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BUSINESS & FINANCE 17
EUROPE EDITION
VOL. XXXI NO. 76
BHR BD 1.50 EGY $1.75(C/V) JOR JD2 KWT KD 1 OMN OR 1.5 POL ZL 12 QAT QR 14 SAU SR 14 UAE 15 AED
WSJ.com
MONDAY, MAY 20, 2013
Yahoo to Pay
$1.1 Billion
To Buy Tumblr
Yahoo Inc.s board has approved a deal to acquire blogging startup Tumblr, people
familiar with the matter said
Sunday.
By Joann S. Lublin,
Amir Efrati
and Spencer E. Ante
Yahoo has agreed to pay

$1.1 billion for the company,
one of the people said. Tumblr would continue to operate
largely as an independent
business, the people said.
It wasnt immediately clear
whether Tumblrs board had
approved the deal. Spokesmen
for Yahoo and Tumblr didnt
immediately respond to requests for comment.
Yahoos board approved
the deal in a meeting by telephone on Friday, one of the
people said. A deal could be
announced as soon as Mon-
Business & Finance
Big U.S. companies are

sizing up Europe..........19
Bloomberg ramps up
compliance efforts......19
Battle for Web ad
ratings heats up..........20
Heard: Yahoos Tumblr
of opportunity...............32
day, the person said.
Tumblr, founded in 2007,
fast built a following by making it easy for people to post
blogs and photos, follow other
people on Tumblr and receive
updates via a feed. The websites simple design has lowered the bar for online publishing and effectively merged
blogging with social media.
By acquiring Tumblr, Yahoo would gain a social-media
site that has become a hub of
communication and blogging
for millions of people, but one

that generates little revenue.
Talks between Yahoo and
Tumblr were reported earlier
by technology news and opinion website All Things D, a
unit of Wall Street Journal
parent News Corp.
Tumblr Chief Executive David Karp has focused on building the companys user base
for its minimalist blogging
platform while leaving for
later the question of earning
money. It is a pattern typical
for young Internet companies.
Tumblr began placing ads
on its service last year. Mr.
Karp, who once told the Los
Angeles Times that he was
pretty opposed to advertising, said in recent media reports that Tumblr generated
$13 million in revenue last year.
People familiar with the
matter said Yahoo believes it
Please turn to page 20
Swedish Firms Squeezed

As Krona Rises on Euro
BY CHARLES DUXBURY
VADERSTAD, Sweden
This cozy village got a visit in
March from Swedens prime
minister, who praised farmmachinery company Vaderstad-Verken AB as one of the
countrys successful export
companies.
But Fredrik Reinfeldt got a
stern complaint from Christina Stark, an executive at the
family-run company, which
has been in business for half a
century. She told the prime
minister that the strong
Swedish krona is battering
the bottom line, while rivals
especially in Germany benefit
from the comparatively
weaker euro.
Because Sweden isnt a
member of the euro zone, it

has avoided much of the economic mess that spread
across Europe. The Nordic
country is a popular destination for investors throughout
the world, pushing the krona
higher.
That is bad for profits at
Swedish companies because
the money they make from
products sold elsewhere is
worth less when converted
back into Swedish kronor. As
of Friday, one euro was worth
8.59 Swedish kronor, down
about 6% from around 9.15
kronor a year earlier.
The squeeze is hurting
firms ranging from baby-carrier maker BabyBjorn AB to
potato-chip maker Svenska
Lantchips to Sandvik AB,
1.70 / 3.20
All the Fives in Fergusons Final Farewell
Reuters
Manchester United followers found it hard to smile Sunday as Alex Ferguson bade farewell at the
end of his final match as manager. His side drew 5-5 with West Bromwich Albion. Sport, page 30
Inside
North Korea Fires

Missiles Into the Sea
BY KYONG-AE CHOI
AND ALASTAIR GALE
which makes equipment for

miners and construction companies.
In March, Sweden exported goods worth 14% less
than a year earlier. A purchasing managers index fell below
50 in April, indicating contraction in business activity.
Other European countries
that arent in the euro zone
face the same challenge in
managing the appreciation of
their currencies against the
euro.
In Switzerland, though,
the central bank enforces a
David Camerons EU
waiting game is over,
says Simon Nixon
Agenda ................... 4
U.K. Treasury cites dangers

in Scottish independence..... 4
Outlook: Euro zone risking an
Argentina moment?................. 6
U.S. government now

investigating the press
Opinion ................. 14
French restaurants
facing cost crisis
preparing meals
Europe News .......... 5
SEOULNorth Korea on
Sunday fired a short-range
missile into the sea off the
eastern coast of the Korean
peninsula following three similar launches Saturday, once
again stirring tensions that
had appeared to ease in the
wake of a recent series of
threats directed at South Korea and the U.S.
The latest missile firing
came after the South Korean
government on Sunday condemned Pyongyangs earlier
launches and urged it to come
to the negotiating table over
the jointly run Kaesong Industrial Complex to allow South
Korean companies to withdraw their raw materials and
finished goods.
On Sunday, U.N. chief Ban

Ki-moon also asked the North
to refrain from further missile
tests.
The missiles posed no danger to neighboring countries.
Analysts said the launches,
which arent uncommon, were
likely intended as a protest
against joint South KoreanU.S. naval drills last week.
North Korea, a financially beleaguered state hit by fresh
U.N. sanctions following its
nuclear test in February, may
expect the launches will
prompt the offer of dialogue
from the U.S., they said.
North Korea will achieve
nothing by threats or provocations, which only further
Seoul concerned as Japanese
official visits Pyongyang..... 10
2 | Monday, May 20, 2013
AM
IM
UK
SW FR
IT SP
TK BR
PL
IS
AE
THE WALL STREET JOURNAL.
GR
PAGE TWO
Whats News
i
n Japan pledged $2 billion for

energy and mineral projects in Africa, as it seeks to catch up with
years of Chinese investment. 11
n China is showing rapid increases in wages despite slowing
growth, a reassuring sign for leaders, but a trend that could prove
difficult to sustain. 11
n Starbucks has penetrated
scores of markets, but might face
a challenge in Vietnams deeprooted coffee culture. 17
n Prices of many commodities are
down this year, but U.S. oil futures
have rallied. Skeptics say the mismatch is a sign of trouble. 17
n Surging credit has kept Chinas
real-estate sector humming during
a renewed attempt by the government to bring prices under control, risking a destabilizing correction in prices down the line. 17
n Roger Carr, the chairman of
U.K. gas utility Centrica, is the
front-runner to replace Dick Olver
as chairman of Britains defense
contractor BAE Systems. 19
n As U.S. lawmakers fret about
privacy implications of Google
Glass, one thing is clear: The technology that can redefine what is
public and link the digital and
physical worlds is here. 20
n As Facebook reached the anniversary of its IPO, how the socialnetworking giant tackles revenue
will be one of the largest challenges in its short life as a public
company. 21
n E.ON has made its first significant move in Germanys decentralized power market by agreeing to
build four combined heat and
power units for retailer Metro. 22
n A North American natural-gas
trade group is planning a campaign to show compressed natural
gas can be an effective fuel for
passenger cars to encourage wider

use of the fuel. 22
n J.P. Morgan Chase Chairman
and CEO James Dimon is making
the case for continuity in the final
days before a potentially defining
vote on his future. 23
n SAC Capital Advisors told clients it will no longer cooperate
unconditionally with the U.S.
government on an insider-trading
probe of the hedge-fund firm. 24
n Turkish stocks and bonds
surged to record levels after Ankara secured its second investment-grade credit rating, offering
a boost to a government that has
long coveted an upgrade to increase institutional investment. 24
World-Wide
n The U.S. is seeing a rise in
al Qaeda-related terror plots and
threats against its embassies in
Libya, Yemen and Egypt, current
and former U.S. officials say. 3
n Eurovision fans got Greek men
dancing in skirts, a Romanian resembling a vampire singing shockingly high notes and other overthe-top shows as a Danish
songstress won in the 58th edition
of the song contest. 6
n Political violence has shaken
the most affluent area of Karachi,
as the killing of a prominent local
political organizer appears to have
frightened many Pakistani voters
away from a rerun election. 8
n Syrian government forces
backed by members of Lebanese
militant group Hezbollah began a
push to capture a rebel stronghold
near the Lebanese border, Syrian
state media and activists said. 8
n The chief adviser to Canadas
prime minister stepped down, after the government said he gave
an embattled Conservative lawmaker around $87,540 to repay inappropriately claimed housing expenses. 10
Associated Press
Business & Finance
STAND ON MY SHOULDERS: Members of the Castellers de la Vila de Grcia form a human tower Sunday in the
Barcelona neighborhood of Gracia. A castell is a human tower usually built during festivals in Spains Catalonia region.
ONLINE TODAY
Readers Choices
1. Opinion: StrasselThe IRS

Scandal Started at the Top
2. Opinion: No Ordinary Scandal
3. Swearing In the Enemy
4. Frances Plat du Jour: Frozen
Meals
5. Higher Ups Knew of IRS Case
6. Opinion: Annise ParkerThe
Modern American Boomtown
7. U.S. Approves Expanded Gas
Products
8. Opinion: Merely a Tax
Misunderstanding
9. Denmark Wins Eurovision Song
Contest
10. Apps Raise the iPads Aptitude
for Real Work
Eurovision
europe.wsj.com
Middle East Real Time
Question of the Day

Which of these luxury
European properties is
your favorite?
Its good for

countries that have
a bad economy too;
they can still feel
part of Europe.
Vote online at europe.wsj.com/polls
Previous Results
Eurovision fan Johann Soerensen.
Would you be willing to

pay more for fair-trade
clothing?
For real-time insight

and analysis from
across the region, visit
wsj.com/middleeast
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60%
No
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Monday, May 20, 2013 | 3
NEWS
Terror Threats to U.S. Embassies Rising

BY SIOBHAN GORMAN
WASHINGTONThe U.S. is seeing a spike in al Qaeda-related terror

plots and threats against its embassies in Libya, Yemen and Egypt, say
current and former U.S. officials citing domestic and foreign intelligence reports.
The threats against U.S. missions
in Tripoli and Yemens capital, Sanaa,
are believed to involve bomb plots by
Sunni extremists and perhaps al
Qaeda-linked individuals, and have set
off alarms among U.S. officials still
shaken by Septembers attack on a
diplomatic outpost in Benghazi, Libya.
A planned attack against U.S. and
French diplomatic targets in Egypt
was wider and more precise than
had been reported when Cairo authorities said earlier in May that
they detained three men in connection with it, according to intelligence cited by the U.S. officials.
Earlier reports had indicated
that embassies had been targeted.
But the plots focused primarily on
the U.S. and French ambassadors
there, the current and former U.S.
officials said Friday.
One of the three detainees was
the intended suicide bomber, these
people said.
Threats against U.S.

missions in Tripoli and
Sanaa are believed to
involve bomb plots by
Sunni extremists.
There appear to be serious terrorist threats against U.S. embassies
in North Africa and the broader
Middle East, said Seth Jones, an al
Qaeda specialist at Rand Corp. and
a former adviser to the U.S. military.
It shows that terrorist groups, including al Qaeda, remain very active. They have flourished in a political vacuum in several of these
countries.
The apparent uptick in threats
comes eight months after the al
Qaeda-linked terrorist attack killed
four Americans in Benghazi and as
U.S. counterterrorism officials watch
for threats in the wake of the Arab
Spring.
They also emerge as the Obama
administration faces heightened
pressure over security issuesincluding accusations that it could
have better anticipated the Benghazi attacks, and that it had overstepped by seizing the phone records of Associated Press reporters
in connection with another counterterrorism operation.
Counterterrorism
specialists
draw a distinction between threats
in Egypt and Libya and those in Yemen. Daniel Benjamin, who until recently was the top State Department
counterterrorism official, said there
are frequent threats to the U.S. embassy in Sanaa but that the countrys counterterrorism efforts are
making inroads.
By contrast, he said, the weaker
governments in Libya and Egypt
face a growing threat from extremist groups that previous regimes
kept under wraps.
These groups are under considerably less pressure than they used to
be, said Mr. Benjamin, now director
of the Dickey Center for International
Understanding at Dartmouth College.
That has certainly changed the security scene.
U.S. officials are scrutinizing the
alleged plots in Tripoli, Sanaa and

Cairo, although they say there have
so far been no signs of ties between
them.
In the thwarted Cairo plot, one
militant group implicated by the intelligence reports is led by an Egyptian who has training camps in Libya
and has received support from al
Qaedas Yemen branch.
That group, known as the Jamal
Network, is among those implicated
in the Benghazi attacks, where at
least one of its operatives was
among the attackers, U.S. officials
say. The groups leader, Muhammad
Jamal Abu Ahmad, and his top deputy were detained by Egyptian authorities prior to the most recent
Cairo arrests, according to U.S. officials.
State Department spokeswoman
Jen Psaki declined to speak specifically about the embassy plots. But
she said the department works every day with foreign governments
and interagency partners to mitigate
the risks to our diplomatic and consular operations overseas.
The alleged Tripoli and Sanaa
plots appeared less developed than
the one in Cairo, and it wasnt clear
how likely they were to be carried
out. Still, their inclusion in recent
intelligence reporting suggests the
seriousness with which the U.S. government is taking them.
A car-bombing plot against the
U.S. embassy in Tripoli was corroborated by multiple intelligence agencies, and the U.S. has identified individuals associated with the plot who
are part of Sunni extremist groups
that may have al Qaeda links, said a
former U.S. official familiar with the
intelligence. It isnt clear whether
the plot remains active.
Tripoli has been restive in the
months following the Benghazi attacks. On April 23, a car bomb exploded outside the French embassy
there, injuring two guards.
On May 8, the State Department
evacuated a handful of nonemergency personnel from Tripoli. The
next day it issued a travel warning
for U.S. citizens but didnt cite a terrorist threat.
The department warned of civil
unrest and urged U.S. citizens to
avoid demonstrations, which could
turn violent. The security situation
in Libya remains unpredictable, the
warning said, citing an early May
incident when armed groups seized
Libyan government buildings.
In Yemen, intelligence agencies
have warned recently of a car-bomb
plot against the U.S. embassy in
Sanaa.
That plot, according to the intelligence reports, is connected to indi-
viduals who are part of al Qaeda in

the Arabian Peninsula, the groups
Yemen branch.
There have been periodic threats
against the U.S. embassy there in recent years, officials said. The State
Department travel warning for Yemen was last updated in November
2012, warning of a high security
threat level.
The Egypt plot, however, appears
to have been fairly advanced, said
the former U.S. official, especially
given that U.S. intelligence concluded that one of the three men arrested was the suicide bomber recruited to attack either the U.S. or
French ambassador to Egypt.
U.S. officials believe that at least
one of the men the Egyptians arrested has direct links to the Jamal
Networks second-in-command and
also has ties to al Qaeda facilitators,
the former official said.
4 | Monday, May 20, 2013
EUROPE NEWS
The EU Waiting Game Is Over for Cameron

[ Agenda ]
Are you a major
manufacturer
trying to decide
where to locate
your new factory
to serve the
European market? Maybe youre a
car-maker that already has
substantial operations in the U.K.
Or a large U.S. or Asian bank that
has established a European
headquarters in the City of
London? Or perhaps youre an
investment manager hoping to
take advantage of new European
Union rules allowing you to
market your funds across the
continent from London without
the need for separate
authorization in each of its 27
member states? Or perhaps youre
simply a British business anxious
to know whether your exports will
continue to enjoy favorable
treatment available under EU freetrade agreements with countries
like South Koreaand possibly
soon, the U.S.
All sorts of businesses all over
the world have good reason to be
alarmed at the latest twists in the
U.K. debate over the countrys
membership of EU. Many will
already have doubts about
investing in the U.K. because of its
draconian new immigration laws
which make it hard to bring in
highly-qualified staff to make up
for the U.K.s chronic skill
shortages. Now they must
confront a new reality: an in/out
referendum on U.K. membership
of the EU has turned from a
possibility into a near-certainty.
Even Deputy Prime Minister
Nick Cleggthe most pro-EU
party leader in the U.K.acknowledges that it is now a question of
when rather than if the country
has an in/out referendum. That in
turn means there is a real risk of
a U.K exit or Brexit.
How big a risk of Brexit
depends largely on Prime Minister
David Cameron. Referendums are
always risky because they are
often decided on extraneous
factors such as the popularity of
the government rather than the
merits of the question. As things
European Pressphoto Agency
BY SIMON NIXON
U.K. Prime mInister David Cameron attends a press conference at the United Nations headquarters in New York last week.
stand, 46% of voters say they
would vote out, versus 36% who
would vote to stay in, according to
the latest poll by MORI. To the
extent Mr. Cameron has a
strategy, it is to delay the vote
until 2017, buying him time to
negotiate sufficient changes to the
terms of Britains membership to
reconcile his party and the
country to support staying in.
The first plank in this approach
of persuasion is a government-led
review of the workings of the EU
which is due to start reporting
after the summer. This is
supposed to provide authoritative
proof of the benefits of EU
membership while highlighting
potential reforms that could feed
into Mr. Camerons promised
renegotiation.
But this step-by-step strategy
is being blown away by events. A
large section of Mr. Camerons
Conservative party does not want
to be persuaded. For them, the EU
debate doesnt turn on economics

and cost/benefit analyses but
questions of sovereignty wrapped
in notions of British exceptionalism. Their antipathy to the EU is
as much emotional as rational.
For this group, Mr. Camerons
promise of a referendum was
never sufficient. They dont want
him to reform the EU to make it
palatable; they want him to lead
the campaign to take Britain out.
Their two-part strategy is first to
bully Mr. Cameron into publicly
declaring he would vote to leave
an unchanged EU, as two
ambitious senior cabinet ministers
did last week. Then they want to
set the bar for Mr. Camerons
renegotiation so high that he is
doomed to fail.
Whether Mr. Cameron falls into
this trap is the central question in
British politics. For supporters of
U.K. membership, which includes
the overwhelming majority of
British-based businesses as
represented by the Confederation

of British Industry, the Institute
of Directors and TheCityUK, the
omens do not look good. After all,
Mr. Cameron has consistently
buckled under pressure to the
demands of the anti-EU wing of
his party that one of his
colleagues last week allegedly
dubbed mad, swivel-eyed
loonies. To win the leadership, he
courted their support with an illjudged promise to quit the
European Peoples Party grouping
in the European Parliament that
his rival refused to match.
In December 2011, he opted for
diplomatic isolation by vetoing
the euro zones plan to embed its
fiscal pact in the EU treaties
rather than risk confrontation
with his partys Europhobes in
parliament. The referendum
promise he made in January was
another concession extracted
under extreme pressure.
But to govern is to choose
and Mr. Cameron may not much

longer be able to avoid staking
out the ground on which he
intends to fight the referendum.
The politics is now running far
ahead of his policy. The electoral
success of the anti-EU UK
Independence Party is having a
galvanizing effect on all parties
but particularly his own; positions
are hardening, reducing the scope
for compromise, even before the
proper debate that Mr. Cameron
says he wants to lead has started.
Meanwhile, uncertainty over
British membership is having real
world consequences, undermining
his efforts to win battles in
Brussels. The U.K. is already
paying a price for Mr. Camerons
isolation in Europe; the recent
defeat over new EU bank-bonus
curbs was the first time the U.K.
had been defeated on a
substantial issue relating to
financial services.
U.K allies such as Poland,
Sweden and the Netherlands are
wary of being identified with what
is perceived to be British
obstructionism. Far too late, Mr.
Cameron has understood the
necessity of strengthening his
governments relationship with
Germanythe number of bilateral
meetings at all levels has risen
four-fold since 2010but there is
still a long way to go, a senior
government figure concedes.
The stakes could not be higher.
Mr. Cameron likes to say that
Britain is engaged in a global race.
While he sits on the fence, hiding
behind promised renegotiation,
other EU countries such as Ireland
are taking full advantage of the
uncertainty to try to lure away
valuable foreign investment. Mr.
Cameron is fast approaching a
simple choice: Either he must
allow himself to be dragged
further down the path towards
Brexit, shoring up his short-term
political position but risking
major damage to the U.K. national
interest. Or he must make a fullthroated defense of British
membership that categorically
rules out an exit.
Of course, the latter comes
with significant risk that he splits
his party and swiftly finds himself
out of a job. But thats the thing
about leadership: Sometimes you
have no option but to lead.
An Independent Scotland Risks Financial Shocks

BY AINSLEY THOMSON
LONDONAn independent Scotland would have an exceptionally

large banking sector, compared with
the size of the rest of its economy,
making it vulnerable to financial
shocks and putting Scottish taxpayers at significant risk in the event of
the country being hit by another
banking crisis, the U.K. Treasury
said Sunday.
In an analysis paper, the third in
a series the U.K. government is releasing ahead of the independence
referendum next year, the treasury
estimated that an independent Scotland would have banking assets
worth more than 1,250% of Scottish
gross domestic product.
The scale of Scotlands banking
assets dwarfs those of Iceland and
Cyprus, which had banking assets
around 880% of GDP and 800% of
GDP before their respective col-
lapses in 2008 and 2013. Both countries suffered severe financial problems due in part to the
disproportionate size of their banking sectors.
The experience of financial crises shows that countries with a
large banking sector compared to
the size of their GDP are significantly more vulnerable, the report
says.
The treasury analysis found
banking sector assets for the whole
U.K. at present are around 492% of
GDP.
The size of the U.K. economy
relative to its financial sector means
that the U.K. authorities are in a position to effectively coordinate the
resolution of failing firms, and to
stand behind any resolution arrangements, the paper said. Resolving large banking failures with
confidence is likely to be impossible
unless there is a strong and large
fiscal base underpinning actions to

mitigate financial risk.
Scots go to the polls Sept. 18,
2014, to vote on whether to stay in
the U.K. or go it alone as an independent nation.
There is a substantial
area of uncertainty
around the reaction of
large firms to these
risks.
As the date draws nearer, the
London-based U.K. government,
which is staunchly in favor of maintaining the 300-year-old union between Scotland and the rest of the
U.K., is pointing out the economic
risks and uncertainty that it be-
lieves an independent Scotland

would create.
By contrast, the semiautonomous
Scottish government, which is proindependence, is campaigning to
convince Scots that their small nation, which is rich in natural resources such as oil and gas in the
U.K. sectors of the North Sea, would
be better off if it cut its ties to the
rest of the U.K.
Alex Salmond, Scotlands first
minister and the leader of the Scottish National Party, last month told
The Wall Street Journal that the independence referendum isnt deterring foreign companies from investing in the country, despite
scaremongering from the U.K. government.
In the last 18 months we have
seen record levels of investment in
Scotland, Mr. Salmond said.
The first minister said the Scottish government would use its natu-
ral resources as a bargaining chip in

negotiations with the U.K. government about forming a sterling monetary union.
The treasury paper also said that
if Scotland became independent, it
could cause difficulties for financial
services firms, particular around
their cost of borrowing.
There is a substantial area of
uncertainty around the reaction of
large firms to these risks, according to the paper. These would be
difficult decisions for industry, particularly those firms that have
strong historic and cultural links to
Scotland.
It is not clear whether an independent Scotland would be presented with a bill from London for
bailing out Royal Bank of Scotland
Group PLC and Bank of Scotland,
now part of Lloyds Banking Group
PLC, at the height of the global financial crisis in 2008.
Monday, May 20, 2013 | 5
EUROPE NEWS
The Big Chill Inside French Restaurants

