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By PAUL HANNON

LONDON—Euro-zone businesses and consumers became significantly less confident about their prospects in July, as manufacturers experienced a drop in export orders, and consumers fretted about the outlook for the economy and the jobs market.

The European Commission’s monthly survey of economic confidence across the 17 countries that share the euro also recorded a drop in inflation expectations among businesses, a development that should ease concerns at the European Central Bank about the possibility that earlier rises in commodity prices will lead to a more general increase in prices. The survey was released Thursday.

The survey’s headline Economic Sentiment Index fell to 103.2 from 105.4 in June, a sharper decline than the drop to 104 that had been expected by economists. It was the fifth straight monthly decline in the ESI, and indicates that economic growth will weaken in the months to come. That in turn suggests that the ECB would be unwise to press ahead with further increases in its key lending rate, having raised it twice since April.

“It is notable that the decline in sentiment was widespread across the euro zone … and that the deterioration did not just occur in the struggling Southern periphery economies,” said Howard Archer, an economist at IHS Global Insight. However, the ESI remained above its long-term average of 100.

The survey recorded a sharp decline in confidence among manufacturers, which had led the currency area’s economic recovery. The survey’s headline measure of industrial confidence fell to 1.1 from 3.5, a larger fall than that expected by economists.

The decline in confidence was driven by a drop in export orders, a worrying sign for the euro-zone economy, where domestic demand has remained weak throughout the recovery from the global financial crisis.

According to a quarterly survey, capacity use in the manufacturing sector fell to 80.9% in July from 81.6% in April. That was the first drop since capacity use reached its trough in July 2009, the commission said.

The survey also recorded a sharp decline in new orders reported by manufacturers, and a similarly sharp decline in expected export volumes. Manufacturers reported that they were less competitive on world markets than they had been in April.

A separate measure of the conditions facing manufacturers fell for the fifth straight month, as the Business Climate Index plummeted to 0.45 from 0.95. But manufacturers weren’t alone in becoming more wary of the future.

“In the euro area the fall resulted from a decline in confidence in all sectors, with strong losses in industry and services,” the commission said. Its headline measure for confidence in the services sector fell to 7.9 from 10.1, while its measure for the retail sector fell to minus 3.5 from minus 2.6 and for the construction sector, it fell to minus 24.5 from minus 23.5.

Domestic demand appears unlikely to strengthen any time soon. The commission’s headline measure of consumer confidence fell to minus 11.2 from minus 9.7, a slightly smaller drop than the decline to minus 11.4 expected by economists.

That reflected increased gloom about the outlook for the economy and consumers’ personal financial prospects over the next 12 months, as well as heightened fears about the threat of unemployment.

With their government teetering on the brink of default, Greek consumers became less confident than at any time since the commission’s survey began in 1990.

Write to Paul Hannon at paul.hannon@dowjones.com

Corrections Amplifications: A separate measure of the conditions facing manufacturers fell for the fifth straight month, as the Business Climate Index plummeted to 0.45 from 0.95. An earlier version of this article misstated the figures.

Article source: http://online.wsj.com/article/SB10001424053111904888304576473534057023722.html?mod=rss_economy

By MIN ZENG

Foreign central banks are the true giants of the market for U.S. Treasury bonds, so the U.S. government will be relieved that the dispute over the nation’s debt ceiling hasn’t sent these deep-pocketed bondholders running for the exits.

But the reason these all-important investors continue to buy and hold Treasurys may have little to do with their faith in Washington, D.C.’s capacity to get its fiscal house in order and more to do with a Catch-22 dilemma known as “the dollar trap.”

Here’s how it works: If central banks such as those of China and Japan–which collectively have more than $4 trillion in foreign-exchange reserves–were to dump some of their gigantic holdings of U.S. Treasurys, or even signal their intent to do so, they would drive down the value of the dollar against their own currencies. That in turn would force them to intervene in foreign-exchange markets and buy dollars to protect their exporters’ interests. It would leave them with little choice but to plow those dollars back into Treasurys, the world’s only bond market deep and liquid enough to handle such big transactions.

“I don’t believe foreign central banks will dump Treasurys, in the sense that they will not sell the stock of what they already own,” said Stephen Jen, managing partner of London-based hedge fund SLJ Macro Partners LLP and former head of global currency research at Morgan Stanley.

Some Asian central banks, including those of Thailand and South Korea, intervened earlier this week by buying dollars and selling their local currencies. Japanese Finance Minister Yoshihiko Noda dropped hints Thursday when he expressed sympathy with exporter concerns over a strengthening yen.

