Iran defiant amid new nuclear plant row

Iran's new nuclear plant was built in line with UN regulations, President Mahmoud Ahmadinejad claimed on Friday, as Western powers accused Tehran of "breaking" every rule of international behaviour.
By Alex Spillius and Andrew Porter in Pittsburgh and David Blair
Published: 7:30AM BST 26 Sep 2009
America, Britain and France raised the prospect of new, tough sanctions after Tehran was forced to admit that its experts have secretly constructed a highly sensitive nuclear plant.


This facility, buried in a mountain outside the city of Qom, is designed to enrich uranium and could be used to produce the essential material for a nuclear weapon. Iran chose to admit its existence shortly before President Barack Obama, Gordon Brown and President Nicolas Sarkozy of France made a joint appearance at the start of the G20 summit in Pittsburgh.
The three leaders chose to maximise the pressure on Mr Ahmadinejad’s regime. “Iran is breaking rules that all nations must follow,” said Mr Obama, adding that Iran was “endangering the global non-proliferation regime and threatening the stability and security of the region and the world”.

“The level of deception by the Iranian government and the scale of what we believe is the breach of international commitments will shock and anger the entire international community,” said Mr Brown. He added there was “no choice but to draw a line in the sand”.

The secret facility, which Western intelligence agencies discovered some months ago, is due to become operational next year. The plant is large enough to hold 3,000 centrifuges, the machines used to enrich uranium. A clandestine facility of this kind, beyond the reach of inspectors from the International Atomic Energy Agency, would be enough to produce sufficient weapons-grade uranium for one nuclear bomb in about a year.

Mr Obama pointed out that the “size and configuration of this facility is inconsistent with a peaceful programme”. Privately, Western officials pointed out the plant is too small to produce enriched uranium for a civil nuclear power station - but just large enough to make enough weapons-grade material for a bomb every year.

A US official said the facility was located 120 miles south-west of Tehran, in a network of underground tunnels found beneath a military base once used as a missile test site by the Revolutionary Guards.

Mr Obama said Iran “must come clean” about its nuclear ambitions at the meeting next week in Geneva. “I won’t speculate on what course of action we will take, we are going to give Oct 1 a chance,” he said, repeating his position that the use of force against Iran would not be ruled out.

Iran’s chief negotiator will meet an American official along with representatives of Britain, France, Germany, China and Russia in Geneva. Unless this meeting yields real progress, America and her allies are likely to table a new resolution before the Security Council imposing more economic sanctions on Iran.

Mr Sarkozy set a deadline of December for Iran to show a change of heart or incur more sanctions. He said Iran must “put everything on the table” at the meeting on Oct 1. “What has been revealed today is exceptional,” said Mr Sarkozy. “We can’t let the Iranian leaders gain time while the motors are running.”

American officials said that Mr Obama had shared the intelligence about the nuclear facility’s existence with President Hu Jintao of China and President Dmitry Medvedev of Russia on the margins of the General Assembly in New York. Iran then learned of the discovery of its plant and chose to come clean in a letter to Mohammed ElBaradei, the head of the IAEA.

A spokesman for Mr Medvedev said that he was “alarmed” by the development. Earlier, Russia’s leader had publicly softened his country’s once implacable opposition to imposing more sanctions on Iran.

America and her allies united to demand that Iran allow IAEA inspectors to visit the new facility. Ma Zhaoxu, a Chinese foreign ministry spokesman, said that Beijing supported this request.

The enrichment plant was uncovered by British, French and American intelligence agencies. One source credited MI6 with “a very big part” in establishing exactly what was going on beneath the mountain north-east of Qom.

The source stressed how the existence of the plant undermined Iran’s constant claim that its nuclear programme is solely for electricity generation. This formerly clandestine facility is of the right size to produce weapons-grade uranium for a bomb.

Iran has previously been caught with designs on how to build nuclear warheads and the existence of its declared enrichment facility in Natanz only emerged in 2002. Gordon Brown said this occasion marked the “third time they have been caught red handed not telling the truth”.

New Jersey man pleads guilty for hiding UBS account

WASHINGTON (Reuters) - A New Jersey man pleaded guilty on Friday to failing to report about $6.1 million he had held in a UBS AG Swiss bank account, the Justice Department said, the latest plea in the U.S. crackdown on tax fraud.

Juergen Homann agreed to plead guilty to failing to report his UBS account on his U.S. income tax return as well as the income he received from the account, according to the Justice Department.

By ASHLEY M. HEHER AP Retail Writer.

CHICAGO -- Cruise operator Carnival Corp. said increased summer bookings from last-minute getaway seekers combined with falling fuel costs to help it beat third-quarter profit forecasts.

But profit still fell from the same period last year for the owner of the Carnival, Princess and Holland America cruise lines.

Executives, who boosted the company's full-year profit forecast, said business was stabilizing after a year of troubles brought on by the recession and the swine flu. That steadying is allowing the company to finally begin to raise deeply discounted fares for some destinations, executives said.

"I think it is clear that we've kind of stabilized here," said Chief Operating Office Howard Frank. "And that we have been able to tweak pricing up at a price point that people (still) find very attractive."

Frank said a full recovery from the worst economic downturn since World War II is likely years away, however.

"We're not going to see dramatic increases," he said. "I just think it is going to be a fairly stable environment, maybe slightly improving, but nothing more than that."

For the three months that ended Aug. 31, the Miami-based company earned $1.07 billion, or $1.33 share. That's down 19.5 percent from $1.33 billion, or $1.65 per share, in last year's third quarter.

Revenue fell 14 percent to $4.14 billion from $4.81 billion in the same period last year.

An important industry gauge measuring profit after subtracting expenses fell from last year but was better than expected as more travelers booked vacations just weeks before departure to take advantage of discounts.

Wall Street forecast earnings of $1.18 per share on revenue of $4.05 billion.

Carnival said its fuel costs fell almost 40 percent for the quarter compared with the same period in 2008. And bookings for the rest of the year and through the first half of 2010 are up nearly 20 percent.

The company also said travelers were beginning to make reservations longer in advance than the last-minute purchases that have been standard for months.

"While the environment for travel remains challenging, we are encouraged by the strength we have had in booking volumes throughout the year," Chairman and Chief Executive Officer Micky Arison said in a statement.

The company's performance was also helped by travelers beginning to spend more while aboard the company's 93 ships.

That revenue - $826 million - is 5 percent lower than last year but about 22 percent higher than in the second quarter.

Chief Financial Office David Bernstein said spending at on-board art auctions and casinos is still weak, but other areas such as on-board bars and off-boat excursions are faring better.

For the full year, Carnival now expects to earn between $2.16 per share and $2.20 per share, up from $2 per share to $2.10 per share. In the fourth quarter, it expects to earn between 16 and 20 cents per share. The company expects its costs to fall 12 percent for the year, thanks to cost cutting and lower fuel consumption.

Citi Investment Research analyst Greg Badishkanian said the company's outlook was conservative and it might be able to exceed those figures.

