Business News: Egypt’s Ruling Party Poised to Prevail as Vote Starts

Business News: Egypt’s Ruling Party Poised to Prevail as Vote Starts

Egypt’s Ruling Party Poised to Prevail as Vote Starts

Posted: 28 Nov 2010 05:09 AM PST

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By Alaa Shahine and Abdel Latif Wahba

(Updates with comments from voter in third paragraph, death in seventh, Human Rights Watch in 14th.)

Nov. 28 (Bloomberg) -- Egyptians are voting in a parliamentary election that the ruling party is poised to sweep, paving the way for next year’s presidential poll that may see the first leadership change in three decades.

Rights groups, including Human Rights Watch, have accused President Hosni Mubarak’s National Democratic Party of undermining free elections by cracking down on other candidates including members of the Muslim Brotherhood, the country’s biggest opposition group. The government, which has rejected a U.S. call to allow international monitors, says it will oversee a fair vote.

“The NDP brings whoever it wants to power,” Ibrahim Sabri, 46, said in an interview outside a polling station in central Cairo. “There is nothing that makes me want to vote.” Other people standing outside said they saw no reason to take part.

The lack of a designated successor to Mubarak, who has ruled Egypt since 1981 and hasn’t said whether he’ll seek another six-year term, has fueled concern that a succession crisis may lead to political unrest. That could endanger foreign investment that is needed to create jobs and expand output in the most populous Arab country.

Police rounded up hundreds of Muslim Brotherhood supporters ahead of the vote. The Islamist group, which fields candidates as independents to bypass an official ban on its activities, said last week that 1,200 of its supporters have been detained.

Keeping Control

“One reason for the crackdown is that the regime wants to keep things under control before the presidential election,” said Moustafa El-Husseini, a political commentator and author of the upcoming book “Egypt on the Brink of the Unknown.”

The son of an independent candidate was stabbed to death in a brawl, the state-run Middle East News Agency said today. Interior Ministry spokesman Tarek Atiyya told reporters in Cairo that the death had nothing to do with the election.

Stocks plunged in March when Mubarak underwent surgery to have his gallbladder removed, sending the benchmark EGX30 index down 6.7 percent in a week. The index’s 4.6 percent gain in dollar terms this year is less than half of the increase in the MSCI Emerging Markets benchmark.

Mubarak’s opponents say the president is grooming his son Gamal to succeed him, a charge both men deny.

Possible Successors

Intelligence chief Omar Suleiman has been mentioned by many analysts, including the London-based Economist Intelligence Unit, as a presidential contender. Mohamed ElBaradei, the former head of the United Nations nuclear agency, said in February he may stand in the election, due in September, if curbs on independent candidates are lifted.

Gamal Mubarak has been among the drivers of economic policy since 2004 as Egypt cut income tax rates and sold state-owned companies to buyers including Turin-based Intesa Sanpaolo SpA, Italy’s second-biggest bank.

The resulting increase in foreign investment helped the economy grow at an average pace of 7 percent in the three years before the onset of the global financial crisis in 2008. Critics of the policies say they widened income inequalities, while leaving the country with an inflation rate that has exceeded 10 percent in the past two years and has hurt the poor.

The Muslim Brotherhood has about 130 candidates vying for seats in the 508-member house. The NDP has fielded more than 800 candidates.

“We have been told, and it seems to be true, that monitors of opposition candidates, especially independents representing the Muslim Brotherhood, have been barred from entering the polling stations to observe,” Daniel Williams, a researcher for Human Rights Watch, said by telephone from Alexandria in northern Egypt.

Help Rejected

The Egyptian government has rejected a U.S. call to allow international observers, saying it was capable of running a fair and free election, monitored by domestic civil society groups.

The Brotherhood won one-fifth of parliament seats in 2005, in a vote that coincided with U.S. calls for President Mubarak to expand political freedoms, pressure that has since waned.

“Egypt has carried out mass arbitrary arrests, wholesale restrictions on public campaigning, and widespread intimidation of opposition candidates,” New York-based Human Rights Watch said in a Nov. 24 report. “The repression makes free and fair elections unlikely.”