At $9.3 trillion outstanding, the U.S. Treasurys market is second in size to Japan’s government bond market, whose $9.7 trillion makes it the world’s biggest. But unlike Japan, where about 90% of the bonds are owned by domestic investors, nearly half of Treasurys are held by investors outside the U.S. That’s a key reason why the dollar remains the currency of choice for Asian central banks, which need big, deep, liquid markets so that shifts in their mammoth portfolios don’t distort prices to their disadvantage.

So far, the Treasury market has held up well. The benchmark 10-year note’s yield, which moves inversely to its prices, traded at 2.947% Thursday, far off this year’s peak of 3.77% in February. A measure of foreign demand in this week’s two-, five- and seven-year auctions was down only slightly from recent averages.

Mansoor Mohi-uddin, the Singapore-based chief currency strategist at UBS AG, said the U.S. Treasury market is the “only bond market large enough to absorb” the bulk of a global pool of foreign-exchange reserves worth around $10 trillion. German bunds and U.K. gilts–two other major government bond markets–are around $1 trillion each, and gold markets are “tiny” in comparison, he said.

To be sure, the political wrangling in Washington has provided another incentive for foreign central banks to continue shifting away from a dollar-denominated portfolio. Already, reserves denominated in dollars had dropped to about 60% of the total world global foreign-exchange reserves from 70% over the past decade. But that is still more than twice the share of euro, its closest rival, whose position has been undermined by the euro-zone debt crisis. Any further diversification is expected to continue to be gradual.

So far, officials from countries that are big Treasury bond holders have refrained from any bold comments on the U.S. debt-talks stalemate. In two articles Thursday, China’s state-run Xinhua news agency castigated U.S. leaders for putting the world economy in jeopardy with their wrangling over the debt limit. Yet it also described U.S. Treasurys as “still the safest, most stable, least risky bonds, and the U.S. debt market is the only market that can absorb China’s rapidly growing foreign-exchange reserves.”

Tim Condon, chief Asia economist at ING Bank, said central banks will live with the fact that their dollar reserves are piling up even as the dollar is losing value, because “they have no alternative.” That’s the trade-off for protecting their exporters by slowing the currency’s rise, he said.

Martin Vaughan, Aaron Back and William Sposato contributed to this article. Contact: min.zeng@dowjones.com

Write to Min Zeng at min.zeng@dowjones.com

Article source: http://online.wsj.com/article/SB10001424053111904800304576474340028810266.html?mod=rss_economy

BY CONOR DOUGHERTY

New claims for unemployment insurance dropped below a key level last week, a sign that the jobs market’s woes may be starting to ease. But the indicator comes with an abundance of caveats stemming from its inherent volatility as well as seasonal factors.

Initial claims for unemployment insurance fell 24,000 to 398,000 in the week ended July 23, the Labor Department said Thursday—the first time since early April that claims have been below the crucial 400,000 mark. When claims are below that level, economists generally think the economy …

Article source: http://online.wsj.com/article/SB10001424053111904888304576473803942960410.html?mod=rss_economy

BY COREY BOLES AND MICHAEL CRITTENDEN

WASHINGTON—The House of Representatives moved a step closer Thursday afternoon toward a high-stakes vote on a Republican plan to raise the U.S. debt ceiling, even as the leader of the Democratic majority in the Senate declared the House plan dead on arrival.

House Speaker John Boehner (R., Ohio) cleared a test of his control over a fractious Republican caucus when his two-step plan to raise the federal debt ceiling and cut roughly $2.7 trillion from federal spending over the next decade cleared a procedural vote, 238-186. The party-line vote wasn’t a clear guarantee that Mr. Boehner could win passage of …

Article source: http://online.wsj.com/article/SB10001424053111904800304576474072808358338.html?mod=rss_economy

I was two years old when my activities first came to the attention of MI5. In 1952, nothing if not thorough, a security service officer carefully filed a copy of an article written by my father in the Daily Worker about the books good Communists should encourage their children to read. The answer, my father wrote, was complicated by the age factor. “My son (aged 2½) adores Tootles the Train but would scarcely enjoy Kidnapped yet.”

And there the truth about Tootles and me might have remained. But someone in MI5 decided last year it was time to place 12 files of surveillance records on my father, covering the years 1938 to 1960, in the public domain. Why his files were released, I have no way of knowing. But they are in the National Archives and I have read them. They reveal lots about my parents. But they also say lots that is freshly topical this week about the logic and limits of attempts to monitor political threats.