But Goldman Sachs analyst Steven Kent told investors in a research note that he thought the company's outlook was "too positive," given that fuel prices are climbing and swine flu might cut into winter travel.

Carnival shares climbed $1.52, or 4.8 percent, to close at $33.52 Tuesday.

Citigroup U.S. retail bank focusing on 6 cities

NEW YORK (Reuters) - Citigroup Inc's (C.N) U.S. retail banking business plans to focus its marketing efforts on six cities, a source familiar with the matter said, but the bank's chief executive said he does not plan to dramatically shrink its branch network.
The bank plans to extend branch hours, refurbish branches and boost marketing efforts in: New York, Washington, Miami, Chicago, San Francisco, and Los Angeles.
A report in the Wall Street Journal on Thursday said Citigroup was looking to limit its overall consumer lending in the United States to credit cards and large mortgages, and plans to cater to largely affluent customers.
That report also said the bank may sell or scale bank its branches in cities such as Boston or Philadelphia.
In a memo to employees, CEO Vikram Pandit wrote, "We are in the right places, and while we continuously refine our branch locations, we are not anticipating any dramatic changes to our footprint -- despite recent media reports to the contrary."
(Reporting by Dan Wilchins, editing by Leslie Gevirtz)

Japan govt team to study JAL rehabilitation plan

The Japanese government Friday set up a special team to study struggling Japan Airline's rehabilitation plan

(AFP) – 1 hour ago

TOKYO — The Japanese government Friday set up a special team to study struggling Japan Airline's rehabilitation plan, the transport ministry said.
Transport Minister Seiji Maehara and experts on industrial revitalisation formed the team a day after Asia's largest carrier sought a public bailout to survive the economic downturn.
"The first meeting will take place shortly today," said a ministry official.
JAL, which lost more than one billion dollars in the April-June quarter, has announced plans to slash 6,800 jobs and pursue a tie-up with a foreign carrier as part of efforts to return to profit.
It will also submit further rehabilitation measures to the government by the end of this month.
The special team is expected to study the measures intensively while making an assessment of the carrier's assets.
JAL president Haruka Nishimatsu met Maehara Thursday and sought a public bailout, but the government gave a cool response to the request as the minister said the business revival plan was "insufficient."
Japan's new centre-left government has said that it would overhaul the restructuring process set in motion for JAL under the previous government, but has ruled out allowing it to collapse.

G20: Passing the buck in Pittsburgh

Everyone knows something needs to be done to prevent another crisis, but will the G20 leaders agree on a course of action?

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The skyline of downtown Pittsburgh, Pennsylvania. Photograph: Saul Loeb/AFP/Getty Images

There's nothing like a crisis to bring out the best in people, particularly international statesmen. Unfortunately, the very real problems facing the world don't look like a crisis any more. The banking disaster, which temporarily united April's G20 in London, has passed before politicians had time to work out how to stop it happening again. Friday's return summit in Pittsburgh threatens to turn into a rather less dignified game of passing the buck.
Ostensibly, all sides are pretty much agreed that something still needs to be done: no one is complacent enough to believe that the few months of calm which followed that concerted global intervention in the spring means we can just go back to business as usual. But the fragile state of the world economy means America and Britain are uncomfortable with the idea of hobbling Wall Street and the City just when they are starting to become net contributors to the exchequer again. With less to lose, France and Germany find themselves playing the more appealing role of financial reformers – raising uncomfortable questions about bank bonuses and long-term sustainability.
In an ideal world, we would have a bit of everything. President Obama is right to focus on "rebalancing" the world economy – persuading the west to save a bit more and persuading the east to invest a bit more in its own citizens rather than just storing up destabilising trade surpluses. Gordon Brown is right to stress that we are not out of recession yet and should focus on restoring growth before worrying about the next boom. And Angela Merkel is right to warn that both of these concerns should not to distract us from the number one aim of reforming the banking system.
Unfortunately, instead, it looks like we're heading for a fudge. The Americans have already conceded we are unlikely to reach agreement on the key issue of bank capital ratios. This time, European special pleading looks to blame. And neither Brown nor Obama seem strong enough to tackle the equally pressing issue of bonuses. No doubt, common ground will be reached on the rather less-vexed issue of trade imbalances, but it will be the lowest common denominator.

Muslims to Conduct National Prayer Rally Outside Capitol

Updated: Thursday, 24 Sep 2009, 11:16 PM EDT
Published : Thursday, 24 Sep 2009, 6:46 PM EDT

As many as 50,000 American Muslims are expected to gather on Capitol Hill Friday for the religion's first-ever national prayer rally, organizers of the event say.
The rally is intended to be all about prayer, and no political speeches or signs will be allowed, said the event's organizer, Hassen Abdellah, president of the Dar-ul-Islam mosque in Elizabeth, N.J.
But at least one of the prominent speakers who will read from the Koran has drawn criticism in the past for statements he's made about the Sept. 11 terror attacks, as well as for saying that the American media are largely under "Zionist control."
In 2005, according to the Middle East Media Research Institute, Sheik Ahmed Dewidar said the "suspicion towards anything Islamic" remained a burden on Muslim Americans and that "the media — most of which is under Zionist control — has helped to spread this perception.
"When [the media] see a bearded Muslim selling fast food on any street in any state, they put the camera lens in front of him and interview him as though he represents Islam. At the same time, they ignore every moderate Islamic voice, every serious, scientific Islamic model, and every expert religious scholar."
During another interview by the Egyptian Muslim Brotherhood's Web site, Dewidar hinted at an American government conspiracy in relation to the Sept. 11 terror attacks.
"Whether or not these events were planned, or pinned on the Muslims, or something else — [it] provided an opportunity for [the American government] to legislate dubious laws that restrict the growth and presence of Islam in the U.S.," Dewidar told ikhwanonline.com.
Dewidar also denounced then-President Bush's policy in the Middle East, claiming it was dictated by Israeli politician Natan Sharansky.
"This Jew has despicable goals, and we see their effects today in America's actions in the region, imposing its opinion and its outlook on democracy, education, and political involvement on our countries," Dewidar told the Web site.
According to a biography on islamoncapitolhill.com, the prayer rally's Web site, Dewidar was born and raised in Rashid, Egypt, and had memorized the Koran by age 12. Now an instructor at Manhattanville College in New York, he also established the Islamic Center in Manhattan, near the United Nations. Efforts to contact Dewidar were unsuccessful.
Despite the controversy surrounding Dewidar, Abdellah said politics will play no part in Friday's gathering outside the Capitol.
"This is just about prayer," he told FOXNews.com. "The purpose is Islamic unity, so we can display the beauty of Islam. We believe the group are going to be people who love and respect America, and we want to let America know that we're here and that we support the country.
"I know it's difficult for people to believe it could be that simple."
Another man scheduled to recite the Koran at Friday's rally is Sheik Muhammad Jebril. According to a biography, he is among the most prominent chanters of the Koran in the Muslim world. He has served as an instructor of the Koran at the University of Jordan and led a religious program on Jordanian television networks.
Contrary to reports, Jebril was not named as an unindicted co-conspirator in the Holy Land Foundation trial, which resulted in life sentences for five men found guilty of funneling $12 million from an Islamic charity to Hamas.
Abdellah, an attorney who has represented convicted and suspected terrorists, said President Obama's inaugural address and his subsequent speech in Egypt in June led him and a local imam, Abdul Malik, to form the idea of the prayer rally.
Any individuals who come to the gathering with the goal of disrupting the event will be left to Capitol Hill police, he said.
"If they come to the event with another agenda, then the Capitol police will take care of them," he said. "We're focusing on the positive, not the negative. The only question I would ask is, why would you come to disrupt prayer?"
"Buses are coming from everywhere," he said. "We love this country and we believe this country accommodates our religion and we're part of the fabric of this society."
But not all Muslims agree with Abdellah's approach. ISNA officials say the prayer gathering is misguided.
"We are not sure this is the best way to achieve the objective," Louay Safi, ISNA's director of communications, told FOXNews.com. "Our approach is really to encourage the community to become more active in society and the government by participating in interfaith and charitable activities. We fear that the gathering will not be understood by some Americans."
While ISNA will not participate in Friday's event, Safi said he

