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The Wall Street Journal: Russian’s Slaying Jeopardizes Cleanup

By MICHAEL CONNOLLY
September 15, 2006

Last year, Andrei Kozlov shut down 14 dodgy Russian banks, this year 44. Thursday’s assassination of this tireless campaigner against money laundering could impair efforts he spearheaded as Russia’s deputy central-bank chairman to clean up Russia’s banking sector after a string of financial crises wiped out the savings of millions of people and destroyed public faith in the system.

In his most dramatic intervention, in May 2004, he used a newly adopted money-laundering law to revoke the license of Sodbiznesbank, an outfit that he said had handled ransom money, among other questionable transactions. The move, which led to an armed standoff, marked the start of a drive to close down some of the country’s most questionable banks. It is important that the Kremlin finds his killer and pursues even more vigorously the cleanup he began.

Meanwhile, a pair of multibillion-dollar energy projects off Sakhalin Island in Russia’s far east led by Exxon Mobil and Royal Dutch Shell have encountered unprecedented regulatory pressure in recent weeks, amid rising Russian complaints that the deals are unfavorable to Russia. And in another sign of the cooling of the Orange Revolution’s pro-Western zeal, Ukraine’s new prime minister told NATO his country is putting efforts to join the alliance on hold because of lack of public support for the move.

Read Guy Chazan’s article on Mr. Kozlov’s exceptional impact and tragic end:
http://online.wsj.com/article/SB115821575647562942.html

Read Greg Walters and Gregory L. White’s article on the oil projects:
http://online.wsj.com/article/SB115827099320863552.html

Read Alan Cullison’s article on Ukraine:
http://online.wsj.com/article/SB115824057929363061.html

* * *
STOPPING THE BLEEDING: Ford’s move to offer buyout packages to all 75,000 of its U.S. hourly workers is a bid to slash its costs to stop its financial bleeding as its sales have declined in its struggling North American operations under heavy competition from more fuel-efficient models from Asian makers.

With new CEO Alan Mulally on the job for little more than a week, Ford’s board decided at a major two-day meeting to accelerate existing cost-cutting efforts, which called for cutting as many as 30,000 jobs and closing 14 plants by 2012.

Soaring health-care and pension costs have been shrinking Ford’s cash flow. A similar move at General Motors enabled it to pare its work force by about 34,000. Ford’s stock has gained about 50% since the company announced in July that it would be moving faster in its turnaround.

Read Jeffrey McCracken’s article:
http://online.wsj.com/article/SB115825406763263239.html

* * *
CHINA’S HYPERINVESTMENT REFLECTS LOSS OF CONTROL: More than a quarter century of economic change has produced a striking contrast in China: While politically, the Communist central government maintains a tight grip over the entire country, economically it is losing control as hyperinvestment roils the world’s fastest-growing major economy.

Despite concerns about the dangers of property bubbles, China is generating outsize demand for energy and raw materials, pushing up their cost around the world. Though inflation remains low at 1.3%, the top leaders are worried, issuing new edicts almost daily to try to slow the economy, but with little effect. They can’t even be sure how much municipalities are spending because local finances have become so murky. If inflation takes hold, as some economists expect, the effects would be felt globally.

The International Monetary Fund, which meets next Tuesday and Wednesday in Singapore, this week urged China to rein in credit to avoid “tipping off a boom-bust cycle.” But as they cast around for ways to rein in investment, China’s leaders are caught in a trap. The old administrative methods aren’t working as before, partly because local governments are defying Beijing. And market-oriented measures, such as interest-rate increases, are proving less effective in China.

Read Andrew Browne’s compelling article:
http://online.wsj.com/article/SB115825781810063286.html

Read Michael M. Phillips’ article on plans by the G-7 leading industrial nations to warn China and other big developing countries not to overload poor countries in Africa and elsewhere with high-priced loans they can ill afford to repay:
http://online.wsj.com/article/SB115826807563263495.html

Read Karen Lane’s article on the IMF’s forecast that economies in emerging Asia will grow faster than anticipated this year and next:
http://online.wsj.com/article/SB115825934870063322.html

Read Joellen Perry’s article on the impact of the oil-price decline on the ECB’s plans to raise interest rates this year:
http://online.wsj.com/article/SB115827059078363539.html

Read Gordon Fairclough and Mei Fong’s article on China moving to discourage low-end exports in favor of more sophisticated information-technology goods:
http://online.wsj.com/article/SB115825113793763190.html

Read Kate Linebaugh’s interview with World Bank President Paul Wolfowitz, who says Singapore, Taiwan and South Korea, among others, should be “more open to the world,” after Singapore authorities denied entry to 27 activists invited to the World Bank and IMF’s annual meetings:
http://online.wsj.com/article/SB115824235482163080.html

* * *
DIPLOMACY NEEDED: Emboldened by their capture of a major rebel encampment last week, the Sri Lankan army has embarked on a fresh offensive against the Liberation Tigers of Tamil Eelam, writes Ashok K. Mehta on our opinion pages. But tempting though it is for the government to press its military advantage, this two-decade-long conflict is not going to be settled on the battlefield, he says. Instead, with the Tamil Tigers now on the defensive, it would be better to seize this opportunity to resolve the conflict through diplomatic means.

Read the article by Mr. Mehta, a retired major general of the Indian Army who was involved in five major Indian-Pakistani crises:
http://online.wsj.com/article/SB115827006915863531.html

Write to Michael Connolly at [email protected]

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