It was never a secret that my father, Arnold Kettle, was a Communist. He joined the Communist Party in 1936 as an undergraduate at Cambridge and he was still a member when he died 50 years later. He spent most of his life as a university English teacher, wrote Marxist books on the novel, and was on the CP’s inner executive committee. All this was public knowledge. But my father was also a member of the 1930s Cambridge Apostles, along with the spies Anthony Blunt and Guy Burgess, both of whom he knew, and he made occasional visits behind the Iron Curtain after the war. Was there, perhaps, more to his political activites than he ever admitted? Was he even in some way a spy?

Arnold was certainly a secretive man. And a disciplined one. His loyalty to the Communist party rarely wavered. Only after he died, for example, did I discover that, as a member of the CP executive in 1956, he had voted in a minority of two to condemn the Soviet invasion of Hungary. But the vote went against him and, as he believed in party discipline, he never referred to it again.

But the most striking aspect of the MI5 records on him is paradoxical. They are simultaneously thorough and inadequate, a point echoed in recent criticisms of the service today. Arnold’s files are full of carbon copies of innumerable memos and reports. But he was a medium-sized target in a huge operation. By 1952, according to Christopher Andrew’s history, MI5 knew the names of 90% of the CP’s 35,000 members — not least by bugging the party’s Covent Garden headquarters, but above all because they had acquired the party membership lists.

My father first crops up in MI5′s files in 1938 in what now seem romantic circumstances, a member of a student delegation to Barcelona during the Spanish civil war. During the second world war, he applies to work in intelligence, but is rejected as “highly undesirable”. When he goes for officer training , MI5 keeps in touch with his officers. “I have observed no evidence of anything subversive in his conduct … Kettle is not a striking figure physically,” one of them writes back.

After the war, his marriage to my mother is noted – “she is an ardent communist and seems to be present when anything of note is taking place in the left-wing world in London” – and they move to Leeds. His mail is opened, and there are phone intercepts whenever he contacts the CP headquarters or stays with prominent Communists during London visits. His bank accounts are monitored. In 1952, with Doris Lessing and others, he visits the Soviet Union. An MI6 report describes him as “an intellectual with a clever approach to communism when talking to the unconverted, in that he appears to ask searching or suspicious questions concerning the regime in the USSR but sees that the answers are always favourable to the Soviet side”. That gets it about right.

Sometimes the reports widen into less conventional subjects. Cambridge police report to MI5 about a meeting “at which Dr Arnold Kettle will speak on Hamlet”. An intercepted letter, carefully filed for posterity, asks for Arnold’s views on Shelley. A note reveals that Arnold has defended EP Thompson’s views on William Morris in a party meeting. A party official asks why Arnold’s new book is “imbued with the Leavis critical approach” and contains “nothing approaching Marxist criticism”. In 1958, Arnold writes a letter to the party urging them not to denounce Boris Pasternak’s Dr Zhivago, “a work of great genius by a man of extraordinary intelligence and honesty”. John Berger writes back, intercepted again, to congratulate him.

Occasionally, there is something more serious. An invitation from party HQ to take part in a meeting on “the development of automation and automatic devices which are substituting larger numbers of clerical and accounting workers” leads to him being tailed across London by the legendary Jim Skardon, interrogator of Kim Philby. Then, during a 1958 visit to Leeds, the Communist party leader John Gollan, who is being tailed, gives him a box, thought by MI5 to contain money, which he places in his bank for a year, before giving it back to Gollan. It looks as though Moscow gold passed through our house. Certainly many Indian and African students did so; “they all appeared to be intellectual types”, a watcher reported.

On a personal level, these 12 files are of course hugely fascinating to me. But what wider lessons, if any, do they contain? I think MI5 was right to try to try to monitor the Communists. At least in its early days, the CP wanted to overthrow capitalism and transform the British state – and it was being financed by a hostile power to do so. MI5 could hardly look in the other direction, even when it was clear, as it certainly was by the 1950s, that the CP wasn’t going anywhere as a revolutionary force and was increasingly looking for democratic and liberal legitimacy. My father was a small part of that, not a spy, but some monitoring of our lives made sense.

