pro-democracy protests, prompting Gayoom to introduce reforms, and also suffered its first terror attack a year ago, with Islamic militants blamed for bombing a park in Male and wounding a dozen tourists.
While opposition rallies have drawn large crowds in Male, Gayoom and his conservative Muslim platform and father figure persona appear to be well liked on outlying atolls.
But security around him remains tight — in January, one islander tried to stab him with a kitchen knife.
Gayoom says he can fight off any challenger and win more than 50 per cent of the vote to avoid a run-off but with no reliable opinion polls, the outcome is impossible to predict.
‘I feel I must be at the helm to see through the reform programme,’ Gayoom told reporters in his final campaign appearance, positioning himself as a committed democrat rather than the Robert Mugabe-type politician his opponents paint him as.
‘It is very wrong to compare me to those people,’ he said, promising to bow out quietly should he lose. He has also accused his rivals of dirty tricks, taking out defamation cases against two opposition politicians who accused him of stealing 40 million dollars of tsunami aid and stashing away tens of millions more in a foreign bank account. Other prominent opponents of the president include former attorney general Hassan Saeed and local business magnate Ghaseem Ibrahim.
In all, 208,000 people are eligible to vote. Polls opened at 9:00am (0400 GMT) and close at 9:00pm. Results are expected Thursday.

No gas for Bangladesh right now: Myanmar

Yangon on Wednesday informed Dhaka that it did not have enough gas at the moment for supply to Bangladesh for the installation of a fertiliser plant or other uses.
If Bangladesh wants to import gas from Myanmar in future, it will need to compete with other countries.
Mayanmar’s energy minister Lun Thi informed M Tamim, the chief adviser’s special assistant, of the matter at a meeting in Tamim’s office.
Lun Thi said Myanmar’s existing gas reserve near Bangladesh had already been sold out to Thailand and China.
This has dealt a blow to Bangladesh’s plan to meet its growing demand for gas with import from the neighbour.
The president, Iajuddin Ahmed, on the day expressed his keen interest in importing gas from Myanmar for fertiliser production for re-export as the vice-chairman of the Myanmar State Peace and Development Council, vice-senior general Maung Aye made a goodwill call on him at Bangabhaban.
The head of the army-controlled interim government, Fakhruddin Ahmed, on Tuesday requested Myanmar to sell gas to Bangladesh through pipeline while he had official talks with Maung Aye.
Referring to his meeting with the Myanmar energy minister, Tamim said, ‘He [Lun Thi] informed us that Myanmar does not have enough gas now for supply to Bangladesh as it has made agreements with China and Thailand for gas supply from the exiting reserve.’
The minister, however, said they were expecting to discover gas in two blocks near Bangladesh by 2008 and Bangladesh could secure gas from that reserve in competition with other countries.
Regarding the Myanmar-Bangladesh-India gas pipeline project, which has now been stalled, the Myanmar energy minister said the possibility of such a pipeline was not on board as they had already sold out the gas, which was supposed to be supplied to India, to China after the talks with the countries failed.
Tamim said Lun Thi had assured him that Yangon would not conduct gas exploratory work in the disputed maritime boundary area until the issue was settled.
The minister responded positively to Dhaka’s proposal for the installation of a hydropower plant in the Rakhain state in Myanmar to bring electricity to Bangladesh, said Tamim.
Tamim told reporters Lun Thi would talk with the Myanmar’s electric power ministry so that a Bangladesh delegation could visit the country for an initial study.
Myanmar earlier proposed that Bangladesh should install the plant on its own investment and give Myanmar 30 per cent of the power from the plant and take the remaining 70 per cent for its use.
Iajuddin, meanwhile, expressed his satisfaction with the existing excellent relations between Bangladesh and Myanmar.
He said this as Maung Aye made a goodwill call on him at Bangabhaban. Iajuddin and Maung Aye assured each other of ‘all-out cooperation’ to mutual benefits.
On the second day of his three-day visit to Bangladesh, Maung Aye began his day by paying tribute to the martyrs of the war of independence at the National Martyrs’ Memorial at Savar.
He placed flowers, planted a sapling and wrote a note on the visitors’ book at the place.
Maung Aye then made a courtesy call on the army chief, general Moeen U Ahmed, in the army headquarters. Maung Aye was apprised of different activities of the Bangladesh army.
The army chief, principal staff officers of the army headquarters and the entourage of the Myanmar general attended.
Maung Aye later visited the Military Institute of Science and Technology in the Mirpur cantonment. He signed the visitor’s book.
The visiting Myanmar construction minister major general Saw Tun on Wednesday discussed with the communications adviser, Ghulam Quader, the Bangladesh proposal for a survey on the proposed direct road link between the two neighbours.
‘The Myanmar construction minister showed a positive attitude to the Bangladesh-Myanmar link road project. We have placed our proposal for a survey on the proposed 25om road with 23 kilometres spanning the Myanmar territory,’ Quader said after the meeting.
A six-member delegation of Myanmar accompanying Maung Aye, visited Beximco Pharma at Tongi in the morning.
The delegation, led by Myanmar’s national planning and economic development minister U Soe Tha and commerce minister Grig Gen Tin Naing Thein, visited the production area of the factory.

Fuel oil prices to fall in a month

Staff Correspondent

The finance ministry on Wednesday gave nod to an energy division proposal for reducing fuel oil prices in a month based on the formula that prices would be adjusted every three months in accordance with those on the international market.
‘We will decrease oil prices within a month, most likely within this month. The finance ministry has in principle approved our proposal to review and adjust fuel oil prices every three months,’ special assistant to the chief adviser M Tamim told New Age after a meeting with finance adviser Mirza Azizul Islam at the latter’s office.
Tamim said initially they would decrease prices of fuel oils like diesel, kerosene, octane and petrol up to a certain level, which had yet to be decided. ‘We will soon work on how much prices will be decreased.’
He said they would also discuss the issue with the communications ministry as transport fares would have to be reduced after the reduction in fuel oil prices.
‘Initially, we will reduce the price for one month and then follow the formula to review and adjust fuel prices every three months. As per the formula, fuel prices would be adjusted if the import cost of Bangladesh Petroleum Corporation increases or decreases by 10 per cent from the last adjustment,’ he said.
Tamim, however, said the government would require to give some subsidies for diesel and kerosene prices even if their prices increased in future as per the formula as these major fuels are used in agriculture sector and by the rural people.
The price of crude oil was around $141 per barrel when the government increased the price of diesel and kerosene to Tk 55 per litre from Tk 40 and octane to Tk 90 from Tk 67 and petrol to Tk 87 from Tk 65 on July 1. The government also approved increase in transport fares with effect from the same day following the fuel oil price adjustment.
Tamim said they had decided to decrease fuel oil prices as they made commitment during price hike in June that prices would be decreased again if the prices of fuel oils come down in international market. ‘When we increased fuel oil prices in June, the price of crude oil was around $141 and refined oil was $180. Now the prices of crude oil have come down to $90 and refined oil at around $100,’ he said.
The chief adviser’s special assistant, however, said it had to be ensured that the people got the benefit from the decrease in fuel oil prices.