$35B Air Force tanker competition set to reopen

FILE - In this Wednesday, Feb. 18, 2009 file photo, a lineup of U.S. air force KC-135 tanker planes seen at the Manas air base in Bishkek, Kyrgyzstan. The Air Force is poised to reopen the competition between rivals Boeing Co. and Northrop Grumman Corp. for a troubled $35 billion tanker contract.

Azamat Imanaliev, file / AP Photo

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Trade ruling adds fuel to aerial-tanker contract fight

Trade ruling adds fuel to aerial-tanker contract fight

WASHINGTON — A long-awaited ruling in an international trade dispute could become the latest flash point in the competition for a $35 billion contract to start replacing the aging fleet of Air Force aerial refueling tankers.
The Pentagon is expected to release a draft request for bids on the tanker contract this week.
Boeing supporters in Congress have made it clear that they won't tolerate a competition that doesn't take into account a preliminary ruling earlier this month from the World Trade Organization that Airbus has received billions of dollars in illegal subsidies from four European governments.

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Trade ruling adds fuel to aerial-tanker contract fight

Trade ruling adds fuel to aerial-tanker contract fight

A long-awaited ruling in an international trade dispute could become the latest flash point in the competition for a $35 billion contract to start replacing the aging fleet of Air Force aerial refueling tankers.
The Pentagon is expected to release a draft request for bids on the tanker contract this week.
Boeing supporters in Congress have made it clear that they won't tolerate a competition that doesn't take into account a preliminary ruling earlier this month from the World Trade Organization that Airbus has received billions of dollars in illegal subsidies from four European governments.

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Gates restores Air Force authority in tanker deal

Gates restores Air Force authority in tanker deal

Defense Secretary Robert Gates on Wednesday restored the Air Force's authority to select the winner of a $35 billion contract for aerial refueling tankers between Boeing Co. and Northrop Grumman Corp.
Gates last summer stripped the service's ability to award a contract in the wake of a Government Accountability Office report that found the Air Force failed to evaluate both proposals on the same merits.
Northrop, and its partner Airbus parent European Aeronautic Defense and Space Company N.V., beat out rival Boeing for the deal to replace 179 tankers last February. Boeing later successfully protested the award.

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Air tanker contract competition rules ignore WTO ruling, lawmakers say

Air tanker contract competition rules ignore WTO ruling, lawmakers say

The Air Force has decided not to consider the billions of dollars in illegal subsidies a European aerospace company received as it seeks new bids on a $35 billion contract to start replacing the nation's fleet of aging aerial refueling tankers, members of Congress briefed on the contract said Thursday.
The decision not to take into account a recent ruling from the World Trade Organization that Airbus received $5 billion in illegal "launch aid" from four European governments for the A-330 and billions more for other aircraft was not unexpected.
But even so, it touched off an uproar on Capitol Hill.

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Air Force won't factor WTO ruling in tanker competition

Air Force won't factor WTO ruling in tanker competition

As it seeks new bids on a $35 billion contract to start replacing its fleet of aging aerial refueling tankers, the U.S. Air Force has decided not to consider a World Trade Organization ruling that a European aerospace company received billions of dollars in illegal subsidies for other aircraft.
The competition is expected to be a rerun of an earlier showdown between Boeing and a team of Northrop Grumman and the European Aeronautic Defense and Space Co., the parent company of Airbus.
The decision not to take into account a recent interim WTO ruling that Airbus received $5 billion in illegal "launch aid" from four European governments for the A330 and billions more for other aircraft wasn't unexpected.

By DONNA BORAK

AP Business Writer

WASHINGTON -- The Air Force is poised to reopen the competition between rivals Boeing Co. and Northrop Grumman Corp. for a troubled $35 billion tanker contract.
The Pentagon has tried and failed twice to award a contract to replace its Eisenhower-era fleet of tankers that refuel military planes in flight. The last attempt in early 2008 was overturned on appeal and led Pentagon leaders to temporarily revoke the Air Force's authority to award a contract. The 2004 award to Boeing was undone by an ethics scandal that resulted in prison terms for a former company executive and a former high-ranking Air Force official.
"After eight years, we can finally get on with this program," Rep. John Murtha, D-Pa., said Thursday.
Murtha chairs the House Appropriations subcommittee on defense. He was one of several lawmakers briefed by Air Force Secretary Michael Donley and other Pentagon officials on the latest request for bids - due out Friday - on the tanker competition.
The Pentagon's briefing materials said the Air Force is seeking to reduce the number of requirements to replace its aging tankers to 373 from 800, in a bid to make the process more transparent.
"This time we will be crystal clear about what we want and what the bidders need to do to win," according to the briefing.
The department also changed course on two other issues. The winner will be based on "best value" and not price, and the deal will be a fixed-price contract. The switch from a cost-plus pact means the contractor will be paid a negotiated amount regardless of extra expenses.
"At this point, neither (company) knows enough about the selection process to figure who is better off with the new terms," said Loren Thompson, a defense consultant for the Lexington Institute.
Richard Aboulafia, aerospace analyst for the Teal Group, said despite a strong start, the Air Force's efforts won't be enough to shield the contract from political bickering on Capitol Hill.
"It's tough to be optimistic of avoiding yet another political firestorm, but this is the best chance they've got to start with," said Aboulafia.
Rep. Norm Dicks, D-Wash., a Boeing supporter, said the service's plan appeared to be "a much fairer approach."
Washington, Kansas, and other states stand to gain jobs if Boeing lands the award, while Alabama is anticipated to get a new plant in Mobile should Northrop win.
Los Angeles-based Northrop and partner Airbus parent European Aeronautic Defense and Space Co. N.V., won the deal to replace 179 aging planes in February 2008. Boeing later successfully protested the award after congressional investigators found the Air Force failed to evaluate both proposals on the same merits.
Representatives from Northrop and Chicago-based Boeing declined to comment until the companies receive a draft of the request for bids.
EADS North America Chairman and CEO Ralph Crosby said the company is looking forward to working with Northrop in evaluating the tanker request.
The Pentagon still anticipates awarding a single contract next summer, according to lawmakers. Some, including Murtha, had pushed for awards for both companies, but Pentagon leaders say that would be far more costly to taxpayers.
One area of concern to Dicks and Sen. Patty Murray, D-Wash., was the exclusion of language in the contract that would require the Air Force to consider the World Trade Organization's interim ruling earlier this month that European loans for Airbus were illegal subsidies. A separate ruling on a European Union counter-complaint against the U.S. is expected in about six months.
Northrop supporter, Alabama Republican Sen. Richard Shelby welcomed the service's decision to exclude the WTO's results from the competition. Sen. Jeff Sessions, also an Alabama Republican, said it was too early to tell whether the draft request includes more objective criteria.
The tanker deal - one of the largest in Pentagon history - is the first of three contracts worth up to $100 billion to replace nearly 600 aircraft over the next 30 years.
Defense Secretary Robert Gates last week restored the Air Force's authority to select a new winner after stripping the service's ability to award a deal in the wake of the congressional investigators' report. Gates' office will continue to oversee the competition.
The Air Force says replacing the tanker remains its top acquisition priority.