Maybe there are more damning files elsewhere. In their absence, though, the picture in these documents is of someone who was not so much wicked or threatening as wrong. “Nobody any longer believes socialism won’t work,” Arnold is reported to MI5 as saying in 1959. Half a century on, plenty of people believe the opposite. My father got a lot of the individual issues – Spain, Hungary, Stalin, Pasternak and certainly Hamlet – right. But he and his comrades got the big call very wrong indeed. Reading these files does not make me shocked so much as sad.

Ironically, my father did have a real secret. His family have known it for years. Doris Lessing wrote about it in her autobiography. And MI5 knew about it too. “It has been suggested from a somewhat doubtful source that Dr Kettle may have homosexual tendencies,” they noted in 1953. The source was right. Five years later, the watchers reported: “Kettle attends meetings of the political committee in London on the second Saturday in each month, following which he makes contact with homosexual friends in St Martin’s Lane and Soho.”

Half a century on, much of the technology of surveillance has changed out of recognition from those distant days. So have the threats. But the pressure to monitor the potentially dangerous is just as great as it was in the cold war era. I want MI5 to protect us from bombers like the 7/7 jihadis or butchers like the Norwegian racist. I’d like to think they have become better at sorting out the lethal from the harmless and the public from the private. “It is a wonder that you can pick as many locks leading into the hearts of the wicked men as you do,” Oliver Cromwell’s son wrote to England’s spymaster John Thurloe. Then as now, the effort comes at a high price.

Article source: http://www.guardian.co.uk/commentisfree/2011/jul/28/mi5-security-service-records-my-father-surveillance

Startling divisions inside the coaltion have been exposed after Steve Hilton, David Cameron’s strategy guru, proposed the temporary abolition of all maternity rights while Vince Cable, the business secretary, was preparing to meet policy experts on salaries to prepare the ground for new controls on excessive executive pay.

The degree to which senior figures in the coalition are pushing in entirely opposite ideological directions underlines the growing sense that the coalition is now struggling to retain a set of coherent ideas.

Hilton has always been regarded as a source of originality as much as pragmatic Whitehall-ready policy, but his opposition to any form of employment protection for mothers will alarm centrists in the coalition.

He has also suggested the abolition of all consumer rights as part of an initiative to inject life into Britain’s sluggish economy. Cable, responsible for growth policy, yesterday presented limited proposals to abolish outdated shopping legislation. Demands for ever-more urgent deregulation has grown inside the government in the face of evidence that the economy is not growing as fast as the prime minister hoped a year ago,

At one point Hilton, a euro-sceptic, advocated Britain ignoring a directive on EU temporary and agency workers’ rights, even though the government had committed itself to implementing the directive.

Hilton would always defend himself as willing to advance iconoclastic thinking, but some civil servants are now hitting back claiming he is a diversion from serious policy.

Cable is to meet members of the independent High Pay Commisison, a body that is looking at mainly non-legislative ways of curbing undeserved high pay to executives.

The commission is urging him to consider making companies declare the share of revenues that goes to executive pay – compared with dividends, capital investment and overall remuneration – as part of his effort to limit excessive awards.

Cable is thinking of making excessive executive pay a centrepiece of his speech to party conference, a speech that will show the degree to which he has recovered his political authority after losing control of media policy in December last year. He lost control of media policy after he was recorded by journalists in an undercover sting saying he had declared war on the Murdoch empire.

Article source: http://www.guardian.co.uk/uk/2011/jul/28/tory-lib-dems-clash-on-policy

Britain is to open negotiations at the UN to unfreeze assets running into hundreds of millions of pounds to be funnelled to the Libyan rebel council that was recognised by the UK on Wednesday as the “sole governmental authority” in the country.

As the foreign secretary, William Hague, announced the expulsion of the Libyan chargé d’affaires and eight remaining Libyan embassy staff in London, British diplomats in New York planned to unfreeze assets covered by UN sanctions.

Britain has frozen £12bn of Libyan assets since the conflict began in February this year, the bulk of which will remain frozen until the regime of Muammar Gaddafi loses power. But a proportion of the assets can be released if Britain can prove that they will only be used by the Benghazi-based National Transitional Council (NTC).

The push by the UK, which has temporarily closed its embassy in Tripoli, will raise questions about whether the funds will be used to buy arms. Foreign Office sources said assets would remain frozen if there is any evidence or suspicion that they were being used to pay for arms, even for the Libyan rebels. Arms sales of any description to any quarter in Libya are banned by UN sanctions.