BY GABRIELE PARUSSINI
Bill of Fare
Personnel costs are up at Frances
independent restaurants.*
France is fth highest out of 20 in the EU with a national minimum wage.
Breakdown of costs
Nominal minimum wage in France, per

hour
Monthly minimum wages for

selected countries, 2013
100%
10
EU
Other
80
60
32.4%
30.8%
Food
supply
41.1%
43.3%
2012
9.31
09
0
1990
$1,842.4
6. U.K.
2004
$1,934.6
2. Belgium
5. France
Staff
20
$2,414.3
1. Luxembourg
40
$1,628.6
8. Spain
95
2000
05
12
U.S.
$969.8
$1,160
*With sales of up to 400,000 a year Based on the national miniumum wage of $7.25 per hour
Sources: Xer, Eurogroup Consulting 2011 (restaurant cost breakdown); Insee (nominal minimum wage), Eurostat (monthly minimum wage)
sidered good for business, Mr. Guy

said it was fair to assume that most
of those that dont have a label are
using a lot of frozen ingredients or
industrially prepared dishesor
both.
Restaurateurs started buying dehydrated meat and fish stock in the
1960s, allowing them to skip long
hours of preparation and simplify
the cooking of sauces.
In the 1990s, frozen ingredients
went from the family refrigerator,
where they had been made popular
by the rising rate of working
women, to restaurant cold rooms.
Industrially prepared food followed
in the 2000s.
Mr. Madec said the economic
gain for his business from buying
prepared food is too big to pass up.
Sitting at one of Les Templiers tables, he takes buf bourguignon,
the classic dish prepared with beef
braised in Burgundy red wine, as an
example.
Adding up the price of fresh
meat, wine and vegetables and the
labor costs, a portion of the stew
costs Mr. Madec 3.53 (about $4.50)
to make. Ready-to-serve portions
from Davigel, a unit of Nestl SA,
allow him to trim that to 3.17 per
serving.
The 10% savings is significant at
a time restaurant profit margins are
thin.
As a cook I hate it, but the price
pressure leaves me with no alternative, Mr. Madec said, who charges
18 for the dish but says profit is
still scant once other costs are
counted.
Independently owned restaurants in France accounted for 60%
of Davigels 800 million in sales
last year, up from 40% in 2000, said
marketing manager Ignace de Villepin.
Riccardo Vecchiarelli for The Wall Street Journal
ELANCOURT,
FranceWhen
Jean-Luc Madec opened his restaurant west of Paris more than 20
years ago, he would get up at 3 a.m.
and race to the citys wholesale
market to select the best fresh food.
Nowadays, he can sleep in. With
high labor costs eating into his bottom line, Mr. Madec uses frozen ingredientsand even complete main
coursesfor the dishes served at
Les Templiers.
Its the only way we can survive, he said. But its also killing
French cuisine.
France is a country that prides
itself on the quality and sophistication of its foodUnesco listed the
Gallic meal as an global treasure
and more than a third of the 18 million annual visitors to Paris put
fancy restaurant dinners at the top
of their to-do list, according to a
2010 survey by the Paris-Ile-deFrance Tourism Committee.
But a steady increase in labor
costs and food prices has fueled an
unexpected phenomenon: Many restaurants can no longer afford to prepare meals from fresh ingredients in
their own kitchens.
Instead, they have progressed
from buying frozen vegetables and
the like to outsourcing more and
more work to industrial suppliers in
an attempt to keep their businesses
viable.
Frozen food got a foot into restaurant kitchens two decades ago,
and kept the door open to industrially prepared dishes, said Patrick
Rambourg, a culinary historian who
worked on Frances application to
have its cuisine recognized by the
United Nations Educational, Scientific and Cultural Organization.
Today, most restaurants in this
country serve food that has been
cooked elsewhere, he said.
To be sure, France remains a
beacon for talented chefs who devote hours to meticulous preparation of fresh food in their kitchens.
France has the most three-star Michelin restaurants in the world after
Japan, and leads in the one- and
two-star categories.
Of the 80,000 table-service restaurants in France, fewer than 10%
have labels certifying that most of
their ingredients are fresh and that
the dishes are cooked on site, said
Grard Guy, head of CPIH, one of
the countrys largest restaurant and
hotel organizations.
That number hasnt changed
much in recent years. There are several reasons why restaurants might
not want to apply for such labels,
including the cost and hassle of being audited.
But since having the label is con-
Jean-Luc Madec sitting at a table in his Les Templiers restaurant..
The company has recently upgraded its product line, which includes classic meat dishes as well as
desserts. Others, including the German wholesale giant Metro AG, are
also feeding demand from restaurants.
Restaurant owners argue that
the 36.3% increase in real terms in
Frances minimum wage since 1990
has forced them to cut costs aggressively to preserve their profit margins.
In 1995, Les Templiers lowestpaid employee cost Mr. Madec
12,610 a year. By 2012, that salary
had doubled to 25,153, while inflation over the period was 33%.
Unions say pay for restaurant

workers should be even higher.
Restaurant staff works nights
and weekends, said Denis Raguet, a
union leader at Force Ouvrire. Its
not an easy job.
The growing dependence on prepared food has sparked a backlash
from some restaurant owners who
still make everything in their kitchens, including Xavier Denamur, who
owns five restaurants in central
Paris.
Helped by the recent discovery
across Europe of horse meat in frozen dishes labeled as beefwhich
exposed the lack of checks in the
processed-food chainhe has lob-
bied for French authorities to force

restaurants to disclose where their
food comes from.
Its the clients right to know
whats on the plate, said Mr. Denamur. Otherwise its fraud.
The extent of the practice is unknown to many diners.
I guessed not everything was
homemade, but I thought it was exceptional practice, like little white
lies, said Marie Gibert, a 23-yearold fashion photographer who said
she dines out once a week on average.
Worried by what they view as
declining standards, a panel of 15
top French chefs, including Alain
Ducasse and Jol Robuchon, started
a new quality label in April that will
be awarded only to establishments
that prepare their own food.
A diner needs to be able to tell
the difference between restaurants
who have staff cooking in the
kitchen and those who use microwaves to reheat industrial dishes,
said Mr. Ducasse.
Politicians are joining the fray,
too.
A group of Socialist lawmakers is
working on a draft bill it hopes to
submit to Parliament by the summer
that would force restaurants to list
dishes obtained from industrial suppliers on their menusa practice already in place in Italy, Europes
other culinary giant.
Mr. Madec, the restaurant owner,
said the fallout could be harsh.
We all agree in principle, he
said, but if that bill passes, businesses like mine will be wiped out.
6 | Monday, May 20, 2013
EUROPE NEWS
Euro-Zone Risking an Argentina Moment?

underestimated Europeans
willingness to put up with years of
hardship rather than gamble on an
exit. But European officials who
point to the stability of pro-euro
sentiment may be making the
opposite mistake.
Europeans reserves of patience
are deep, but surely finite.
Just the sheer enormity of
quitting the euro has so far
militated against a surge in
support to leave, says Simon
Tilford, chief economist at the
Center for European Reform, a
London-based think tank. Once
people feel theres no light at the
end of the tunnel, however, well
probably start to see a more open
debate about the costs and benefits
of remaining in the single
currency, he says. And once you
see that debate, things could
happen quite quickly.
It has happened before. Like
countries that joined the euro
zone, Argentina in the 1990s gave
up control over its own currency,
fixing it 1-to-1 to the U.S. dollar.
That tamed hyperinflation, but it
also allowed a borrowing binge in
dollars that pushed up wages and
business costs. Like southern
Europe today, Argentina became
deeply uncompetitive and the
countrys currency couldnt fall to
make its goods attractive abroad.
Like euro members today,
Argentina had to grin and bear it
until wages and prices fell far
enough for the country to become
competitive again. Conventional
wisdom at the time was that
Argentines would bear any
hardship to keep using the U.S.
[ The Outlook ]
BY THOMAS CATAN
AND MARCUS WALKER
Unemployment in Spain is at
27%. Young people are fleeing
Portugal and Ireland. One-in-four
Greeks say they have difficulty
paying for food.
Despite the Depression-era
conditions, however, Europe has no
crash plan to get people back to
work. Under the Germanengineered strategy to escape the
euro crisis, struggling southern
European members must continue
to cut public spending, lower
wages and grind down prices until
theyre competitive again. At
current rates, it could take a
decade or more to complete the
process, according to studies by
Goldman Sachs.
All the pain being endured
raises the question: Is there a
breaking point at which Europeans
simply say, Enough?
Certainly, Europeans have
protested austerity. But despite
some scares, no country has left
the euro. Support for remaining in
the common currency remains
high, even though theres
widespread disenchantment with
the European Union. Over 60% of
Spaniards, Greeks, Italians and
French want to keep the common
currency, according to a survey
published this month by the Pew
Research Center.
Euro doomsayers who expected
Greece would tumble out of the
currency last year have seemingly
Cumulative
loss in GDP
(2013
projections)
0%
Spain
5.7%
Breaking
Point?
10
Portugal
7.9%
Some euro countries

are now nearing the
same decline in gross
domestic product
that Argentina had
when it abandoned
the dollar peg.
Greece has far
Argentinas GDP had fallen
surpassed that level. 8.4% when it abandoned
the dollar peg in January 2002
15
20
25
0
YEARS SINCE START OF CRISIS*
Italy
8.3%
Greece
23.5%
6
*Year zero for Argentina represents full-year 1998 GDP; for others, it represents full-year 2007
Source: WSJ analysis of International Monetary Fund data
dollar, so seared were they by

decades of political and economic
chaos that included periods of
four-digit inflation.
Devaluation is not an option in
Argentina, a World Bank
economist said at the time. With
such a high dollarization level, a
devaluation would be too costly.
Technically, Argentina had its
own currency to return to, but
abandoning parity with the dollar
was seen as too excruciating to
undertake, because almost all debts
and business contracts were in the
U.S. currency. After three years of
The Wall Street Journal
recession, though, Argentines

appeared to decide en masse that
whatever came next couldnt be
worse than the unending
depression needed to keep their
pesos interchangeable with dollars.
On a balmy night in December
2001, the middle class took to the
streets of Buenos Aires in an
explosion of rage. Riots across the
country swept the government
from power. Argentina defaulted
on its debt soon after, and then the
country abandoned the pesos peg
to the dollar.
How similar is the situation
southern Europe today?

Argentinas economy had
contracted by around 8% in the
three years before the uprising. By
the end of this year, Italys and
Portugals economies will have
shrunk by around 8% from their
peak, Spains by around 6% and
Greeces by more than 23%,
according to the International
Monetary Fund.
EU policy makers who take
comfort in the apparent popularity
of the euro should consider that
Argentines also widely supported
the dollar pegright up until the
moment they exploded. In a poll
published in December 2001, the
same month that Argentines
rioted, just 14% said the currency
regime should be scrapped; 62%
said they wanted to keep it. Thats
virtually the same proportion of
Spaniards and Greeks who say they
want to keep the euro today.
Argentina, with its ups and
downs since devaluation, isnt a
model for Europe. Rather, its a
cautionary tale.
In late 2001, Argentinas
economy minister called the
countrys dollar peg a permanent
institution, whose unthinkable
collapse would cause the
dissolution of the basic
institutions of the economy and
society. A month later it was
gone.
Those who say the risk of
countries leaving the euro has
gone away should consider other
times when people viewed a
currency regime as sacred, right
up until the time they swept it
away.
Subdued Danish Songstress Captures Eurovision
MALMO, SWEDENEurovision
fans got what they expected in the
58th edition of a song contest
known as much for kitsch outfits,
over-the-top stage shows and geopolitical tension as for musical quality.
Memorable hallmarks of the

weekend event included a Romanian
resembling a vampire singing shockingly high notes; Greek men dancing
in skirts; and a twiggy Ukrainian
wrapped so tightly in her dress that
it seemed to make sense to have one
of the tallest men in the world carry
her on stage.
Early Sunday morning however,
after nearly four hours of performances and vote tallying, the crown
went to a 20-year-old Dane who
opted to go with a more predictable
and mainstream formula that has
delivered the prize to performers in
recent years. Picking a catchy ballad
called Only Teardrops written by
a Scandinavian songwriter and
abandoning shoes in favor of the
same barefoot approach taken by
the winner in 2012, Emmelie de Forest relied on powerful vocals and a
load of pre-Eurovision hype to
handily beat the closest runners up
Azerbaijan and Ukraine.
The more toned-down Ms. de
Forest stood in contrast to the antics that have made Eurovision famous. Recent performances include
Swedens Eric Saade breaking
though a wall of glass in 2011 and
Russias band of grandmothers last
Agence France-Presse/Getty Images
By Frances Robinson,
Jens Hansegard
and Clemens Bomsdorf
Denmarks Emmelie de Forest raises her prize after winning the 2013 Eurovision Song Contest in Malmo, Sweden.
year. The most gimmicky act to win
was perhaps Lordi, the Finnish monster mask-wearing rocker who
wowed audiences in 2006 by blending pyrotechnics with Tolkienesque
monsters.
Held in Malmo, Swedens thirdlargest city, the 2013 Eurovision is
estimated by organizers to have
been watched on TV by well over
100 million people world-wide, with
new viewers from the U.S. watching
via web stream. Organizers, under
pressure to rein in costs after some

countries sat the show out due to
cost concerns, cut the budget in half
compared with the prior year and
spent about $20 million producing a
contest of 39 nations, with 26 making it to the final.
Like the winner, this edition of
Eurovision was a bit more subdued,
reflecting a Europe that is having to
do more with less.
With Ms. de Forests victory, Eurovison promises to stay close to
Swedens borders and in a Nordic

region that has proven to take the
song contest very seriously even as
other participants show less enthusiasm. As this years winner, Denmark will become the fourth Nordic
nation in the past eight years to
host Eurovision, following Finlands
victory in 2006, Norways win in
2009 and Swedens conquest last
year. Copenhagen is about a halfhour train ride from Malmo.
It will likely be several months
before Denmark picks the actual city

of the 2014 Eurovision, but the Danish capital is the most likely pick
given its size and infrastructure.
Ms. de Forestwith a Swedish
father and Danish mother and relatives in New York and North Carolinais well aware of the events
sustained global popularity, due in
part to its world-wide web streaming. She grew up inspired by the
victory of Denmarks Olsen brothers
in 2000, when she was 7 years old,
and called that group heroes in a
recent interview.
Its indescribable to win for
your country, Ms. de Forest told
Danish broadcaster DR. I think this
will be fantastic for me and my career. She was a strong favorite with
bookmakers and Eurovision fans
ahead of the event.
While contestants are free to
sing in their native tongue, most opt
to belt out tunes in English. This
has led to a Eurovision that resembles the oft-random flavor of many
of the more commercial singing contests, such as American Idol, more
than it resembles a celebration of
the unique aspects of the nations
competing.
For instance, Alyona Lanskaya,
from Belarus, performed Soloya
with a flair more reflective of the
Miami club scene than Eastern European tradition.
Finnish entrant Krista Siegfrids,
who chose to sing Marry Me,
staged a performance closely resembling the style of American pop
singer Katy Perry. At the end of her
song, she kissed a female backup
dancer as a protest against the fact
that gays cant marry in Finland.
Monday, May 20, 2013 | 7
U.S. NEWS
A Victim-Fund Chiefs
Critical Calculations
[ The Numbers Guy]
Associated Press
BY CARL BIALIK
President Barack Obama boards Air Force One Sunday in Maryland.
White House Aide

Chides the GOP for
Fishing Expeditions
BY JOHN D. MCKINNON
White House senior adviser

Dan Pfeiffer said the Obama administration wouldnt cooperate in
partisan fishing expeditions
over targeting of tea-party groups
by tax officials, raising the prospect of future battles with lawmakers over their investigations.
Mr. Pfeiffer also hinted at the
possibility of further personnel
changes at the Internal Revenue
Service in coming days. President
Barack Obama last week forced
the ouster of the acting commissioner.
Speaking on ABC, Mr. Pfeiffer
said the law governing the targeting of conservative groups was
irrelevant, saying the conduct
itself was outrageous and promising the administration would
make sure it never happens
again.
Pressed on his characterization
of the law, he added: What I
mean is, whether its legal or illegal is not important to the fact
that the conduct doesnt matter.
The Department of Justice has
said theyre looking into the legality of this. The president is not
going to wait for that. We have to
make sure it doesnt happen
again, regardless of how that
turns out.
The IRS apologized Friday for
what it said were mistakes in targeting tea-party and other conservative groups for extra scrutiny
during the 2012 election campaign, but said its actions werent
politically motivated.
During a series of appearances
on the Sunday talk shows, Mr.
Pfeiffer was at times defensive
about what had happened at the
IRS while also taking a more aggressive tone against GOP efforts
to investigate the matter.
Weve seen this playbook from
the Republicans before, Mr. Pfeiffer said on NBC. What they want
to do when theyre lacking a positive agenda is to try to drag
Washington into a swamp of partisan fishing expeditions, trumpedup hearings and false allegations.
Were not going let that happen.
Mr. Pfeiffer said on ABC that
the administration would consider
any request that lawmakers put
forward, adding that our hope is
that they do this in a bipartisan
way.
Republicans said a hearing before the House Ways and Means
Committee Friday represented

only a first step, and that much
more fact-finding will occur before they can judge who is to
blame.
Speaking on NBC, Ways and
Means Chairman Dave Camp (R.,
Mich.) said the Treasury inspector
general for the IRS is now conducting a more thorough investigation. That will likely include
more documentary evidence, such
as emails, than the audit report issued on Tuesday.
Mr. Camp and the top Democrat on his panel, Rep. Sander
Levin of Michigan, also have requested extensive evidence from
the IRS. Mr. Camp hasnt ruled out
the possibility of issuing subpoenas.
Congress has been trying to
get answers for two years and we
were stonewalled, Mr. Camp said.
We still need to have the investigation.
Two other committees are
holding hearings this week.
Several GOP lawmakers questioned the wisdom of allowing
Sarah Hall Ingram, who formerly
oversaw tax-exempt organizationsthe heart of the current
controversyto run the IRS office
in charge of compliance with the
2010 health-care overhaul. Ms. Ingram was in charge of tax-exempt
and government entities until the
end of 2010. The improper targeting of tea-party and other conservative groups appears to have
started in early 2010.
On ABC, Mr. Pfeiffer said the
newly installed acting commissioner, Daniel Werfel, would do a
30-day review to see that anyone
who did anything wrong is held
accountable. He noted that this
individual you are referring to is
not mentioned in the inspector
generals report.
He didnt rule out the possibility of other changes regarding the
health-care implementation.
Hes going to get in there, hes
going to do a top-to-bottom review and make sure that they can
do the job and do it right, Mr.
Pfeiffer said.
Lawmakers also have been critical of Lois Lerner, the director of
the IRS exempt-organizations division.
Ms. Ingram and Ms. Lerner havent responded to requests for
comment in recent days and didnt
immediately respond to requests
on Sunday.
Kenneth
Feinberg, the
veteran victimfund administrator,
knew almost
immediately after
hearing about the Boston
Marathon bombings that he would
be getting a call.
He likened the moment to a
red light blinking, signaling: Here
it comes.
Soon after, Boston Mayor
Thomas Menino called Mr.
Feinberg, who was named by Mr.
Menino and Massachusetts Gov.
Deval Patrick to head the One
Boston Fund two days after the
bombings last month. Mr. Patrick
cited the 67-year-old Mr.
Feinbergs long history of public
service, especially in times of
tragedy.
That history includes running
fundsor advising those running
fundson a pro bono basis in the
aftermath of the Sept. 11, 2001,
terrorist attacks and the mass
shootings in Blacksburg, Va.;
Aurora, Colo.; and Newtown,
Conn.
And it informs Mr. Feinbergs
calculations about distributing
funds to victims. What better
evidence to rely on when
determining the value of lives
than what youve done before?
he said in an interview.
There are nonetheless
important differences between the
funds he has run. After Sept. 11,
Congress formed a fund to offer
victims families payments in
exchange for agreeing not to sue
the airlines involved, so amounts
offered were based on what they
could have expected to get in
court. Since court awards often
are based on lifetime earning
potential of victims, survivors of
big earners got the most from the
September 11th Victim
Compensation Fund. By contrast,
funds in Boston and for the massshooting victims were set up to
hand out no-strings-attached gifts,
not to substitute for the tort
process.
Boston, meanwhile, differs
from the others in that the
bombings cost more limbs than
lives, and the number of severe,
life-altering injuries of all kinds is
so highhigher than after Sept.
11, Mr. Feinberg said.
What unites all these funds is
Mr. Feinbergs approach, which he
calls rough justice.
Though he works as a lawyer
when not administering victim
funds, his approach isnt based on
tort law and none of his Boston
team are lawyersmost are
PricewaterhouseCoopers
accountants working pro bono.
His priority is to get funds to
recipients quickly, and with a
minimum of strife.
Im trying to encourage
people to move on as best they
can, he said.
In practice, that means
drawing simple, easy-to-follow
rules for dividing funds.
For instance, funds run by Mr.
Relief Measures
The way Kenneth Feinberg determined compensation for victims of the 2007
shooting at Virginia Tech and the 2012 shooting in Aurora, Colo., will inuence
how he will distribute the donations pouring in for victims of the Boston
Marathon bombings and their aftermath.
PAST COMPENSATION PATTERNS
Victim
status
Number of victims
compensated
Injured
Virginia Tech*
Aurora
Deceased
$9.2 mil.
$42,400
50
$103,783
26
32
$220,000
$220,000
12
TOTAL FUND SIZE

Hokie Spirit
Memorial Fund
Average
payout
One Fund Boston

(as of Friday)
Aurora Victim
Relief Fund
$5.3 mil.
$30.4 million
*Includes 23 people not injured but present when shootings occurred

Sources: Feinberg Rozen LLP; One Fund Boston
Feinberg since Sept. 11 typically

award the same amount for
recipients within each category
survivors of those killed, for
example, or double amputees or
those with severe brain injuries.
Mr. Feinberg doesnt revise
awards based on expected
earnings, financial means, medical
bills, health insurance, other
sources of incomesuch as the
individual funds set up by
marathon victimsor the severity
of injuries within each category.
To ask [victims] and their
families to start getting you reams
of information so you and you
alone can do means testingit
will slow getting the money out,
Mr. Feinberg said. It will
promote, not help cure, emotional
wounds.
The Boston Marathon

bombings took more
limbs than lives.
Boston victims and their
families got to hear from Mr.
Feinberg about his approach this
month, when he spoke at two
town-hall meetings.
To 25-year-old Kaitlynn Cates,
a marathon spectator who
suffered a severe calf injury, Mr.
Feinberg came off as very blunt,
very forward.
Ms. Cates said that wasnt a
bad thing: He did what he had to
do.
Mr. Feinberg said he did take
into account feedback from
victims and their families when
drawing up the Boston plan,
which was announced last week
without specific dollar figures, as
the fund is still accepting
donations and the extent of some
victims injuries remains unclear.
Among the decisions he
attributes to their feedback
include giving money to people

who were injured but treated on
an outpatient basis.
One contentious point is
whether to compensate for
psychological trauma.
The Boston fund wont do it,
because Mr. Feinberg said there
isnt enough money to go around.
Emotional trauma was a
sticking point in Aurora, where
Richard Audsley, adviser to a
committee distributing $5.3
million, favored including those
who had suffered trauma from
events such as holding dying
people in their arms.
His point of view was, there
wasnt enough money to deal with
emotional trauma, Mr. Audsley
said of Mr. Feinbergs work as a
special master for the fund.
I understand his point of view,
but I think many victims, in that
particular event, felt what they
had experienced was minimized to
the point it created a lot of
additional emotional strife.
Many who have worked with
Mr. Feinberg before applaud his
performance. John Ashcroft, the
former U.S. attorney general who
chose him to administer the Sept.
11 fund, said in an interview, I
dont think theres any question
about the fact that he did the job
well.
Despite their differences in
priorities, Mr. Audsley appreciated
Mr. Feinbergs work. Mr. Audsley
called his approach formulaic,
but said adhering to a formula
may be the best way to get funds
out quickly in a manner perceived
as fair.
Is his formula perfect?
Mr. Feinberg answers his own
question: Absolutely not. Is it
near perfect? Absolutely not. But
its the best way of the
alternatives, I think. He added,
By the end of June, $30 million
will be out the door, and then we
move on, and hope there isnt
another one.
8 | Monday, May 20, 2013
WORLD NEWS
BY SAM DAGHER
nels correspondent, who is embedded

with government troops in Qusayr,
said soldiers took over several government buildings, including the local
municipal building, where the rebel
flag was brought down and the Syrian
flag hoisted in its place. The capture
of the building couldnt be independently verified.
We have crushed more than 70
terrorists, and the army is making
progress, and it has liberated the
cemetery and the church areas, an
army officer told the channel by
telephone from Qusayr. God willing, Qusayr will be liberated in the
coming hours or days.
The rebels in Qusayr, who are estimated to number about 5,000 and
whose ranks include foreign fighters
and extremists, denied the governments claims. But rebels said the
town was being subjected to one of
the most intensive bombardments
by regime forces to date.
Activists said at least 40 people
had been killed so far, all men except for two women, in the offensive, which started overnight Saturday with several airstrikes and a
barrage of artillery and rocket fire.
Syrian government forces and
Hezbollah fighters have been gradually tightening their siege of Qusayr
since mid-April. About 10 days ago,
the Syrian regime dropped leaflets
on the town telling fighters to surrender and civilians to evacuate.
An activist identified as Abu alHoda al-Homsi and purportedly
speaking from Qusayr told the Al
Jazeera television channelwhich is
owned by Qatar, a principal backer
of the Syrian rebelsthat about
40,000 civilians remained in Qusayr.
DAMASCUSSyrian government
forces backed by members of Lebanese militant group Hezbollah
launched a sweeping operation Sunday to capture a rebel stronghold
near the Lebanese border, according
to Syrian state media and to activists opposed to the regime.
Taking the town of Qusayr,
southwest of the city of Homs,
would bolster recent gains by regime forces in central Syria and
around the capital, Damascus. It also
could further embolden Syrian President Bashar al-Assad, who told an
Argentine newspaper over the weekend that his fate would be decided in
elections scheduled for next year.
Activists said at least 40

people had been killed so
far, all men except for
two women, in the
offensive.
Such a timetable complicates the
renewed U.S.-Russian push for a political settlement to end the more
than two-year civil war in Syria.
Rebels and their Western and Arab
backers insist any settlement must
be predicated on Mr. Assad relinquishing power.
Government forces had cordoned
off Qusayr on Sunday and were waging street battles against rebels on
multiple fronts, according to Syrian
state television. The state TV chan-
Syrian Forces
Push to Retake
Rebel Redoubt
A Syrian soldier sits inside a tank as troops take control of the village of Western Dumayna last week.
Al Jazeera broadcast what it said
was exclusive footage from inside
Qusayr narrated by another activist,
identified as Hadi al-Abudallah. He
spoke of civilian casualties, but the
images showed the bloodied corpse
of a fighter wearing an ammunition
vest in the back of a truck and the
bodies of bearded military-age men
at a field hospital, shrouded in
white sheets and being readied for
burial in accordance with Islamic
traditions. The footage showed
parts of the town engulfed in black
smoke, as explosions and the crackle
of gunfire are heard in the background.
It is unclear how many civilians
remain in Qusayr and whether the
figure given by opposition activists is
accurate.
Before the start of the conflict,
Qusayr was home to about 60,000
people, mostly Sunni Muslims and
Christians. Almost all the Christians,
who numbered about 10,000, fled the
town in early 2012 after rebels belonging to the countrys Sunni major-
ity clashed with Christian families

supporting the regime. Hundreds of
Sunni families also left the town,
with most going to neighboring Lebanon, according to international aid
workers in Lebanon.
Last year, Sunni rebels also
started to attack Alawites and Shiite
minorities inhabiting the farming
villages surrounding Qusayr, and
earlier this year openly vowed to
cleanse the area of the two
groups. Alawites belong to an offshoot of Shia Islam and dominate
the Assad regime.
In April, the Iran-backed Lebanese group Hezbollah took over at
least 14 villages around Qusayr and
said it would defend Mr. Assad
against what it called a conspiracy
by Israel, the U.S. and Sunni Arab
dynasties in the Persian Gulf.
Hezbollah has said nothing about
its role in the current battle in
Qusayr, but a senior fighter with the
group and residents of border towns
and villages told The Wall Street
Journal at the end of April that Hez-
bollah was instrumental in planning

for Qusayrs takeover. U.S. officials
estimate there are 2,000 to 2,500
Hezbollah fighters in Syria.
In his interview with Argentine
daily El Clarn, published on the
newspapers website Saturday, Mr.
Assad denied that Hezbollah was
helping him battle rebels, but said
both Iran and the Lebanese group
have experts in Syria who have
been coming and going for years.
An assertive Mr. Assad, who still
enjoys popular support, particularly
among Syrias minorities, said his
fate wouldnt be decided at peace
talks that the U.S. and Russia are
trying to convene in Geneva between the regime and the opposition.
I am a president elected by the
people, and only the Syrian people
will decide whether I stay or leave,
and the ballot box is the referee,
said Mr. Assad, according to a transcript of the interview that was released by the Syrian Ministry of Information.
Karachi Suburb Shaken by Party Officials Killing