'Al-Qaeda group' flees Iraq jail

The Iraqi police were offered US military help with the search

Sixteen members of al-Qaeda in Iraq have escaped from a prison north of Baghdad, Iraqi security officials say.

Reports said five of the group, who were being held at a facility in Tikrit, had been sentenced to death for involvement in attacks.
A security official said that the men removed the windows from a bathroom, crawled through the opening and climbed a ladder over the prison walls.
One of the men has since been caught, but the rest remain at large.
Checkpoints have been set up around Tikrit, which is a predominantly Sunni town in Salah al-Din province about 80 miles (130km) from Baghdad.
Iraqi military spokesman Maj Gen Abdul-Karim Khalaf said extra surveillance had also been ordered at Iraq's borders and throughout the north-west of the country.
A senior provincial security official told AFP news agency that the escapees had probably received assistance from within the prison system.
"It is clear there was co-operation with specific groups that helped them escape. Probably one of the officials helped them," he said.
In a separate development, 24 people have been arrested in Morocco on suspicion of having links to a cell recruiting suicide bombers for Iraq, according to a state news agency.
It said the group, based in towns and cities across Morocco, was also suspected of recruiting men to fight in Somalia and Afghanistan.

Fisker gets $528 million in government funds

The U.S. Government sure is hot on these electric car programs. The Energy Department granted Fisker Automotive, a California electric-car startup, a $528 million loan to finish work on its $88,000 Karma plug-in electric sports car and to develop a smaller, cheaper model. The loan deal follows a $465 million loan to Tesla Motors, another California electric-car startup, made by the DOE in May.

In both cases, the government is betting on technology that has yet to prove its way with consumers. Electric cars are still too expensive and in most cases can’t drive far enough on a charge to appeal to the masses. Tesla has delivered 700 of its $109,000 roadsters and is trying to gets its $50,000 Model S sedan ready to sell in 2011. Fisker has yet to sell a car, but plans to launch its Karma sports car next summer. Fisker, started by former Aston Martin designer Henrik Fisker, expects that its sports car will go 50 miles on electric drive before the gasoline engine kicks in. It’s a similar concept to General Motors Corp.’s Chevrolet Volt, which will likely go 40 miles before the gasoline engine kicks in to recharge the battery. GM got a preliminary city fuel economy rating of 230 miles per gallon for the Volt.

Is this money well spent? It’s a big gamble. Both companies will need to get their less expensive cars on the road and in big numbers to lower production costs and start showing consistent profits and positive cash flow. If not, paying those loans back could be a tall order. Fisker’s second project, called Nina, is designed to do just that. The company wants to sell 100,000 of them a year at around $40,000 apiece. Maybe at that kind of sales volume they can make money. At lower sales volumes, electric cars are a money loser. GM, which expects to sell about 10,000 Volts in the first year of production, is likely going to lose money on the first-generation car. It’s hard to see sales of 100,000 Fisker Ninas since the BMW 3-series sells that many cars in the U.S. in a year at about the same price. And it’s an established brand in the marketplace. Another big point: Battery costs need to come down to gin up consumer appeal and improve the profit picture.

Using government funds for technology projects always sparks a hot debate. On one hand, if the government is going to dole out loans to businesses, why not spend the money on something that could change the game? Electrification of the car could do that for an industry that has made gas burners for more than 100 years. On the other hand, promising new technologies have usually been funded by risk-taking venture capital firms and daring investors. To date, Fisker has raised more than $100 million in private capital. Tesla has raised much more, including $82.5 million in private funds and $50 million from Daimler AG recently. For Fisker, that means tax payers are being asked to gamble roughly five times more than the private players who invest in technology. In other words, if the true believers who think electric cars are the future don’t have enough conviction to invest more money, why should the public? There’s nothing inherently wrong with public funds spurring new technology. But at a time when the nation is running huge deficits, it would be nice to see the private players match Uncle Sam’s skin in this game.

EU plans tougher financial supervision

(AFP) – 4 hours ago

BRUSSELS — The European Commission was to forge ahead on Wednesday with detailed proposals for tough financial supervision amid horse-trading over a pivotal role for the Bank of England's governor.

The EU announcement, on the eve of a summit of the Group of 20 leading world economies in Pittsburgh, Pennsylvania, will also include plans for new pan-European super watchdogs to oversee banks, insurers and securities firms.

The emergence of the BoE's Mervyn King as the leading contender to be the deputy head of a new European Systemic Risk Board, expected to be chaired by the president of the European Central Bank, Jean-Claude Trichet, is aimed at overcoming misgivings emanating from the City of London.

The new bodies will be responsible for identifying threats to the EU economy as a whole and will have the power to demand national action or impose mediation on national supervisors in the event of disagreement.

The aim is to avoid a repeat of last year's financial crisis which saw over-leveraged banks go under or require massive state bailouts.

But it is this overarching power that has Britain and some other EU nations worried about the proposals, agreed at a European Union summit in June but which must be backed by member states and the EU parliament if they are to come into force.

"The devil is in the detail," one European source said.

Backing from Britain -- Europe's biggest financial centre -- is vital if the new structures are to be up and running as planned by the end of next year.

Under the commission proposals, the European banking authorities should have "the power to require national supervisory authorities to take specific action" to remedy emergency situations, according to a draft text.

The commission itself would have powers to decree an emergency situation.

"Our aim is to protect European taxpayers from a repeat of the dark days of autumn 2008 when governments had to pour billions of euros into the banks," Commission President Jose Manuel Barroso said in a statement.

"This European system can also inspire a global one and we will argue for that in Pittsburgh."

London is concerned about ceding to Brussels binding powers that leave British taxpayers picking up the tab.

"We think that it is important that responsibility for making those types of decisions rests with national supervisors," a British diplomat said.

Diplomats said Britain, which is not part of the 16-nation eurozone, could be brought on board if King was given real influence on the oversight body.