But a source close to the NTC said funds may be used to buy weapons. “We can’t,” a source close to the NTC told the Guardian when asked how it would make sure funds are not used to buy weapons.

The source added: “We are militarily engaged in removing Gaddafi. Therefore it would be a bit strange to say that we are happy for you to have the no-fly zone, but rather that you didn’t buy arms.

“They [the NTC] haven’t been able to meet their payroll, which is their biggest problem to keep going. They also desperately need money to buy arms, particularly in the western mountains where there is often one weapon between two fighters, who go into battle hoping to get one from the enemy or a fallen comrade.”

Libya’s deputy foreign minister Khaled Kaim condemned the UK for recognising the NTC as the “sole governmental authority” in Libya. Kaim said the decision was “unprecedented in diplomatic history” and that he considered it “a stain on the forehead of Britain”.

Kaim said: “It’s illegal, it’s irresponsible and for us it was a surprise to happen from the British government because if other countries will [follow] Britain, then the international diplomacy will be chaos.”

He said Libya would try to reverse the decision by legal action in British courts and the international court of justice.

Hague paved the way for the unfreezing of assets after expelling the last remaining diplomats loyal to Gaddafi and announcing the embassy would be taken over by the NTC. The chargé, Khaled Benshaban, was summoned to a meeting at the Foreign Office, where he was given three days to leave Britain. Other diplomats at the Libyan People’s Bureau in London have been told to leave over the course of the summer.

Shortly after the meeting with the chargé, Hague invited the NTC to nominate an ambassador and other diplomats to take over the Libyan mission. In a statement crafted with the advice of Foreign Office lawyers and the attorney general, Dominic Grieve, Hague said: “The prime minister and I have decided that the United Kingdom recognises and will deal with the National Transitional Council as the sole governmental authority in Libya.”

The remarks by Hague allowed the government to unfreeze £91m in UK assets belonging to the Arabian Gulf Oil Company, a Libyan oil firm under the NTC’s control, which had been on an EU sanctions list.

Assets would be unfrozen by using three main methods:

• Exemptions for basic services, such as paying for food and fuel. That can be agreed at the UN security council without a vote as long as there is a consensus.

• Provision for exceptional services such as medical supplies. That would need a formal vote.

• Releasing large assets. That would also need a formal vote. Britain would not apply for the release of these assets, which are inextricably linked to the Gaddafi regime, until the Libyan leader leaves power.

Speaking about Britain’s move to recognise the NTC, Hague said: “This decision reflects the National Transitional Council’s increasing legitimacy, competence and success in reaching out to Libyans across the country. Through its actions, it has shown its commitment to a more open and democratic Libya, something that it is working to achieve in an inclusive political process. This is in stark contrast to Gaddafi, whose brutality against the Libyan people has stripped him of all legitimacy.”

Hague has warned that a lot of the democratic changes made during the Arab Spring could be at risk from internal political issues and sectarianism.

“The next few months could be quite turbulent and difficult in Egypt,” he said in an interview with the Times. “One of the risks in the Arab Spring is the unleashing of sectarian divisions.”

“What has started this year will take a generation to work through,” he added. “We mustn’t expect each country to be neatly done in six months. It’s not a computer game that comes to an end when you get bored. It’s not a TV programme that finishes at 10pm. We are going to be working at this for the rest of our lives.”

The foreign secretary said that Britainnow runs its largest diplomatic mission in north Africa after Cairo in the Libyan rebel stronghold of Benghazi. This will be designated as an embassy if the NTC requests an upgrade.

The decision to recognise an opposition group is a rare step for Britain, which declined to follow the example of the French president, Nicolas Sarkozy, who recognised the NTC at the start of the conflict. Britain said at the time it could not recognise the NTC because it recognises states rather than governments.

A Foreign Office source said Britain would continue to abide by the convention by which it recognises states rather than governments, saying: “These are exceptional circumstances. It was an anomaly that we had these people here still representing Gaddafi … we dragged in the chargé d’affaires. He and his colleagues are now packing their bags.”

The Treasury has frozen the assets in the UK of 39 individuals in Gaddafi’s government, family and army.

A further 53 entities have had their assets frozen including oil companies, airlines, property firms, banks and investment authorities in London, the Isle of Man, the British Virgin Islands and in Libya.

In February, £900m of recently printed hard Libyan currency was impounded in the north-east of England. The assets of six Libyan ports were also frozen, including the port in the oil town of Ras Lanuf in the east of the country which was claimed by rebel forces in March.