After the 2005 ballot, the government passed constitutional amendments that human rights groups say limited judicial supervision over polls. The amendments also banned the use of religion for political ends, in what the Brotherhood says was an attempt to drive it out of politics and pave the way for a succession of power from Mubarak to his son.

Economic Program

Over the past two months, the 47-year-old Gamal, a former investment banker, has campaigned to promote the party’s economic program for the next five years. The pledges include reducing the budget deficit to as little as 3 percent of gross domestic product from 8.1 percent in the fiscal year that ended June 30, along with doubling the wages of public-sector workers. The government agreed this month to raise the minimum wage to 400 pounds ($69) from 35 pounds.

Other NDP policies, such as reducing subsidies, may prove less popular. Discontent about the rising cost of living and low wages sparked riots in 2008.

The government’s main aim will be “to achieve economic growth to generate enough jobs as well as to implement anti- poverty policies,” Reham El-Desoki, senior economist at Cairo- based investment bank Beltone Financial, said by e-mail. “You will see a lot of social spending until the presidential election.”

--Editors: Digby Lidstone, Louis Meixler.

To contact the reporter on this story: Alaa Shahine in Cairo at asalha@bloomberg.net.

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net.

BP Sells Interest in PAE to Bridas for $7.06 Billion

Posted: 28 Nov 2010 05:09 AM PST

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By Kari Lundgren

(Updates with asset disposals in fifth paragraph.)

Nov. 28 (Bloomberg) -- BP Plc, seeking to cover clean-up costs in the Gulf of Mexico, agreed to sell its 60 percent interest in Pan American Energy to Argentina-based oil and gas company Bridas Corp.

Bridas will pay $7.06 billion in cash for the holding, making it the sole owner of PAE, BP said in a statement today. The transaction is expected to be completed in 2011.

BP is aiming to conserve capital and avoid risk after the spill at its Macondo well in the Gulf of Mexico left it facing a bill projected to reach $40 billion and forced former Chief Executive Officer Tony Hayward to resign. The oil company said in July it was planning to sell $30 billion in assets by the end of 2011. Divestments to date, including the PAE sale, total around $21 billion.

“We now have agreements in place that should secure the majority of our divestment target,” BP CEO Robert Dudley said in a statement today. “We will continue to identify further assets that may be strategically more valuable to others than to BP as we complete the program.”

Colombia, Tanzania

In July, BP agreed to sell assets in North America and Egypt to Apache Corp. for $7 billion, while in August the company disposed of fields in Colombia to Ecopetrol SA and Talisman Energy Inc. for $1.9 billion. BP has also sold operations in Vietnam and Venezuela to its Russian joint venture partner TNK-BP for $1.8 billion.

The company agreed earlier this month to sell its fuels marketing businesses in Namibia, Botswana and Zambia to Puma Energy, as well as 50 percent interests in BP Malawi and BP Tanzania to a Trafigura Beheer BV unit for $296 million in cash. Last month, BP sold stakes in four Gulf of Mexico deepwater oil and gas fields for $650 million, following the sale of its role as operator of the Tubular Bells fields.

Bridas will pay BP a cash deposit of $3.53 billion and the remainder upon completion of the sale, BP said. PAE controls holdings in four hydrocarbon basins in Argentina, where it is the second largest producer of oil and gas.

Bridas is 50 percent owned by China’s Cnooc Ltd., which spent $3.1 billion to acquire the stake in March. The deal marked Cnooc’s entry in Latin America and topped the $2.7 billion it paid in 2006 for a share in a Nigerian oilfield.

Cnooc and Bridas Energy Holdings will contribute $4.94 billion to Bridas to finance 70 percent of the acquisition, the company said in a statement today. The remaining 30 percent will be paid with third party loans, Cnooc said.

--Editors: Mike Harrison, David Merritt

To contact the reporter on this story: Kari Lundgren in London at Klundgren2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

Dubai May Sell Shares to Public Amid Restructuring

Posted: 28 Nov 2010 05:02 AM PST

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By Arif Sharif and Vivian Salama

(Updates with Shaibani’s comment in fifth paragraph.)

Nov. 28 (Bloomberg) -- Dubai may sell stakes in some of its state-owned companies to the public to reduce debt as the Persian Gulf emirate alters terms on $24.9 billion of loans at Dubai World as well as restructures Dubai Holding LLC.