Britain thinks "there is a good case for putting forward the Bank of England governor as the vice chair," one EU diplomat said.

"There is an appreciation (in Brussels) of the fact that Britain is a large financial centre and its consideration might be above that of some other countries," the Financial Times reported on Wednesday.

Britain has also obtained an undertaking that centrally-decided measures "must not impinge on the fiscal responsibilities of (EU) member states."

The commission is therefore proposing a "safeguard clause" which would allow an EU nation to refuse to apply a decision which they opposed, after which a decision could be made by the EU nations in council.

Britain still wants this clause to be both clearer and broader.

It is not alone in having misgivings. France, Germany and others want the safeguard clause to apply only to the risk of state intervention in the case of a failing bank, one European source said.

"If we don't clarify this point it will remain too ambiguous and be subject to manipulation," the source said.

Some nations, France in particular, fear that the scheme will give the commission too much power and slow the reaction time for dealing with crises.

"This text could give the commission too much power and has little chance of being approved as it is," another diplomatic source said.

Brown offers to cut Trident nuclear submarines by a quarter

A Royal Navy Trident nuclear submarine. Photograph: Corbis

Gordon Brown will add momentum to moves towards nuclear disarmament tomorrow by announcing that he intends Britain to build only three, and not the planned four, replacement Trident nuclear submarines.

The move, which could cut billions from the defence budget over the next decade, was welcomed by anti-nuclear campaigners today, who said it was a "step in the right direction" but did not go far enough.

In a speech to the UN general assembly today, Brown will say it is time for "statesmanship, not brinkmanship" on nuclear disarmament if the ambition to create a nuclear-free world is genuine.

He will outline the details of Britain's unilateral gesture at a UN security council nuclear non-proliferation conference hosted by Barack Obama in New York tomorrow.

The UK has already reduced the overall explosive power of its nuclear arsenal by 75% since the cold war. Sources added that savings to the Ministry of Defence budget might be £3bn to £5bn, and even more in reduced running costs. But they stressed that the Trident move was not primarily designed to cut costs, and savings may be hard to predict.

The Campaign for Nuclear Disarmament (CND) welcomed the news but called for the government to abandon plans to renew Trident.

"By failing to disarm, we encourage proliferation and put ourselves – and the whole world – at greater risk," Kate Hudson, the CND chairman, said. "The government has understood this, and has taken a step in the right direction. But the disarmament process cannot stop here – the government must press ahead courageously and scrap Trident."

The announcement has been agreed with senior officials at the MoD, and the issue will be referred by Brown to the national security cabinet committee for endorsement by December.

The committee will also look at the current plan to retain 160 warheads. It is feasible to keep all the warheads with a reduced number of submarines. But some cabinet members will be disappointed Brown is not willing to abandon the British deterrent altogether, and will press for some movement on reducing warheads.

The move is understood not to be conditional on major new disarmament offers by other nuclear states. Final decisions on the Trident contract probably do not need to be made until 2012, with the fleet becoming operational in 2025. British officials travelling with the prime minister said the decision was not necessarily the last disarmament offer to be made by Brown ahead of the general election.

The reduction from four to three submarines would still allow the continuous operational use of the submarine fleet, and is not a precursor to abandonment of the independent deterrent.

Brown is making his move ahead of Labour conference next week and the international nuclear non-proliferation review conference next May. The cost of Trident has been set out at between £72bn and £92bn over the next 20 years, including maintenance.

Polls, including one published this week by New Labour website Left Foot Forward, show growing support for the total scrapping of the UK deterrent. Only 23% wanted to replace Trident with an equally powerful weapon given the budget pressures of the continuing Afghan deployment.

Last night Lib Dem leader Nick Clegg told Newsnight: "I really do welcome that finally the dam has burst on this. I have been saying for months it is just unrealistic for us to believe that we can foot the £100bn like-for-like replacement cost for Trident over the next 25 years. I think the strategic context in which that decision is taking place is very different."

Brown had announced a wider strategic defence review for after the election. But he has been impressed by the speed with which Obama has moved to grasp nuclear disarmament. Last week Obama announced he was not going ahead with a nuclear weapons shield in Poland; he has also ordered officials to look at cutting the stockpile from 2,100 warheads to a figure in the hundreds. Brown has been backing a new non-proliferation regime in which the onus is placed on non-nuclear weapon states to prove they are in compliance with the treaty. In return, the states would be given access to uranium for nuclear power. In an opinion piece in the New York Times today, he described the offer as a "grand bargain" and said a new treaty was needed urgently because the world was threatened "by a looming new arms race".

Critics of Brown will argue his move to reduce the deterrent is the minimum possible, given the international disarmament momentum. But the initiative has come earlier than some expected.

Professor Ron Smith, a defence economist at Birkbeck College, told BBC Radio 4's Today programme that as the fourth submarine was designed for "insurance" the move probably did not make any difference to international disarmament "except politically". Given that Trident is not due to be replaced until 2020 he added the decision "was not going to help the [budget] deficit in the short-term".

In his speech to the UN general assembly, Brown will argue that "the world is at a point of no return" and needs leaders to grasp the issues of the next six months with the same focus that marked the banking crisis. He will argue that the world needs his brand of progressive multilateralism, and will suggest that the "little Englandism" of David Cameron is inappropriate. Procuring three, rather than four Trident nuclear missile submarines, is the easiest and cheapest option open to the government, defence officials and independent analysts say.

It was signalled in the government's 2006 white paper on renewing the multi-billion Trident system and would save a very small amount of this,they say.

The white paper said that designing and building four new submarines would cost between £11bn and £14bn. This is set against the estimated £70bn or more defence officials say the proposed replacement of the existing Trident system, including new missiles and warheads, would cost over its 30-year lifetime.

Greenpeace said in a detailed study published last week that a new Trident system would cost £97bn when all running costs, including ships and satellites deployed to protect the submarines, were taken into account.

Brown's announcement reflects growing opposition among defence chiefs, particularly in the army and the RAF, to the government's decision to renew the Trident system at a time when the defence budget is under huge pressure because of the need to provide troops fighting the Taliban and other insurgent groups on the ground in Afghanistan.

Even those military chiefs in favour of maintaining some kind of nuclear deterrent question the government's insistence that the existing Trident system should be replaced by a new fleet of submarines carrying long-range ballistic missiles with nuclear warheads.

Brown's concession is unlikely to carry any conviction with states, such as Iran, which argue that the official "nuclear club" should do more to show they are willing to take significant steps to disarmament.

More significant as far as Britain is concerned would be to cut the number of nuclear missiles and warheads. Reducing a new Trident fleet from 3 to 4 submarines would save about £3bn.

Europe orders more Airbus sensor checks

A China Southern Airlines Airbus A330-300 plane lands in front of an Air China plane waiting next to the runway at Beijing Airport June 24, 2009. REUTERS/David Gray

By Tim Hepher

PARIS (Reuters) - European safety officials have ordered checks on certain Airbus speed sensors supplied by U.S. manufacturer Goodrich, weeks after clamping down on alternative equipment from France's Thales.