KARACHI, PakistanPolitical violence has shaken the most affluent
area of this sprawling city, as the
killing of a prominent local political
organizer appears to have frightened many voters away from a rerun election Sunday.
Zahra Shahid Hussain, one of
the founders of Pakistan Tehreek-eInsaf party led by former cricket
star Imran Khan, and an active
campaigner before the vote, was
shot outside her home in one of
Karachis richest areasDefence,
Saturday. It was a rare killing of a
woman, even by the bloody standards of Karachi politics.
On Sunday, a senior local police
officer, Nasir Aftab, said the investigation has tilted more toward assassination, after police initially
said it was unclear whether Ms.
Hussain was a victim of street
crime or a targeted killing.
PTIs Mr. Khan said he held the
leader of the Muttahida Qaumi
Movement, Altaf Hussain, who lives
in self-imposed exile in London, responsible for the killing of the
party worker Ms. Hussain, along
with the British government, for
sheltering him.
MQM described Mr. Khans allegations as outrageous. The party
BY SAEED SHAH
Voting in Karachis NA-250 District was sparse on Sunday, after a local party
organizer for Pakistan Tehreek-e-Insaf was killed the day before.
already had been boycotting the
revote in Karachis NA-250.
Dont waste this martyrdom,
people of Karachi, Mr. Khan said in
a video message from the hospital
bed to which he has been confined
after an accidental fall earlier this
month.
Later Sunday, after polls closed,
emotional funeral prayers for Ms.
Hussain were held at a mosque in
the neighborhood, which is lined by
ostentatious villas. People have
this perception that Defence is a

posh area and nothing can happen
here. But last night, all that came
crashing down, said Ahmed Godil,
a 23-year-old PTI supporter at a
polling station here. Everyone was
asking this morning if it is safe to
come out to vote.
Pakistans Election Commission
ordered fresh voting in 43 of the
180 voting stations in the NA-250
parliamentary district of Karachi,
after reports of widespread alleged
voting abuses here during the national vote May 11. The main contest in the district was between the
MQM, an ethnic party that has controlled Karachi politics for decades,
and the PTI.
Heavily armed soldiers were deployed inside and outside polling
stations, along with paramilitary
troops and police on Sunday.
The wealth and education of
voters in Defence means NA-250 is
where the PTI, which appeals to
middle-class and upper-middleclass voters fed up with traditional
patronage politics, stood its best
chance of winning a seat in Karachi,
the nations economic capital.
The MQM represents descendants of Muslims who fled todays
India after partition in 1947. It has
long kept a political stranglehold on
the city, where this ethnic group
outnumbers all others. Opponents
often accuse the MQM of being routinely involved in murder, extortion
and intimidation, charges the party
denies. A secular political group,
the MQM was part of the previous
government and was singled out for
attacks by the Taliban ahead of this
months elections. It didnt make it
into the new government, however.
For the May 11 elections, the national turnout was 60%, a substantial gain on previous elections. In
Karachis Defence area, long queues

of voters were seen that day, partly
because polling stations didnt open
on time, but also due to voter enthusiasm. But at Sundays revote,
many polling stations were so quiet
at times that security and polling
officials outnumbered voters.
At a polling station at the Bay
View School in Defence, a PTI polling monitor, Aamra Tariq, said: I
got involved with PTI because Im
so angry with what MQM does here.
We want a progressive country. We
are sticking our necks out.
Meantime, British officials said
police in London are investigating
whether the MQM leader was inciting violence in a telephonic speech
last week to supporters in Karachi,
in which he appeared to threaten
PTI activists.
On Sunday, several hundred
demonstrators against the MQM
gathered outside 10 Downing
Street, in London, residence of the
U.K. prime minister. In Pakistan
many are critical about Mr. Hussain, who has British citizenship,
being able to run his party from
London. British police are also investigating the 2010 killing of a dissident former senior MQM leader in
London, Imran Farooq. The Muttahida Qaumi Movement denies any
involvement in Mr. Farooqs killing.
Monday, May 20, 2013 | 9
WORLD NEWS
Social Media Pose New Riddles for CIA

Alleged U.S. Spy Arrested in Russia Had 243 Friends on Facebook; Technology and the Intelligence Business
BY ANTON TROIANOVSKI
AND SIOBHAN GORMAN
Effective spycraft has long
called for covera job, family or
routine that would keep a government agent from drawing undue
attention. Now, that calculation extends to spies use of social media.
Only in the past few years has
the Central Intelligence Agency issued standardized guidelines on
how to use social media, according
to one former intelligence official.
The line these guidelines draw appears to be thin: Revealing too
much on Facebook and Twitter
risks tipping too much to the
other side. But given that social
media use is becoming ubiquitous,
revealing too little could also
arouse suspicion.
Technology is changing the
spy business in so many different
ways, the ex-intelligence official
said. Its very easy to find out a
lot of information about people.
The question of how much a
spy should divulge online became
a touch less theoretical this week

after Russia unmasked what it
said was an American spysaying
it had detained Ryan C. Fogle, a
junior political officer at the U.S.
Embassy in Moscow, amid what it
alleged was an effort to recruit a
Russian officer.
U.S. officials declined to say
what agency employs the detained
man. His family wouldnt speak
about the situation. The CIA declined to comment.
Regardless, the detention of
the 29-year-old Mr. Fogle, a 2006
graduate of Colgate University,
makes him one of the first members of the social-media generation whose online activities could
be read against allegations that he
spied.
Mr. Fogles Facebook page, as
visible to his 243 friends, offered details about his social life,
contacts and travel plans. One of
those friends provided The Wall
Street Journal with images of how
Mr. Fogles page appeared to
them.
On that page, Mr. Fogle said he

worked at the State Department,
posted photos of a tour of a Moscow Cold War bunker and of Mont
Saint-Michel in France and Krakow, Poland. He bantered with apparent colleagues about flights
back to the U.S. He also indicated
he had plans to return to the U.S.,
doesnt include a photo of him or

personal information.
Personal information is, of
course, the coin of the Facebook
realm, and each user determines
how little or much to divulge. The
CIA, in setting standards for its
own employees, appeared to draw
its own lines.
The issue is particularly sensitive for young

government employees who went to college when
Facebook was already ubiquitous on campus.
including a date and flight route,
and said that over Memorial Day
weekend he planned to hang out
at a restaurant in Arlington, Va.,
Rays the Steaks.
Mr. Fogles level of sharing appears restrained, by the standards
of his generation. His 243 friends
isnt large for someone of his age
group. The publicly accessible version of his Facebook profile
The issue is particularly sensitive for young government employees who went to college when
Facebook was already ubiquitous
on campus. They are part of a generation that shares personal information more widely and rapidly
than before.
The agencys social-media
guidelines, described by the former official, allow even under-
cover officers to maintain Facebook accounts under their real

names. The rules had to catch up
with the technology, the former
official said.
But there are limits. While officers cant post details of their
work projects or travel, they may
post personal notes on travel and
photos, according to the ex-official. Officers were encouraged to
use discretion to avoid compromising their agency status.
Facebook friendships between
undercover officers and people
openly working for the CIA were
discouraged, according to the former official. Among other things,
such connections could be used to
identify
undercover
agents,
through link analysis.
When the policy was issued, it
led to a quandary for CIA officers,
the ex-official said: Whether to
defriend undercover officers. Doing so en masse could have had an
unintended effect of alerting others to an undercover officers status.
FROM THE END OF

THE EARTH TO ROME
The inside story of the unlikely rise of a
pope whose election rocked the world.
No one could see Pope Francis coming. He hailed from a small, troubled
nation haunted by civil war and poverty. Thanks to a series of stunning
twists, he is suddenly atop the Catholic Church and its 1.2 billion adherents.
With in-depth reporting and unparalleled access, The Wall Street Journal
presents an original e-book detailing how Pope Francis rose to become
the most powerful religious leader on Earth.
Available at PopeFrancisTheBook.com
Amazon, Barnes & Noble, iTunes and wherever e-books are sold.
2013 Dow Jones & Company, Inc. All rights reserved. 5WSJC2010
10 | Monday, May 20, 2013
WORLD NEWS
North Korea Fires

Missiles Into the Sea
Shin Jong-dae, a professor at the

University of North Korean Studies
in Seoul, said the launches were
likely a means of drawing attention
of the international community, particularly from the U.S. North Korea
is an expert at crisis diplomacy, or
crisis marketing, Mr. Shin said.
The firings came after Glyn Davies, the top U.S. envoy on North
Korea, wrapped up a visit to Tokyo,
Beijing and Seoul last week for talks
on dealing with North Korea.
Pyongyangs actions, including
threats of attack that escalated in
recent months, are widely viewed as
an attempt to generate enough fear
to prompt other countries to consider concessions on security and
aid, a gambit it has used in the past.
Those threats peaked during annual military drills held by South
Korea and the U.S. through the end
of April, which the North portrayed
as a prelude to war. The heated
rhetoric eased following the end of
the drills, but fresh naval exercises
early last week prompted renewed
warnings of counterattack from
Pyongyang.
The latest drills were led by the
aircraft carrier USS Nimitz, a move
North Koreas state media called a
grave military provocation.
The missile launches also came
during a low in inter-Korean relations as Pyongyang has rejected repeated calls from Seoul for dialogue
over their closed joint industrial
complex. The closure of the Kaesong
complexthe last outpost of interKorean economic cooperationin
turn followed weeks of near-daily
verbal attacks by North Korea
against the South and the U.S. after
the U.N. imposed tougher sanctions
against Pyongyang following its
third nuclear test in February.
Dion Nissenbaum in Washington
contributed to this article.
Associated Press
Continued from first page

isolate [North Korea] and undermine international efforts to ensure
peace and stability in Northeast
Asia, said Caitlin Hayden, spokeswoman for the National Security
Council in the U.S. We continue to
urge the North Korean leadership to
heed President Obamas call to
choose the path of peace and come
into compliance with its international obligations.
South Koreas defense ministry
said North Korea fired three missiles into waters off the Korean peninsula on Saturday, followed by a
fourth missile Sunday. North Koreas
short-range missiles have ranges of
around 160 kilometers.
In our judgment, the missiles
are short-range guided missiles, not
midrange missiles such as the
Musudan, South Korean Defense
Ministry spokesman Kim Min-seok
said. It remains unconfirmed what
type of short-range missiles were
fired over the weekend.
Attention has been focused on
the deployment of two Musudan
missiles on North Koreas east coast
last month for an expected test firing. Officials and media reports earlier this month said North Korea
had moved the Musudan missiles
away from the firing locations.
The Musudan has a range of up
to around 4,000 kilometers, meaning it could threaten U.S. bases in
the region, Guam and Japan. Tokyo
put its missile defenses on alert in
response to reports of the Musudan
deployment.
North Korea launches smaller
missiles with ranges of a few hundred miles, such as Scud variants, in
test firings from its coasts a few
times each year. The last reported
firing was in March.
North Korea made no immediate
statement about the latest launches.
South Korean soldiers monitor the North near the border village of Panmunjom.
Associated Press/Kyodo
Senior Japanese government adviser Isao Iijima, shown above, likely discussed abductions with the North Koreans.
Aides Pyongyang Trip

Troubles Tokyos Allies
BY ALEXANDER MARTIN
AND YUKA HAYASHI
TOKYOA secretive trip to

Pyongyang this past week by a top
aide to Japans prime minister is
raising concerns in South Korea and
the U.S. that Tokyo could undermine
coordinated efforts to pressure
North Korea into abandoning its nuclear and missile programs.
Prime Minister Shinzo Abe and
his top officials declined to specify
the purpose of the aides unannounced trip, but suggested an effort
to free some Japanese citizens believed abducted by North Korea decades ago was atop his agenda. Its
our governments stance that abduction, nuclear and missiles must be
resolved in a comprehensive framework, chief government spokesman
Yoshihide Suga said on Friday.
Mr. Abe has defined the abductee
issue as a foreign-policy priority
and said in the past week he would
consider a bilateral summit with
North Korean leader Kim Jong Un to
resolve the issue. Meetings with
North Koreas leader are rare for
foreign leaders, except for Chinas.
But Japans focus on abductees
has often been seen as an obstacle
for international efforts to cope
with North Koreas isolated regime
and its weapons programs.
Officials from the U.S. and South

Korea warned that independent actions could weaken joint efforts to
pressure North Koreas young
leader. President Barack Obama and
South Korean President Park Geunhye emphasized a united front when
they met in Washington this month.
On Thursday, South Korean Foreign Ministry spokesman Cho Taiyoung noted there was no prior notice from Tokyo about the trip by
Isao Iijima, a senior adviser to Mr.
Abes cabinet, calling it unhelpful.
Glyn Davies, the U.S. special representative on North Korea, also
said he wasnt aware of Mr. Iijimas
trip. The issue of denuclearization
is central and is paramount, Mr.
Davies told reporters in Tokyo on
Thursday. Thats why it is importantthat we stay connected very
closelyall of us stay knitted up on
the issue of how we approach North
Korea. Mr. Davies didnt criticize
Mr. Iijimas trip directly.
The trip added to heightened
tension between Japan and South
Korea that stems from disagreements over Japans colonial rule
over the Korean peninsula.
Animosities have grown since
Mr. Abes return to power in December. His nationalistic views have
raised ire among Japans neighbors.
Visits to a war shrine by Mr. Abes
top officials in April led to the cancellation of a bilateral meeting of

foreign ministers, who were slated
to discuss North Korea. Offensive
remarks on wartime sex slaves by
Osaka Mayor Toru Hashimoto last
Monday set off protests across Asia.
Mr. Iijima, upon landing in Beijing from Pyongyang on his return
to Tokyo on Friday, said he wouldnt
release any details of his visit. Japanese Defense Minister Itsunori Onodera said he believed the visit
would contribute to the efforts to
resolve outstanding issues.
Few details of Mr. Iijimas visit to
Pyongyang have been made available.North Koreas state-run news
agency reported Mr. Iijima met Kim
Yong Nam, Pyongyangs No. 2 official, on Thursday, without providing
further details. North Korean state
television showed Mr. Iijimas arrival in Pyongyang on Tuesday.
I think the Japanese government wasnt planning on making Mr.
Iijimas visit open. It was supposed
to be behind-the-scenes, but the
North went ahead and publicized
it, said Lee Young Hwa, professor
at Kansai University in Osaka. Now
the Japanese government will be
pressured to reveal what went on
during the trip, he said.
Toko Sekiguchi
Canadian Prime Ministers Chief Adviser Resigns
BY PAUL VIEIRA
AND ALISTAIR MACDONALD
OTTAWAThe chief adviser to

Canadian Prime Minister Stephen
Harper said he has stepped down,
four days after the government said
he gave an embattled Conservative
lawmaker more than 90,000 Canadian dollars, or about US$87,540, to
repay inappropriately claimed housing expenses.
Analysts see the loss of a key
aide amid a scandal that has
sparked negative headlines as a major blow to Mr. Harper, whose Conservative Party has governed since
2006.
Nigel Wright, a former privateequity executive, said on Sunday
that his actions were intended
solely to secure the repayment of
funds, which I considered to be in
the public interest, and I accept sole
responsibility.
Mr. Wright said Mr. Harper has
accepted his resignation. Mr. Wright
wasnt immediately available to
comment.
Mr. Wright wrote a personal
check to Conservative Party Sen.
Mike Duffy, the subject of an independent probe about housing expenses claimed by members of the
countrys senate. Mr. Wright said

Mr. Harper wasnt aware of the
check.
Mr. Duffy, appointed to Canadas
upper chamber by Mr. Harper in December 2008, said in late February
he discovered he may have erred in
filing expense records and pledged
to repay the amount inappropriately
claimed.
Mr. Duffy was one of three senators targeted in an independent audit on expenses, amid accusations
they had abused the payment system. In late March, Mr. Duffys lawyer informed the government-appointed auditor, Deloitte LLP, that
his client had repaid allowances

owed, according to a report from
Deloitte released May 9. As a result,
the lawyer said, Mr. Duffys participation in the audit was no longer
needed, according to the Deloitte
report.
Members of the Conservative
cabinet later lauded Mr. Duffy for
his leadership in paying back the
expenses. But last Wednesday, the
prime ministers office confirmed a
media report that Mr. Wright gave
Mr. Duffy the money to reimburse
the Senate. That led to accusations
from opposition politicians that the
payment may have violated conflict-
of-interest rules or rules governing

the receipt of gifts by politicians.
Canadian lawmakers can accept
small gifts, but none that could influence their work. For senators, any
gift worth more than $500 has to be
reported to the Senate ethics officer.
This is the biggest blow to Stephen Harper since he came to
power. Its his big test, said Michael
Behiels, a professor at the University of Ottawa.
Even before the controversy
over Mr. Wrights payment, Mr.
Harper had seen his opinion polling
fall as the countrys economy hit
stiff headwinds.
Monday, May 20, 2013 | 11
WORLD NEWS
Rising Wages Pose Dilemma for China
Accelerating Wage Increases Have Manufacturers Turning to Cheaper Alternative Production Sites in the Region
BY TOM ORLIK
BEIJINGChina is showing rapid
increases in wages and signs of resilience in hiring despite slowing
growth, a reassuring sign for leaders seeking to put more money in
the pockets of ordinary Chinese, but
a trend that could prove difficult to
sustain as countries nearby threaten
to encroach on Chinas manufacturing dominance.
Chinese private-sector wages
rose 14% in 2012, data showed Friday, good news overall for Beijings
push to make consumer spending a
more important part of growth. But
higher labor costs also hurt business profitability and export competitivenesswhich could pose its
own risks to the economic recovery.
Countries such as Bangladesh,
Cambodia and Vietnam have all
ramped up their garment sectors as
global retailers look for alternatives
to China.
Crystal Group, an apparel producer for Marks & Spencer, Abercrombie & Fitch, and Gap, says it
has more than tripled its staff in
Vietnam over the past three years,
but made only small increases in its
China workforce. Its a simple matter of economics for us, says Andrew Lo, CEO of the Hong Kongbased company, as it becomes less
cost-effective to make basic t-shirts
and jeans in China.
The 14% wage rise for privatesector workers in 2012, reported by
Chinas National Bureau of Statistics
on Friday, represented an acceleration from 12.3% in 2011. Over the
period, Chinas annual economic
growth rate slowed to 7.8% from
9.3%.
A recent spate of accidents, including a factory-building collapse
in Bangladesh that killed more than
1,100, has focused new attention on
a shift away from China as costs
rise there. Some experts say worries
that China is pricing itself out of its
manufacturing edge may be overblown. Supply-chain linkages, strong
infrastructure and access to Chinas
Expensive China
Chinas wages rise, despite
slowing growth
but manufacturing wages

run above labor productivity
hitting export
competitiveness.
Change from a year earlier
Wages: 14%
15%
20%
40%
30
15
10
GDP: 7.8%
Manufacturing wages: 17%

10
2011
0
2009
12
10
0
Labor productivity: 8.3%
10
11
12
10
20
2009
10
11
12
Sources: National Bureau of Statistics; CEIC; World Bank
own market make the case for keeping a foothold. Overall, most manufacturers operating in China are still
profitable even though their margins are being squeezed, says Nigel
Knight, who heads Ernst & Youngs
advisory practice for greater China.
I dont see a huge rush for the
doors, says Mr. Knight. The underlying strategic rationale for manufacturing in China is still very powerful.
Meanwhile, job creation and
wage increases are a key focus for
Chinas leaders. In the past, turbocharged growth was seen as essential to creating enough employment
opportunities for a swelling workforce. On a visit to the northern city
of Tianjin this week, Chinas top
leader, Xi Jinping, signaled a continued focus on employment by visiting a local job-training center and
pledging to improve services for job
seekers.
Continued strength in the labor
markets suggests that China can
now create sufficient jobs to shore
up social stability with a significantly lower pace of growth.
Strength in the labor markets
means there is less need for shortterm stimulus measures, said RBS
2012: 8%
20
China economist Louis Kuijs.

Big increases in wages also help
the rebalancing of Chinas economya key objective for the new
leadership. With growth in wages
outstripping the rest of the economy, households slice of the pie is
getting bigger. The government
hopes that will drive higher levels of
consumption, helping wean the
economy off its addiction to exports
and investment as drivers of
growth.
Rising manufacturing costs in
China were one reason private-equity firm Grumman Hill Group LLC
decided to put shoe maker Aerosoles up for sale this year, a person
familiar with the matter said. The
Edison, N.J.-based shoe company
makes virtually all of its products in
China, but wage inflation there is
pressuring margins, this person
said.
Wages in the Chinas manufacturing sector have risen 71% since
2008, according to the National Bureau of Statistics. Improvements in
labor productivity, which the World
Bank estimates is growing at about
8.3% a year, offset some but not all
of the wage growth.
An executive with Guangdong
Sunrise Houseware Corp.a maker

of high-end kitchenware for exportsaid last year the firms labor
costs rose at least 30%. We have
more than 600 workers, many of
them left last year, he said. When
you hire new people you found that
the average wage level had already
risen.
The trend could be hard

to sustain as firms look
elsewhere.
With that experience replicated
across Chinas factories, industrial
profits contracted for much of 2012.
Export growth fell to 7.9% from
20.3% in 2011, as Chinese firms lost
out to Vietnam and other low-cost
competitors. That suggests Chinas
leaders face a tough choice between
keeping wages on a rising trend to
boost household income, and controlling costs for the manufacturers
that create many of the mainlands
jobs.
Other data show signs the
strength extended into this year de-
spite a continuing slowdown. Data

made available to The Wall Street
Journal from Zhaopin.com, one of
Chinas largest recruitment websites, shows the total number of
jobs advertised rose 24.6% in April
from a year earlier. At the same
time, government data showed demand for workers outstripping supply by a record amount in the first
quarter.
A migrant worker from Wuhan in
central China who gave his surname
as Chang is one who has benefited.
In February he quit his job at an
auto-parts factory in the southern
city of Shenzhen because the
monthly salary of 2,800 yuan ($455)
didnt meet his expectations. In
April, after a month of searching, he
found a new job making shells for
cellphones, with a take-home pay of
4,200 yuan a month. Im not very
anxious to find a job so it took a
while, said Mr. Chang.
Not all the most recent indicators on labor markets have been
positive. Chinas official purchasing
managers index, and a similar survey by HSBC Holdings PLC and business survey firm Markit Economics
both suggest some factories laid off
workers in April.
A spokesman for Zhaopin.com
also pointed to signs that hiring had
eased off going into the second
quarter. Many companies are pessimistic about the Chinese market in
2013, and that is passing through to
recruitment plans, said a spokesman for the company, after a hiring
peak in the first quarter sentiment
has deteriorated somewhat.
So far we havent seen unemployment rates going up, with real
estate, infrastructure, and services
supporting strong job creation,
said Haibin Zhu, China economist at
J.P. Morgan. But wage growth cant
be sustained without profit growth.
If the corporate sector remains
weak, rapid wage growth will be difficult to sustain.
Kathy Chu,
Dana Mattioli and Lilian Lin
Japan Will Invest $2 Billion in African Resources

BY MARI IWATA
AND YUKO TAKEO
TOKYOJapan is pledging $2
billion for energy and mineral projects in Africa, capping a conference
with government resource officials
from across the continent as it
seeks to catch up with years of Chinese investment.
Japan needs to secure long-term
reliable sources of natural materials.
It is also eager to provide its technologies to build roads, railways and
utilities, providing a competitive alternative to the Chinese stateowned companies that have helped
China become Africas dominant investor.
The Japanese government funding will be used for direct loans, underwriting of debt offerings and equity stakes in projects covering
crude oil, natural gas, coal and minerals over the next five years.
This conference has put in place
the building blocks to encourage investment from Japanese companies
and to help create Africas sustainable growth, Toshimitsu Motegi,
minister of economy, trade and industry, said at a Saturday news con-
Growth Engine
Africa's share of world commodity production, 2010

Platinum and palladium
95%
Cobalt
70
Oil
12
Copper
Bauxite
Natural gas
Coal
Sources: U.S. Geological Survey; BP Statistical Review of World Energy
ference after a meeting with representatives from 15 African countries

that followed the two-day J-SUMIT
conference.
Japan put together the conference in hopes of demonstrating the
appeal of the long-term approach
typical of Japanese companies.
Many African countries have begun
to complain about what they see as
the heavy-handed approach of
Chinas investments.
Delegates to the conference ap-
peared receptive to the overtures.

