All Akcess

Japan’s economy has fallen back into deflation for the first time in more than a year, new data for March shows.

Gloomy figures also showed that the country’s unemployment rate moved to a four-year high of 4.8% in the month.

Meanwhile the number of available jobs in the world’s second biggest economy has fallen to a seven-year low.

The latest news comes a day after figures showed industrial output in Japan rose in March by 1.6%, the first production rise in six months.

"They don’t have a job for us, they’re saying ‘we’ll give you a little money, but don’t come back. Bye bye’"
Wellington Shibuya

From Brazil to Japan and back again

On Thursday the Bank of Japan said GDP would shrink by 3.1% in the year to March 2010, compared to an earlier forecast of 2%, but it has argued that a recovery will begin in 2010.

But in its latest update earlier this week it also warned that consumer prices will fall by 1.5%, pushing Japan into deflation.

Price cuts

The number of unemployed has jumped by 670,000 over the past 12 months, and now stand at their highest level since August 2004.

With more people out of work and falling household incomes, that could push down consumer prices further as companies try to attract people into buying their goods by cutting prices.

The core consumer price index, which excludes volatile prices of fresh fruit, vegetables and seafood but not oil prices, fell 0.1% in March from a year earlier.

The Bank of Japan has forecast two years of deflation, which stalked the Japanese economy in the 1990s.

‘Weak consumption’

Analyst Takeshi Minami, chief economist of Norinchukin Research Institute said the price drops will accelerate.

"Deflation will be damaging to the economy. Companies will have difficulty increasing profits, and their effective burden from borrowing money will increase," he said.

"With job conditions worsening, consumption will remain weak. As such, downward pressure from weak demand on consumer prices will continue as a trend."

Annual consumer inflation in Japan hit a decade high of 2.4% in July and August last year.

Action needed

Meanwhile Japan’s "core-core" inflation index, which strips out energy and food prices, fell 0.3%.

"As we head into summer, the scale of the fall will increase," said Yoshikiyo Shimamine, chief economist at Dai-Ichi Life Research Institute.

"Some sort of economic policy will be needed to stimulate consumption. The Bank of Japan may also have to really look into doing something to stop price deflation."

On Monday, the government submitted its plans to the Diet for its latest stimulus package, worth 15 trillion yen ($155bn, £105bn).

Car sales fall

Japan has been hit badly by the downturn because worldwide demand has collapsed for its cars and electronics goods.

Vehicle sales in Japan fell 28.6% in April from a year earlier to 166,365, the Japan Automobile Dealers Association said on Friday.

Sales at Toyota, excluding the Lexus brand, fell 32.%, and those at Nissan dropped by 38.7%. But Honda bucked the trend and saw its sales increase by 4%.

The April figures marked the ninth successive month of year-on-year declines.

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By Natalia Antelava
BBC News, Amman

The boy looked like an old man. His lips moved slowly, trying to stretch against his inflexible, badly scarred skin, and bandages covered his eyes.

But the voice that came out of his disfigured face was loud and cheerful and it filled the hospital room.

"I want to go back to Iraq, I miss my dad," Hussein said.

Six years ago, when Hussein was 11 months old, his grandmother took him along to a market near their house in Baghdad.

That day the market was ripped apart by a car bomb explosion, hours later Hussein was found, badly injured, next to his grandmother’s body.

After several failed operations, his family became certain that he’d stay disfigured for the rest of his life.

"What we do is not available in Iraq not because of the lack of skill, but lack of resources and security"
Anonymous, surgeon

But a few months ago his mother heard about a free clinic in Jordan where doctors could restore the damaged tissue on Hussein’s head.

It was only on the operating table in Amman, as Hussein was put under anaesthetic, that surgeons discovered that something else was wrong – the boy could not close his eyes.

"Because his skin is so stretched, he could not shut his eyes. That is very dangerous and could lead to blindness. So we operated on his eyes instead," Hussein’s doctor says.

Dr Nagham Hussein, who is Iraqi herself, says she is not surprised that despite multiple surgeries no-one in Baghdad noticed Hussein’s serious chronic condition.

"Doctors in Iraq are too busy saving lives. This kind of surgery is a luxury," she says.

Medical exodus

Tens and possibly hundreds of thousands of people are estimated to have died in Iraq in the recent years of war and violence, and many more have been injured.

Those injuries from explosions and car bombs often cause long lasting damage and demand subsequent treatment. But its not available in Iraq.

