The Economist: News analysis

Oracle and Sun Microsystems: Too close to Sun

Tue, 10 Nov 2009 08:06:06 GMT

Europe’s regulators object to Oracle’s attempts to buy Sun Microsystems

FOR a brief period expectations had been high that trustbusters on both sides of the Atlantic would start playing in tune. The European Commission's regulators have customarily taken a far more activist approach to competition policy than their American counterparts. A few months ago, Barack Obama’s administration let it be known that it would act with more vigilance particularly with regard to antitrust issues related to information technology. But this apparent meeting of minds has proved illusory. It emerged on Monday November 9th that the commission has officially objected to the proposed $7.4 billion purchase of Sun Microsystems, a troubled maker of computer hardware, by Oracle, the world's second-biggest software firm.

America’s Department of Justice had given its approval to the tie-up in August. Not long after the news of the commission’s objections filtered out the justice department backed up its ruling by issuing a statement arguing that the deal does not raise any antitrust concerns. “After conducting a careful investigation of the proposed transaction between Oracle and Sun, the department’s antitrust division concluded that the merger is unlikely to be anticompetitive”, insisted Molly Boast, one of the division's lawyers. But she did attempt to limit the damage to the newly warming relations between trustbusters on both sides of the Atlantic. She added that the department and the commission “have a strong and positive relationship on competition policy matters…The antitrust division will continue to work constructively with the [commission] and competition authorities in other jurisdictions”. ...

Kraft's bid for Cadbury: Unsweetened

Mon, 09 Nov 2009 12:03:02 GMT

Kraft goes hostile with its bid for Cadbury, a British confectioner

CHOCOLATES are universally recognised as a potent means of winning over hearts. And usually a suitor who presents a bigger box of treats is thought to have a better chance of success than one who brandishes a smaller one. So the decision of Kraft Foods to launch a hostile bid for Cadbury on Monday November 9th that fails to match up to its original offer of a couple of months ago is unlikely to result in a happy union. The American company’s hand was forced by a ruling from Britain’s Takeover Panel that it must make a full bid (which it has now done, in effect restating the original offer) or walk away for at least six months.

The hostile bid, like the offer that the American food giant made at the beginning of September, offers GBP3 ($5) and around one Kraft share for every four shares of the British maker of Crunchies and Creme Eggs. The potential burden of Kraft’s purchase of Cadbury and some lacklustre results have depressed the American firm’s share price (while Cadbury unveiled quarterly numbers that were better than expected). The current offer values the deal at GBP9.8 billion compared with GBP10.2 billion when Kraft made its initial approach. ...

Health-care reform in America: Claiming a victory

Mon, 09 Nov 2009 01:46:38 GMT

A bill to reform health care squeaks through the House. The action moves to the Senate

THE House of Representatives narrowly passed a health-care bill on Saturday November 7th, a big step for those who want to reform America's $2.5 trillion health-care system. Barack Obama spent part of his Saturday making a rare visit to Capitol Hill to press some hesitating Democrats into giving their support, although in the end the tally of 220-215 in favour of the legislation, with 39 Democrats voting against, was a tight margin. The bill picked up the support of just one Republican, Joseph Cao, a first-term congressman from New Orleans who faces a tough battle for re-election next year. After securing the lone Republican's support, Steny Hoyer, the Democrats' majority leader, jokingly declared that there had been “a bipartisan vote”.

Success in the House, however, is just one part of a long process. Senators must next debate their own health-care proposals, which could be brought to the Senate floor before the end of this month. If they manage to pass a bill then differences between the House and Senate versions would need to be hammered out before a final act is sent to the president to sign. Nevertheless, the House bill marks a step towards America getting the most significant piece of health-care legislation through Congress since Medicare in 1965, creating near-universal coverage for health insurance. Veterans of past health-care battles are delighted. ...

The coming days: The week ahead

Sun, 08 Nov 2009 03:07:06 GMT

Barack Obama travels to Asia, taking in visits to Japan and China

• BARACK OBAMA begins a trip to Asia on Thursday November 12th. A visit to Japan could prove to be frosty, even though the country is America's most important ally in the region, as the newly elected government has seemed unwilling to back American foreign policy, for example in Afghanistan. Mr Obama will also attend a summit of leaders from the Asia-Pacific region, the part of the world demonstrating the most robust economic growth. Most notable, the American president will spend four days in China, where talks may focus on international efforts to curb carbon emissions in the hope of limiting global climate change. Economic relations, in particular American concern about the weakness of the yuan, may also be discussed.