John Bande, minister of mining
for Malawi, said he had expressions
of interest ranging from trading
companies such as Marubeni Corp.
to auto maker Toyota Motor Corp.
The idea is that we want to encourage more faithful investors like
those from Japan, he said, adding
that he admired Japans reputation
for honesty and willingness to provide technical assistance and longterm investments.
For many Japanese industrial

companies, the reason for the increased level of interest is clear
the need to secure resources.
The competition for acquiring
coking coal has begun, Shinichi Fujiwara, a managing executive officer
for Nippon Steel & Sumitomo
Metal Corp., told the conference.
Japans largest steelmaker is especially interested in getting coking
coal, a key ingredient in iron production, from Mozambique, Mr. Fujiwara.
That is good news for companies
such as Baobab Resources PLC, a
London-based mineral-exploration
group that is seeking investment for
its iron project in Mozambiques
Tete province.
Baobab officials and others also
spoke of the growing interest in
completing more of the value-added
steps in the production process
within the countries holding the resources, instead of just shipping raw
materials overseas.
Were quite cognizant of the opportunity here to take this right the
way to steel, said Managing Director Ben James.
For Congo, one of the largest
producers of copper in Africa, the

drive to keep more of the value at
home has taken the form of a coming ban on copper concentrate exports.
Mining Minister Martin Kabwelulu said the government wanted to
stop the current export of unprocessed copper because of the lower
tax revenue generated.
On that, the government was
making nothing, he said, adding
that it wants the copper refined domestically.
Attendees said the Japanese
overture was welcome and that the
continents dependence on China
was because of necessity, not necessarily by choice.
When you have no friends, any
friend is a good friend, said Zimbabwes deputy minister of mines and
mining development, Gift Chimanikire. China came in when Zimbabwe was shunned by the rest of the
world.
For Japan, the resources conference also was a curtain-raiser for a
summit-level international conference on African development that
will take place next month in Yokohama.
12 | Monday, May 20, 2013
Cate Gillon for The Wall Street Journal
IN DEPTH
Scotland has launched a $150 million program, running from 2008 to 2015, to diagnose and treat hepatitis C, regardless of the patients history, Sam Nicoll, above, has tested positive for hepatitis C.
Scotland Turns Aggressive

Amid Spread of Hepatitis C
Government Makes Push to Control a Virus Considered One of the Biggest Time Bombs in Medicine
BY JEANNE WHALEN
Dundee, Scotland
am Nicoll, an unemployed laborer with

a history of heroin use in this downand-out city, has recently been released from prison. Hes just become a father. And on a recent morning, he ran out of
injection needles. But a nurse here, Brian
Stephens, wants the 24-year-old to focus on
a different problem: hepatitis C.
Mr. Nicoll recently took a blood test for
the virus at a local needle exchange, and it
came back positive. In most parts of the
world, he wouldnt be diagnosed or considered for treatment. Few countries conduct
widespread testing of injection drug users
or offer them medication for hepatitis C, in
part because they are considered too unreliable to turn up for appointments or to stick
to the costly, monthslong treatment regimen.
Scotland, however, is ignoring conventional wisdom and making a bold push to
control a virus that may be one of the biggest ticking time bombs in medicine. Hepatitis C kills about 350,000 people a year globally, and in many Western countries it
infects far more people than HIV. The disease can lead to cirrhosis or cancer of the
liver and is the leading cause of liver transplants in many countries.
Yet because the virus often strikes injection drug users, the homeless and other
hard-up populations, efforts to tackle the
problem have lagged behind, health experts
say. While hepatitis C now kills more Americans each year than HIV does, the U.S. Centers for Disease Control and Prevention
spends only about $30 million a year on
prevention of viral hepatitis, compared with
almost $800 million for HIV.
For its part, Scotland, with a population
of only five million, has launched a 100
million (about $150 million) program, running from 2008 to 2015, to diagnose and
treat hepatitis C, regardless of the patients
history. Medication alone can cost anywhere
from $10,000 to $40,000 per patient.
Because Scotland was hit with a wave of
hepatitis C in the 1980s and it can take 20
years or more for infections to seriously
damage the liver, the country is just at the
moment beginning to see this increase in
end-stage liver disease, says David Goldberg, head of Health Protection Scotlands
hepatitis C and HIV programs and professor
of public health at University of Glasgow.
That clearly is going to have a major impact on demand for liver transplants over
the next decade.
The countrys taxpayer-funded health
system is scrambling to find and treat infections in all hepatitis-prone communities, in-
Identifying the Cases
Number of people in Scotland testing positive

in an initial screening test for hepatitis C
2011: 2,318
2,500
2,000
1,500
1,000
500
0
2001
'03
'05
'07
'09
'11
Source: Health Protection Scotland

cluding Pakistani immigrants and people

who received blood transfusions before the
virus was discovered in 1989. But it is
mostly focusing on current and former injection drug users, who account for about
90% of infections here.
Cities such as Dundee and Edinburgh
setting of the heroin-drenched 1996 film
Trainspottinghave been particularly hard
hit by injection drug use since an economic
downturn in the 1980s. Within the European
Union, Scotland has one of the highest reported prevalence levels of injection drug
use, according to the European Monitoring

Centre for Drugs and Drug Addiction.
Early results of the Scottish program are
promising. About half of the 38,000 Scots
estimated to have been chronically infected
have now been diagnosed, compared with
39% in 2007. Of those, about 1,100 new patients a year are receiving treatment, nearly
triple the number from 2007. Dr. Goldberg
says the aim is to reach 2,000 new patients
a year, which should help prevent up to
5,200 cases of cirrhosis by 2030.
Tackling hepatitis C is a difficult assignment. It typically is spread when an infected
persons blood enters another persons body,
as often happens when drug users share
needles. According to the U.K.s National
Health Service, the virus can also be found
in some other body fluids, including saliva
and semen, but this is far less common,
making sexual transmission more rare than
it is with HIV.
Because symptoms often dont surface
until decades after infection, many people
dont know they are infected.
To find infections in current drug users,
Scotland is blanketing needle exchanges
with simple finger-prick diagnostic kits. After identifying people with infections, many
parts of Scotland try to start weaning them
off heroin before offering hepatitis C medication. The typical approach is to prescribe
Monday, May 20, 2013 | 13
NEWS IN DEPTH
methadone, a synthetic opiate that can help reduce heroin cravings, and wait for the patient
to gain some stability, says John Dillon, a doctor in Dundee who helps run the hepatitis C
program, which is staffed with about 85 doctors and nurses.
But Dundee and other regions have started
treating drug users without necessarily trying
to stabilize them on methadone first. They are
motivated by research from University of Bristol, London School of Hygiene and Tropical
Medicine and other institutions suggesting
that if just 20 out of 1,000 active injection drug
users are treated each year, it could stop them
infecting others and reduce the rate of hepatitis C prevalence by nearly 30% in 10 years.
Doing that requires a ton of support, says
Mr. Stephens, 41, the nurse at the hepatitis C
program in Dundee. But for many, it may be
years before they are ready to quit their drug
habit, he says. And how many people will they
have infected in that time?
Much of the program involves sending
nurses like him out into the field. A 16-year
veteran in nursing, he is known for going to extremes to stay in touch with patients, sometimes phoning them many times to remind
them to turn up for appointments. He gives
them his cellphone number, answers their calls
on weekends, helps them inject the weekly interferon shots they need to kill the virus and
sometimes spends hours at needle exchanges
and methadone clinics waiting in vain for them
to appear.
On a recent morning, Mr. Stephens met
with Mr. Nicoll, who had come to a needle exchange program for a new set of syringes. Mr.
Stephens invited him into a private room to
discuss the results of the blood test he had
taken at the exchange about seven months previously, which indicated that he probably had
the hepatitis C virus. Mr. Nicoll had missed
several appointments to return for a second
test needed to confirm the infection. Ive been
quite scared to come back, he acknowledged.
Mr. Stephens seized the moment and drew
the blood on the spot, explaining what treatment would involve. Clutching a small bag of
syringes, Mr. Nicoll mentioned that his life was
about to get more hectic: Ive got a baby
daughter coming. Shes due soon.
About two weeks before meeting Mr. Stephens, Mr. Nicoll had started taking methadone
in an effort to tame his drug habit. But like
many methadone recipientsparticularly in
the early stages of treatmenthe was continuing to use heroin. Mr. Stephens said that
wouldnt disqualify him from hepatitis C treatment. If someone is continuing to use heroin
and they continue to come to appointments,
we dont really care. Well go ahead and treat
them anyway, he said. (In a subsequent interview, Mr. Nicoll said he had stopping using
heroin, which Mr. Stephens said was confirmed
in a urine test. The two are awaiting more
blood test results before deciding on the next
step in his hepatitis treatment.)
Mr. Stephens said he wound up specializing
in hepatitis C after a London surgeon once told
him: Whatever you do, get into hepatitis, because its going to be huge. The work takes its
own form of patience: At a nearby methadone
clinic that afternoon, Mr. Stephens met with
George Nelson, a 44-year-old addict who was
successfully cured of hepatitis C a few years
ago, only to find recently that he had reinfected himself through risky drug use.
I remember getting cleared last time and
saying, Ill never do that again, Mr. Nelson
told Mr. Stephens. For 14 months I was clean.
Then I put myself at risk again.
Many countries dont treat active drug users or patients taking methadone because of
this risk: they fear the money and effort will be
wasted if the person continues using illicit
drugs and gets reinfected. Theres been an argument, if you have constrained resources,
who would you treat first? Obviously not drug
users. But actually theres an argument that
you should treat them first, says Charles Gore,
president of the World Hepatitis Alliance in
London. In Scotland and many places, injection
drug use is by far the biggest source of the viruss transmission. Stopping that transmission
is a way to turn off the tap, and then we can
empty the pool, Mr. Gore says.
In a recent study, University of Dundee analyzed treatment results for 291 patients in the
region, comparing outcomes for people who
had never injected drugs to those of active and
former users. They found that 61% of noninjection-drug-users achieved a sustained virologi-
A Fatal Problem
Deaths from liver disease

in people diagnosed with
hepatitis C in Scotland
2010: 111
100
80
60
40
20
0
1996
2000
05
'10
Source: Health Protection Scotland

cal response, or SVR, the clinical term for a

cure. About 55% of former users and 47% of active users obtained an SVR, the study showed.
The authors concluded that active injection
drug use is not a barrier to treatment or a
successful achievement of SVR.
In the U.S., few doctors offer hepatitis C
treatment to people taking drugs or methadone, says Michael Ninburg, executive director
of the Hepatitis Education Project in Seattle.
There are also few needle exchanges or methadone clinics in many communities, and even
those that do exist dont typically test people
for hepatitis C. John Ward, director of the
CDCs viral hepatitis division, says the disease
is simply underrecognized, undermanaged
and undertreated.
Still, the Scottish approach is being tried in
a few places.
Diana Sylvestre, an assistant clinical professor of medicine at University of California, San
Francisco, runs a nonprofit clinic in Oakland
that treats many people with drug addictions.
When she started the clinic 15 years ago, it
became apparent hepatitis C was a huge problem, she says. She started out treating people
who had achieved some stability in their lives
while taking methadone, later branching out to
addicts in more of a state of disarray, she

says. The clinic conducts blood tests and doles
out medicine at weekly meetings that also include lunch and hepatitis C education sessions.
We find that some people you would never
predict are able to organize themselves around
this schedule, she says, adding that virtually
100% of patients who start treatment complete it, and that 80% to 85% are cured.
The lack of medical insurance among many
U.S. drug users makes it hard to tackle the
hepatitis C problem in a comprehensive way,
says Brian Edlin, an associate professor at
Weill Cornell Medical College in New York who
treats injection drug users for hepatitis C.
Indeed, in a recent study he led to evaluate
hepatitis C treatment in active drug users,
some of the patients didnt have health insurance, Dr. Edlin says. He provided free care to
everyone in the study and helped eligible patients get enrolled in Medicaid to cover the
cost of medication. For those who werent eligible, he obtained free drugs from manufacturers. He also offered mental-health and substance-abuse treatment to anyone who wanted
it. Overall, 72% of the patients were cured of
hepatitis C, a result he called very successful.
Next he is aiming to recruit up to 200 injection
drug users for a larger trial that will more rigorously test the benefits of treatment.
Doctors raise legitimate uncertainties
about treating this population that need to be
addressed through research, Dr. Edlin said.
In Dundee, Mr. Stephens and his colleagues
are also attempting to enroll injection drug users in a similar study. To encourage them to
sign up, they are offering participants a regular
supply of high-protein drinks and vouchers to
buy food at supermarkets. That is an incentive
because heroin users dont eat very well, Mr.
Stephens says. They spend most of their
money on drugs.
Still, recruitment so far has been tough.
One young woman he was hoping to enroll
didnt turn up for a meeting at the needle exchange. Later, he learned she was due in court
on charges she had assaulted a shopkeeper after she had been caught stealing. He ultimately
tracked her down and enrolled her in the
study. If she goes to prison, he says, well continue her treatment there.
Meanwhile, Mr. Stephens says he has seen

anecdotal evidence that current and recent
heroin users can make it through treatment.
One patient recently cured, 35-year-old Leanne
Petrie, took heroin for 16 years before quitting
in late 2011. In an interview, she said she
tested positive for hepatitis C around the age
of 25 but didnt seek treatment for years.
In 2010, while living in the Scottish county
of Fife, she was taking methadone to try to
withdraw from heroin, and attending hepatitis
C support meetings to learn about treatment.
But because she was drinking heavily, her substance-abuse counselor cut off her methadone,
which she says prompted her to drink more
about a bottle of vodka a day. She was also still
dabbling in heroin.
In 2011, she says she got involved with a violent man who also took heroin. In December
2011, he burned her hand with a cigarette and
wrecked her apartment, she says. A few days
later, she took an overdose of sleeping pills. I
felt I couldnt get out, she says.
Because the virus often strikes

injection drug users, the
homeless and other hard-up
populations, efforts to tackle the
problem have lagged behind.
She woke up in the hospital, and, at the encouragement of her family, decided to move to
Dundee to say with her cousin. She stopped
drinking and taking heroin, and in January
2012, sought treatment for hepatitis C. In the
middle of her treatment, she had to leave her
cousins house and stay in a homeless shelter
for three months, but she eventually got an
apartment from social services. She completed
her treatment in November.
Seeing progress with her hepatitis C treatment helped her cope with the instability in
her life and stay off drugs, she says. Since I
moved to Dundee Ive achieved a lot, she says.
When you see the treatment is working, it
helps you keep going.
Cate Gillon for The Wall Street Journal
Nurse Brian Stephens, right, takes blood from Stephen Rachwell. He has seen anecdotal evidence that heroin users can make it through treatment.
14 | Monday, May 20, 2013
OPINION: REVIEW & OUTLOOK
Japan Discovers QE Has Risks
ell, that was fast. Japanese

Prime Minister Shinzo Abes
aggressive pro-inflation policy
is only a few months old and a fight has
erupted over its early effects. And this
while there is no economy-wide inflation.
On Wednesday, the Nikkei 225 closed
above 15000 for the first time since
2007. Former Vice Finance Minister
Eisuke Sakakibaraknown as Mr. Yen
from his stint managing foreign-exchange policytook to the airwaves to
call the market bubbly and warn that
there will be some corrections . . . probably by the summer. Bank of Japan Governor Haruhiko Kuroda contested this
bubble theory in parliamentary testimony, arguing that fundamentals support the market moves.
Then theres real bubble trouble in
the market for Japanese government
debt. Years of exceptionally loose monetary policy encouraged markets to
value Japanese government bonds
(JGBs) far above what one might expect

for a highly leveraged government sitting atop an anemic economy with a
shrinking population. Last week prices
fell and yields for 10-year bonds rose to
0.92% on Wednesday from 0.6% the previous week, before the central bank
stepped in to reduce yields slightly.
That yield is only a three-month high,
but the speed of the move was surprising, and the warning is clear. If investors
start to believe the pledges by Messrs.
Abe and Kuroda to deliver inflation of
2%, they will demand higher returns on
their investments. In a Japanese twist,
looser money could lead to higher nominal interest rates.
This would have potentially serious
consequences for the balance sheets of
Japanese banks, insurers, pension funds
and households that are the main holders of government debt that totals more
than 200% of GDP. It also raises the sobering prospect that a rotation out of
JGBs could come long before other parts
of Abenomics have begun and a durable

economic expansion that lifts revenues
has taken hold.
Meanwhile, commentators are engaged in an esoteric debate about what
sort of inflation Japan may develop. A
growing chorus of observers suggests
the economy is headed for cost-push
inflation, the kind that happens when
a weaker yen causes import prices to
rise and consumers bear the burden
when their incomes dont increase proportionately.
Mr. Abe and his supporters are hoping
for demand-pull inflation, in which
companies would increase wages to
boost purchasing power. Since a weak
yen is increasing operating costs and the
economy remains sluggish, theres little
sign this is happening. Wage growth is
still negligible.
Yet since inflation is by definition a
rise in the general price level, not one
set of prices, its never as orderly as proponents of inflationary policies like to
claim. Its hard for a central banker or

anyone else to predict who will win or
lose more. Meanwhile, investors are
pouring into assets in search of a return
for their loose cash, which takes us back
to the rising stock market.
What ties all of this together is the
desperate need for growth in the real
economy, and not simply in the money
supply. Growth will boost corporate
earnings in ways that give stocks a sustainable reason to rise, make the governments debt burden repayable, and stimulate wage growth and consumer
confidence.
Japanese are discovering that although their politicians often equate a
return to inflation with a return to
growth, the two are different. Mr. Abe
has set his sights on inflation, and perhaps hes going to get some. But hell regret that choice unless the other policy
reforms he is promising succeed. As he
announces his plans in the coming
weeks, the stakes are high.
Those AP Subpoenas
he same press corps that has

blessed every Obama Administration enforcement action and regulatory intrusion has suddenly concluded
that the feds are dangerously overreaching. The reason? The U.S. government is
now investigating the press. Welcome to
the club, but wed also add some context
to the shouts of media outrage.
The press is exercised because the
Justice Department issued a subpoena
for the phone records of Associated
Press reporters and editors as part of a
criminal probe into a national-security
leak. Some of the loudest protests are
coming from those, such as the New
York Times, that cheered the criminal
pursuit of the leak to conservative columnist Robert Novak during the Bush
years in the Valerie Plame case. (See
Prosecutor of the Times, Feb. 23,
2005.)
Then the target was Scooter Libby
(who wasnt even the leaker) while now
its someone who leaked to their mainstream comrades at AP. Such double
standards are one reason the public mistrusts the media.
In this case, Justice is investigating
because the leak may have done serious
national-security damage. Attorney General Eric Holder said last week that it
was one of the worst leaks hes seen in
government. Our own security sources
support his claim.
The AP story at issue seems to be the
May 7, 2012 report that the U.S. had bro-
ken up a plot to bomb a U.S.-bound air- lics right to know is the obligation of
liner with a sophisticated new device responsible publications. Deciding when
that was difficult to detect. Government not to publish is often the more publicsources say the story led to the public spirited choice, especially in a nation
suspicion that the U.S. had a source in- that protects a free press from forces
side al Qaeda, and that the sources (like al Qaeda) that would destroy it.
cover was essentially
Too often these days the
blown. They add that the The press corps finally media default is to publeak makes it that much
lish a story no matter the
discovers a case of
harder for the CIA to repotential damage.
cruit future agents from government overreach.
This is the context in
inside terrorist networks.
which the Justice DepartAP says it withheld the
ment subpoenaed the restory for several days at White House cords over two months of some 20
request, but then published it a day be- phone lines assigned to AP and several
fore the government was going to dis- bureaus. On the merits, the medias
close the story anyway. The White House Nixon analogies are overwrought. Jusdenounced the story at the time, blam- tice issued subpoenas to telephone data
ing AP for the disclosure even as it con- providers that could object if the refirmed that it had foiled the plot.
quests were extralegal. The subpoenas
Without a top-secret clearance, we were also approved at an appropriately
cant judge these competing claims. But high levelby the Deputy Attorney Genits certainly possible the AP story eral after Mr. Holder recused himself.
harmed U.S. antiterror efforts, with benOne fair media complaint is that this
efits to the public interest that are far dragnet was too broad, violating normal
from obvious. Americans learned from Justice practice of narrowly tailoring
the story that al Qaeda was still actively requests that concern the media. Justice
planning threats, in this case a year af- also failed to tell AP about the subpoeter Navy SEALs killed Osama bin Laden. nas in advance and not for weeks, when
This contradicted the re-election claim typically the media would have been inof President Obama that al Qaeda had formed immediately. Such blanket subbeen decimated.
poenas and secrecy can have an intimiBut if the AP story did contribute to dating effect on the press, which may
compromising a source inside al Qaeda, have been the Justice Departments innews of a foiled plot hardly seems worth tent. Or perhaps the feds didnt want to
the price. Balancing the potential dam- risk alerting the APs sources that their
age to national security against the pub- calls might have been tracked.
Whatever the motive, this overreach is

typical of the Obama Administrations attitude toward the law in many areas
non-recess recess appointments, environmental regulation, selective enforcement
of immigration and drug laws, or its own
media leaks about the bin Laden raid intended to improve its terror-fighting image. The difference this time is that the
American press was the target.
i
Amid the media backlash, the White

House is trying to make amends by reviving a federal shield law to protect
against having to disclose government
sources. Some of our colleagues are
cheering, but count us skeptical. We like
the shield law known as the First Amendment. Any legislation needs to be vetted
for unintended consequences that would
protect some journalists but not others,
or that would undermine the balance of
rights (such as a free press vs. fair trial)
that are inherent in the Constitution and
typically settled on a case by case basis.
Regarding AP and the Obama Administration, both sides might have exercised
better judgment. But the matter should
be negotiated without a prosecutorial
fishing expedition or Constitutional
showdown. Meantime, maybe the press
corps will be more skeptical the next
time the political class starts calling for
bankers to be hanged in the public
square.
Pepper . . . and Salt
THE WALL STREET JOURNAL
Notable & Quotable

Fraser Nelson writing for the U.K. Spectator on May 19:
Most Brits think that Eurovision is confected tat. Denmark doesnt seem to have
received that memo. Its entry [Saturday]
night had a (Scottish) immigrants influenceas do most of Europes great
achievements. But the song was distinguished not by some generic Eurotrash
drumbeat but flute, drums and the voice of
a leading light of the Danish folk scene. . . .
For all sorts of reasons (politics, class,
identity) our official arts bodies and

broadcasters struggle to recognise or promote our indigenous talent. It is, alas, inconceivable that a 19-year-old British folk
singer would end up on what is now the
worlds most-watched musical stage. Unless she emigratedas so many of our
folk musicians end up doing.
The pubs of Edinburgh and Aberdeen
are full of similar acts. But the British entry nowadays is picked by an anonymous
BBC bureaucrat, who seems to have a su-
percilious disregard for Eurovision and an

abject ignorance of the nature or location
of our young talent. . . .
We have hundreds of brilliant musicians who would kill to be given the kind
of chance that Fraser Neills protg was
given [Saturday] night. And I dont think
this will ever happen, for as long as the
BBC treats Eurovision as a kind of musical
freak show. The BBC is becoming the UKIP
of Eurovision: fielding weak candidates in
an election which it holds up to ridicule.
Monday, May 20, 2013 | 15
OPINION
[ Declarations ]
BY PEGGY NOONAN
Americans are
in the midst of the
worst Washington
scandal since Watergate. The reputation of the Obama
White House has, among conservatives, gone from sketchy to sinister,
and, among liberals, from unsatisfying to dangerous. No one likes
what theyre seeing. The Justice
Department assault on the
Associated Press and the ugly politicization of the Internal Revenue
Service have left the administrations credibility deeply, probably
irretrievably damaged. They dont
look jerky now, they look dirty. The
patina of high-mindedness the
president enjoyed is gone.
Something big has shifted. The
standing of the administration has
changed.
As always it comes down to
trust. Do you trust the presidents
answers when hes pressed on an
uncomfortable story? Do you trust
his people to be sober and fairminded as they go about their
work? Do you trust the IRS and the
Justice Department? You do not.
The president, as usual, acts as
if all of this is totally unconnected
to him. Hes shocked, its unacceptable, hell get to the bottom of it.
He read about it in the papers, just
like you.
But he is not unconnected, he is
not a bystander. This is his administration. Those are his executive
agencies. He runs the IRS and the
Justice Department.
A president sets a mood, a tone.
He establishes an atmosphere. If he
is arrogant, arrogance spreads. If
he is too partisan, too disrespecting
of political adversaries, that
spreads too. Presidents always
undo themselves and then blame it

on the third guy in the last row in
the sleepy agency across town.
The IRS scandal has two parts.
The first is the obviously deliberate
and targeted abuse, harassment
and attempted suppression of conservative groups. The second is the
auditing of the taxes of political activists.
In order to suppress conservative groupsat first those with
words like Tea Party and Patriot in their names, then including those that opposed ObamaCare
or advanced the Second Amendmentthe IRS demanded donor
rolls, membership lists, data on all
contributions, names of volunteers,
the contents of all speeches made
by members, Facebook posts, minutes of all meetings, and copies of
all materials handed out at gatherings. Among its questions: What
are you thinking about? Did you
ever think of running for office? Do
you ever contact political figures?
What are you reading? One group
sent what it was reading: the U.S.
Constitution.
The second part of the scandal
is the auditing of political activists
who have opposed the administration. The Journals Kim Strassel reported an Idaho businessman
named Frank VanderSloot, whod
donated more than a million dollars
to groups supporting Mitt Romney.
He found himself last June, for the
first time in 30 years, the target of
IRS auditors. His wife and his business were also soon audited. Hal
Scherz, a Georgia physician, also
came to the governments attention. He told ABC News: It is odd
that nothing changed on my tax return and I was never audited until I
publicly criticized ObamaCare.
Franklin Graham, son of Billy,
told Politico he believes his father
was targeted. A conservative Catholic academic who has written for
these pages faced questions about
Associated Press
This Is No Ordinary Scandal
her meager freelance writing income. Many of these stories will

come out, but not as many as there
are. People are not only afraid of
being audited, theyre afraid of saying they were audited.
All of these IRS actions took
place in the years leading up to the
2012 election. They constitute the
use of governmental power to intrude on the privacy and shackle
the political freedom of American
citizens. The purpose, obviously,
was to overwhelm and intimidate
to kill the opposition, question by
question and audit by audit.
It is not even remotely possible
that all this was an accident, a
mistake. Again, only conservative
groups were targeted, not liberal. It
is not even remotely possible that
only one IRS office was involved.
Lois Lerner, who oversees taxexempt groups for the IRS, was the
person who finally acknowledged,
under pressure of a looming investigative report, some of what the
IRS was doing. She told reporters
the actions were the work of
frontline people in Cincinnati. But
other offices were involved, including Washington. It is not even remotely possible the actions were
the work of just a few agents. This
was more systemic. It was an oper-
ation. The word was out: Get the