Hague said Britain only decided to recognise the NTC after it was certain that Libyan students in Britain, who are funded by their embassy, would continue to be supported.

He added that the appearance this week on Libyan television of the Lockerbie bomber Abdelbaset al-Megrahi showed it had been a mistake by the Scottish justice minister to release him on compassionate grounds in 2009. Hague said no deadline has been set for the military campaign against the Gaddafi regime. British military chiefs have advised ministers they can continue with the bombing indefinitely.

Hague, who appeared to indicate earlier this week that Britain was more relaxed about Gaddafi’s personal future, made it clear that it would be better if he left Libya. But Britain could not dictate the outcome of a political settlement to the Libyan people.

“Let’s point out though, at the same time, that the view of the chairman of the NTC is that any successful political settlement does involve Gaddafi leaving Libya and that is what we continue to say is the best solution,” he said. “So don’t make any mistake about that, but we’re saying we can’t impose that or guarantee that.”

Hague also said Britain was committed to ensuring Gaddafi faced justice before the international criminal court.

The foreign secretary denied that discussions about Gaddafi were part of a back-channel communication with the regime, but did not deny that such a channel existed. The renewed diplomatic offensive comes as British aircraft stepped up the bombing against Gaddafi’s security and intelligence apparatus before the start of Ramadan on 1 August.

Article source: http://www.guardian.co.uk/politics/2011/jul/27/libya-britain-gaddafi-regime

Outside the Libyan People’s Bureau in Knightsbridge, central London, the all-green Gaddafi-era flag was still hanging limply from a pole attached to the first-floor balcony.

But, by lunchtime, as news spread of William Hague‘s announcement that the incumbent diplomats were to be removed, a growing crowd of exiled anti-Gaddafi Libyans began to gather, waving the green, white and red revolutionary flag and launching into loud chants whenever a TV camera was pointed their way.

Some even ventured to ask the police guarding the mission if they might be allowed access to the balcony to replace the green standard with their own version. No, not just yet, came the polite reply.

There was certainly no immediate sign of an exodus of staff. Five diplomatic-plated cars were parked outside the mission, a pair of spacious if slightly shabby four-storey Victorian buildings near Hyde Park Corner. A couple of staff scurried in and out. For a short while, a face at a second-floor window glumly watched the protesters and media assembled below.

“It would be wonderful if I could see the diplomats leave, but it’s enough to know they’re going,” said Muftah Abdelsamad, a 57-year-old exile who came to the UK in 1977, initially to study, and saw policewoman Yvonne Fletcher shot dead in 1984 as he protested outside the former Libyan People’s Bureau in St James’s Square. “I try to walk past this building every day so I can shout insults at Khaled Benshaban, the charge d’affaires. I call him a traitor and a coward, that he has blood on his hands. I’d like to tell him that in person.”

Abdelsamad, who returned in May to visit relatives in rebel-controlled Benghazi, added: “You can smell the freedom in the air there, in fact you can taste it.”

Supporters of the anti-Gaddafi rebels hope that, after the decision by Hague, that freedom will soon be tasted in Knightsbridge. Speaking to the Guardian, the UK co-ordinator of the National Transitional Council (NTC), Guma el-Gamaty, said he and his colleagues were “very pleased” about the diplomatic changes to come – changes he said he hoped to see “within three or four days” following Benshaban’s departure.

El-Gamaty said he was “100% sure” that the man expected to lead the new diplomatic operation would be Mahmoud Al-Nakou, a British-based dissident who came to London in 1988 as an embassy staff member but remained when his posting finished. The appointment was also referred to in Benghazi by Mustafa Abdul Jalil, the leader of the NTC. El-Gamaty said he “no idea whatsoever” who the other diplomats would be or even, he said, if he would be one of them.

On Wednesday night al-Nakou confirmed that he had been approached to be what he called the “representative” of the NTC in London. “They all knew me … I think they chose me because of my history (as an anti-Gaddafi dissident) and because … of what I offer to my country,” he said.

Al-Nakou said he believed the British move was “very significant.” He was ready, he said, to see “a new stage in the history of Libya” marked by “freedom of thinking, freedom of political parties and freedom for journalists.”

A member of the anti-Gaddafi opposition from the early days, Al-Nakou has become a well-known writer and journalist, and has commented extensively in the Arabic press in support of the rebels. In February, he wrote a piece in the Guardian outlining a vision of post-Gaddafi Libya where “transparency, democracy, pluralism, freedom and fairness prevail”.