• CELEBRATIONS will be held in Germany, and elsewhere, on Monday November 9th to mark the 20th anniversary of the fall of the Berlin Wall. Despite current economic difficulties in the region, opinion polls suggest that the populations in eastern and central European countries that had previously been subject to Soviet style rule remain resolutely committed to liberal democracy and capitalism. See article ...

Shootings at Fort Hood: After the horror at home

Sat, 07 Nov 2009 06:00:32 GMT

Is there any lesson to be drawn from the shootings at Fort Hood?

FORT HOOD is one of the largest army bases in America, sprawling over more than 300 square miles (some 780 square kilometres) of nondescript central Texas grassland between Austin and Waco. It is home to more than 50,000 active-duty soldiers, many of whom pass through on their way to Iraq or Afghanistan. One of their errands before deploying is to stop at the Soldier Readiness Processing Centre for last-minute medical and dental checks. It was here, on Thursday November 5th, that soldiers preparing for and returning from war encountered a tragedy no one expected.

Early in the afternoon a major, Nidal Malik Hasan, who worked as an army psychiatrist, walked into the centre and opened fire with two weapons. He shot dozens of people before Kimberly Munley, a civilian police officer serving on the post, shot him. The bloody rampage lasted for about 10 minutes: 13 people died of their injuries and 28 more were wounded, including Ms Munley. For several hours the base was locked down and plunged into confusion, amid misplaced fears that more than one gunman was at large. Most of the dead were young soldiers. Five had been specially trained to deal with stress among soldiers in combat. ...

This week's top stories [06 November 2009]

Fri, 06 Nov 2009 14:00:46 GMT

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Unemployment in America : Jobs gloom, with glimmers

Fri, 06 Nov 2009 12:31:59 GMT

America's jobless rate passes 10% but the job market should start to improve soon

IT WAS widely expected to happen at some point, but not yet. The unemployment rate in America jumped to 10.2% in October, up from 9.8% the month before, an increase that was far more dramatic than most economists had projected.

The grim milestone demonstrates that, even though the recession is apparently over, for the average worker it remains in force. The misery is actually greater than the headline number suggests: an alternative unemployment rate that includes those who would like to work but are not looking for a job, and those who are employed part-time but would rather work full-time, rose by half a percentage point to 17.5%. This rate has jumped almost nine percentage points since the recession began in December 2007, compared with an increase of 5.3 points in the regular unemployment rate. The median spell of unemployment now stands at a record 18.7 weeks. ...

Protests in Iran: Green November

Thu, 05 Nov 2009 08:13:21 GMT

Iran's opposition takes to the streets again

THIRTY years ago, the world was mesmerised by pictures of 52 blindfolded Americans being taken hostage in their embassy in Tehran by Iranian students. This week’s anniversary provided more gripping scenes, as Iranians used the official celebration of that event to take to the streets once again, this time to protest against their own government and their country’s controversial president, Mahmoud Ahmadinejad, whose re-election in June they still hotly dispute.

The green movement, as the opposition calls itself, had held no big rally since Jerusalem Day in mid-September, when protesters turned an officially sponsored event into an anti-government one. On November 4th they did it again. Thousands came on to the streets, despite dark warnings from the authorities. There were big demonstrations in Tehran, and reports of others in provincial cities such as Arak, Isfahan, Mazandaran, Rasht, Shiraz and Tabriz. The internet hummed with tales of opposition protests, replete with videos and photographs. It was hard, however, to assess the size of the crowds. ...

General Motors keeps its European arm: Handbrake turn

Wed, 04 Nov 2009 11:07:57 GMT

GM’s decision to keep Opel causes anger in Germany

THE decision by General Motors to abandon its sale of a controlling stake in Opel to a consortium led by Magna, an Austrian-Canadian partsmaker, has embarrassed and angered the German government and alarmed workers. After months of negotiations, and with an agreement about to be signed, GM made a last-minute handbrake turn, unexpectedly announcing on Tuesday November 3rd that it will now hang on to all of its carmaking operations in Europe except Saab of Sweden, and try to revive them.