Potentially faulty speed readings from sensors made by Thales are at the center of investigations into the crash of an Air France A330-200 jet in the Atlantic on June 1.

In an airworthiness directive dated September 22, the European Aviation Safety Agency said there had been reports of loose fittings on a number of Goodrich sensors, known as pitot probes.

This could be the result of "mis-torque...at equipment manufacturing level," the Cologne-based agency said.

If not corrected, such a problem could lead to an air leak and false speed readings, according to the public document.

The Goodrich sensors were designed for the A330 and A340. The company was not immediately available for comment.

A spokeswoman for EASA, a European Union safety agency, said the problem would be "relatively easy" to address and services were unlikely to be severely disrupted.

An Airbus spokesman said the checks affected a "limited batch" of sensors and these had been tracked down through their serial numbers. The number of airlines and aircraft affected was not immediately available.

It is the first time Goodrich sensors have come under the spotlight since the Air France crash highlighted the occasional fragility of systems used to measure an aircraft's speed.

All 228 people on board were killed when Air France flight AF447 crashed en route from Rio de Janeiro to Paris.

Investigators revealed inconsistent speed readings from the three Thales sensors on board the doomed Air France A330, but have said it is too early to say exactly what caused the crash.

Since the crash several other incidents involving speed sensors have come to light, but French investigators attribute this in part to extra zeal in reporting momentary glitches that would otherwise pass almost unnoticed and never get reported.

Pitot probes take pressure readings from which computer systems calculate an aircraft's speed, but they are vulnerable to icing or anything else that interrupts the air flow.

Without accurate speed data, pilots can accidentally fly the plane too fast, putting pressure on its structure, or too slowly, causing it to stall.

EASA last month banned the particular model of Thales sensor installed on the crashed jet and restricted the use of a newer Thales model to just one per aircraft. The move meant that at least two sensors must in future come from Goodrich.

Goodrich is the standard supplier of sensors for the Airbus A330 and A340. Thales makes the only approved alternative.

The EASA spokeswoman said it had acted over the quality of a batch of sensors leaving the Goodrich factory but not over their design. In the case of Thales probes, safety officials had been more worried about their inherent resistance to bad conditions.

(Editing by Jon Boyle)

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Mini points to revamped BMW image

By Jorn Madslien Business reporter, BBC News, Frankfurt

The buzz around Mini's launch of new models at the Frankfurt motor show last week brought fresh hope for the future for factory workers in Oxford. The models may also point to the future of parent company BMW.

Mini has launched two new models at Frankfurt

The two-seater coupe and convertible roadster are both concept cars, though their future as production cars has already been decided.

Both will be produced alongside existing Mini-derivatives, the standard hatchback, the convertible and the Clubman. But first, production of a four-door 4x4 cross-over model will begin this winter.

"We will open up a new segment with this car," says Ian Robertson, BMW Group sales and marketing director, though he expects the coupe and the convertible to remain niche products.

Mini's growing model range is doing much to firm up Mini's role as a marque in its own right within the BMW Group, Mr Robertson tells BBC News in an interview.

And "there are plenty of other ideas" for forthcoming models that will further extend the brand, which has already sold 1.5 million cars since its relaunch in 2001.

Evolutionary process

Both the coupe and the convertible have lower roof lines and a lower centre of gravity than previous Minis.

MOTOR SHOW COVERAGE Mini points to revamped BMW image Rolls and Bentley rivalry heats up Car firms disagree on electric future Opel tries to get back to 'living cars' Volkswagen eyes global dominance BMW unveils two new Mini models Crowded industry eyes the future

As such, they are taking Mini in a new design directions.

When BMW's first Mini was launched a decade ago it had been designed by Frank Stephenson, who went on to design Fiat's retro-model and Mini-rival, the Fiat 500.

"In practice, the Mini had been left unchanged since the first model in 1959," Mr Stephenson, who now works for McLaren, tells BBC News in an interview.

So to come up with a model that looked right for the turn of the century, he "designed a Mini for 1969, one for 1979 and one for 1989, the way they would have looked had the brand gone through an ordinary evolutionary process", he explains. The 1999-design was then chosen for production.

Electric Mini

A decade on, Mini is emerging as a test-bed for BMW's Project I, an autonomous division within the group which is working to identify what the future will bring for the motor industry - both in terms of how cars are powered, as well as in terms of new materials, how cars will be used and how they are paid for.

In the past, for example, "engines and vehicles aged together", Mr Robertson explains. This may no longer be the case in the future, in particular in the case of electric vehicles such as the Mini E which is currently being marketed to customers prepared to take part in research.

The Mini E is a two-seater driven by a battery

Like Mini's new coupe and convertible, the Mini E is also a two-seater, largely because the rest of the car is taken up by its huge battery.

"There hasn't been a two-seater Mini for a long time," says Mr Robertson. "The last one was a pick-up."

This seems to make the coupe and convertible ideal hosts for the company's electric car ambitions, though Mr Robertson will not confirm this.

Instead he focuses on how "battery manufacturers are advancing so fast at the moment" so "batteries are getting smaller and less heat generative", hence it is not a given that they will still take up so much space in the future.

The crossover has also been muted as a likely electric model; its elevated stance could help make space for batteries.

Green premium

But the electrification of BMW Group cars is not expected to be limited to Mini.

For a while, the group had been considering the launch of a fourth brand alongside BMW, Mini and Rolls-Royce as the basis for its electric car development.

BMW's concept cars hint at a zero or low emission future

As part of a "new focus on sustainable vehicle technology", electric cars are instead expected to emerge across the group's marques, as "the marketing department believes that it will not be regarded as a premium brand in the future if it does not become overtly environmentally friendly", according to analysts Global Insight.

"BMW believes that 'premium' will increasingly come to be defined in terms of environmentally compatible vehicle technology," they observe, so the company is "planning for full electric and hybrid versions of most models".

Mr Robertson confirms that "sustainability, as you've seen from the show downstairs, is at the heart of everything we're doing".

"We have that within our philosophical discussions [and] continuing down that road, with that as the underpinning of the company, is a big competitive advantage for the BMW Group."

World leader

Regulatory requirements, such as "the imminent deadline of limiting carbon emission from new vehicles to 120 grammes per kilometre by 2015", and "a slew of tax penalties introduced to discourage... high emissions" have also encouraged BMW's change of heart, reason analysts BMI Western Europe Automotive Insights.

"BMW is cautious that without such technology, carmakers 'may no longer be in the market'," they say.

But regardless of BMW's underlying motives, there are clear indications that the strategy is bearing fruit.

BMW's average emissions have fallen sharply in recent years

Earlier this month, for the fifth consecutive year, BMW Group was rated the world's most sustainable automobile manufacturer in the Dow Jones World Sustainability Indexes, calculated jointly with Sam, an investment house that focuses exclusively on sustainability investing.

Even chief rival Daimler, which owns Mercedes and Smart, is prepared to accept Mr Robertson's claim that "we are pushing the emissions of our fleet down faster than anybody else".