Relations with the west, he said, had to be based on “mutual recognition, shared and common interests and parity, not the old ways of a relationship built on corrupt dealings, fear and abuse.”

“Hundreds of thousands of Libyans have studied and lived in the UK, Europe and the US in the decades since oil was discovered, and those highly educated individuals yearn for a productive, co-operative and collaborative relationship with the west,” wrote al-Nakou.

“Make no mistake, post-Gaddafi Libya will require a healthy link with western governments and companies to benefit from their technology, skills and expertise, while the west needs our immense natural and mineral riches.”

Asked about al-Nakou on Wednesday, the Foreign Office said it was aware of his name but could not confirm his appointment. But the rumour he would be Libya’s new envoy was enough to spark celebrations among those familiar with his work.

“He is very quiet, very considered, very well-educated,” said Ashur Shamis, an exiled Libyan writer, who added that al-Nakou was a hugely respected figure among the Libyan community.

There was no such warmth for the outgoing staff of the People’s Bureau, where Benshaban has been given three days to leave and where the fate of the eight remaining employees will be decided on a “case-by-case” basis. One of them, Tarek al-Obide, told the Guardian he refused to be drawn on his intentions. Asked when he would be leaving Britain, he said: “I don’t know, don’t know.”

Wednesday’s expulsion announcement marks the end point for an embassy that had been disintegrating gradually since May, when Omar Jelban, the then ambassador, was expelled following an arson attack on the unmanned British embassy in Tripoli. The dissidents outside the building will not be sad to see them go.

Abdelitf Kleisa, a 48-year-old businessman, had taken time off from business engagements to join the crowd, and also planned to stay all day in the slight hope the embassy might leave. “We’ve waited 42 years to see the end of Gaddafi, and this is the start of it. I’m just so happy the British government has made this decision.

“If I see the diplomats leave I won’t shout. I’ll be satisfied just to watch.”

Article source: http://www.guardian.co.uk/world/2011/jul/27/libyan-diplomats-leave-london-embassy

James Murdoch will on Thursday chair a full board meeting of BSkyB for the first time since his family firm dropped its bid for full control of the satellite business. It will be “back to business as usual”, said one non-executive director, almost as if nothing has changed. Except, of course, that almost everything has.

Not only has News Corporation, the media group owned by Rupert Murdoch, been forced to drop its bid for Sky after the public and political outcry over the phone hacking scandal, but the Sky chairman himself faces a parliamentary inquiry into whether he misled MPs when he gave evidence to a select committee last week.

In a letter to the police, Paul Farrelly, one of the MPs who has led the parliamentary inquiry into phone hacking since evidence first emerged four years ago, demanded assurances that the “evident cover-up since” would also be investigated.

The select committee is set to demand further information from Murdoch after last week’s testimony was subsequently contradicted by former executives at News International. It was considering the best way “to get to the bottom of how and by whom we have [been] misled during our enquiries into phone hacking,” he wrote.

The extent of the crisis was underscored when the editor of the Times, James Harding, admitted that News International’s handling of the phone-hacking crisis had been “catastrophic”. In an interview with the BBC, Harding said readers had cancelled subscriptions to the Times and to digital versions of the paper in the immediate aftermath of the revelations about Milly Dowler’s phone allegedly being hacked by its sister title the News of the World.

With a separate and equally potentially damaging investigation carried out by media regulator Ofcom into whether the Murdochs as “controlling directors and shareholders of BSkyB” are “fit and proper to continue to hold a broadcasting licence”, the stakes for the Sky chairman could not be higher.

It took just one meeting with Rupert Murdoch’s youngest son to convince Nicholas Ferguson, Sky’s lead independent non-executive director, to support his 38-year-old chairman. A private conversation over a cup of coffee at Wapping at the end of last week convinced the company’s deputy chairman that his record as former chief executive and as chair before the bid from News Corporation made him the right choice to carry on running the firm. Murdoch is understood to have dismissed suggestions that continuing inquiries would leave him short of time for his role at Sky.

Investors, in the main, appear to agree, if only because of the financial strength of a company expected to reveal some sort of special dividend or buyback when it announces its annual results on Friday – although any buyback that allowed News Corp to increase its stake from its current 39% is likely to be highly controversial given the furore over “creeping control” the last time such a move was made.