Germany’s economy minister, Rainer Bruderle, denounced GM’s behaviour as “completely unacceptable”. Equally angry German trade unions are calling a strike at Opel, fearing that GM’s turnaround plans, unlike Magna’s, will involve huge job cuts. GM is likely to demand substantial state aid for its restructuring plan; the German government, having assured the European Commission in writing that the aid it had offered to Magna was available to anyone seeking to save Opel, may find it awkward to resist this. ...

American elections: The shine coming off

Wed, 04 Nov 2009 06:02:54 GMT

Voters punish Barack Obama and the Democrats in two states, but offer solace in New York

A YEAR after winning America's presidential election, Barack Obama and the Democrats have suffered two big defeats in governors races in Virginia and New Jersey. Last year Mr Obama won in Virginia in a particularly sweet moment for his party. This time the Republican, Bob McDonnell, trounced the Democrat, Creigh Deeds, by 59% to 41%. In northern corners of the state, which form part of Washington's suburbs and are vital to Democratic chances in statewide contests, the Republican did even better in some places, winning Loudoun county by 61% to 39% for example. In the much deeper-blue state of New Jersey, the loss was narrower for the Democrats. Chris Christie, the Republican, won with 49% of the vote, defeating Jon Corzine, the incumbent governor, who picked up around 45%.

There were also various mayoral contests on Tuesday November 3rd. In New York Michael Bloomberg won a third term, but by a much narrower margin of victory than had been expected. Mary Norwood led the field in Atlanta but faces a run-off on December 1st, which if she wins will make her the first female white mayor in the historically black city. And in Houston Annise Parker picked up 31% of the vote and faces Gene Locke in a run-off on December 12th, which if Ms Parker wins would make her the first openly gay person to be elected to the mayor's office in Texas's largest city. ...

Local elections in America: An electoral test

Tue, 03 Nov 2009 11:27:38 GMT

“Mini mid-term” elections get under way in America, with Democrats braced for bad news

VOTERS were at the polls to elect governors in New Jersey and Virginia on Tuesday November 3rd and others were voting in a special election to fill a vacant congressional district in upstate New York. Together, these three races (numerous mayoral contests and state referendums are also taking place) provide the biggest political test for the parties since last year's presidential election. A year since Barack Obama won that prize, these elections will be studied for clues about the electorate's mood. Facing what looks likely to be a heavy defeat for the Democrats in Virginia and a fight to keep the governor's mansion in New Jersey, the president would be wise to remind people of Tip O'Neill's famous dictum that “all politics is local”. But Mr Obama will not be able to avoid some of the finger-pointing if things go very badly.

At the weekend Mr Obama supported Jon Corzine, the embattled governor of New Jersey, appearing at two rallies. Over the summer polls suggested that Mr Corzine was trailing Chris Christie, his Republican challenger, by large margins. Mr Christie attacked Mr Corzine's record on the local economy and found some traction on ethics issues. Mr Christie has been embarrassed in the last days of campaigning by a bizarre political advert he made featuring a Monty Python sketch. Michael Palin, who appeared in it, criticised the advert and said he was surprised that Mr Christie, a former federal prosecutor, was not aware about copyright infringement. ...

Reshaping British banking: Putting competition first

Tue, 03 Nov 2009 06:53:10 GMT

Lloyds and Royal Bank of Scotland are forced to sell businesses

AT THE height of the banking crisis, restoring financial stability was paramount for the British government. Worries about limiting the taxpayer’s exposure came second. Ensuring that banking customers continued to enjoy a competitive market was a distant third. Indeed, the government waived competition rules to let Lloyds TSB take over Halifax Bank of Scotland (HBOS), Britain’s biggest mortgage lender, in what proved to be a disastrous move for Lloyds, as the merged group then required a massive state bail-out.

Now that the crisis has abated, fostering a competitive banking market is becoming more significant again, though mainly because of the intervention of Neelie Kroes, the European Union’s competition commissioner. Last week she forced ING, a rescued Dutch bank, to split its banking and insurance operations. She also imposed restrictions on lending and deposit-taking at Northern Rock, a nationalised mortgage lender which the British government is splitting into a “good” bank, to be privatised, and a “bad” part, to be wound down. ...

CIT files for bankruptcy: A prepackaged pratfall

Mon, 02 Nov 2009 05:08:22 GMT

CIT, a lender to thousands of small businesses, files for bankruptcy

THE most gut-wrenching failures may be over, but the financial crisis continues to claim the occasional big victim. CIT, a lender to small and medium-sized businesses, from clothing retailers to Dunkin’ Donuts franchisees, filed for bankruptcy on Sunday November 1st after failing to garner enough support for a debt-restructuring plan. With $71 billion in assets, the century-old firm is only one-ninth the size of Lehman Brothers, which collapsed in September 2008. Nevertheless, its Chapter 11 filing augurs ill for America’s corporate minnows, whose financing options have narrowed dramatically over the past year.

