Why Putin Has the U.N. over a Barrel

Cynics may believe that George W. Bush’s desire for regime change in Iraq is ultimately meant to serve the interests of his petro-cronies. If so, U.S. oil companies will have to get in line: Saddam Hussein has recently cut a slew of generous deals with Asian and European concerns, giving them first crack at Iraq’s 112 billion barrels of known oil — worth at least $3 trillion at today’s prices — as well as unexplored fields. Non-U.S. firms have over 30 deals with Iraq waiting to take effect when sanctions are lifted; France’s TotalFinaElf, Spain’s Repsol, and Italy’s Eni all have Iraqi interests worth millions of dollars. But Russia is king: in the Qurna oil field alone, Russia’s Lukoil holds a majority stake in at least 11 billion barrels. When President Vladimir Putin hardened his antiwar stance last week during British Prime Minister Tony Blair’s visit, some analysts believe he wanted Russia’s contracts protected in return for support on any U.N. action. “But is it actually within his authority to make that promise?” asks Manouchehr Takin of the Centre for Global Energy Studies. “Iraq is a sovereign state, and just because Saddam was in power when these deals were made doesn’t mean they’re invalid.” Yet Takin believes that after any war with Iraq, U.S. firms would be keen to fight for new deals and renegotiate old ones. And no one is taking bets on who would win that war.

THE RACING BUSINESS
Reinventing The Formula
Fast racehorses are handicapped — given extra weight to carry — so why not Formula One race cars? Last week the sport’s supremo, Bernie Ecclestone, proposed handicapping as one way to stop the Ferrari team from waltzing away with next year’s championship, as they have done this season. Since Ferrari wrapped up Michael Schumacher’s record-equaling fifth drivers’ championship in July, Ecclestone has been under pressure from sponsors, advertisers and TV companies that have seen viewing figures for Grands Prix plummet — only 4 million Britons watched the U.S. race two weeks ago compared with 7 million last year. On Oct. 28 the sport’s representatives will meet in London to discuss how to make the racing more fun and bring back the fans. Ferrari — which spends an estimated $390 million a year to win — and the other big teams, Williams and McLaren, will resist change. But since the Prost team went bust last year, and Orange-sponsored Arrows is likely to follow suit, Formula One has to bite the bullet, now.

Archive: Schumy the Great

THE BOURSE
Insolvency, She Wrote
Deutsche Bank paid €667 million for a 40.3% share in Axel Springer, Europe’s top publisher, once owned by fallen media baron Leo Kirch. The bank then sold 10.4% of the stake to Friede Springer, giving her control.

Turning Each Other On
The U.K.’s two largest commercial broadcasters, Carlton and Granada, agreed on merger plans to create a new company worth over $4 billion. The deal will face strict regulatory scrutiny.

There’s No Place Like Home
Further undoing former CEO Jean-Marie Messier’s strategy, Vivendi is moving control from New York back to Paris. Vivendi will also finalize its €12 billion disposal plan this week.

Growing Pings
HSBC continued its international expansion, buying a 10% stake in China’s No. 2 insurer, Ping An, for $600 million.

INDICATORS
Chocolate Prices Get Hot
Cocoa prices hit 17-year highs of $2,317 a ton as rebel forces in the Ivory Coast blocked roads and moved toward the key trading town of Daloa. The country produces 40% of the world’s cocoa, and prices have risen nearly 15% since the fighting began.

That Should Catch Them
Rest easy: prompted by the government, American business is enlisting itself in the war on terror. Dell Computer’s online order form now asks: “Will the product(s) be used in connection with weapons of mass destruction, i.e. nuclear applications, missile technology, or chemical or biological weapons purposes?”

Own A Piece Of The Rock
Prudential Securities, one of the world’s largest insurance firms, lost a class-action suit in Ohio, to 250 individual investors who accused their broker of selling stock without permission. The $261.7 million damage award is a record; Prudential says it will appeal.

Who Wants To Be Employed?
In a move that comments on the quality of German TV as much as on its economy, Neun Live will launch a game show this fall in which the top prize is … a job. The concept is imported from Argentina, where the show was an instant hit.

BOTTOM LINES
“They are treating Switzerland like an alpine Iraq.”
Jean-Claude Juncker, Luxembourg’s Prime Minister, on E.U. states threatening to sanction Switzerland for refusing to share information about E.U. citizens’ bank accounts

“We worship at the feet of J.K. Rowling.”
Jeff Bezos, Amazon.com CEO, on how the Harry Potter books helped the company make its first profit in a year of dot.com disaster

“I feel very peculiar asking customers to give me love.”
Takashi Uchida, shop owner in Yamato, Japan, on problems with his town’s new local currency, the love