The UN estimates that more than 400 specialised doctors have left Iraq since hostilities began in 2003, hundreds of others have been killed. Understaffed hospitals lack staff, basic infrastructure and security.

Since 2006, a team of Iraqi surgeons in Amman have been trying to finish the work started by their colleagues in Iraq.

The reconstructive surgery programme is funded jointly by the non-governmental organisation Medicines Sans Frontiers and the Red Crescent of Jordan.

"What we do is not available in Iraq not because of the lack of skill, but lack of resources and security," says the programme’s head surgeon.

"The doctors in Iraq are the real heroes, we are just picking up the pieces, we are completing their work," he says.

The surgeon does not want to be named, for fear that doing even this kind of work under the umbrella of a Western organisation could put his relatives in Iraq in danger.

Also, as a result a result of security concerns the programme does not have a representative in Iraq. Instead it relies on an undercover network of doctors in Iraqi hospitals, who refer patients to Amman.

Lurking dangers

Over the last two years, 660 people went through the clinic, currently another 100 are on a waiting list back in Iraq.

"I want to be a doctor when I grow up so that I can have a lot of money and buy chicken and fruit any time I want"
Hussein

"Word of mouth has made us relatively well known in Iraq. But there is a great deal of demand, and unfortunately we are probably not reaching people in rural areas who badly need the procedures we offer," the head surgeon says.

These procedures are sophisticated and surgeries often last many hours.

"These may not be TV-style emergency operations, but indirectly we are saving lives," says Dr Annick Antierens, MSF medical director at the Amman project.

"Some of our patients cannot have a life because they are so handicapped, others cannot eat because their face is so disfigured. And without these surgeries many can and will die"

In one of the clinic’s two operating theatres, a heart monitor beeps steadily as a surgeon leans over a young man and cuts open his face. Across from him another doctor cuts into the patient’s leg.

"They are taking bone from his hip and using it to reconstruct his face," the nurse explains in whisper.

Downstairs, back in his hospital room, Hussein and three other children are recovering from their surgery. The three girls are too ill and too weak to speak but Hussein chats away.

"I want to be a doctor when I grow up so that I can have a lot of money and buy chicken and fruit any time I want," he says.

Hussein still needs another operation – a tissue transplant on his head.

Eventually, once his bandages are off, he will be sent home. But the Iraq that he will be going back to is still violent, and dangerous and his hospital bed wont stay empty for long.

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This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

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By Kim Ghattas
BBC’s state department correspondent, Washington

Iran remains the "most active state sponsor of terrorism" in the world, a report by the US state department says.

It says Iran’s role in the planning and financing of terror-related activities in the Middle East and Afghanistan threatens efforts to promote peace.

Al-Qaeda, however, remains the biggest danger to the US and the West, the annual report states.

It says that while the number of terror attack around the world is dropping, they are on the increase in Pakistan.

‘Existential threat’

The new US administration may be trying to engage Tehran, but, just like last year, Iran is still described as the most active state sponsor of terrorism.

The report charges that Iran’s involvement in countries like Lebanon, Iraq, Afghanistan and in the Palestinian territories threatens efforts to promote peace, economic stability in the Gulf and democracy.

The report singles out the Quds force, an elite branch of Iran’s Revolutionary Guard as the channel through which Iran support terrorist activities and groups abroad.

The report also takes to task Syria, an Iranian ally in the region.

Of equal concern, is the advance of al-Qaeda in Pakistan and Afghanistan where terrorist attacks are on sharply on the rise while the rest of the world, including Iraq, has seen terrorist attacks decrease.

Washington is worried that the government in Islamabad might collapse, and last week US Secretary of State Hillary Clinton said the Taleban fighters posed an existential threat to Pakistan, which is a nuclear power.

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This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

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Mexico is preparing for a five-day shutdown of parts of its economy in a bid to slow the spread of swine flu.

Non-essential government services will be suspended, while businesses such as cinemas and restaurants will be closed.

Mexican officials say the spread of the virus – suspected in more than 160 deaths – is slowing, but international experts are more cautious.

Globally, cases of swine flu have now been confirmed in 12 countries across three continents.

In cases outside Mexico the virus does not appear to be severe, although one death has been confirmed in the US.

The WHO has set its pandemic alert level at five – but says it has no immediate plans to move to the highest level of six.

Economy fears

The shut-down in Mexico covers two public holidays and a weekend.