Financial-services firms have a harder time than most bouncing back from bankruptcy, because their business relies so heavily on trust, which has a tendency to evaporate in such situations. CIT has improved its chances by securing the support of the vast majority of its bondholders for a “prepackaged” filing that will reduce its debt by $10 billion while allowing its subsidiaries to go on operating. Among those persuaded to come on board is Carl Icahn, a veteran corporate gadfly who had been trying to derail CIT’s restructuring in the hope of profiting by picking through its entrails; he has even offered a $1 billion back-up loan. The firm’s advisers say it could emerge from bankruptcy by the end of the year. ...

Afghanistan's presidential election: Out of the running

Sun, 01 Nov 2009 09:56:41 GMT

Abdullah Abdullah pulls out of the presidential race, deepening the political crisis in Afghanistan

TO THUNDEROUS applause Abdullah Abdullah announced yet another twist in Afghanistan’s convoluted path to finding a new leader. The second-placed candidate for the presidency announced on Sunday November 1st, to a tent full of thousands of his supporters, that he would not participate in a run-off vote set for Saturday.

Virtually all the conditions he set for reform of Afghanistan’s blatantly partisan Independent Election Commission (IEC) had been rejected out of hand. So had his requests for the suspension of some of Hamid Karzai’s cabinet ministers in the run up to the vote. But as his flag-waving audience roared approval, diplomats across Kabul groaned at the prospect of a run-off vote with just one candidate, Mr Karzai, in contention. ...

The coming days: The week ahead

Sun, 01 Nov 2009 06:08:56 GMT

Marking a year since Barack Obama's victory in the presidential election

• THE first anniversary of the general election that brought Barack Obama to the American presidency will be marked on Wednesday November 4th. Democrats and Republicans will have a chance to guage the public mood in some states the day before, when voters in 380 cities—including New York, Boston and Houston—elect mayors. Polls for governors will take place in Virginia and New Jersey and a special election is scheduled in New York's 23rd congressional district. With America's economy apparently leaving recession in the third quarter, the next statistic to be studied will be the monthly report on unemployment, which is due to be published on Friday. See article

• AFGHANS are set to go back to the polls to decide whether to re-elect Hamid Karzai as president for another five years on Saturday November 7th. The election may go ahead without Abdullah Abdullah, Mr Karzai's only competitor, who withdrew from the poll after demands he made about the running of the election were not met. Such was the fraudulence of the first round that UN investigators threw out more than a million votes, enough to force Mr Karzai into a run-off. But little has been done to prevent a repeat of the fraud, prompting Mr Abdullah's decision. If the election is cancelled it is unclear whether Mr Karzai will retain the presidency. See article ...

Honduras: Back in his old hat?

Sat, 31 Oct 2009 08:01:33 GMT

A deal brings hope of an end to the political crisis in Honduras

FOUR months after Manuel Zelaya was hauled out of bed at gunpoint, flown to Costa Rica in a military plane, and replaced by Roberto Micheletti as president of Honduras, negotiators for the two sides have reached an agreement to put an end to the country’s political crisis. On Thursday October 29th, representatives of both the deposed and de facto presidents declared they would ask the Congress—which voted to name Mr Micheletti president after Mr Zelaya was exiled—to hold a new vote on whether to reinstate him for the remaining three months of his term. They pledged to abide by the result.

The deal was hailed for its importance in the consolidation of democracy in the region. There is no doubt that the agreement represents a significant victory for foreign leaders, and particularly for Barack Obama, whose decision to send a high-level diplomatic mission to Honduras two days earlier provided the decisive push to conclude the talks. It establishes both a path for a possible return to office for Mr Zelaya and stops him from calling a constituent assembly, a body with the job of rewriting the constitution. His opponents say this would have enabled him to eliminate the country’s ban on presidential re-election. ...