Democratic Partys foes. It is not
remotely possible nobody in the
IRS knew what was going on until
very recently. The Washington Post
reported efforts to target the conservative groups reached the highest levels of the agency by May
2012far earlier than the agency
had acknowledged. Reuters reported high-level IRS officials, including its chief counsel, knew in
August 2011 about the targeting.
The White House is reported to
be shellshocked at public reaction
to the scandal. But why? Were they
so highhanded, so essentially ignorant, that they didnt understand
what it would mean to the American people when their IRSthe
revenue-collecting arm of the U.S.
governmentis revealed as a low,
ugly and bullying tool of the reigning powers? If they didnt know
how Americans would react to that,
what did they know? I mean beyond Harvey Weinsteins cellphone
number.
And whyin the matters of the
Associated Press and Benghazi
toodoes no one in this administration ever take responsibility? Attorney General Eric Holder doesnt
know what happened, exactly who
did what. The president speaks in
the passive voice. He attempts to

act out indignation, but he always
seems indignant at only one thing:
that hes being questioned at all.
That he has to address this. That
fate put it on his plate.
We all have our biases. Mine is
for a federal government that, for
all the partisan shootouts on the
streets of Washington, is allowed to
go about its work. That it not be
distracted by scandal, that political
disagreement be, in the end, subsumed to the common good. It is a
dangerous world: Calculating people wish to do us harm. In this
world no draining, unproductive
scandals should dominate the governments life. Independent counsels should not often come in and
distract the U.S. government from
its essential business.
But that bias does not fit these
circumstances.
What happened at the IRS is the
governments essential business.
The IRS case deserves and calls out
for an independent counsel, fully
armed with all that positions powers. Only then will stables that
badly need to be cleaned, be
cleaned. Everyone involved in this
abuse of power should pay a price,
because if they dont, the politicization of the IRS will continueforever. If it is not stopped now, it will
never stop. And if it isnt stopped,
no one will ever respect or have
even minimal faith in the revenuegathering arm of the U.S. government again.
And it would be shameful and
shallow for any Republican operative or operator to make this scandal into a commercial and turn it
into a mere partisan arguing point
and part of the game. Its not part
of the game. This is not about the
usual partisan slugfest. This is
about the integrity of Americans
system of government and our ability to trust, which is to say our
ability to function.
Larry Ellisons Dangerous Americas Cup

BY G. BRUCE KNECHT
Last week, an Olympic gold
medalist died in San Francisco Bay
while training for Americas Cup,
the worlds most famous sailing
competition. British sailor Andrew
Simpsons death is the latest evidence that the current competition is fundamentally flawed.
Billionaire Larry Ellisons ambitions for the Americas Cup have
always gone beyond winning,
which he did in 2010 with his
Team Oracle. The Americas Cup
winner determines the ground
rules for the next competition, and
Mr. Ellison created a new class of
large but lightweight doublehulled vessels that are powered by
solid wing sails. He hoped the
supercharged catamarans would
catapult the 162-year-old event
into the modern age and transform it into a spectator sport fit
for TV.
In terms of the hardware, Mr.
Ellison has succeeded. When the
wings and wind are properly
aligned, the 72-foot boatsor
AC72s, as they are knownliterally lift out of the water, supported only by the foils on their
daggerboards, the retractable
keels that drop down from each of

the hulls. The vessels skim across
the water at speeds of close to 50
miles per hour.
In October, an AC72 built by
Mr. Ellisons team, Oracle Team
USA, flipped and was severely
damaged. The wipeout came as a
surprise to manybut not to the
sailors. They already knew that
AC72s are dangerous, overpowered beasts that are always skating on the edge of catastrophe.
This riskplus the massive expense to design and build the
boatsis why Mr. Ellison failed to
deliver on his promise that more
than a dozen teams would challenge Oracle for the cup this year.
Only three signed up: Artemis Racing, representing Sweden; Luna
Rossa Challenge, bankrolled by Patrizio Bertelli, the owner of Prada
and a longtime sponsor of Italys
Americas Cup campaigns; and
Emirates Team New Zealand, the
airline-backed national team.
The fatal accident came when
one of Artemis Racings bows dug
into the water and structural elements disintegrated, causing the
vessel to fold up on itself and capsize. Mr. Simpson, a 36-year-old
married father of two, was
trapped underneath.
Artemis has not determined
whether it will press on with its
campaign. Luna Rossas Mr. Bertelli says he will leave it up to his
crew. If they told me to stop, that
wouldnt be a problem for me, he
told Yacht Capital, an Italian sailing magazine, last week. This Cup
with the AC72s is too extreme.
They have to realize it and change,
revise the rules, everything.
The new boats have made the

race life-threateningand
have dumbed down the sailing.
Having written about sailing
for the last 15 years, I believe Mr.
Bertelli is correct, and that Larry
Ellison should rethink the guidelines for this years race.
Mr. Ellison didnt become one
of the worlds richest men by
holding back from challenges.
When I interviewed him for my
book about the deadly 1998 Sydney to Hobart Race, in which he
sailed, he told me he believed the
purpose of life is to engage in difficult competitions to determine
how good we are.

But after the Hobart Race, during which six sailors died, Mr. Ellison said there had to be limits:
This is not what racing is supposed to be. Difficult, yes. Dangerous, no. Life-threatening, definitely
not. Because of the Hobart Race,
Mr. Ellison gave up ocean racing
and turned to inshore sailing contests such as the Americas Cup. I
decided to focus on a more technical and less life-threatening form
of sailing, he told me in 2008.
Yet it is Mr. Ellison who has
made the Americas Cup dangerous. Until his involvement, beginning in 2000, winning was determined both by the intrinsic speeds
of the boats and by tactical decisions about where each team positioned its vessel relative to the
opposition throughout the race.
The AC72s are all about
straight-line speed. They are so
difficult, time-consuming and dangerous to turn that boat-to-boat
tactics are less important than
simply keeping the monsters
under control. Consequently, the
enhanced technological sophistication of the AC72s has had the effect of dumbing down the sailing,
another reason for Mr. Ellison to
reconsider.
The Cup, which is supposed to
begin in September after an elimination round in July, would not
have to be postponed. Since 2011,
the contenders have been racing
against each other in much safer
45-foot catamarans. The Cup could
be sailed with them.
Youre probably thinking that
the headstrong Mr. Ellison will
never agree to it. You are probably
right. Then again, he understands
that his legacy will be forever intertwined with the Americas Cup.
Not long before he became the
first American to win it since 1995,
I suggested to him that if he prevailed the first words of his obituary might be about sailing rather
than his business achievements.
He did not disagree. Oracle could
disappear someday, he said. The
Americas Cup will not.
Indeed. The best way for Mr.
Ellison to secure his position as
the founder of the modern-day
Americas Cup would be to admit
that the AC72s are a mistake.
Mr. Knecht is the author of The

Proving Ground: the Inside Story
of the 1998 Sydney to Hobart
Race (Little, Brown & Co., 2001).
16 | Monday, May 20, 2013
OPINION
BY PAUL KAGAME
As the world economy continues to stagnate, a story of hope
is unfolding on my continent.
Nine out of 15 of the worlds fastest growing countries today are
African. Over the past decade,
the continents economies have
grown at an average 5% per annum. Foreign direct investment,
which stood at $9 billion at the
turn of millennium, last year exceeded $80 billion. Far from being a flash in the pan, this is the
result of a sustained period of increasingly sophisticated economic management and stable
politics.
This improvement in governance has changed the lives of
citizens across the continent. In
Rwanda alone, more than a million people have overcome poverty in the past six years. Ten
years ago, Rwandan villagers
would ask the government for
food and basic necessities; today
they demand better roads, improved electricity access and fast
broadband. From Sierra Leone to
Ethiopia to Malawi, the story is
the same: an emerging middle
class, growing in confidence and
ambition, that seeks the same
educational, economic and social
opportunities that Americans and

Singaporeans enjoy.
Thats not to say the picture
in Africa is perfect. Far from it.
Poverty levels are still too
high and energy production is
too low. Infrastructure still needs
more investment, and access to
capital and savings remains problematic. But in our pursuit of development, Rwandans will not allow ourselves to stray from the
our intention: to build a modern

economy, with a vibrant private
sector that is connected to international markets. We want to be
a nation less dependent on aid
and fully engaged in a globalized
economy.
That investors are pursuing
high yields is perhaps one unintended consequence of the global
financial crisis. But that should
not diminish how encouraging it
is that investors also embraced
the chance to seek returns beyond the usual commoditygrowth story. While Africa is a
continent rich in resources, with
12% of the worlds oil reserves
and 42% of its gold, we cannot
follow too narrow a path to development.
Yes, we need to keep liberalizing our economies and pursuing
greater global integration. But
governance reforms and social
development, propelled by economic growth that delivers tangible improvements in the lives of
citizens, must also continue.
This has been our approach in
Rwanda. We have decentralized
the state, reformed our business
sector and strengthened our institutions. But we have also invested in health care, agriculture
and education. As a result, the
Economic growth and

improved governance have
changed the lives of citizens
across the continent.
path of fiscal prudence. Rather,
we will continue to focus on
building robust and reliable legal
and regulatory frameworks.
When Rwanda issued its first
international bond last month,
we stood true to these values.
The $400 million in 10-year
bonds, sold at a yield of 6.875%,
were a sign that Rwanda is now
firmly on the path to economic
maturity, having retreated from
the edge of the abyss after the
1994 genocide. It also showed
Getty Images
Rwanda and the New Lions of Africa
In Kigali, Rwanda: Development is a marathon that must be run at a sprint.

World Bank this year ranked
Rwanda as the 8th easiest place
in the world to start a business.
A recent index in Foreign Policy
magazine named the country the
5th best investment destination
world-wide.
There is a view that development is a marathon, not a sprint.
We do not agree. Development is
a marathon that must be run at a
sprint. In our pursuit of progress, we have of course looked to
East Asias so-called tiger
economies for inspiration. But

Africas experience is unique, and
we must now define our own
destiny.
So while being described as
an African tiger is a welcome
recognition of how far Rwanda
has come, perhaps it isnt quite
right. After all, our continent has
its own big cat. Step forward the
new lions of Africa.
Mr. Kagame is president of

Rwanda.
BY RUBANA HUQ
Several tragedies at Bangadeshi garment factories in recent months have claimed hundreds of lives, and also focused
international attention on this important but often overlooked industry. Yet greater scrutiny has
not led to greater understanding,
raising the prospect that any proposed solutions will have serious
unintended consequences. Here
are some basic facts confronting
both workers and employers in
the garment industry:
Before you can improve the

lives of workers, you have
to understand the industry.
Much discussion has focused
on Bangladeshs minimum wage
law. It is true that at its current
level, even after two revisions in
recent years, the legal minimum
wage still isnt enough to support
a life. After working two hours of
overtime per day, the average
garment workers take-home pay
stands at between $70 and $80
per month.
Assuming the garment worker
(80% of whom are women) is
married to a rickshaw puller and
has a child, the rent on a oneroom home is around $40 per
month. The average food intake of
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30 kilograms per adult costs $13.

Adding vegetables and occasional
meat and fish costs another $20
per adult. And add $5 for milk for
the child. Those bare necessities
alone have already consumed
more than the garment workers
wage.
One problem is that in this
household, the garment worker is
the primary breadwinner. Few
other jobs in the country pay as
highly relative to the skill level of
the worker. Increasing the minimum wage in the garment industry to $64 per month before overtime, or even $90 as some have
proposed, would certainly help
such a household make ends
meet. But that puts the entire
burden for increasing Bangladeshis standard of living on a
single industry that can ill afford
it and now needs the price support of global brands.
Then theres the question of
who is paying that minimum
wage. While the worker is sewing,
on another floor of the same factory building, negotiations are underway between the factory
owner on one hand and a retailers representative on the
other. Theyre trying to settle on
an order to produce over the next
five months.
The factory owner is offering a
shirt to the buyer at $6.75 per
piece. Of that, the owner will
spend $4.75 buying the 1.9 yards
of 100% cotton with a fine 50s
thread count, and another $1 buying the labels, accessories and
other components the retailer
specifies. The remaining $1 per
shirt gets stretched thin. Part of
it funds the cutting and making,
which includes wages for the
workers. Part of it funds the next
round of letters of credit the
manufacturer will use to ensure a
Bloomberg
Letter From a Bangladesh Factory
Workers at a Dhaka factory last month.

steady supply of raw materials
over the life of the supply contract. Part of it goes toward capital expenses. And part of that dollar will become the
manufacturers profit.
Imagine an order for 400,000
pieces of one shirt style is spread
over a four-line (meaning four
rows of sewing machines, each
row with 50 workers) factory of
1,600 square meters. Those 400
workers produce 3,077 pieces per
day. The wage cost works out to
about 38 U.S. cents per shirt. Another 15 cents goes to sending the
shirt for a fine washing spin. Rent
and utilities for the factory floor
works out to about 11 cents per
shirt, and head-office and marketing costs for the factory are 11
cents.
As for the remaining 25 cents,
that will just about cover repaying a 10-year bank loan at 18% interest, which the factory owner
has used for set-up costs along
with a home and car. All is at a
delicate equilibrium, until the
owner feels compelled to give in

to a firmly worded request from
the retailer for an additional discount, or a demand to air-freight,
at manufacturers expense, some
boxes of shirts that suffered a
two-week production delay and
now wont be accepted by the retailer if theyre any later than
they already are.
Given this financial situation,
some recent solutions to workers problems would be extremely
challenging for the industry. The
government has proposed an increase in the minimum wage, but
would make the increase retroactive to May 1. That will simply be
impossible for manufacturers who
are already locked into supply
contracts for the next few
months.
Meanwhile, an agreement announced between European retailers and workers advocates this
week, may lead to investment in
safety enhancements. But many
ground realities will continue to
haunt the industry unless land
and transitional funds are readily

available to turn out-of-date factories into fully equipped and
compliant facilities. The approximate calculation to set these factories up, assuming 2,600 square
meters per floor would cost approximately $128,000 per factory.
Some factory owners may be
in pursuit of a quick profit. But
for many of us, the problem is not
that we dont want to have gleaming, fully up-to-date factories or
to pay our workers a living wage.
Rather, its that we dont have the
resources. And we have to balance the costs against the risk
that purchasers will turn to other,
lower-cost countries. That would
be a disaster for Bangladesh,
where 20 million people depend
on garment workers for financial
support.
Ms. Huq is managing director of

the Mohammadi Group, a garment manufacturer and exporter
in Bangladesh.
Thorold Barker, Editor,

Europe, Middle East & Africa
Bruce Orwall, Senior Editor, Europe
Gren Manuel, Executive Editor, Europe
Terence Roth, Managing Editor, Europe
Brian M. Carney, Editorial Page Editor
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Kate Dobbin, Communications
Florence LeFevre, Institutional Sales Europe
Michael Lloyd, Institutional Sales U.K.
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Jonathan Wright, Circulation Sales
Kelly Leach, Publisher
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Pound/Euro 0.8449 0.22%
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Global Dow 2235.02 0.20%
Gold 1364.90 g 1.60%
Oil 96.02 0.90%
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And Its Not the Only One
Risks Rise as Turkey

Moves Up a Grade
BUSINESS & FINANCE 20
Monday, May 20, 2013
10-year Treasury g 24/32 yield 1.949%
HEARD ON THE STREET 32
THE WA L L STR E ET JOU RNAL.
europe.WSJ.com
BY CHRISTIAN BERTHELSEN
Prices of many commodities are

down this year, but U.S. oil futures
have rallied. Skeptics say the mismatch is a sign of trouble.
U.S. benchmark crude-oil futures
ended Friday at $96.02, up 4.6%
since the start of
ABREAST OF 2013. Oil is a
THE MARKET standout in a
mostly dismal year
for commodities, as the Dow JonesUBS Commodity Index has fallen
5.6%. The decline has been even
steeper for gold, copper and other
former darlings.
Oil isnt a gusher compared with
stocks, such as the Dow Jones Industrial Average, which is up 16%
this year. But some analysts and investors say oils rise is remarkable
because it came despite several factors that often push prices lower.
For example, U.S. economic
growth is tepid, domestic oil stockpiles are at their highest in more
than three decades, the unemployment rate is at 7.5% in the U.S., and
inflation is lower than the Federal
Reserves target of 2%.
Meanwhile, domestic oil production is soaring and U.S. fuel demand
is soft.
I think the optimism is a bit
misplaced. Theres a significant disconnect between the physical market and the financial market for oil,
says Jaya Bajpai, managing director
of Applied Energy Analytics, an oil
and natural-gas hedge fund in Boston. The bullish bet on oil is fueled
by hopes that we will get enough
economic growth over the next six
months that demand will recover,
he says.
Oils rise amid a shortage of economic fundamentals partly reflects
the scramble for investments that
offer the potential for higher returns than those shackled to rockbottom interest rates.
Hedge funds, index funds and exchange-traded funds remain a large
part of the trading picture. As much
as 70% of price moves in commodity
markets are generated by trading
programs reacting to one another,
according to a recent study by the
International Monetary Fund.
Crude has at times traded in
league with other commodities, for
instance in the wake of the Federal
Reserves 2010 decision to open a

second round of bond-buying known
as quantitative easing that briefly
sent commodity prices higher.
Yet even as weak signals on
global growth have taken a bite out
of copper this year, U.S. oil prices
have remained aloft.
Traders, analysts and economists
cite the resurgence of the U.S. dollar, growing global energy demand
and a steady flow of investment dollars into markets designed to trade
and hedge price risks between producers and users of oil.
Its this investment demand for
exposure to oil prices that is supporting the market, said Tim Evans, analyst with Citi Futures Perspective, a unit of Citigroup Inc.
Its not really runaway physical demand growth.
The number of long and short
positions held by banks and hedge
funds in the market outweighs those
held by producers, merchants and
commercial end-users, according to
data released Friday by the Commodity Futures Trading Commission. Commercial participants are
now 31% of the market, while banks
make up 22% and speculators make
up 11%.
Questions about the staying
power of oils rally underscore the
dangers for those seeking to play
commodity markets that only a few
years ago looked like a sure thing.
Investors who bought oil and gold
futures a decade ago could count on
steadily rising prices, pocketing returns that easily outpaced stocks
and Treasury bonds over that period.
In the last 10 years, gold futures
have gained 285% and U.S. crude futures have risen 230%. The total returns on the S&P 500-stock index,
reflecting price appreciation and
dividend payments, have been 114%,
compared with 71% on the 10-year
Treasury.
To be sure, this years rise in U.S.
oil prices has been an isolated
bright spot for commodity bulls. Futures prices for the Brent global
benchmark contract have dropped
5.8% this year on fears of falling
global demand, led by Chinas cooling economy. And though the U.S.
benchmark contract has risen, retail
gasoline prices continue to decline,
Oil Is Out of Sync

With Market Forces
Vietnams coffee culture dates to colonial times. Above, a Starbucks cafe in Ho Chi Minh City prior to its launch this year.
Starbucks Introduces
Its Culture to Vietnam
BY JAMES HOOKWAY
Starbucks Corp. has entered

scores of new markets over the
years, but in Vietnam, could it have
met its match?
The Southeast Asian nation
known for its nerve-jangling strong
coffee, often sweetened with condensed milkhas its own deeprooted coffee culture that could
prove challenging to the Seattlebased coffee chain.
The company launched a flagship
two-story store in Ho Chi Minh City
in February. So far sales at the new
location are exceeding expectations,
according to Starbucks Chief Executive and Chairman Howard Schultz,
though he didnt provide specific
sales figures.
Starbucks decorated the downtown store with local art and artifacts to create a distinctly Vietnamese flavor. It also came up with a
drink, the Asian Dolce Latte, to appeal to local palates. For food, it
serves roast-duck wraps and
French-style baguettes.
Room to Grow
Average per capita annual

consumption of coffee,
in kilograms
Brazil
5.8
U.S.
= 1 kg
Honduras 3.6
Vietnam 1.2
Source: U.S. Department of Agriculture
But some say the chain could do

more. Nguyen Van Minh Khanh, 24
years old, said Starbucks should use
drip filters perched on top of glass
mugs, the way the Vietnamese do.
If Starbucks wants to succeed in
Vietnam, they have to change the
way they serve, he said.
Local coffee entrepreneurs such
as Dang Le Nguyen Vu seem confi-
dent that drinkers will likely stick

with thick, oily Vietnamese coffee.
The drink is available nearly anywhere, from Mr. Vus 1,000 or so
Trung Nguyen brand stores to the
glamorous cafes of Ho Chi Minh
City. It is also sold by vendors in
Cong Vien Van Hoa Park in the center of the city, which is still referred
to as Saigon by locals nearly 40
years after the Vietnam War.
But Mr. Schultz, speaking at a recent interview in Bangkok, said
Starbucks is selling more than just
coffee. The environment that we
create, the store design, the experiencethey all add up to a much different position to anything that anyone in Vietnam currently occupies,
he said.
Of course, Starbucks has managed to penetrate many seemingly
tough markets since opening its
first overseas store in Japan in
1996. The move into Vietnam reflects a continuing effort to venture
into far-flung regions as core markets such as the U.S. and Europe rePlease turn to page 18
Credit Surge Lifts Chinese Property, Despite Government Crackdown
BY TOM ORLIK
AND ESTHER FUNG
Surging credit has kept Chinas

real estate-sector humming in the
teeth of a renewed attempt by the
government to bring prices under
control, supporting short-term economic growth but risking a destabilizing correction in prices down the
line.
While the rising prices may generate a short-term burst of activity,

Chinas government could be faced
with a sharper correction in the future, as prices adjust down to levels
that average households can afford.
Average house prices rose 4.3%
from a year earlier in April after
gaining 3.1% in March, according to
The Wall Street Journals calculations from official data on price
changes in 70 cities, released Saturday. On a month-to-month basis, average home prices rose 0.9% in
April, slowing from Marchs 1% increase, the Journals calculations
showed.
While there has been some
moderation in April, there are still
many cities with rising prices, Liu
Jianwei, an official with Chinas National Bureau of Statistics, said. Ex-
pectations that prices will continue

to rise havent been eliminated.
That cuts against a March announcement by Chinas State Council, the governments top policymaking body, saying it would crack
down on burgeoning speculation
and sharply rising prices.
The State Council move sparked
fears of a downturn in the real-estate sector, which is the biggest sin-
gle contributor to Chinas growth

and a major part of global demand
for commodities.
Behind the continued climb in
home values is a big increase in
lending that started in the second
half of 2012 and extended into the
first four months of 2013.
Total credit, including bank loans
and other forms of finance, rose
18 | Monday, May 20, 2013
BUSINESS & FINANCE
Credit Lifts China Property
Continued from page 17