“We are working on opening up the capital of leading companies to our public,” Sheikh Ahmed bin Saeed Al Maktoum, chairman of the Dubai Supreme Fiscal Committee, told a conference in the emirate today. The sheikhdom needs to “regroup, review and reconsider some of our investments and re- challenge our competitive edge,” he said. The committee is the top decision-making body for Dubai’s financial affairs.

Dubai and its state-controlled companies are struggling to repay debt that Barclays Capital estimated in September at about $112 billion. The second-largest sheikhdom in the United Arab Emirates accumulated the loans during years of rapid growth in its property industry and other businesses. The International Monetary Fund estimates the debt at $109.3 billion.

The emirate roiled global markets last year when Dubai World sought to freeze payments on loans. All of Dubai World’s creditors have agreed since then to a loan restructuring plan, a person with knowledge of the plans said in October.

Unlisted Companies

The Investment Corp. of Dubai, one of the three main state- owned holding companies, owns stakes in unlisted companies including Emirates, the world’s biggest airline by international passengers, Emirates National Oil Co., Dubai Aluminium Co. and stock market operator Borse Dubai Ltd. Companies owned by the Investment Corp. had a market value of 73.7 billion dirhams ($20 billion) at the end of December last year, according to a government’s bond prospectus issued in September.

“There might be a privatization plan, which is something that we are working on with the government,” Mohammed Ibrahim al-Shaibani, the director-general of the Dubai ruler’s court, said at the conference. The government is evaluating such a plan and may use it as a “mechanism of reducing some of our debt in the future,” he said.

Dubai allowed foreigners to buy property in some parts of the emirate in 2002, a decision that triggered a building boom and a quadrupling of home prices until mid-2008. The credit crisis, which drove away speculators and squeezed mortgage lending, caused home prices to plunge by more than half.

A share sale by Emirates “may be a reality one day, not now,” al-Shaibani said. “Dubai is very rich in good quality assets and we have been chased by so many friends, bankers and investment bankers to really do something with our assets.”

Dubai shares fell to the lowest in more than two months, with the DFM General Index dropping 1.4 percent to 1,659.5 at the 2 p.m. close in Dubai.

“At present, there is very little confidence in U.A.E. exchanges leading to low volumes and sharp volatility,” said Shehzad Janab, head of asset management at Dubai-based Daman Investments PSC. “That’s hardly a recipe for successful initial public offerings.”

--With assistance from Ayesha Daya in Dubai. Editors: Shaji Mathew, Claudia Maedler.

To contact the reporters on this story: Arif Sharif in Dubai at asharif2@bloomberg.net To contact the reporter on this story: Vivian Salama in Abu Dhabi at vsalama@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

Rio de Janeiro Police Take Over City’s Biggest Crime Stronghold

Posted: 28 Nov 2010 04:18 AM PST

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By Francisco Marcelino

Nov. 28 (Bloomberg) -- Rio de Janeiro police took over the city’s biggest crime stronghold, the cluster of shanty towns known as Complexo do Alemao, Military Police General Commander Mario Sergio Duarte told reporters today.

“We won this war,” he said on Globo TV. “Every house will be searched.”

To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net

To contact the editor responsible for this story: Carlos Caminada at ccaminada1@bloomberg.net

Swiss Likely to Vote Against Tax Initiative on Wealthy, SF Says

Posted: 28 Nov 2010 04:07 AM PST

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By Matthias Wabl

Nov. 28 (Bloomberg) -- Swiss Television SF reported that Swiss voters are likely to reject increasing taxes for the wealthy and top earners, citing first projections. At least 55 percent of voters will probably reject the proposal, according to the broadcaster.

To contact the editor responsible for this story: Matthias Wabl at mwabl@bloomberg.net

EU Ministers Meet to Find Agreement on Irish Bailout

Posted: 28 Nov 2010 03:30 AM PST

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By Finbarr Flynn and Stephanie Bodoni

(Adds Ireland saying no agreement has been reached.)

Nov. 28 (Bloomberg) -- European finance ministers are racing to conclude an international rescue package for Ireland before markets open to stop the country’s financial crisis from spreading to the rest of the euro region.

