Bizwatch

Poland: New Car Sales in Free Fall
Used cars from Western Europe have been flooding into Poland since it joined the E.U. on May 1, delighting consumers but worrying authorities. New car sales since accession have dropped by almost 20% from the same period last year. Such trade used to be stymied by a ban on cars that didn’t meet exhaust emission standards, and wrecks that could no longer be driven, but with E.U. regulations ending the restrictions, nearly 400,000 used cars entered Poland between May and August — 25 times more than in the first four months of the year. With car-repair costs around four times lower in Poland than in Germany, Polish buyers can import a damaged car and fix it up. “Long term, it will cause turmoil in the car market,” grumbles Poznan-based car salesman Jacek Pietrzyk.

The government fears losing revenue: imported cars are still subject to a tax based on their declared value, but buyers and sellers understate that amount. The Finance Ministry is considering measures to stem the flow of cars,

INDICATORS
Jammed Signal
Iran’s parliament approved a bill giving the legislature a veto over majority foreign-owned investments in the country. The vote cast doubt over Turkey’s leading cell-phone operator Turkcell’s $3 billion deal to begin operating Iran’s second cell-phone network.

Long-Term Interest
Britain’s Barclays announced it was in talks to buy a majority stake in Absa, South Africa’s biggest retail bank, its first such investment there since 1986.

A Burning Issue
A $280 billion U.S. trial began against cigarette makers. The Justice Department claims they hid smoking’s harmful effects for 50 years. Tobacco firms deny it.

Long-Term Interest
Britain’s Barclays announced it was in talks to buy a majority stake in Absa, South Africa’s biggest retail bank, its first such investment there since 1986.

such as registration fees and technical tests, but for the moment, it’s open road for used cars. — Reported by Tadeusz L. Kucharski

Oil Crisis? What Oil Crisis?
Rising oil prices? No problem — they won’t stifle the current recovery in Europe, the U.S. or Japan. At least that was the soothing message delivered last week by the Paris-based Organization for Economic Cooperation and Development (O.E.C.D.). Oil prices continue to spike — last week they briefly hit $49 per bbl. in New York, and a study by the International Energy Agency estimates that a sustained $10 rise in oil prices knocks about 0.5% off the euro zone’s economic growth. But Jean-Philippe Cotis, the O.E.C.D.’s chief economist, says that unlike the oil shocks of the’70s and early’80s — when the price was almost double in today’s dollars — the increases aren’t prompting inflationary wage demands, and so far haven’t hurt consumer demand. “The impact is modest,” Cotis says. His view was confirmed by the U.S. Federal Reserve, which raised a key interest rate last week in a sign that it too believes the U.S. economy is rebounding. — By Peter Gumbel

Hiding The Red Ink
The E.U. threatened Greece with legal action for underreporting its budget deficit between 2000 and 2003. Revised data put the deficit for the period above the euro-zone ceiling of 3% of GDP. Meanwhile, France unveiled its 2005 budget aimed at bringing its own deficit under the limit for the first time since 2001.