RJ Reynolds Pulls Out of Tobacco Deal

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WASHINGTON: Calling the current tobacco settlement legislation "the politics of punishment," RJ Reynolds CEO Steven Goldstone announced Wednesday that his company wanted no part of the Senate's vision of the deal -- and that the rest of the Big Five would soon follow.

Although not unexpected (RJR was making loud pullout noises late last week), the move was bold nonetheless; this was (don't laugh) Big Tobacco's bid for sympathy. "Tobacco feels betrayed by the Senate on this deal," says TIME Washington correspondent Bruce Van Voorst. "Senators aren't returning their calls, and the legislation is draconian compared to their deal with the states."

Wall Street loved Goldstone's stand, pushing up tobacco stocks as word got out. Politicians aren't panicking; negotiations aren't negotiations until someone walks away. But if the Senate is serious about saving children's lives, it will want to start right away. "Politically, there is a sense of urgency," says Van Voorst. "And to get this done in the near future, without long court battles, they'll need Big Tobacco to sign on." That's what RJR is betting on.