The Irish government wants to reach an agreement to stamp out the “uncertainty” that’s unsettling euro region investors, Energy Minister Eamon Ryan told Dublin-based broadcaster RTE yesterday. Finance ministers from the 16 euro nations meet at 1 p.m. in Brussels before a meeting of all 27 EU ministers. European Central Bank President Jean-Claude Trichet will also attend.

Prime Minister Brian Cowen’s government is finalizing a bailout agreement that may amount to 85 billion euros ($113 billion) after more than 50,000 people took to the streets of Dublin yesterday to protest budget cuts. As Ireland’s crisis spreads to Portugal and Spain, investors are looking for details on the interest rate Ireland will pay on its loans and the fate of senior bondholders in the country’s banks.

“The euro is under threat here,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin. “The market has got it into its head that it is going to pick off one country at a time.”

An Irish Finance Ministry spokesman rejected a Reuters report that an agreement has been reached on a bailout.

The average yield investors demand to hold 10-year debt from Greece, Ireland, Portugal, Spain and Italy climbed above 7.5 percent on Nov. 26. The yield on German 10-year bonds was 2.73 percent.

Cowen’s Woes

Cowen has overseen the collapse of Ireland’s banking system and national finances after a 10-year property bubble burst, the country fell into a recession and unemployment surged close to 14 percent. Cowen’s government is also unraveling. The Green Party, a junior coalition partner, wants January elections and some lawmakers from his own party are slamming his leadership.

Ireland is set to become the second euro country to seek a rescue after the Greek debt crisis earlier this year destabilized the currency and forced the EU to set up a 750 billion-euro rescue fund. Ryan yesterday said a Nov. 25 report by RTE that Ireland may pay as much as 6.7 percent interest for loans over nine years was “inaccurate.”

“Ireland must not dance to the tune of the ECB and IMF and run the risk of squandering our future by rushing any decision regarding borrowings or repayment terms in the next 24 hours,” said Ned O’Keefe, a lawmaker from Cowen’s ruling Fianna Fail party, in a statement yesterday.

Spending Cuts

Ireland’s government plans to cut spending by about 20 percent and raise taxes over the next four years to reduce its budget deficit to 3 percent of gross domestic product by 2014, from 32 percent this year, when 31 billion euros in capital support for banks are included. The government expects tax revenues for this year to be 31.5 billion euros, it said Nov. 24.

Protesters cheered yesterday on Dublin’s O’Connell Street when Siobhán O’Donoghue, director of Migrants Rights Center Ireland, tore up a copy of the government’s four-year budget plan, and called for a general election before the announcement of next year’s budget on Dec. 7.

Ireland has been brought “to its knees” by the government and bankers, Jack O’Connor, head of Ireland’s umbrella organization for labor unions, told the crowd. “Several generations of Irish men and women” will have to foot the bill, he said.

Irish Banks

The need for a pact is intensifying as Irish banks’ capital dwindles. Allied Irish Banks Plc and Bank of Ireland Plc bonds fell Nov. 26 on concern the government will abandon a pledge to protect senior bondholders and force them to share the bailout costs. Ireland’s Sunday Business Post and the Sunday Tribune newspapers today reported that the ECB vetoed hurting senior bond holders.

U.K. Chancellor of the Exchequer George Osborne is attending the meeting euro-area finance ministers today, a British spokesman said. Britain intends to make a bilteral loan to Ireland and not join the euro-area financing.

--With assistance from Dara Doyle in Dublin. Editors: John Fraher, James Hertling

To contact the reporters on this story: Finbarr Flynn in Dublin at fflynn3@bloomberg.net Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

GMR to Sell Intergen Stake to China Huaneng for $1.23 Billion

Posted: 28 Nov 2010 03:18 AM PST

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By Ruth David

Nov. 28 (Bloomberg) -- India’s GMR Infrastructure Ltd. today said it will sell a 50 percent stake in power utility InterGen to China Huaneng Group for $1.23 billion.

To contact the reporter on this story: Ruth David in Mumbai at rdavid9@bloomberg.net

To contact the editor responsible for this story: Mike Harrison at mharrison5@bloomberg.net