CONFIRMED CASES

• Mexico: 168 suspected deaths – 12 confirmed
• US: one death, at least 109 confirmed cases
• New Zealand: 3 confirmed, 13 probable cases
• Canada: 19 confirmed cases
• UK: 8 confirmed cases
• Spain: 10 confirmed cases
• Germany: 3 confirmed cases
• Israel, Costa Rica: 2 confirmed cases each
• The Netherland, Switzerland, Austria: 1 confirmed case each

Peru case now ‘unconfirmed’ by national government

Mapping the outbreak

Mexico: First swine flu cases

Border town not slowing down

Africa awaits two swine flu tests

Some factories will stop production and schools are already closed. Residents have been urged to stay at home.

But some people say they will ignore it because they cannot afford not to work.

There is also growing concern at the effect the virus could have on Mexico’s already-struggling economy.

The number of confirmed cases of swine flu infection in Mexico now stands at 260.

Twelve people are known to have died from the virus and it is suspected in more than 160 other deaths.

Announcing the figures, Mexican Health Secretary Jose Angel Cordova said that new cases of the virus were levelling off.

"The fact that we have a stabilisation in the daily numbers, even a drop, makes us optimistic," he said.

But Dr Keiji Fukuda, acting assistant director general of the World Health Organisation, said fluctuations were to be expected. "If it didn’t do that [it] would be very unusual," he said.

In other developments:

• The US has announced that it will buy 13 million new courses of antiviral treatment and send 400,000 of them to Mexico

• Mexico says it will lodge a formal challenge at the World Trade Organisation demanding explanations from countries that have banned imports of Mexican pork products

• The Inter-American Development Bank said it would approve $3bn in loans to help Mexico fight the virus

‘No panic’

On Thursday European health ministers held an emergency meeting on measures to tackle the virus, which has been confirmed in six European countries.

SYMPTOMS – WHAT TO DO

• Swine flu symptoms are similar to those produced by ordinary seasonal flu – fever, cough, sore throat, body aches, chills and fatigue
• If you have flu symptoms and recently visited affected areas of Mexico, you should seek medical advice
• If you suspect you are infected, you should stay at home and take advice by telephone initially, in order to minimise the risk of infection

Q&A: What is swine flu

In pictures: Swine flu concern

Mexican economy squeezed by flu

The quest for a swine flu vaccine

EU Health Commissioner Androulla Vassiliou said Europe was well prepared to handle swine flu and there was "no need to panic".

The ministers agreed to work with pharmaceutical companies to develop a vaccine, but rejected a French plan to suspend flights to Mexico.

Several countries have restricted travel to Mexico and many tour operators have cancelled holidays.

The WHO, meanwhile, says it will now call the virus influenza A (H1N1) rather than swine flu – which it says is misleading as pork meat is safe and the virus is being transmitted from human to human.

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Trade unions in France have called for French people to come out in force for the traditional May Day march.

Some 300 rallies are planned throughout the country as demonstrators protest against the government’s handling of the economic crisis, the BBC’s Emma Jane Kirby in Paris says.

Every year on Labour Day thousands of people in France bring their myriad gripes to the streets.

But this year it is a bit different because – with unemployment set to hit 10% by next year and with another 70,000 people joining the ranks of the jobless last month alone – everyone now seems to be chanting the same bitter slogans.

Earlier this week at a big student demonstration on the left bank in Paris, few students were interested in talking about controversial university reforms; most wanted to give their opinion about the economic crisis.

"Why should workers pay for the economic crisis" asks student Fabrice. "Plenty of profits have been made in various sectors. So there is money available and it should be used for the people, not for those who are already well off."

His friends tell us that they are totally depressed by France’s bleak financial climate. Protesting in the streets, they say, is their only means of signalling to President Nicolas Sarkozy they are not happy with the way he is handling this crisis.

Boiling over

Some politicians, such as former Prime Minister Dominque de Villepin, warn that France could be on the verge of a revolution.

"Holding a hostage is not a new negotiation tactic… When people feel they are not represented, they take violent action"
Antoine Boulay, Vae Solis firm

And although his comments have been swiftly played down by both the governing right-wing UMP party and the opposition Socialists, there are certainly signs here that the anger simmering underneath is beginning to bubble over.

Last week, when workers from the Continental car parts and tyre factory in Compiegne, northern France, learned their plant was to close, they stormed their factory building and a local government office, smashing furniture and trashing equipment.

In the last couple of months there has been a spate of "boss-nappings" when workers – threatened with lay-offs – took their employers hostage for 24 hours or so and used them as bargaining chips to secure better redundancy deals.

One Paris communications company, Vae Solis, has even launched a boss-napping training course for worried employers and has already signed up eight interested businesses.