64.7% year-to-year in the first four
months of 2013, according to government statistics, with a substantial chunk flowing into the real-estate sector.
Its monetary policy, not administrative controls, that determine
whats happening in Chinas housing, said Jinsong Du, a real-estate
analyst at Credit Suisse. When
China loosened credit in the second
half of 2012, it was inevitable that
transactions would rise, and that
made it inevitable prices would
rise.
A city-by-city approach to implementing the State Councils crackdown is also a factor. In Beijing
which according to analysts has
been the only city to deliver on the
promise of a 20% capital-gains tax
on property salestransaction volumes in the secondhand market
spiked in March as sellers rushed to
complete deals before that tax came
into effect.
Beijing resident Cao Chenggang
counts himself lucky that he completed the purchase of his home just
before the new measures were implemented. But Mr. Cao worried that
the new tax would make it more difficult for his girlfriend to buy a
house. You wont find a single person whos satisfied with this situa-
tion, he said.
High volatility in transactions
has led to some of the governments
own economists questioning the effectiveness of crude administrative
controls. The spike in existing
home sales and prices in March indicated that the tightening measures could have the opposite effect
from what was intended, said the
State Information Center, a government think tank, in a recent report.
Chinas overall economic growth
in the first four months of the year
has been lackluster.
A disappointing round of data in
April, showing overall investment
growth slowing and weak industrial
output, prompted a round of forecast downgrades by investmentbank economists.
But strong real-estate demand
and rising prices could prompt developers to break ground on new
projects, supporting growth in the
remaining months of the year.
There is some evidence that is
happening. Both land sales and new
residential floor area under construction have edged back into
growth in 2013, having contracted
for much of 2012. A strong housing
market bolsters demand for everything from cement to furniture.
E-House China, a property
agency, reported surging revenue
from both real-estate brokerage and

online advertising when it published
first-quarter results Wednesday.
Chief Executive Xin Zhou sounded a
positive note on the outlook.
Things didnt fall off a cliff following the governments new controls,
he said on the companys first-quarter earnings call. They returned to
a normal level.
But rapidly rising prices could
also undo the governments painstaking efforts to bring the sector
under control and to improve affordability for first-time home buyers. Prices that rise out of line with
income reflect demand from speculators and are difficult to sustain.
That burst of activity could come at
the cost of a sharper correction in
the future as prices adjust down to
levels average households can afford.
A study by researchers at the
governments Chinese Academy of
Social Sciences, published in late
April, warned that Chinas real-estate sector is already out of balance.
The government needs to implement changes and enforce curbs on
the market, the authors of the report said, otherwise there could be
an overall loss in control of property prices.
Richard Silk
A real-estate
exhibition in
Wuxi, China
Reuters
All About the Money
China's house prices continue to rise, supported by abundant credit

Average of price changes in 70
Credit and house sales in
Chinese cities
rst-tier cities*
8%
6
400%
Year to year
Month to month
300
200
100
2011
12
100
13
Credit
House sales
2011
12
*House sales are secondary market

Sources: National Bureau of Statistics, Credit Suisse, WSJ calculations
13

main relatively weak.
Still, Starbucks is back on the expansion track following the financial
crisis of 2008, when it closed underperforming stores and slowed plans
to roll out new U.S. outlets. The company plans to open 1,500 new stores
in the U.S. over the next five years to
add to the 11,100 it had last year.
In Asia, however, Starbucks
never really took its foot off the
pedal. It plans to more than double
the number of stores in China to
1,500 by 2015 and build on the
4,000 stores it operates across the
Asian-Pacific region. Southeast
Asias fast-growing economies are
an increasingly important growth
zone, with the company aiming to
double the number of stores in
Thailand to 320 and possibly venture into Myanmar in the next couple of years.
Ten years ago, if we looked at a
business plan for some of these
markets it would have been much
smaller than the reality today, Mr.
Schultz said.
Starbucks Introduces Its Coffee Culture to Vietnam
A Starbucks employee took orders during the opening of the first Starbucks store in Vietnam in February.
Still, Vietnam could prove a
tough nut to crack.
In other Asian markets, Starbucks often found itself introducing
the concept of drinking coffee to
consumers who traditionally drank

tea, such as in India. In many cases
the company quickly supplemented
its menu with drinks more familiar
to local tastes.
Vietnams coffee culture dates

back to the 19th century, when locals
adopted the habit from French colonizers. Vietnam grows the stuff, too.
Some farmers hunt down beans that
have been eaten and digested by

civet cats and are then collected from
the animals dung. Aficionados say ca
phe chon, or weasel coffee, imparts a
darker, smoother flavor, and its beans
can sell for as much as $500 a kilo in
places like London and New York.
Some early customers at the new
Ho Chi Minh City store said they
were more interested in sampling
the ambience of the store than the
taste of Starbuckss coffees.
It was a fresh and exciting experience, said 22-year-old Nguyen
Ngoc Mai Huong, whose recent trip
to the Starbucks in Ho Chi Minh
City was her first visit to one of the
companys stores. I like the location a lot, but the price is a little
high compared with other coffee
shops, she said.
Ms. Huong added that Starbucks
might just be a trend for younger
customers.
My parents said they would
stick with the traditional Vietnamese coffee.
Nguyen Anh Thu
INDEX TO BUSINESSES
Businesses
This index of businesses

mentioned in todays
issue of The Wall Street
Journal is intended to
include all significant
reference to companies.
First reference to the
companies appears in
bold face type in all
articles except those
on page one and the
editorial pages.
ABB.............................19
Abercrombie &
Fitch.........................11
Americas Natural Gas
Alliance....................22
Anheuser-Busch
InBev ....................... 20
Apple .......................... 32
BabyBjorn.....................1
BAE Systems.............19
Baobab Resources ..... 11
BitTorrent...................32
Bloomberg..................19
BMW...........................22
Cadbury ...................... 19
Centrica......................19
Chesapeake Energy....22
Chrysler Group...........22
Coca-Cola....................20
comScore....................20
Encana........................22
E.ON............................22
European Aeronautic
Defence & Space.....19
Facebook................21,32
Ford Motor.................22
France Telecom..........20
Gap..............................11
General Electric.....19,22
General Motors..........22
Goldman Sachs..........19
Google....................20,32
Grumman Hill
Group.......................11
International Business
Machines.................19
JackThreads.com........21
J.P. Morgan
Chase..................20,23
Kimberly-Clark ........... 20
Kraft Foods Group.....19
Lloyds Banking.............4
Manchester City ........ 30
Marks & Spencer
Group.......................11
Marubeni....................11
Mattel.........................31
Mlaga........................30
Metro.......................5,22
Mitchells & Butlers ... 19
Nestle...........................5
Netflix ........................ 32
News Corp....................1
Nielsen Holdings........20
Nippon Steel &

Sumitomo Metal.....11
Ocado Group...............32
Procter &
Gamble ............... 20,21
Publicis Groupe..........20
Real Madrid................30
River Plate ................. 30
Royal Bank of
Scotland .................... 4
SAC Capital
Advisors .................. 24
Samsung
Electronics...............32
Sandvik.........................1
Schneider Electric......19
Southern California
Gas...........................22
Starbucks ................... 17
Starcom MediaVest
Group.......................20
Svenska Lantchips.......1
Thames Water...........19
TomTom......................32
Toyota Motor.............11
T. Rowe Price
Group.......................23
Unilever......................20
United Technologies..19
Vaderstad-Verken........1
Waitrose.....................32
Waze...........................32
Whirlpool....................22
Wm. Morrison
Supermarkets..........32
WPP............................20
W.W. Grainger............19
Yahoo.......................1,32
ZenithOptimedia........20
Zynga..........................21
Corrections Amplifications
The aggregate gross domestic product,
or GDP, of the 17 euro-zone countries,
when adjusted for inflation and seasonality, has contracted by 2.8% from its
level at the end of 2007. A chart that accompanied a front-page article Thursday
about the euro-zones six-quarter contraction incorrectly plotted and labeled
the change through the first quarter of
2013 as -3.4%.
Readers can alert the London newsroom of The
Wall Street Journal to any errors in news articles
by emailing wsjcontact@wsj.com or by calling
+44 (0)20 7842 9901.
Monday, May 20, 2013 | 19
BUSINESS & FINANCE
BY WILLIAM LAUNDER
Bloomberg LP stepped up efforts

to address client concerns over data
security and privacy, appointing
Samuel Palmisano, former chairman
and chief executive of International
Business Machines Corp., to conduct an independent review of the
companys data practices.
In Mr. Palmisano, Bloomberg has
tapped a senior executive with
strong ties to Bloombergs clients on
Wall Street, a large and longtime
source of business to IBM. The computer-and-technology
company,
which Mr. Palmisano ran from 2002
to the end of 2011, is considered
well versed in high-level computer
security and privacy matters.
Bloomberg also said it hired the
Promontory Financial Group, a
Washington, D.C.-based consulting
firm with deep ties to Wall Street
and its regulators, to assist Mr. Palmisano with the review. Promontory
counts Arthur Levitt, former chair of
the Securities and Exchange Commission, as a member of its advisory
board.
Mr. Levitt is also a director at
Bloomberg and an adviser to Goldman Sachs Group Inc., one of
Bloombergs biggest customers. It
was a complaint from Goldman
Sachs last month that prompted
Bloomberg to restrict its journalists
access to certain subscriber data.
The announcement Friday adds a
new level of review in Bloombergs
attempt to contain an outpouring of
media attention and inquiries from
clients about what kind of subscriber data Bloomberg previously
made available to its newsroom.
Bloomberg Chief Executive Daniel Doctoroff said the company
wants to go even further and get
the benefit of independent leading
experts so that we set the new standard for privacy and data security,
in a statement announcing Mr.
Palmisanos appointment Friday.
Bloomberg also said it had hired
law firm Hogan Lovells to assist Mr.
Palmisano. Meanwhile, Clark Hoyt,
editor-at-large at Bloomberg News,
will conduct a review of Bloomberg
News relationship to the companys
commercial operations. Before coming to Bloomberg, Mr. Hoyt was at
one point public editor at the New
York Times.
Bloomberg has been considering
plans for an outside adviser such as
Mr. Palmisano since last month when
it first restricted the ability of its
journalists to view subscriber information, a person familiar with the
matter said.
Larry Tabb, founder of the research firm Tabb Group, called Mr.
Palmisanos appointment a good
start, but he cautioned the move
wouldnt immediately resolve the
scrutiny of Bloomberg. Im not sure
they can erase all their problems.
These things are hard to get over,
he said.
The company has said that in
April it restricted its journalists
from accessing information about
subscribers to its terminals, including when the subscribers last logged
on, when they first subscribed and
how often they accessed features
like news or the chat function.
Christopher S. Stewart, Spencer
E. Ante, Aaron Lucchetti and Liz
Moyer contributed to this article.
Hows Europe Doing? Watch GE

[ The Week Ahead ]
BY BOB TITA
AND DOUG CAMERON
When General Electric Co.
Chief Executive Jeff Immelt takes
the stage at an industry
conference Wednesday, flip quickly
through his presentation slides
and watch for the possible return
of what once provided investors
with a fear gauge for Europe.
GE, which generated almost
19% of its revenues from the
region in the first quarter,
introduced a regular and detailed
breakdown of its European
exposure at the height of the
financial crisis, but dropped the
practice in October 2011. It may be
ripe for a comeback.
Soft European markets were a
consistent and negative theme of
the first-quarter results from big
U.S. industrial companies, and
concerns about further
deterioration are expected to be a
key topic as leaders from most of
the largest players gather for the
annual Electrical Products Group
conference that starts Monday
near Sarasota, Fla.
The event, which is sponsored
by a confederation of sell-side
industrial analysts and limited to
fewer than 300 attendees, has
become a barometer of companies
health, sandwiched between firstquarter financial reports and the
start of whats becoming a crucial
second half.
After a mostly lackluster first
quarter, many companies
anticipate a better performance
later in the year. Attendees will be
on the lookout for tangible
evidence that companies secondhalf optimism is rooted in more
than faith alone.
Were all conditioned to be
skeptical of second-half weighted
stories, said Deane Dray, an
analyst at Citi Research who plans
to attend the Florida event.
Mr. Immelt, who traditionally
closes out the conference, will be
joined by other industrial
Carl Wiens
Bloomberg
Sets Review
Of Customer
Data Privacy
heavyweights such as Louis

Chnevert from United
Technologies Corp., and Dave
Cote from Honeywell Inc.
Many of the 25 companies find
themselves at a crossroads. As the
recovery phase from the 2008
recession fades, companies are
looking for the next set of levers

to pull for sales and profit growth
in a slow-growing global economy
with an increasing number of
markets to be wary of, starting
with Europe.
Most euro-zone economies
remain in recessionary headlocks
that have squeezed capital

spending by businesses and the
public sector to a trickle. If you
have a lot of exposure to Europe,
youre not doing so well, said
Nicholas Heymann, an analyst at
William Blair & Co. A lot of what
is being done by European
companies is to offset or mitigate
weaker sales in their home
markets.
Mr. Heymann cited
Switzerlands ABB Ltd. and
Frances Schneider Electric SA as
conference participants that have
aggressively diversified from
sluggish home markets in Western
Europe by buying companies in
North America, where demand for
electrical gear has been stable
through far from spectacular.
In recent years, ABB has
acquired U.S.-based equipment
makers Baldor Electric and
Thomas & Betts and energy
software and consulting company
Ventyx in Atlanta. The acquisitions
helped ABBs sales from North and
South Americas increase 77% since
2009 to $10.7 billion last year. The
Americas now accounts for almost
a third of ABBs annual sales,
compared with 19% in 2009.
But other companies
presenting have defied
conventional notions about
avoiding Europe. Industrial and
maintenance-supply distributor
W.W. Grainger Inc. bought Fabory
Group of the Netherlands in 2012
to get more penetration in Europe.
Graingers $344 million purchasw
of Fabory, a distributor of tools
and fasteners, was the U.S.
companys largest in 15 years.
Were very happy with the
business, said James Ryan,
Graingers chief executive, who is
due to present at the conference
on Wednesday. We know how to
run a distribution business in a
tough economy. If you keep up
your service levels and keep
people front of customers, you can
gain market share, even in a down
economy.
The Week Ahead looks at coming
corporate events.
Carr Tipped for BAEs Chairman Post

BY MARIETTA CAUCHI
AND JESSICA HODGSON
LONDONRoger Carr, the chairman of U.K. gas utility Centrica

PLC, is the frontrunner to replace
Dick Olver as chairman of Britains
defense contractor BAE Systems
PLC, a person familiar with the matter said Sunday.
The person said that Mr. Carr
was in the final stages of due diligence with BAE Systems over the
position. The 66-year-old Mr. Carr
was on a very short shortlist, consisting of him and at most one other
person, said this person.
A spokesman for BAE declined to
comment.
Mr. Olver, 66, is stepping down
after nine years in the post in the
wake of BAEs failed merger last
year with Airbus-owner European
Aeronautic Defence and Space Co.
The deal was vetoed by the German government but some of BAEs
British institutional shareholders
were among the most vocal opponents of the deal, which was championed by Mr. Olver. He will leave
his post by April 2014.
A new chairman at BAEa

maker of aircraft carriers, submarines, fighter jets, missiles and armored vehiclesmust repair its
bruised relations with U.K. investors. Some investors have expressed
concerns over the companys ability
to stand alone as an independent
company at a time of plunging de-
Mr. Carr played a prominent role

as chairman of British gum and
candy maker Cadbury PLC when it
defended itself against the high-profile hostile takeover by Kraft Foods
Group Inc. in 2009 and 2010. After
initially mounting a robust defense,
saying Krafts approach fundamentally undervalued Cadbury, Mr.
The new chairman will have to repair BAEs bruised

relations with investors, who have expressed
concerns over its ability to stand alone as a company.
fense spending in the U.K. and the
U.S., which account for roughly 70%
of the companys business.
The post of chairman at BAE, the
biggest non-U.S. defense contractor,
is highly sensitive and requires a
rubber-stamp from the British government and the goodwill of the
Pentagon.
Mr. Carr was reportedly proposed for the BAE job by the U.K.
government, according to a Sunday
Times report.
Carr eventually accepted Krafts

raised 11.9 billion ($18.1 billion) bid
for the company.
Mr. Carr afterward pressed U.K.
lawmakers to toughen up rules to
protect British businesses against
foreign takeovers, arguing in
speeches and interviews that shortterm shareholders like hedge funds
skewed takeovers against the interests of the longer-term shareholders
on whom companies depend for
their long-term stability.
He is known to be a tough negotiator who is familiar with both

sides of takeover battles. While at
Centrica, he led the companys hostile takeover of Aberdeen-based oil
and gas firm Venture Production for
1.3 billion, overcoming the Venture
boards initial opposition to the
deal.
In addition to holding the chairman posts at Centrica and Cadbury,
Mr. Carr has been a chairman at
four other U.K. companies, including
Thames Water PLC and pubs chain
Mitchells & Butlers PLC. He is currently president of the Confederation of British Industry and a senior
independent director at the Bank of
England.
Recent U.K. press reports have
suggested Mr. Carr was one of two
leading candidates for the BAE post,
alongside John Rose, formerly chief
executive of Rolls Royce Holdings
PLC. The Sunday Telegraph on Sunday reported that Mr. Rose has now
withdrawn his candidacy.
Mr. Rose, currently a deputy
chairman of Rothschild Group, an
investment bank, couldnt be
reached for comment on Sunday.
20 | Monday, May 20, 2013
BUSINESS & FINANCE
Google Glass Stirs Privacy Fears

BY AMIR EFRATI
AND GEOFFREY A. FOWLER
BY SUZANNE VRANICA
Getty Images
As Congress frets about the privacy implications of Google Glass,

one thing is clear: The technology
that can redefine what is public
and link the digital and physical
worlds is here.
Now the question is what will
anyone do about it?
Owners of wearable Internetconnected devices already face
choices about where or when it is
appropriate to wear themwhile legal experts say there arent many
protections for people whose activities the technology records.
Noble Ackerson, a 33-year-old
software developer in Washington,
D.C., who has been wearing Google
Glass for the past month, says he
has developed his own common
sense etiquette standards for
Google Inc.s new digital headset.
For instance, he takes Glass off
in a public restroom, in a movie theater and in casinos, where having
such a device could give him an unfair advantage. Google Glass has
technology that isnt new, and the
etiquette weve applied to existing
technologies should roll into it, he
says.
Products like Glass are sparking
a discussion about what is possible
with technologies such as facial recognition, and whether governments
need to intercede. While several
members of Congress pressed
Google on Thursday for answers
about how its technology works,
some business owners like bars or
casinos are already banning it.
Right now, Google Glass, which
places a small computer screen
above one eye and has a built in motion sensor, camera and microphones, acts like an extension of a
persons smartphone.
It lets the user take photos and
record videos by touching the side
of the device or speaking commands
aloud, as well as allowing them to
give Web users access to the devices camera so they can see
what the wearer is looking at. People also can use Glass to make
phone calls, access Googles Web
search, get turn-by-turn navigation
information and receive text messages on the screen, as well as send
texts using their voice.
The device isnt widely available,
but Google plans to publicly launch
it next year.
Early testers of the device say
the potential benefitssuch as giving paraplegics the ability to take
photos using their voice or making
it easier to document police brutality, among other usesoutweigh
such privacy and security risks.
But one potential use has captured the imaginationsand fears
of many: facial recognition.
While such technology still faces
numerous hurdles, the capability to
use it for purposes once relegated to
science fiction have already been
Questions of appearance and privacy arrive for Google Glass wearers. Above, a Google engineer shows off the glasses.
proven in a real-world context, most
recently by Carnegie Mellon University researchers in 2011.
By combining public information
from social networks and facial-recognition technology, the researchers
used a webcam on a college campus
to identify people by name, and
thenby using information from
their social-network profilesalso
predict sensitive personal data, such
as hobbies and Social Security numbers.
The genie is out of the bottle,
says Carnegie Mellon professor
Alessandro Acquisti, who was part
of the research team. My bet is facial recognition and augmented reality will become commonplace and
popular.
While real-time facial recognition technology isnt yet scalable,
remaining hurdles already are being
overcome, he says, and societies will
need to discuss and try to create
frameworks so that good applications will survive and creepy ones
will not.
Google Glass product management director Steve Lee said in a
statement Friday that we wont
add new face-recognition features to
our services unless we have strong
privacy protections in place.
On Thursday, Mr. Lee and other
Google employees say that while
any device, including todays smartphones, can be misused to hurt or
spy on other people, the company
would endeavor to bar such applications from being available on its
public app store for the device.
Mr. Lee says the device would
also be a lousy way to spy on people because the wearer must face
whatever it is they are recording.
The devices small screen lights up
when it is taking a photo or record-
ing a video using the camera, allowing people near the wearer to know
that it is on.
Mr. Lee added that he expected
there would be facial-recognition
applications available on Glass in
the future, possibly created by third
party software developers.
Google has said data recorded by
the device would be bound by its
current privacy policy, meaning it
could be collected in an anonymous
way and the company would hold
data about specific individuals only
if they explicitly agree to it, the
same as with smartphone-related
data.
Some business owners

like bars or casinos are
already banning it.
Most of the wearable devices on
the market, with names like LUMOback and Fitbit, are meant to
capture health-related information
about the person wearing them,
such as heart rate and posture. Now
new devices led by Google Glass
capture data around the wearerincluding the people they interact
with.
For instance, a forthcoming $279
device called Memoto, designed to
be worn on a chain around the neck
or clipped to clothing, automatically
snaps photos every 30 seconds, or
nearly 3,000 a day, and uploads
them to the Web so the wearer can
access them.
Oskar Kalmaru, a co-founder of
Memoto, said the company stresses
to its customers how its actually a
pretty crappy spycam: no remote
control, no streaming, very visible

and so on.
There is almost nothing individuals can do to prevent their activities
from being recorded or tracked
while in public, legal experts say.
Chris Conley, a technology policy attorney at the American Civil Liberties Union of Northern California,
says that while Google Glass is currently a primitive device, its something you could see evolving into a
state of constant awareness of the
environment, making it difficult for
third parties to understand whether
theyre being analyzed or recorded.
But he added that he cant think
of anything that Google Glass could
conceivably do that is actually going
to run into legal concerns, unless
perhaps someone creates an application that invades peoples privacy
by seeing underneath their
clothes, similar to the passenger
scans at U.S. airports.
Consumers and governments
world-wide have grappled with
some of these questions before with
the discreet cameras on cellphones.
When they first emerged in the
early 2000s, some worried about
their potential use for espionage
and voyeurism. Businesses such as
gyms banned their use.
And in 2004, Congress passed
the Video Voyeurism Prevention Act
without much opposition, which prohibits photographing a naked person
without his or her explicit permission in a gym, dressing room, or
other places that one expects a reasonable expectation of privacy. (Violators face fines of up to $100,000
and up to a year in prison.)
Yet a decade later, cameraphones have become an accepted
and relatively uncontroversial part
of modern culture.
Yahoo to Pay $1.1 Billion to Acquire Tumblr

could help Tumblr bring in more
money by selling ads, boosting its
own revenue in the process.
Tumblr has grown quickly. In
March, the blogging site had about
117 million unique users world-wide,
up from about 58 million a year earlier, according to comScore Inc. On
smartphones, Tumblr had almost 12
million unique visitors, up from
ComScores
Web Rating
Scores Win
Over Nielsen
about four million, comScore said.