"There's no doubt that BMW, four or five years ago, decided to roll out new technologies - mostly conventional technologies that we had as well - in a broader scope than we did," Daimler's chief executive Dieter Zetsche acknowledges.

"Therefore [BMW] had some greater improvements in CO2 reductions last year than we did," he says.

But he is also eager to stress that Daimler has been catching up "so today we have closed the gap".

BMW may have been the first of the luxury car makers to have smelt the coffee and this may have enabled it to steal a march on its rivals.

But staying ahead of the pack is not going to get easier as time goes by.

American Airlines Seriously Considering Turning Japanese

The recession has been particularly cruel to Japan Airlines. Since expensive intercontinental travel is exactly the kind of thing thing that corporations are trying to replace with teleconferencing, JAL is particularly vulnerable to dips in demand. The result has been a $1 billion loss in the last quarter.
The financial hardship has opened JAP up for partial acquisition, and reports have it that both American Airlines and Delta are interested in getting their piece. The stakes are pretty high and include JAL's presence at Tokyo's Haneda Airport, one of the few alternatives to Tokyo's "thank you for landing, please enjoy your upcoming four hours in traffic" Narita International:

American Airlines parent AMR Corp. is negotiating for closer ties and possibly an investment in financially troubled Japan Airlines Corp... Delta Air Lines Inc., the world's biggest airline operator, also is in preliminary discussions about buying a stake in JAL for about $300 million.

Our deep-seated cynicism about American Airlines aside, this move makes more than a little bit of sense. AA and JAL already have a code-sharing agreement, so AA would both be helping a partner and maintaining their own travel ecosystem.
The only downside is that American might be breaking a whole lot of antitrust laws by colluding with JAL. They'd be cooperating on setting prices and schedules and they'd be doing it on major business routes like Chicago-to-Tokyo. Those are exactly the kinds of things that regulators tend to frown on. Pesky frowning regulators.

Air France holds talks with Japan Airlines: source

TOKYO — The leading Japanese carrier, Japan Airlines (JAL), and Dutch-French group Air France-KLM are holding talks, a source close to the matter told AFP on Wednesday.
"Talks are being held between Japan Airlines and Air France-KLM," the source said, but gave no details.
A spokesman for JAL said meanwhile that the Japanese airline was not currently in concrete talks with Air France.
JAL was considering various possibilities regarding possible partnerships with foreign companies, but nothing had been decided, he said.
Air France-KLM declined to comment on any such talks.
On Tuesday, JAL, which suffered a record net loss in the first quarter of its 2009-2010 financial year, signalled that it was in talks with several foreign airline interests with a view to a partnership linked to a capital tie-up.
The executive president of JAL, Haruka Nishimatsu, said nothing had been decided but that JAL was working with the aim of reaching an agreement towards the middle of October.
Sources close to the matter, as well as ministerial sources, say that rival US companies, Delta Air Lines and American Airlines, are at the centre of those talks.
Air France-KLM is a partner of Delta Airlines.

The Associated Press

FILE - This Dec. 14, 2006, file photo shows Washington traffic at rush hour on Interstate 395 near Seminary Road in Alexandria, Va. A broad array of U.S. census data, for release on Tuesday, Sept. 22, 2009, indicates that the recession is profoundly disrupting American life. Twenty-two states had declines in solo drivers compared with the year before; the decreases were particularly evident in states with higher traffic congestion, such as Maryland, Texas and Washington. (AP Photo/Jacquelyn Martin, File)

Trains in Spain signal the future

Spain now has 1,835km (1,140 miles) of high speed track in service

By Steve Kingstone BBC News, Madrid

The 0830 service from Madrid to Barcelona departs promptly and without fuss.
With no lengthy check-in queues, and a slick security control, many passengers had turned up at the Spanish capital's Atocha rail terminal at the last minute, safe in the knowledge that they would still catch their train.
On board, continental breakfast and the morning newspapers are digested, as the city suburbs whizz by. At this hour, the clientele are mostly business-types - people who would previously have made the trip by air, but now prefer the train.
"Door-to-door, I find the train is faster," explains Francisco Lopez, travelling to meet new work colleagues in the Catalan capital.

It's been a huge success, both commercially and in terms of public opinion Abelardo Carrillo, Renfe

"With the plane you have to take taxis to and from airports outside the city, whereas the train stations are right in the centre."
The trip, of 600km (385 miles) used to take four-and-a-half hours. But starting in February 2008, the journey time was slashed to a little over two-and-a-half hours, with the opening of the Alta Velocidad Espanola (AVE) high-speed service.
Since then, custom has shifted at breakneck speed from air to rail, to the point where, in July 2009, more people made the journey between Madrid and Barcelona by AVE than by plane.
This on a route which had been one of the most lucrative air corridors in the world.
Business confidence
Spain was a relative latecomer to high speed rail, inaugurating its first line - between Madrid and Seville - in 1992.
But it has caught up fast, and now has 1,835km of track in service.
Next year, the government boasts, Spain will overtake Japan and France to become the world leader, measured in kilometres of high speed line.

Mr LaHood was impressed by Spain's railway ambitions

From Madrid's central location, routes extend like spokes on a cycle wheel: to Malaga and Seville in the south, Barcelona in the north-east, and Valladolid to the north. New lines, east to Valencia and north-west to Galicia, are under construction.
"We are currently transporting 40,000 passengers a day," beams Abelardo Carrillo, Director of AVE Services for Spain's state railway company, Renfe.
"It's been a huge success, both commercially and in terms of public opinion. And there are two keys: competitive journey times, and a level of service at least as good as the airlines."
Tellingly, Renfe has not chosen to compete fiercely on price. Fares are broadly similar to the airlines, in the confident belief that business travellers will still opt for rail, on grounds of comfort and convenience.
"The Spanish model is very different from the populist approach of France - where passengers pay lower fares for a lower standard of service," explains Prof Josep Sayeras of the Esade Business School in Barcelona.
"Here, Renfe set higher fares, thinking business people will have to make the journey, come what may."
For now, that strategy appears to be paying off.

Having approached speeds of 300 km/h, the 0830 from Madrid pulls into Barcelona at 1113 - on schedule, like 99% of AVE services

Mr Carrillo explains that the AVE network is turning in an operating profit, although neither Renfe nor Spain's Transport Ministry will disclose how much.
The project is attracting considerable attention from abroad. In proposing its own £34bn ($55bn: 37bn euros) high speed line between London and Glasgow, Britain's Network Rail noted how the AVE service had enabled Spain's railways to take market share from airlines and to promote regional economic development.
In the US, the Obama administration has earmarked $8bn for investment in high speed rail, prompting Transportation Secretary Ray LaHood to ride the AVE for himself during a fact finding mission in June.
Judging by his subsequent blog entry, the American politician was impressed.
"Do you know that the Spanish have a goal of establishing high speed rail stations within 30 miles of 90% of all Spaniards by 2020?" Mr LaHood purred. "Now that's ambition."
Budget worries
In backing the bullet trains, politicians can claim they are choosing a mode of transport which is simultaneously traditional and cutting edge, and which reduces both traffic congestion and carbon emissions.
The International Union of Railways (UIC) estimates that the AVE produces six times fewer CO2 emissions per passenger than planes.
In Spain, the AVE has also brought economic development to provincial towns and cities touched by the high speed line. They include Zaragoza, the only station stop between Madrid and Barcelona.