"Holding a hostage is not a new negotiation tactic," says assistant director Antoine Boulay. "It was used a lot in the 70′s by unions… but we are living in very strange and difficult times now… When people feel they are not represented, they take violent action".

Golden parachutes out

Increasingly, here there is a perception that little is being done to protect the ordinary man’s job and wages while shareholders and bankers are the government’s priority.

"There is some ground for potential revolt if you don’t want to say the word ‘revolution’"
Patrick Weil
Social historian

President Sarkozy has publicly condemned the practice of boss napping but he knows he has to tread very carefully.

Interior Ministry spokesman Gerard Gachet admitted that the government was anxious not to "put fuel on the fire" by responding with a too heavy hand. Getting the police involved, he said, was absolutely the last resort.

The government is also in the process of trying to smooth the sense of injustice by outlawing golden parachutes and limiting the size of company bonuses.

But it is much more difficult to explain to the French people how some of the executives who received such generous severance payoffs were from banks bailed out by the French state.

And try telling a hard up Frenchman that the government was able to shore up the struggling banks with a 40bn-euro (£36bn) cash injection, while it offered the poorest households just 2.6bn euros (£2.3bn) in aid.

‘Explosive cocktail’

President Sarkozy’s own rather flashy bling-bling image does not help much either in these cash strapped times.

Almost everyone I talk to complains that the French leader flaunts his wealth in an insensitive way: last year one of his own advisers was allegedly heard to remark that the president has "gorged himself on happiness while the French people are starved of it."

Social historian Patrick Weil does not laugh when I suggest to him that France may be on the verge of a revolution.

"When you have this anger," he tells me, "this feeling of resentment, this feeling of injustice represented by the presidential power, yes, there is some ground for potential revolt if you don’t want to say the word ‘revolution’."

If workers actions are becoming more radicalised then so are their politics.

With an unpopular government and a weak Socialist opposition party, the hard-left is fast scooping up support.

The economic crisis has given new credence to the ideals of the New Anti-Capitalist Party led by the Trotskyist postman Olivier Besancenot. He wants to bring about a new May 1968 with mass strikes and demonstrations until the government agrees to raise wages.

This will be the third national demonstration in three months, and 72% of French people back it.

The last protest in March drew between one-and-a-half and three million people onto the streets.

Its no coincidence, perhaps, that when last week’s unemployment figures showed that 20% of all French under 25 year olds are now out of work, President Sarkozy quickly announced a $1.7bn (£1.1bn) aid package for young people.

Every French government knows that a combination of disenchanted youth and angry workers on the streets can prove to be an explosive cocktail.

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The largest bank in Switzerland, UBS, has asked a US court not to go ahead with a case involving more than 50,000 US customers with Swiss accounts.

UBS told a federal court in Florida it would violate Swiss laws on banking secrecy if it provided the information on its clients.

The US suspects 52,000 Americans of using UBS accounts to hide almost $15bn of assets and unpaid taxes.

Switzerland only recently signed up to global rules on bank data sharing.

It decided in March to ease banking secrecy and fully adopt accepted tax standards. The government agreed to begin negotiations with the US and Japan on tax co-operation.

Standing firm

Correspondents say the US case involving UBS is a sign it is stepping up its campaign against tax evasion – and directly challenging the tradition of Swiss banking secrecy.

The Internal Revenue Service, which administers tax in the US, has taken out a civil suit to force UBS to reveal the identities of 52,000 American customers suspected of holding accounts totalling $14.8bn.

"The court would be substituting its own authority for that of the competent Swiss authorities, and therefore would violate Swiss sovereignty and international law"
Swiss government statement

However, the bank has now told the court that it cannot hand over the information without violating Swiss law.

UBS says no specific evidence has been presented against its clients, meaning it is unable to waive bank secrecy rules.

"Switzerland’s laws prohibit the release of confidential Information to foreign governments when the request has not been made through authorised intergovernmental channels," the country’s government said.

"If the court were to order UBS to produce evidence from Switzerland, and backed that order with coercive powers, the court would be substituting its own authority for that of the competent Swiss authorities, and therefore would violate Swiss sovereignty and international law," it added.

Earlier this year, UBS did cave in to US demands in a separate case involving about 300 customers.

The bank agreed to pay more than $700m in an out of court settlement.

US and Swiss officials have begun negotiations on a new tax treaty that Washington hopes will help it track tax evaders.

Swiss officials, who are also under pressure from the European Union, say it could take until the end of the year to reach an agreement.

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