Yahoo has a bigger presence on
mobile devices but it is growing
much slower. In March, Yahoo
claimed about 84 million unique
smartphone visitors, up from around
63 million, comScore said.
Yahoo Chief Executive Marissa
Mayer, who joined the company last
summer after a 13-year career at
Google Inc., became interested in
the blogging site a couple of months

ago, one of the people familiar with
the matter said. Acquisitions have
long been expected to be part of Ms.
Mayers strategy, though to date she
only has acquired small companies
primarily for their engineering and
product-management talent.
Yahoo recently pulled out of a
roughly $200 million deal to buy a
controlling interest in the video
website Dailymotion, owned by

France Tlcom SA, after the
French government indicated objections to the transaction, people familiar with the matter have said.
Yahoo would be paying a premium for Tumblr. When Tumblr last
raised money, in the fall of 2011, the
$85 million venture-capital investment it received valued the New
York company at $800 million.
The battle among companies

measuring the reach of online ads is
heating up.
Ad-buying giants Starcom MediaVest Group and ZenithOptimedia
said they have signed on to use
comScore Inc.s online-advertising
ratings system, dealing a blow to
TV-ratings leader Nielsen, which offers advertisers a comparable service. The ad-buying firms, both of
which are owned by Publicis
Groupe SA, had been testing both
services for some time.
Marketers have long been demanding a way to measure online ad
campaigns in a manner similar to
how TV is measured. ComScores
Validated Campaign Essentials, or
VCE, and Nielsens Online Campaign
Ratings, or OCR, are two products
that offer a solution.
The new services are the first
step toward a measurement system
that could track how ads perform
across all screens, including TVs,
the Web and mobile devices.
Online marketers say the inability to track ads effectively across
multiple screens is a hurdle they
face when trying to figure out how
much money they should move from
traditional advertising into digital
ads.
The decision of the Publicis firms
to go with comScores system is significant, given the scale of the ad
budgets they handle.
Starcom MediaVest and Zenith
spend about $32 billion annually on
ads in the U.S. on behalf of companies such as Coca-Cola Co., Anheuser-Busch InBev N.V and J.P.
Morgan Chase & Co. Several weeks
ago, Procter & Gamble Co., the
worlds largest advertiser and a
Starcom MediaVest client, signed up
with comScore.
Starcom MediaVest said its chose
comScore in part because its service
will be offered in more countries
and because it will be able to collaborate with comScore to create new
measurement products.
Price also played a role in Starcoms decision.
Its a multi-screen, mobile world
and we need to be able to measure
audiences fluidly and seamlessly,
said Laura Desmond, SMGs chief executive officer.
Traditional industry measures
and players fall short on delivering
the innovation we need for our clients, she said.
A Nielsen spokeswoman declined
to comment.
The Publicis ad-buying firms decisions are favorable for comScore but the race in digital audience measurement is far from
over, said Brian Wieser, an analyst
with Pivotal Research Group.
As of April 15, Nielsen had signed
up more than 100 advertisers such
as Unilever, Kimberly-Clark Corp.
and WPP PLCs ad-buying firm
GroupM for its Online Campaign
Ratings product, and it had been
used on more than 4,000 campaigns.
Clients of Publicis arent obligated to use the comScore ratings
system, despite the ad-buying firms
decision. Also, marketers and ad
agencies could choose to use both
comScore and Nielsens products
rather than choosing one.
Monday, May 20, 2013 | 21
BUSINESS & FINANCE
Facebook Shifts Gears a Year After IPO

The Company Is Getting Serious About Making Money; But the Stock Is Stuck Well Below Its IPO Price
Two weeks ago, new posters began appearing at the headquarters

of Facebook Inc. The posters proclaimed: Advertisers are users
too*. At the bottom of the page, in
smaller font, was the phrase *no
srsly, Internet shorthand for no
seriously.
On the eve of Facebooks IPO anniversary Saturday, how the Menlo
Park, Calif., company tackles revenue is one of the biggest challenges
in its short life as a public company.
After eight years of focusing on
user growth, Facebook has pushed
revenue up its priority list and restructured its business so that many
of its best minds are now thinking
about driving sales.
Before filing for its IPO, Facebook made 85% of its revenue from
desktop ads in the right-hand column of its website, with the rest
coming from a payments business
fueled by virtual-goods sales from
Zynga Inc. games.
Today, the company is experimenting with more than 10 other
ways to make money, including a
fledgling e-commerce store and fees
that it charges users to send chat
messages to strangers.
Facebook has also broadened its
ad business, running ads for the
first time on mobile devices, in its
News Feed, and creating special
widgets for mobile, such as ads that
promote installations of third-party
applications. Facebook has also introduced products familiar to advertisers, including tools that target
people based on their website visits
or their offline behavior. And it has
reorganized itself so project managers and some engineers take ownership of revenue targets.
The changes have helped lift
Facebooks revenue to $1.46 billion
in its most recently reported quarter, up 36% from $1.06 billion in the
same period a year earlier. A quarter of the companys revenue now
come from mobile ads.
But none of that has been
enough to push Facebooks stock
back up to its IPO price last May of
$38. On Thursday, the companys
shares closed at $26.13, down 1.8%
on the day and 31% from its IPO
price.
Today, the company is

experimenting with more
than 10 other ways to
make money.
The increasing importance of

boosting sales also could jeopardize
the users experiencea point not
lost on Facebooks chief, who has repeatedly said that Facebook wasn't
originally built to be a company.
On this months earnings call,
Mr. Zuckerberg assured investors
that the site hasn't seen any meaningful impact on the [user] satisfactionimplying that there may be
some drag on user experiencejust
not enough to matter.
Still, some investors said they are
encouraged by Facebooks new attitude toward revenue. Mark Hawtin,
portfolio manager of the roughly
$250 million GAM Star Technology
Fund, said hes bought more Facebook shares recently because of the
Reuters
BY EVELYN M. RUSLI
Facebook CEO Mark Zuckerberg is seen on a screen televised from their headquarters in Menlo Park moments after their IPO launch in New York May 18, 2012.
rollout of new ad products and because of comments Mr. Zuckerberg
made in September about his focus
on revenue and mobile.
When Facebook went public, the
companys message was we focus
on the user growth and engagement
and the revenue will take care of itself, said Mr. Hawtin, who added
that Facebook is now one of his top
three stock holdings. After the IPO,
the message was that revenue and
mobile are now also key parts.
The tone around revenue began
changing in early 2012, especially
after the fourth-quarter earnings report revealed a sharp drop in sales
growth.
Facebook rushed to shore-up its
mobile applications. The company
introduced mobile ads in March
2012 through its main channel, the
News Feed.
Now ads were no longer relegated to the right-hand side of the
site, but were literally at the center
of the product.
At one meeting last July, as
Facebooks newly public stock was
getting pummeled, the social networks managers, dubbed the M
Team, decided that more teams
needed to be held responsible for
revenue.
Chief Executive Mark Zuckerberg
and his top lieutenants, including
operating chief Sheryl Sandberg and
financial head David Ebersman, reviewed Facebooks entire business at
the meeting, going product by product and team by team.
Revenue was a priority whose
time has come, said David Fischer,
vice president of marketing, who attended the meeting. More leaders
needed to be accountable.
Some of Facebooks key engineers were asked to solve revenuerelated issues for the first time. In
February, Andrew Bosworth, a member of the M Team and a creator
of News Feed, became the head of
advertising engineering, in which he
oversees the technical infrastructure
How a $10,000 bet on Facebooks IPO

compares with other investments
over the past year
$16,000
Google
$14,000
S&P 500
Nasdaq
$12,000
Barclays
bond
index*
$10,000
$8,000
Apple
$6,000
$4,000
2012
2013
*Barclays capital aggragate bond index (through Wednesday)

Sources: WSJ Market Data Group; SIX Financial Information; Barclays Live
behind the ad products.

Jason Sobel, a senior Facebook
engineer who spent six years working on infrastructure and mobile,
also switched to work on advertisements in November. We were getting beat up a lot externally (so) I
felt like it was an opportunity to
have a big impact, he said.
Project managers for some business groups like News Feed were
encouraged to educate themselves
on how their product made money
and to own revenue targets.
More ad employees began to
work closely alongside product engineers and engineers began to visit
Facebooks advertisers. Several
members of the ads team officially
switched to work with product
teams.
In one sign of how a more revenue-centric culture was being inculcated, Facebook in March organized
a field trip to Cincinnati for a few
dozen employees including product
engineers to one of its biggest advertisers, Procter & Gamble Co., so

those employees could learn about
the clients needs and objectives.
Members of Facebooks M
Team who had never spent time
with clients before, such as human
resources head Lori Goler, also began attending meetings with brands.
For advertisers, Facebooks revenue-friendly attitude is giving them
more excuses to spend. Online retailer JackThreads.com said it has
doubled spending on Facebook over
the past year because there are
more products to experiment with.
While it once only bought righthand column ads on Facebooks
website, JackThreads now has purchased photo and link ads for the
desktop and mobile news feeds,
among other things.
It also plans to use Facebook Exchange, a real-time marketplace to
buy ads based on what sites users
are visiting. The company declined
to disclose how much it is spending

on Facebook.
The more sophisticated the
tools, the more comfortable well
feel spending significant dollars
with them, said Ryan McIntyre,
JackThreadss executive vice president of marketing, who said he
would still like Facebook to provide
more data for its newfangled mobile
ads.
In April, Facebook started holding ad boot camps for employees to
educate them on what Facebooks
clients are looking for, how different
ad products work and the companys
broader strategies.
The program, which has been
held twice so far, runs about half a
week and features sessions with
Facebooks ad experts.
In the future, the company plans
to incorporate advertisers for client immersion sessions, said Gokul
Rajaram, Facebooks product director for ads.
22 | Monday, May 20, 2013
BUSINESS & FINANCE
BY JAN HROMADKO
AND HENDRIK VARNHOLT
FRANKFURTE.ON SE has made

its first significant move in Germanys decentralized power market
by agreeing to build four combined
heat and power units for retailer
Metro AG.
The deal comes as Germany tries
to move away from relying on large
nuclear and fossil-fueled power
plants in favor of a decentralized
system of much smaller power
plants and renewable energy, often
generated by the user itself.
While E.ONs partnership with
Metro is smallcommercial terms
weren't disclosedthe deal gives
the power company a beachhead in
a market that it believes will be
worth 10 billion ($12.83 billion) a
year across Europe by 2020.
E.ON, and other power companies, hope the decentralized energy
market will help mitigate reduced
earnings from conventional power
plantsespecially those that burn
gas for fuelwhich are under pressure from rising costs and the expansion of renewable energy
sources, such as solar power.
However, some energy analysts
question whether the move may
have come too late and doubt that
small-scale power generation will
ever replace major power companies core business.
Utilities in much of Europe are
losing money on larger gas-fired
plants because European gas prices
remain stubbornly high while
wholesale electricity prices remain
depressed amid weak demand because of the continents economic
malaise.
Germany is one of many countries funding combined heat and
power plant technology, as these
small-scale plants capture heat and
waste less energy in the generation
process than much larger industrialscale power plants fueled by natural
gas.
Under E.ONs deal with Metro,
the power company will build, finance and maintain four small gasfired power turbines, each capable
of generating between 250 and 800
kilowatts, at two of the retailers
German cash & carry stores and two
Russian outlets.
For Metro, which will operate
the units, managing its own on-site
energy supply will reduce its energy
costs at a time when German retail
power prices are soaring as the
country shifts away from fossil and
nuclear fuels.
It also reduces the companys reliance on the countrys aging power
grid, as well as lowering its carbon
emissions.
The companies said they would
consider adding renewable energy,
such as solar power, and expanding
the partnership to other countries,
including the U.S., in the future.
As retail power prices rise across
much of Europe, many industrial
and commercial businesses are considering generating their own energy, said Herv Touati, head of
E.ON Connecting Energies, a recently formed division of the company that focuses on decentralized
energy supplies.
We are starting this approach
with a few large customers like
Metro, Mr. Touati said in an interview.
Cogeneration facilities such as
those E.ON is building for Metro are
known as combined heat and power,
or CHP, plants. They produce electricity and heating, and they have
enormous market potential, Mr.
Touati said.
We estimate the business-tobusiness market [for distributed and
decentralized] energy solutions in
Europe to reach 10 billion a year in
terms of earnings before interest
and taxes by 2020, Mr. Touati said.
It is the fastest-growing segment in the energy sector. For CHP
alone, we estimate the market to be
at two gigawatts of newly installed
capacity per year in Europe, he
said.
Energy Alliance Turns

To Natural-Gas Vehicles
BY CHESTER DAWSON
CALGARYA consortium of North

American energy producers plans to
showcase half a dozen natural-gaspowered vehicles, including a BMW
X3 SUV and a Ford Mustang coupe,
in an effort to drum up interest in
use of the fuel in passenger cars.
Americas Natural Gas Alliance,
a trade group representing more
than two dozen North American oil
and gas companies, is planning to
demonstrate bi-fuel versions of
popular vehicles retrofitted to run
on compressed natural gas, or CNG,
and use a conventional gasoline
tank to extend their range, according to officials. The group declined
to provide further details ahead of
its marketing campaign.
The trade group will preview
those test vehicles on Tuesday at a
Southern California Gas Co. facility
in Los Angeles and then launch a
broader public-awareness campaign
next month, officials said. Converted
vehicles from Ford Motor Co.,
Chrysler Group LLC and four other
manufacturers are expected to be
part of the Alliances lineup.
Chrysler, which now offers a natural-gas-powered pickup inspired by
the shale-gas boom, said it has no
plans to make a passenger-car conversion available. Auto makers have
been focusing on battery- and dieselpowered passenger vehicles and
have been reluctant to add another
energy source. A BMW spokesman
said, We are not currently involved
in natural-gas vehicles, and Ford
said it isnt involved in the Alliances
project, nor does it plan to produce
a conversion kit for Mustang.
These bi-fuel vehicles cost
thousands of dollars more than gasoline-powered vehicles. Advocates
say low natural-gas prices can make
up the difference over time. CNG
costs between $2.20 and $2.50 a gallon-equivalent, below the average
pump price for unleaded gasoline.
But conversions arent cheap: General Motors Co., which began selling
Chester Dawson/The Wall Street Journal
E.ON to Construct
Metro Power Units
A GM Chevrolet Traverse retrofitted to run on compressed natural gas is the

type of vehicle energy companies hope will stir interest in the fuel.
a pair of bi-fuel CNG pickups in December, prices them at about $11,000
more than gasoline versions.
The gas-industry group says the
demonstration is designed to spur
consumer and auto makers interest
in CNG-powered cars at a time when
surging gas production has dramatically lowered prices. That has spurred
a renewed drive by gas producers and
auto makers to make the fuel a more
attractive substitute for gasoline.
We hope the excitement created
by these vehicles encourages policy
makers to take notice, said Anne
Shen Smith, CEO of Southern California Gas.
Some commercial vehicles, including corporate fleets and heavy
trucks, are already using or experimenting with natural gas. One advantage for these large-scale users
over retail buyers is that they can
afford to build and maintain their
own refueling stations. While more
than 100,000 CNG vehicles are being
driven in the U.S., just under 600
stations are open to the public.
Gas producers hope that by
showcasing the CNG-retrofitted vehicles they can spark fresh interest.
Auto-industry analysts remain skep-
tical manufacturers will rush into

the market, no matter how low natural-gas prices fall.
You cant dedicate a vehicle to
this fuel until youve got natural-gas
pumps almost as ubiquitous as gasoline pumps, said Phil Gott, senior
director at IHS Automotive.
To help resolve that dearth in
natural-gas fueling stations, two
leading gas producers have joined
forces with home-appliance manufacturers in separate bids to develop
affordable refueling equipment that
plugs into household gas lines. In
December, Encana Corp., North
Americas third largest natural-gas
producer, linked up with Whirlpool
Corp. and four U.S. utilities. Similarly, Chesapeake Energy Corp. is
working with General Electric Co.
Gas company officials say major
auto makers are paying close attention to these efforts and are readying conceptual models that may
serve as trial balloons for future
mass-market vehicles. You will see
over the next year or two, probably
less than a year, some concepts of
natural-gas [passenger] cars, Eric
Marsh, executive president at Encana, said in an interview.
ADVERTISEMENT
Legal Notices
Crude Enthusiasm
Investors have driven U.S. oil futures higher despite large oil stockpiles and a tepid economy
BANKRUPTCIES
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LEGAL
NOTICES
ADVERTISE TODAY
U.S. crude-oil inventories
WTI crude-oil futures price
Net managed positions
400 million barrels
$150 a barrel
300 thousand
300
Place an ad using the

self-service option at:
wsj.com/classifieds
2013 Dow Jones & Company, Inc.

All Rights Reserved.
200
50
100
200
(44) 20-7572-2123
Stephen.Levey
@wsj.com
100
100
Weekly data
08
09
10
11
12
13
08
09
10
11
12
13
Sources: Energy Information Administration (inventories); WSJ Market Data Group (futures); CFTC
Weekly data
08
09
10
11
12
Oil Is Isolated Bright Spot in Commodities

largely because oil products in many
parts of the country, such as along
the coasts, are priced off of Brent.
I need to see another development, either significantly stronger
growth or slower growth in the
economy, to get oil prices to go up
or down from here, said Jan Stuart,
head of energy research at Credit

Suisse.
Some investors are embracing
nimble strategies to profit from
small short-term price moves. At
Pacific Investment Management Co.,
a unit of Allianz SE of Germany,
which oversees about $30 billion in
commodity holdings across different
13
funds, portfolio manager Nic Johnson said he has been buying oil futures and selling options on them at
a higher strike price. It is essentially
a bet that the price will remain stable and the funds will be able to
keep the premium collected on the
options they sold without having to
deliver the underlying futures.
Monday, May 20, 2013 | 23
MARKETS
J.P. Morgan Chase & Co. Chairman and Chief Executive James Dimon is making the case for continuity
in the final days before a potentially
defining vote on his future.
But behind the scenes, he has

taken steps to head off trouble.
William Daley, a former Dimon
lieutenant who also served as White
House chief of staff, approached an
official with the American Federation of State, County and Municipal
Employees union, which co-sponsored the resolution on the split, to
sniff out potential for a deal ahead
of the final tally, said people familiar with the talks.
Mr. Daley wasnt authorized to
provide the union with any potential
compromise to evaluate, but instead
was asked by Mr. Dimon to see if the
group would agree to another conversation with the boards presiding
director Lee Raymond, one of these
people said. Mr. Daley was told that
it was late to be discussing a deal.
On Thursday, J.P. Morgan sent a
letter to shareholders urging them
to reject the proposal to split the
top two roles. As of last Tuesday,
support for the proposal was running slightly ahead of the 40% it received last year.
The scrutiny has become a source
of frustration for Mr. Dimon because
it is taking time away from his regular duties and distracting attention
from the banks strong performance,
according to people who have spoken to him in recent weeks.
While J.P. Morgan lost more than
By Dan Fitzpatrick,
Robin Sidel
and Kirsten Grind
Mr. Dimon told an audience in
Boston last Tuesday that the nations largest bank had fixed the
problems that led to a massive trading loss last year, according to people who were there. Mr. Dimon also
reminded the 1,300 technology investors that J.P. Morgan was among
the industrys best performers during the financial crisis.
The board should be applauded, Mr. Dimon said, according
to one of these people. He also said
he didnt think any changes were
necessary to the banks board or its
current structure.
Mr. Dimon is expected to fly to
Tampa, Fla., on Monday for a pivotal
shareholder meeting on Tuesday,
during which the final votes will be
tallied on a nonbinding resolution to
separate his CEO and chairman roles.
Mr. Dimon isnt expressing any
sense of panic over the vote, his
friends say, and has repeatedly told
them that he is doing just fine.
NAV
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n ALEXANDRA INVESTMENT MANAGEMENT

AlexandraConvertibleBondFundI,Ltd.(ClassA) OT
OT VGB 08/31 USD
2155.22
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YTD 12-MO 2-YR
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n BANC INTERNACIONAL D'ANDORRA. BANCA MORA.

Avgd. Meritxell 96, Andorra la Vella. Andorra. Ph. +376.884884 www.bibm.ad
Andfs. Anglaterra
Andfs. Borsa Global
Andfs. Emergents
Andfs. Espanya
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Andfs. Europa
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Andfs. Japo
Andfs. Plus Dollars
Andfs. RF Dolars
Andfs. RF Euros
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05/16
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05/16
12/19
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OT MUS 05/10 USD 407896.66
n Citadele
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internet: www.dje.lu email: info@dje.lu phone:+00 352 269 2522 0 fax:+00 352 269 25252
DJE Real Estate P
DJE-Absolut P
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AS EQ LUX 07/20 EUR
EU EQ LUX 05/17 EUR
OT OT LUX 05/17 EUR
n HERMITAGE CAPITAL MANAGEMENT LTD.

Tel: +7501 258 3160 www.hermitagefund.com
The Hermitage Fund
$6 billion from reckless trades last

year, it is once again churning out
record profits, and its stock is at a
five-year high.
Proponents of the resolution said
a split would help Mr. Dimon focus
on running and fixing the company.
J.P. Morgan has outperformed
its peers, but it also has had more
regulatory sanctions than its peers,
said Michael Garland, an assistant
comptroller for New York City and a
co-sponsor of the shareholder reso-
FUND NAME
NAV
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EUR
USD
USD
EUR
EUR
USD
EUR
USD
USD
EUR
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96.81
181.17
151.22
82.99
127.84
135.07
104.69
105.31
150.13
135.36
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n HSBC Uni-folio
Asian AdbantEdge EUR

Asian AdvantEdge
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Emerg AdvantEdge EUR
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Trading AdvantEdge GBP
n HSBC Trinkaus Investment Managers SA

n CHARTERED ASSET MANAGEMENT PTE LTD - TEL NO: 65-6835-8866 E-Mail: funds@hsbctrinkaus.lu
Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg Telephone: 352 - 47 18471
CAM-GTF Limited
J.P. Morgans James Dimon speaks before U.S. lawmakers last June.
GL EQ JEY 03/12 USD
4.94
259.83
195.10
281.66
135.09
155.91
144.57
140.29
19.82
22.28
-3.5
10.8
13.3
11.3
-20.7
3.1
-8.5
-8.8
2.3
4.8
-6.8
23.4
22.2
23.2
-13.5
7.6
5.0
4.4
17.8
17.0
-9.2
6.5
-0.4
7.6
-19.8
5.7
7.6
7.0
6.1
3.1
963.12
4.5
105.6
-23.2
HSBC Trinkaus Golden Opportunities

Prosperity Return Fund A
Prosperity Return Fund B
Prosperity Return Fund C
Prosperity Return Fund D
Renaissance Hgh Grade Bd A
Renaissance Hgh Grade Bd B
Renaissance Hgh Grade Bd C
Renaissance Hgh Grade Bd D
OT
JP
EU
EU
EU
EU
EU
EU
EU
OT
BD
BA
BA
BA
BA
BA
BA
BA
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
05/16
04/29
04/29
04/29
04/29
04/29
04/29
04/29
04/29
USD
JPY
JPY
USD
EUR
JPY
JPY
USD
EUR
n MP ASSET MANAGEMENT INC.

Tel: + 386 1 587 47 77
MP-BALKAN.SI
MP-TURKEY.SI
EE
OT
EQ SVN 08/12 EUR

OT SVN 05/16 EUR
NAV
89.98
9087.79
9317.43
85.32
136.93
10745.47
10745.37
97.85
108.42
19.29
57.52
%RETURN
YTD 12-MO 2-YR
-30.4
-3.9
7.9
-5.2
2.7
2.9
13.8
0.0
0.6
-1.9
18.0
-16.5
3.2
21.7
1.0
14.8
12.8
31.2
8.8
9.6
-8.4
51.8
n HORSEMAN CAPITAL MANAGEMENT LTD.

T: +44(0)20 7838 7580, F: +44(0) 20 7838 7590, www.horsemancapital.com n MERIDEN GROUP
Horseman EurSelLtd EUR EU EQ GBR 04/30 EUR
282.96
11.6
20.8
9.1 Tel: + 376 741 175 Fax: + 376 741 183 Email: meriden@meriden-ipm.com
Horseman EurSelLtd USD
Horseman Glbl Ltd EUR
Horseman Glbl Ltd USD
EU EQ GBR 04/30 USD

GL EQ CYM 04/30 USD
GL EQ CYM 04/30 USD
306.27
488.32
488.32
NS
NS
NS
n HSBC ALTERNATIVE INVESTMENTS LIMITED

T +44 20 7860 3074 F + 44 20 7860 3174 www.hail.hsbc.com
HSBC ALTERNATIVE STRATEGY FUND
Special Opp EUR
Special Opp Inst EUR
Special Opp Inst USD
Special Opp USD
OT
OT
OT
OT
OT
OT
OT
OT
GGY
GGY
GGY
GGY
n HSBC Portfolio Selection Fund

GH Fund CHF Hdg
GH Fund EUR Hdg (Non-V)
GH Fund GBP Hdg
GH Fund Inst USD
GH FUND S EUR
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
lution. An independent chairman

would have more time than Mr. Dimon to deal with unhappy regulators, Mr. Garland added.
There was a point last year
where it appeared that the bank and
Mr. Dimon would be able to put the
trading losses in the rearview mirror. When the CEO appeared before
the U.S. Senate last June he apologized and said the buck stops with
me. A number of Republican senators sought the CEOs regulatory ad-
vice, as opposed to taking him to

task for the episode.
But several events combined to
keep the pressure on.
On July 27, the Office of the
Comptroller of the Currency told J.P.
Morgan in a supervisory letter that it
had downgraded a confidential management rating. Other regulatory actions, from the OCC and Federal Reserve, came in the following months.
In January, the banks board approved a 50% cut in Mr. Dimons pay,
and the company released a report
saying he shared responsibility for
the mistakes and oversights that allowed the trading losses to happen.
In April, meanwhile, regulators
told the board and Mr. Dimon that
their oversight of compliance, audit
and risk was weak, and made it clear
they had lost trust in management.
Still, some institutional investors
believe Mr. Dimon and his team run
the bank well and that a change at
the top would only be a disruption.
T. Rowe Price Group Inc. has signaled it will oppose the role-split
proposal. Another shareholder, Vanguard Group Inc., likely will also do
so, according to a person close to
the situation. Both firms voted
against the proposal last year.
Joann S. Lublin
and Julie Steinberg
INTERNATIONAL INVESTMENT FUNDS
Advertisement
FUND NAME
Getty Images
Dimon Makes His Case for Continuity
GGY
GGY
GGY
GGY
CYM
04/30
03/31
03/28
04/30
04/30
04/30
04/30
04/30
04/30
EUR
EUR
USD
USD
CHF
EUR
GBP
USD
EUR
113.04
88.51
123.18
119.30
NS.00
135.45
NS.00
NS.00
149.10
5.6
0.7
4.2
5.3
5.5
5.2
5.4
5.3
5.4
NS
NS
NS
NS
NS
NS
17.7
-0.3
18.5
17.8
9.9
13.3
10.6
10.0
8.5
8.4
9.1
9.3
9.3
1.2
1.8
2.1
2.7
3.0
Antanta Combined Fund