The government must assign resources very carefully, and in my opinion, high speed rail should not be a priority Prof Josep Sayeras, Esade

"Zaragoza is the new business centre of Spain, because the people of Madrid and Barcelona now meet here in the middle," says a proud Manuel Teruel, the president of the local chamber of commerce.
Pointing out the high tech hotels which have sprung up around the AVE station, he explains that the number of trade fairs taking place in the city has tripled in the space of five years.
Mr Teruel adds that high speed rail has made local businesses more productive, by saving on travel time and hotel costs - because overnight stays on trips to Madrid are now rarely necessary.
And citing a 28% increase in tourist numbers since 2005, he argues that the very association with modern transport has made the city more attractive.
"The AVE symbolises technology and the future," he says. "It's all about image."

Renfe is planning for further investment of up to 120bn euros in the coming decade, with around 80% of it from the Spanish state, and a sizeable chunk from EU funds.
But critics wonder whether the proposed five-fold increase in the reach of the network, to 10,000km by 2020, is realistic in the current climate.
"Right now, Spain is in an economic crisis and we have a huge public deficit," explains Mr Sayeras from Esade.
"The government must assign resources very carefully, and in my opinion, high speed rail should not be a priority. We should invest in local and regional trains."
Renfe's Mr Carrillo acknowledges that, in challenging times, the politicians require some nerve to stay on board.
"Given the budgets involved, these are political decisions which carry huge weight," he admits. "But our experience so far is that this investment is worth it."
Having approached speeds of 300 km/h, the 0830 from Madrid pulls into Barcelona at 1113 - on schedule, like 99% of AVE services.
Never have these two great cities felt so connected. And although questions linger about Spain's ability to remain the pacesetter, its achievements may point the way for others.

Dollar Falls as Signs of Global Recovery Spur Demand for Yield

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By Anchalee Worrachate and Ron Harui

Sept. 22 (Bloomberg) -- The dollar weakened for the first time in three days, falling to the lowest level in a year against the euro, as signs that the global economy is recovering spurred investors to buy higher-yielding assets.
The U.S. currency declined most versus the New Zealand and Australian dollars as the MSCI World Index snapped a two-day decline after the Asian Development Bank said regional economies will expand faster than initially forecast this year. New Zealand’s dollar climbed to a more than 11-month high against the yen after the nation’s current-account deficit shrank to the narrowest in more than four years.
“We expect to see further weakness in the dollar in coming months,” said Ian Stannard, a currency strategist in London at BNP Paribas SA, France’s biggest bank. “There are a number of factors at work against the dollar, and those include improving global economic conditions and a return of risk appetite.”
The U.S. currency weakened to $1.4782 per euro as of 9:40 a.m. in London, from $1.4680 yesterday in New York, after depreciating to $1.4798, the lowest level since Sept. 23 last year. It declined to 91.39 yen, from 91.93 yen and to $1.6324 per pound, from $1.6217. The yen was at 135.15 per euro, from 134.96. BNP Paribas forecast the dollar will depreciate to $1.54 per euro and 85 yen by yen-end.
New Zealand’s dollar strengthened 1.4 percent to 65.93 yen, after climbing to 66 yen, the highest level since Oct. 7. The so-called kiwi rose 2.1 percent to 72.14 U.S. cents and touched the strongest in more than a year. Australia’s dollar advanced 1.2 percent to 87.36 U.S. cents.
ADB Report
Most Asian currencies gained after the ADB said in a report that Asia’s economies, excluding Japan, will grow 3.9 percent in 2009, faster than a March estimate of 3.4 percent. Growth may accelerate in 2010 to 6.4 percent, the ADB said.
The region is leading the world’s emergence from the deepest recession since the 1930s after governments boosted spending, cut taxes and slashed interest rates, averting a spiral into a repeat of the Great Depression. Withdrawing stimulus measures too early may derail the global recovery and lead to a protracted slowdown, the ADB said.
China’s imports of coal more than tripled in August from a year earlier, reaching 11.77 million metric tons of the fuel, data from the customs office showed today. The nation’s copper imports more than doubled from a year earlier.
The South Korean won rose 0.1 percent to 1,203.75 per dollar and the Singapore dollar advanced 0.4 percent to S$1.4125.
Group of 20
The U.S. currency also weakened on speculation that Group of 20 leaders, meeting in Pittsburgh on Sept. 24-25, will call for a reduction in global trade imbalances that may cause further gains in currencies against the dollar.
Policy makers need to promote a “sustained growth track and facilitate global adjustment, as well as structural reform which will need to be undertaken in both deficit and surplus countries,” Dimitri Soudas, a spokesman for Canadian Prime Minister Stephen Harper, told reporters yesterday in Ottawa.
“There’s talk that world leaders may seek to address the U.S. imbalances,” said Masashi Kurabe, head of currency sales and trading in Hong Kong at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s biggest publicly traded bank. “This may lead to weakness in the dollar.”
The U.S. trade deficit widened in July and imports gained by a record 4.7 percent, the Commerce Department said in Washington on Sept. 10. The gap between imports and exports increased 16 percent, the most in more than a decade.
Dollar Index
The Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency against those of six major U.S. trading partners including the euro and the yen, fell 0.8 percent to 76.131, snapping two days of gains.
New Zealand’s dollar rose for a second day versus the yen after Statistics New Zealand said the current-account deficit shrank to NZ$10.61 billion ($7.57 billion) in the 12 months ended June 30, from NZ$14.57 billion in the year through March. The median estimate in a Bloomberg survey was for a NZ$13.3 billion shortfall.
The annual deficit was 5.9 percent of gross domestic product, less than the 7.4 percent forecast by economists, and the least since the period ended September 2004.
“That’s the best number since September 2004 in GDP terms, a significant improvement,” said Imre Speizer, a market strategist at Westpac Banking Corp. in Wellington. “Appetite for risk is pretty subdued and till we get out of the FOMC meeting it will be hard for the global rally to take another step up.”
Fed Meeting
Losses in the U.S. dollar were limited before a Federal Reserve meeting at which policy makers may signal an exit from economic stimulus measures, increasing the allure of assets in the world’s biggest economy.
The Fed will keep its target rate for overnight bank loans at a range of zero to 0.25 percent at its two-day policy meeting starting today, according to all 93 economists surveyed by Bloomberg News. Chairman Ben S. Bernanke and his colleagues may discuss how to wind down purchases of mortgage-backed securities.
“We wait to see how much the Fed acknowledges the improvement in the data recently,” said John Horner, a currency strategist in Sydney at Deutsche Bank AG, the world’s largest foreign-exchange trader. “The risk is that dollar short positions get taken off prior to that event.”
A short position is a bet an asset will decline.
To contact the reporters on this story: Anchalee Worrachate at aworrachate@worrachate@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net