Quotes of the Day
A German arms merchant who illegally sold a giant drill to Iraq in 1999 has left a gaping hole in Germany's efforts to restrict the export of sensitive military-use technology. A Mannheim court last week sentenced Bernd Schompeter, 59, to five years and three months in jail after ruling that he had broken an export embargo with the drill, which can be used to manufacture cannon capable of firing chemical or nuclear weapons. It also handed a suspended sentence to Willi Heinz Ribbeck, 53, a sales manager at the machinery company that made the drill. The convictions embarrass Germany, which has tried to clean up its act following revelations in the 1980s and early 1990s that German firms were major providers of weapons-making equipment to Iraq, Libya and other pariah states. But prosecutors say Schompeter easily found ways around the tougher export restrictions. The initial sale was to a German-based trading company, so as to circumvent the manufacturer's internal controls, and the drill was then exported to Jordan with a dubious end-user certificate before ending up in Iraq, they said. A spokesman says prosecutors are currently investigating five other cases, at least three of which involve illegal sales to Iraq. "The sentences have gotten longer, but it's still possible to get around the bans with forged documents and suchlike," says the spokesman.
Of Stocks And Glass Houses
First it was Donald Rumsfeld attacking "old Europe." Now Alfred Berkeley, vice chairman of the NASDAQ stock market, says that Europeans seek "to pull us down to their own miserable levels of opportunity and performance." He cast this hostile stone in a letter last week to the U.S. Financial Accounting Standards Board, lobbying against a proposal from the International Accounting Standards Board that would count stock options as expenses. As corporate scandals mounted last year, the idea got high-profile support from investors like Warren Buffett. But Berkeley's attack — he also slams accountants, "the shareholder's rights crowd" and media "wage slaves" for supporting the change — is part of a renewed push to keep the U.S. from adopting the IASB's stricter standards. "I'm very bemused by a guy who's running a stock exchange lashing out like this at his own customers," says IASB director of technical activities Kevin Stevenson, but "maybe this is the beginning of a more significant battle." Perhaps Berkeley's volley would have more credibility if the NASDAQ had not plunged 74% since the spring of 2000. Who's pulling down whom?
EUROBLUES
The Real Dogfight
Pity Europe's airlines. With passenger traffic already down 9% from 2000, they're now caught in a nasty squabble over "open skies" agreements that would widen competition on lucrative transatlantic routes. E.U. courts banned the individually negotiated deals between 11 member states and the U.S., saying they should be arranged en bloc. When the U.S. appeared to undercut that decision by offering to sweeten the deals, François Lamoureux, the Commission's director-general for transport, threatened last week to drag into court any state that accepts. But E.U. efforts to draw up a new deal aren't expected to break the sound barrier — and meanwhile, airlines complain, they're left flying in legal limbo.
THE BOTTOM LINE
It's like the legend of Ulysses. The pact helps a government to tie itself to the mast and resist the sirens.
JOSE MANUEL DURAO BARROSO,
Portugal's Prime Minister, on supporting the Stability and Growth Pact
- BLAINE GRETEMAN and PETER GUMBEL
- Jail awaits a German arms merchant who sold a giant drill to Iraq