This week's top stories [30 October 2009]

Fri, 30 Oct 2009 14:00:39 GMT

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Politicians on trial in France: Liberty, equality—not impunity

Fri, 30 Oct 2009 11:29:29 GMT

Jacques Chirac, a former president of France, faces trial for corruption

A DECISION by an investigating judge to send Jacques Chirac, a former president, to stand trial in a court is without precedent in modern French history. Mr Chirac is accused of “misappropriation of public funds” during his time as mayor of Paris. The decision comes in a month in which the entrails of France’s one-time ruling elite have been spilling out. A former interior minister, Charles Pasqua, was this week sentenced to a year in prison (and a suspended sentence of two years) for involvement in arms trafficking to Angola. A former prime minister, Dominique de Villepin, has also been tried in connection with a smear campaign and is awaiting a verdict.

The case against Mr Chirac concerns 21 “fake jobs” that were allegedly created for friends at the Paris town hall, where he held office between 1977 and 1995. As long as he was president, from 1995 to 2007, Mr Chirac was immune from prosecution, and his lawyer has argued that he remains so for acts carried out during his time in office. This has frustrated various investigating judges over the years, who have compiled numerous dossiers concerning Mr Chirac, all of which have been dropped, in some cases because the statute of limitations had expired. ...

Europe's new president: Jostling for position

Fri, 30 Oct 2009 08:49:36 GMT

Who will be president of Europe? Not Tony Blair

TONY BLAIR’S long career as a political chameleon caught up with him on Thursday October 29th, as European Socialist bosses helped to block his bid to become the first full-time president of the European Union, describing him as an unwelcome vestige of the “Bush and Iraq” era. As leader of the Labour Party Mr Blair won three general elections in Britain but served as a centrist who pursued a close alliance with George Bush. That Faustian pact was called in by his nominal allies from the European centre-left, who made clear in a tense meeting before an EU leaders’ summit in Brussels that they would not back him.

The new president’s job involves chairing summits of the 27 national leaders of the EU, and representing them in meetings with other world leaders. The post will be created by the Lisbon treaty, which is now inching towards ratification. At the summit Europe’s leaders offered a written reassurance to the Czech Republic—the only country that has not yet signed the treaty—that nothing in Lisbon can lead to fresh property claims by ethnic Germans whose descendants were expelled from Czechoslovakia after the second world war. The fiercely Eurosceptic Czech president, Vaclav Klaus, has given what senior officials call a “political guarantee” that he will drop his opposition to Lisbon and sign the document, shortly after the Czech constitutional court gives it a green light at a hearing set for November 3rd. ...

America's economy: A joyless recovery

Thu, 29 Oct 2009 11:11:17 GMT

New figures suggest that America has at last moved out of recession

THE American government reported on Thursday October 29th that gross domestic product rose at an annualised rate of 3.5% in the third quarter compared with the second. This was the first increase since the second quarter of 2008. It backs up other evidence that the recession ended in the third quarter or just before, though the official decision, by the National Bureau of Economic Research, a group of academic economists, is still some way off. Robert Gordon, a member of this group, is confident that the recession, which began in December 2007, ended in June. But at 18 months that would still make it the longest since 1933.

Consumers are sceptical. Their confidence fell in October, according to the Conference Board, a research group. A poll for The Economist by YouGov found that 35% of respondents think the economy is getting worse; just 28% think it is getting better. Unemployment is still rising, and even a White House adviser, Christina Romer, predicts it will remain “severely elevated” throughout next year. ...

Health-care reform in America: A public row

Thu, 29 Oct 2009 06:43:36 GMT

Democrats are trying to revive the idea of a government-run health plan

“IT’S not really a public option, it’s a consumer option.” So declared Nancy Pelosi, speaker of the House of Representatives, this week. Her effort to rebrand the hugely controversial proposal to add a government-run insurer (usually called a “public plan”) to the health reforms now being negotiated seems ridiculous at first blush. In fact, it is part of a concerted and clever push by the political left that could—just possibly—revive an idea that had seemed dead and buried.

When Mrs Pelosi revealed, on October 29th, the House's version of a health-reform bill, there were no real suprises; as expected, a public plan featured prominently. The real suprise had come three days earlier. Until very recently, it had looked as though the proposal to tack on a public plan was, despite fervent support among the left, politically doomed. First came Barack Obama’s slippery but clear efforts to back away from it. Then came a crucial vote of the Senate Finance Committee, which rejected the public plan. The final congressional health bill must reconcile the versions coming out of the full House and Senate, and the powerful Finance Committee’s rejection had appeared to be a final nail in the coffin. ...