The former chairman of the BBC has called on Murdoch to offer his resignation to the BSkyB board at the meeting. Sir Christopher Bland, who was BBC chairman from 1996 to 2001, wrote in an article in the Financial Times, that if Murdoch did not resign, the board “and in particular the independent directors, should ask him to go”.

Claire Enders, the head of Enders Analysis, suggested shareholders and the independent directors would have to keep a watching brief on the inquiries into how News International handled the phone-hacking affair.

“In the course of the next few months, the veracity of James’s testimony will stack up or not.

“If it doesn’t stack up, I’m afraid they will have to take action.” Ahead of the Murdochs’ parliamentary appearance, GlaxoSmithKline , Britain’s biggest drugmaker, said James would continue to serve as a non-executive director but that it would watch investigations into the phone-hacking scandal.

Sky is also expected to shake up its board of directors, many of whom are long-serving. Allan Leighton, the former Post Office chairman, has served for 11 years, two more than recommended by good corporate governance, while David Evans is one of eight independent non-executives despite having previously worked for News Corporation.

“People who have been there a long time are more likely to be relied upon to support the existing management,” said Claire Enders.

Article source: http://www.guardian.co.uk/media/2011/jul/27/james-murdoch-bsky-board-meeting

Two men have been convicted of murdering British honeymoon couple Ben and Catherine Mullany on the holiday island of Antigua.

Kaniel Martin, 23, and Avie Howell, 20, shot the Mullanys in their chalet in 2008.

The pair, who refused to face questioning in court, had protested their innocence throughout their two-month trial, which saw more than 90 witnesses give evidence.

But the men were found guilty by a jury in Antigua’s high court in St John’s today.

The Mullanys were both shot in the back of the head during a dawn raid at their luxury hotel chalet on the holiday island in 2008.

Mr Mullany, a student physiotherapist, and Mrs Mullany, a doctor, who were staying in the five-star Cocos Hotel, had only been married just over two weeks.

Mrs Mullany died instantly. Mr Mullany was flown back home to south Wales in an attempt to save his life.

But despite the efforts of his wife’s medical colleagues in Swansea his life-support was turned off a week after he had been shot.

The couple were buried in the grounds of the same church where they had married a little over a month previously.

It has taken almost three years for their killers to be brought to justice.

Two weeks after killing the newlyweds, Howell and Martin then went on to murder 43-year-old shopkeeper Woneta Anderson.

Mr and Mrs Mullany’s parents broke down in tears as the jury of eight men and four delivered its verdicts following a 10-hour wait.

The family said it would never be able to comprehend the nature of the couple’s deaths.

A statement said: “There is no joy at today’s verdict, just a sense of relief that after three years of waiting there is justice for our children, and for Woneta Anderson and her family. These two individuals can never again inflict the same anguish and devastation to any other family as they have to ours.

“Ben and Cath will live in our hearts for ever. They made our lives happy beyond measure and enriched every day that they were with us. On 12 July 2008, Ben and Cath shared a truly perfect day with their friends and family. Just over two weeks later our lives were changed for ever as theirs were cruelly taken.

“We will never be able to comprehend the senseless nature of their deaths, the total disregard shown for human life and that no remorse has ever been shown.”

The couple flew to the holiday island on Antigua for a two-week honeymoon two days after their nuptials.

Their stay at luxury resort Cocos, on the south east coast of the island, had been a wedding present from friends and family.

On 27 July, one day before their honeymoon was due to end, the couple were both shot in the back of the head.

Nearby guests heard screams coming from cottage 15, before the sound of gunshots filled the air.

Martin and Howell, who had been taking part in Antigua’s carnival celebrations hours before, targeted the Mullanys’ cabin completely at random.

It remains unclear who was the gunman, as both killers refused to explain their actions all the way through their eight-week trial.

But despite protesting their innocence, mobile phone records proved Martin had been in the area of Cocos around the time of the shooting.

Prosecutor Antony Armstrong described the evidence against the pair as compelling.

“Physical evidence cannot be wrong. Only human failure to find it, study and understand it can diminish its value.”

While the murder weapon has not been found, forensic tests later showed the bullets in all three killings came from the same gun.

Gunshot residue was later found on Martin and Howell’s clothing as well as in a gun holster found at Martin’s home.

As the verdict was read aloud in Antigua’s high court, Howell and Martin, dressed in jeans and shirts, showed no signs of emotion.

They will be sentenced on 26 September and could face the death penalty.

Article source: http://www.guardian.co.uk/uk/2011/jul/28/antigua-honeymoon-murders-men-convicted