Terror in Afghanistan: Murder in Kabul

Wed, 28 Oct 2009 09:03:04 GMT

The Taliban kill several UN staff in Afghanistan, ahead of a presidential election

THE murder of at least five foreign, civilian, UN staff in a private guest house in Kabul, and a near-simultaneous rocket attack on the city’s most prestigious hotel, on Wednesday October 28th, are reminders of the apparently expanding reach of Taliban insurgents in Afghanistan. At least three suicide attackers, wearing explosives and carrying grenades and automatic weapons, made their way into the Bekhtar guest house, reportedly by posing as policemen. Frequented by foreigners, the guest house is in a central area of Kabul that had previously been considered relatively secure. Guards and the intruders exchanged gunfire, guests were killed (and nine more were injured), as well as four Afghans. Three attackers were eventually shot dead.

A Taliban spokesman promptly claimed responsibility for the murders, saying that they were “just a start” of an assault on “anyone engaged” in the process of preparing for a run-off presidential election that is scheduled for November 7th. The head of the UN mission, Kai Eide, responded to the worst single attack on his staff in the country by vowing to remain “committed to Afghanistan”. But the Taliban may hope that a bloody enough assault on UN workers might yet provoke the organisation either to reduce its activities in the country or to consider withdrawal, as happened in Iraq in 2003 after 22 staff were killed by bombers at its headquarters in Baghdad. ...

Restructuring ING: Breaking up

Tue, 27 Oct 2009 10:36:09 GMT

A dramatic restructuring for ING. Which big European bank is next?

IF ICELAND is the place that has suffered most from the banking crisis, the Benelux countries can make a justifiable claim to second place. After the calamitous sale of ABN AMRO and the subsequent dismemberment of Fortis, ING, the biggest bank in the Netherlands, announced on Monday October 26th that it was splitting itself up. The bank will sell its insurance businesses, divest the American arm of its ING Direct online-banking unit and carve out some bits of its Dutch retail activities. By the time the restructuring is done, in 2013, the bank’s balance sheet will be 45% smaller than it was in September 2008.

That isn’t all. The bank also announced plans for a €7.5 billion ($11.2 billion) rights issue to help repay half the money that the Dutch government injected into ING in October last year. Investors reacted with dismay to the prospect of dilution and the uncertainty of the planned restructuring, sending the bank’s shares down sharply on Monday. ...

American bank failures: An uncelebrated century

Mon, 26 Oct 2009 10:38:49 GMT

Smaller American banks are now at the centre of the credit storm

PARTNERS BANK of Naples, Florida, earned a dubious distinction on Friday October 23rd. It became the 100th American bank failure of the year. On the same day six other lenders—two more in Florida and banks in Minnesota, Wisconsin, Illinois and Georgia—joined the rollcall of failure in the aftermath of the credit crisis.

More banks have failed in other years. The post-war record was set in 1989 when 534 banks went under. That was at the peak of the savings-and-loan (S&L) crisis, which erupted in the late 1980s and continued in the early 1990s. This year has seen more failures than any since 1992, but another 75 banks must go under to overhaul that year’s total. ...

Baghdad bombs: Bloodbath in Baghdad

Mon, 26 Oct 2009 07:39:00 GMT

At least 155 die in the worst bombings in Iraq of the past two years

TWO car bombs turned Baghdad into a killing field on Sunday October 25th, claiming the lives of at least 155 people and injuring hundreds more. The main targets were the ministry of justice and public works and the office of the governor of Baghdad province. Almost simultaneously the explosions sent windows and their frames several hundred metres along Haifa Street, near the fortified Green Zone. Burst water mains flooded parts of the area, washing over charred bodies and through burned cars. This was the second such attack in two months, but the bloodiest in two years. On August 19th bombs destroyed several government buildings including the ministries of finance and foreign affairs, killing perhaps 100 people.

The new attack has heightened the sense of crisis in the Iraqi capital. The past two years have seen fewer bombings and fewer people killed than in the years before. But insurgents are now focusing on spectacular assaults in an effort to affect the political situation. Elections are due in January and security is a big issue. As in Afghanistan, where the Taliban stepped up attacks during the election campaign, more bombings are likely in the coming months. Iraq's prime minister, Nuri al-Maliki, had been claiming credit for ending the descent into civil war and is therefore vulnerable. Voters might also punish political parties with their own militias, if they are seen to be associating with terrorists. ...