Antanta MidCap Fund
Meriden Opps Fund
Meriden Protective Div
EE
EE
GL
GL
EQ
EQ
OT
EQ
AND
AND
AND
AND
04/26
04/26
05/15
11/24
USD
USD
EUR
EUR
247.77
387.81
24.82
NS.00
-5.8
-3.0
-2.3
-2.8
-18.5
-21.9
-13.0
NS
-20.7
-3.8
0.4
-7.0
12.0
2.6
5.9
-2.7
3.3
-10.9
16.3
-24.5
-34.2
-23.7
NS
FUND NAME
NAV
GF AT LB DATE CR
Pictet-Biotech-P USD
Pictet-Brazil Index-P USD
Pictet-CHF Bonds-P
Pictet-China Index-P USD
Pictet-Clean Energy-P USD
Pictet-Conv. Bonds-P EUR
Pictet-Digital Comm-P USD
Pictet-Eastern Europe-P EUR
Pictet-Em Corp Bds-P USD
Pictet-Em Loc Curr Dbt-P USD
Pictet-Em Mkts Hgh Div-P USD
Pictet-Em Mkts Index-P USD
Pictet-Em Mkts Sust Eq-P USD
Pictet-Emerging Markets-P USD
Pictet-Envir Megatr Sel-P EUR
Pictet-Eu Equities Sel-P EUR
Pictet-EUR Bonds-P
Pictet-EUR Corp Bds Ex Fin-P
Pictet-EUR Corporate Bonds-P
Pictet-EUR Government Bonds-P
Pictet-EUR High Yield-P
Pictet-EUR Inflation Lkd Bds-P
Pictet-EUR SM-Term Bds-P
Pictet-EUR ST High Yld-P
Pictet-Euroland Index-P EUR
Pictet-Europe Index-P EUR
Pictet-European Sust Eq-P EUR
Pictet-Generics-P USD
Pictet-Glo Bds Fundamental-P USD
Pictet-Glo Em Currencies-P USD
Pictet-Glo Emerging Debt-P USD
Pictet-Glo Flexible Alloc-P EUR
Pictet-Glo Megatrend Sel-P USD
Pictet-Greater China-P USD
Pictet-High Dividend Sel-P EUR
Pictet-India Index-P USD
Pictet-Indian Equities-P USD
Pictet-Japan Index-P JPY
Pictet-Japanese Eq Opp-P JPY
Pictet-Japanese Eq Sel-P JPY
Pictet-Latam Index-P USD
Pictet-Latin Am Loc Curr Dbt-P USD
Pictet-Pac (ExJpn) Idx-P USD
Pictet-Piclife-P CHF
Pictet-Premium Brands-P EUR
Pictet-Quality Gl Eq-P USD
Pictet-Russia Index-P USD
Pictet-Russian Equities-P USD
Pictet-Security-P USD
Pictet-Short-T Money Mkt CHF-P
Pictet-Short-T Money Mkt EUR-P
Pictet-Short-T Money Mkt JPY-P
Pictet-Short-T Money Mkt USD-P
Pictet-Small Cap Europe-P EUR
Pictet-Sov. ST Money Mkt-P EUR
Pictet-Sov. ST Money Mkt-P USD
Pictet-Timber-P USD
Pictet-US Eq Grwth Sel-P USD
Pictet-US Eq Value Sel-P USD
Pictet-US High Yield-P USD
Pictet-USA Index-P USD
Pictet-USD Government Bonds-P
Pictet-USD Short Mid-Term Bds-P
Pictet-Water-P EUR
Pictet-World Gvt Bonds-P EUR
PTR-Banyan-P USD
PTR-Corto Europe-P EUR
PTR-Kosmos-P EUR
PTR-Mandarin-P USD
OT
OT
CH
AS
OT
OT
OT
EU
OT
OT
GL
GL
GL
GL
OT
EU
EU
EU
EU
EU
EU
EU
EU
EU
EU
EU
EU
OT
OT
OT
GL
OT
GL
AS
OT
EA
EA
JP
JP
JP
GL
OT
AS
OT
OT
GL
EE
EE
GL
CH
OT
OT
OT
EU
OT
OT
GL
US
US
US
US
US
US
OT
OT
OT
OT
OT
OT
EQ
OT
BD
EQ
OT
OT
EQ
EQ
OT
OT
EQ
EQ
EQ
EQ
OT
EQ
BD
BD
BD
BD
BD
BD
BD
BD
EQ
EQ
EQ
EQ
OT
OT
BD
OT
EQ
EQ
OT
EQ
EQ
EQ
EQ
EQ
EQ
OT
EQ
OT
EQ
EQ
EQ
EQ
EQ
MM
OT
OT
OT
EQ
OT
OT
EQ
EQ
EQ
BD
EQ
BD
BD
OT
OT
OT
OT
OT
OT
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/17
05/16
05/16
05/17
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/17
05/16
05/16
05/17
05/17
05/17
05/17
05/16
05/16
05/17
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/16
05/17
05/17
05/17
05/16
USD
USD
CHF
USD
USD
EUR
USD
EUR
USD
USD
USD
USD
USD
USD
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
USD
USD
USD
USD
EUR
USD
USD
EUR
USD
USD
JPY
JPY
JPY
USD
USD
USD
CHF
EUR
USD
USD
USD
USD
CHF
EUR
JPY
USD
EUR
EUR
USD
USD
USD
USD
USD
USD
USD
USD
EUR
EUR
USD
EUR
EUR
USD
NAV
458.90
81.78
463.47
99.47
70.71
102.97
168.95
375.09
104.57
204.20
117.82
252.67
103.23
535.24
117.28
535.67
474.70
131.82
176.33
136.72
207.11
120.91
130.34
111.30
101.58
135.21
174.86
169.90
132.51
108.04
328.35
101.51
181.87
399.93
129.35
90.81
318.92
12893.27
7108.54
10975.86
90.12
159.38
367.71
906.73
121.27
116.71
78.69
61.73
148.13
124.27
137.75
10127.97
132.18
715.86
102.78
101.99
148.78
142.69
169.74
141.53
139.48
593.73
125.72
191.52
138.07
107.57
114.86
105.90
97.03
Data provided by:
%RETURN
YTD 12-MO 2-YR
27.8
-0.8
0.7
-2.4
11.5
7.0
14.3
2.3
1.9
1.5
2.2
-0.3
1.3
1.4
14.0
9.4
2.9
1.7
2.1
2.2
4.3
-0.5
1.0
2.3
9.8
11.5
11.5
11.6
-1.7
0.3
0.1
4.0
13.3
4.4
17.0
3.8
3.5
47.7
49.9
45.9
-1.4
4.8
7.3
8.4
15.6
15.9
-5.3
-6.1
11.6
0.0
0.0
0.0
0.1
14.1
-0.1
0.0
13.1
13.6
16.4
4.6
16.3
0.0
0.3
14.6
-2.8
4.9
4.8
0.3
2.4
35.8
5.6
3.2
13.1
16.5
9.5
22.4
21.3
NS
11.5
NS
12.6
12.5
14.5
21.1
25.0
11.0
6.3
9.2
9.3
18.2
6.3
3.7
9.3
32.6
28.3
25.9
27.3
2.0
3.3
11.2
5.4
25.8
21.0
25.2
23.2
23.0
74.3
73.4
68.5
8.2
12.6
29.0
14.9
22.9
NS
4.7
5.1
21.6
-0.1
0.0
0.0
0.3
30.1
-0.2
0.2
43.5
18.6
28.3
12.4
25.7
1.2
0.4
19.1
-4.8
15.0
16.6
1.8
9.1
18.1
NS
3.8
NS
-6.3
-0.9
6.3
-1.6
NS
4.4
NS
-2.4
NS
-6.3
6.8
7.2
9.0
6.5
6.3
8.3
6.7
3.2
3.6
NS
3.1
8.0
7.1
6.5
NS
-0.7
10.2
NS
5.9
-0.2
11.7
NS
-7.3
25.0
27.6
23.5
NS
5.3
6.2
7.2
12.3
NS
NS
-12.5
4.7
0.0
0.4
0.1
0.3
8.7
0.0
0.2
8.0
11.1
10.7
7.1
12.8
4.6
0.6
13.3
4.9
NS
4.2
NS
-5.4
FUND NAME
NAV
GF AT LB DATE CR
Paragon Limited USD A

UK Fund USD A
EU
OT
n Pictet Funds (Europe) SA, ROUTE DES ACACIAS 60, CH-1211 GENEVA 73
Tel: + 41 (58) 323 3000 Web: www.pictetfunds.com
Pictet-Abs Ret Gl Conserv-P EUR
Pictet-Abs Ret Gl Div-P EUR
Pictet-Agriculture-P EUR
Pictet-Asian Eq ExJpn-P USD
Pictet-Asian Loc Cur Dbt-P USD
OT OT
GL OT
OT OT
OT OT
AS BD
LUX
LUX
LUX
LUX
LUX
05/16
05/16
05/16
05/17
05/17
EUR
EUR
EUR
USD
USD
104.46
118.91
161.45
183.72
156.31
-0.9
-1.0
9.8
4.0
0.8
1.2
2.5
18.8
18.6
6.9
1.5
1.6
5.5
-0.6
4.9
OT
JP
OT
OT
EQ
EQ
EQ
EQ
IRL
IRL
IRL
IRL
05/16
05/17
05/16
05/16
USD
USD
USD
USD
n Hemisphere Management (Ireland) Limited

Discovery USD A
Elbrus USD A
Europn Conviction USD B
Europn Forager USD B
Latin America USD A
GL
OT
EU
EU
GL
OT
OT
EQ
EQ
EQ
CYM
CYM
CYM
CYM
CYM
12/31
10/31
04/30
04/30
06/30
USD
USD
USD
USD
USD
18.76
22.57
22.14
21.78
8.6
26.5
21.6
21.5
13.7
32.1
39.8
39.3
1.6
11.6
20.3
19.9
101.35
10.48
155.25
288.19
NS.00
NS
NS
-1.7
2.1
NS
NS
NS
3.7
6.8
NS
NS
NS
NS
7.1
NS
EQ CYM 12/31 USD

OT CYM 04/13 USD
NS.00
157.94
%RETURN
YTD 12-MO 2-YR
12.7
1.8
12.7
NS
14.2
NS
n PT CIPTADANA ASSET MANAGEMENT

Tel: +6221 25574 883 Fax: +6221 25574 893 Website: www.ciptadana-asset.com
Indonesian Grth Fund
GL
EQ BMU 05/15 USD
195.47
9.1
5.0
1.0
1090.10
1133.88
7.11
5.5
9.8
39.3
7.2
7.3
53.2
2.2
3.6
16.8
n THE NATIONAL INVESTOR

PO Box 47435, Abu Dhabi, UAE Web:www.tni.ae
MENA Special Sits Fund
MENA UCITS Fund
UAE Blue Chip Fund
OT
OT
OT
OT BMU 04/30 USD

OT IRL 05/09 USD
OT ARE 05/09 AED
n YUKI MANAGEMENT & RESEARCH

n YMR-N Series
YMR-N Growth Fund
n Yuki 77 Series
Yuki 77 General
JP
EQ IRL 05/17 JPY
13494.00
55.5
72.5
22.5
JP
EQ IRL 05/17 JPY
8915.00
69.2
92.9
27.5
EQ IRL 05/17 JPY
16221.00
77.1
96.7
28.9
EQ IRL 05/17 JPY

EQ IRL 05/17 JPY
9214.00
10345.00
48.7
61.2
65.7
62.5
21.1
17.3
6844.00
7510.00
66.3
59.0
89.9
77.3
28.6
26.2
5829.00
10762.00
9596.00
6470.00
19079.00
9463.00
55.4
74.7
38.0
47.5
90.0
85.9
71.0
99.8
51.0
60.3
99.6
117.3
19.5
32.3
16.8
18.3
34.3
34.4
n Yuki Asia Umbrella Series

Yuki Rebounding Gro Fd
JP
n Yuki Chugoku Series

Yuki Chugoku Jpn Gen
Yuki Chugoku JpnLowP
JP
JP
n Yuki Hokuyo Japan Series

Yuki Hokuyo Jpn Gen
Yuki Hokuyo Jpn Inc
n Yuki Mizuho Series

Yuki Mizuho Jpn Dyn Gro
Yuki Mizuho Jpn Exc 100
Yuki Mizuho Jpn Inc
Yuki Mizuho Jpn Lg Cap
Yuki Mizuho Jpn LowP
Yuki Mizuho Jpn Val Sel
JP
JP
EQ IRL 05/17 JPY

EQ IRL 05/17 JPY
JP
JP
JP
JP
JP
AS
EQ
EQ
EQ
EQ
EQ
EQ
IRL
IRL
IRL
IRL
IRL
IRL
05/17
05/17
05/17
05/17
05/17
05/17
JPY
JPY
JPY
JPY
JPY
JPY
n OTHER FUNDS
For information about these funds, please contact us on Tel: +44 (0) 207 842 9694/9633
Medinvest Plc Dublin
OT EQ IRL 09/30 USD
NS.00
n WINTON CAPITAL MANAGEMENT LTD

Tel: +44 (0)20 7610 5350 Fax: +44 (0)20 7610 5301
Winton Evolution EUR Cls H
Winton Evolution GBP Cls G
Winton Evolution USD Cls F
Winton Futures EUR Cls C
Winton Futures GBP Cls D
Winton Futures JPY Cls E
Winton Futures USD Cls B
GL
GL
GL
GL
GL
GL
GL
OT
OT
OT
OT
OT
OT
OT
CYM
CYM
CYM
VGB
VGB
VGB
VGB
04/30
04/30
04/30
04/30
04/30
04/30
04/30
EUR
NS.00
GBP
NS.00
USD
NS.00
EUR
251.38
GBP
272.94
JPY 17560.04
USD
894.46
NS
1.3
-4.4
13.4
13.8
13.7
8.8
8.9
9.4
9.0
7.8
8.3
8.1
5.7
6.1
5.9
5.9
1.8
1.9
1.7
3.3
3.4
2.8
3.2
INDICES
n POLAR CAPITAL PARTNERS LIMITED

International Fund Managers (Ireland) Limited PH - 353 1 670 660 Fax - 353 1 670 1185
Global Technology
Japan Fund USD
Polar Healthcare Class I USD
Polar Healthcare Class R USD
NAV
FUND NAME
NAV
%RETURN
GF DATE CR NAV 1-WK 1-MO 1-Q 1-YR 2-YR
n ARIX ABSOLUTE RETURN INVESTABLE INDEX

Feri Institutional Advisors, www.feri.de
ARIX Composite Gross USD OT
OT GBR 04/30.00
USD1554.98
4.8
7.8
1.7
NAV
OT CYM 05/10.00
GBP26302.30
5.3
10.9
9.8
n CG Portfolio Fund Ltd

OT
Data as shown is for information purposes only. No offer is being made by Morningstar, Ltd. or this publication. Funds shown arent registered with the U.S. Securities and Exchange Commission and arent available for sale to United States citizens and/or residents
except as noted. Prices are in local currencies. All performance figures are calculated using the most recent prices available. 12-month and 2-year returns may be calculated over 11- and 23-month periods pending receipt and publication of the last month end price.
For information about listing your funds, please contact: Lauren Berkemeyer tel: +44 20 7572 2102; email: lauren.berkemeyer@dowjones.com
24 | Monday, May 20, 2013
MARKETS
SAC Will Reduce

Aid in Insider Case
SAC Capital Advisors LP told

clients it will no longer cooperate
unconditionally with the government on a criminal insider-trading
probe of the hedge-fund firm, marking an abrupt turn for a company
that has spent months reassuring
investors.
officials said the contrast between

Fridays letter and past communications with SAC clients represented
an acknowledgment that the firm
expects significantly more withdrawals.
SAC investors already have
sought $1.7 billion in withdrawals
this year, and the company has
postponed the next deadline to notify the firm of additional withdrawals to June 3.
At the same time, the company
said in Fridays letter that it believed its new stance will not have
a financial impact to our funds.
The government continues to
probe SAC and its employees, just
two months after the firm agreed to
a record $616 million penalty to settle two civil insider-trading suits
brought by the Securities and Exchange Commission. In settling, SAC
neither admitted nor denied wrongdoing.
Both federal prosecutors in Manhattan and the Federal Bureau of Investigation have been pursuing the
SAC investigation for several years.
At least a dozen FBI agents from
several squads are working on the
investigation, with more involved
part-time, people familiar with the
probe said.
A five-year deadline is approaching in July for prosecutors to decide
whether to file what could be the
most serious criminal charges and
for regulators to decide whether to
file civil charges, related to trading
in one case that touches Mr. Cohen.
SAC officials for months have resisted assertions by some clients
and others close to the firm that
SAC might opt voluntarily to return
all external investors money, even
as the governments investigation
intensified. Fridays letter didnt
necessarily change that, according
to people briefed on conversations
with the firm.
SAC previously said it was cooperating with the government and
made accommodations to investors,
repeatedly giving them more time to
decide whether to withdraw money
from the firm.
Bloomberg News
By Jenny Strasburg, Michael

Rothfeld
and Juliet Chung
Sandvik, a maker of mining and construction equipment, said the strong krona shaved 15% off its first-quarter profit.
Swedish Firms Squeezed by Krona

lower limit for the euros exchange
rate against the franc in order to
protect Swiss exporters. When the
rate reaches a floor, francs are sold
for euros.
However, Mr. Reinfeldt and central-bank officials in Sweden have
shown little interest in taking action
to weaken the krona.
Per Jansson, deputy governor of
Swedens central bank, said currency fears voiced by exporters are
exaggerated. Seen over a longer
perspective, this is hardly a threat to
our industry, he said. If it is, we
have big problems.
Mr. Reinfeldt, who faces an election in about 16 months, said Swedish companies need to get more efficient. You have to do that if you
have a stronger currency, he said
recently. Mr. Reinfeldt has reduced
corporate tax rates to one of the
lowest levels in Europe.
Sweden is a member of the European Union but rejected joining Europes common currency in a referendum a decade ago. Euro
skepticism still is widespread, with
only about 10% of Swedes expressing
interest in abandoning the 140-yearold krona, according to a study by
Gothenburg University. Like other
European countries that dont use
the euro, Sweden can make its own
monetary and fiscal policy.
But Swedens currency has been
trading at stubbornly high levels
Export Pains
How many Swedish krona

one euro buys
9.25 krona
Friday:
8.59 krona
9.00
8.75
8.50
8.25
8.00
2012
13
Source: Factset
against the euro for more than a

year, and the resulting pressure on
export-reliant manufacturers is intensifying.
Swedish companies say they
cant move fast enough to keep up
with competitors with euro- or U.S.
dollar-based production costs.
Sandvik said first-quarter profit
was cut by 350 million Swedish kronor ($52 million) because of the currencys strength. The hit was equal
to about 15% of earnings. A similar
hit is expected in the current quarter.
Robert Arnegard, who oversees
family-run Svenska Lantchips, the
potato-chip maker, said, We will try

and squeeze hard. The companys
products are a staple sold in brown
bags on grocery-store shelves across
Sweden. To resist the currency-related headwinds, the company is
considering whether to open a production plant somewhere in the euro
zone, he said.
Bjorn Jakobson, the founder of
BabyBjorn, set up a production outpost in Milwaukee about four years
ago because of worries about the
kronas value. Mr. Jakobson is well
known in Sweden because of the
popularity of BabyBjorn products
that allow parents to carry children
in an ergonomically sound device.
I didnt trust the currencies, he
said, adding that it helps to buy in
dollars and sell in dollars. Mr. Jakobson would like Sweden to adopt the
euro because it is important for
business people to have clear laws of
the game and to reduce risks.
It would have been great to
know that here the same playing
field applies all the time, he said.
Ms. Stark, the farm-machinery
executive, doesnt necessarily want
to abandon the krona. She hopes
policy makers will take action that
favors hiring and investing in Swedish factories.
I think the export industry is
more important than people in
Stockholm seem to remember, she
said after Mr. Reinfeldts visit. This
will strike back on us.
Rating Upgrade Spurs Turkish Shares
BY EMRE PEKER
AND JOE PARKINSON
ISTANBULTurkish stocks and

bonds surged to record levels on
Friday after Ankara secured its second investment-grade credit rating,
offering a substantial boost to a
government that has long coveted
an upgrade to increase institutional
investment.
Moodys Investors Service, one
of the three main rating firms,
raised Turkeys status by one notch
to Baa3 on Thursday, joining Fitch
Ratings in placing Ankara at the
lowest rung of investment grade.
Turkeys improving economy and
public finances warranted the upgrade, New York-based Moodys said
in a note.
Six months after the Fitch upgrade gave Turkey its first investment-level rating since 1994, the
Moodys action is poised to reduce

the countrys borrowing costs. It
could also foreshadow a wave of investments from funds seeking
higher returns than they can get in
developed economies, as most portfolios require investment-grade ratings from two of the three major
firms to buy assets in a country.
The long-term implications
should be fairly positive, ranging
from improved quality in inflows
and to possible improvement in investment appetite, said Tevfik Aksoy, a London-based economist at
Morgan Stanley. New channels of
fund flows might emerge, especially
those funds that have so far been
unable to invest in a country with a
junk status.
Investors have been pricing in
the Moodys upgrade since Fitchs
November move, driving the Bourse
Istanbul 100 Index up about 30%
and on Friday pushing it above

93000.
During the same period, Turkeys
two-year benchmark bond yield fell
to lows each week, declining to a record 4.63% on Friday after trading
at 5.04% Thursday morning. The
lira, by contrast, lost ground in
early trading as investors sought to
cash in, economists said.
Turkeys government, which has
persistently said ratings firms underestimated the $786 billion economys strength, framed the news as
the result of years of economic
overhauls in the decade under the
Justice and Development Party and
predicted a new wave of investment.
This upgrade is a delayed delivery of our achievements, said Economy Minister Zafer Caglayan. Now,
we anticipate big flows in both foreign-direct investments and portfolio investments.
The move signals that a multiyear, multipronged government investigation of the company and its
billionaire founder, Steven A. Cohen,
has intensified, according to people
familiar with the matter.
The Stamford, Conn., firm also
told investors in a letter Friday that
it wont any longer update them on
developments in the government investigation, according to people
who have seen the letter.
While we have in the past told
you of our cooperation with the
governments investigation, our cooperation is no longer unconditional, and we do not intend to give
updates in this area going forward,
the letter said.
Mr. Cohen hasnt been accused of
any wrongdoing. Since 2009, six former SAC employees have been convicted in criminal cases or pleaded
guilty to insider-trading charges;
four of those are cooperating with
authorities. An SAC spokesman has
said both the firm and Mr. Cohen
acted appropriately.
The decisions reflect new developments in the investigation, said
people familiar with the matter. SAC
has been voluntarily providing documents and engaging in discussions
with the government, but the shift
reflected in Fridays letter means
the government will have to present
subpoenas to obtain further information from SAC, according to the
people.
SAC manages $15 billion in total,
most of which belongs to Mr. Cohen
and SAC employees.
People who have been briefed on
recent conversations involving SAC
Fund Scorecard
Emerging Markets Long/Short Equity
These funds primarily take long/short positions in emerging market equities. At least
60% of assets are invested in emerging market equities. Ranked on % total return
(dividends reinvested) in Euros for one year ending May 17, 2013
Leading 10 Performers
FUND FUND
RATING * NAME
1
2
3
NS
4
NS
4
3
NS
3
FUND MGM'T CO.
LEGAL
CURR. BASE
Emerging
GEM Global
USDBHS
ValueOpportunitiesFundLtd Equities Management SA
Access
Access Turkey
USDUSA
Turkey LLC
Advisors Ltd.
GFM Levant
Levant Partenrs
USDCYM
Fund
Greece S.A.
Harmony
DM Capital Limited
USDCYM
Master Fund
Enhanced
Enhanced
USDBMU
Philippine Index Fund Investment Products Limited
Toccata
Toccata Capital
USDCYM
Capital Fund
Pte. Ltd.
Rega Capital
Rega Technologies
USDCYM
Dynamic Value Fund Limited
Pure Heart
Pureheart Capital
USDCYM
Natural Selection Asia Limited
Fama
Fama Investimentos BRLBRA
Futurewatch I FIC FIA Ltda
Yellow
AlphaMax
USDCYM
CypressOpportunitiesSegregated Investment Management Ltd.
NOTE: Changes in currency rates will affect performance and rankings.

KEY: ** 2YR and 5YR performance is annualized
NA-not available due to incomplete data;
NS-fund not in existence for entire period
YTD
% Return in $US **
1-YR 2-YR 5-YR
14.08 97.24 -11.41 -32.02

17.88 90.72 38.64 20.80
12.96 80.16 30.18 15.67
22.27 75.37 11.10
NS
21.16 43.05 38.68 21.79

9.24 38.72 39.20
NS
6.45 37.09
7.72
NS
34.11 11.20
NS
11.05 33.47 10.43
6.01
14.12 32.40
1.67
14.21
2.39
Source: Morningstar, Ltd

1 Olivers Yard, 55-71 City Road
London EC1Y 1HQ United Kingdom
www.morningstar.co.uk; Email: mediaservice@morningstar.com
Phone: +44 (0)203 107 0038; Fax: +44 (0)203 107 0001
Monday, May 20, 2013 | 25
BLUE CHIPS & BONDS
Major players & benchmarks
Dow Jones Industrial Average
Below, a look at the Dow Jones Stoxx

50, the biggest and best known
companies in Europe, including the U.K.
LAST: 15354.40
YEAR TO DATE:
OVER 52 WEEKS
Stoxx Europe 50: Friday's best and worst...
Previous
close, in
local currency
Volume
STOCK PERFORMANCE
Previous session
Company
Country
Industry
ING Groep
Netherlands
Life Insurance
43,943,971
7.11
YTD
Daimler
Germany
Automobiles
10,287,859
49.00
Deutsche Bank
Germany
Banks
9,944,165
37.51
2.64
13.8
31.8
Standard Chartered
United Kingdom
Banks
4,468,051
1,623
2.53
3.1
23.2
Barclays
United Kingdom
Banks
58,962,421
326.80
24.5
79.7
0.7%
3.95%
18.6
3.85
2.00
P/E: 17
s 121.18, or 0.80%
s 2,250.26, or 17.2%
s 2,985.02, or 24.1%
High
52-week
55.2%
15100
Close
Low
32.3
14600
14100
7.1
5.2
22.8
32.1
16.6
65.4
-1.18
32.1
57.3
-1.10
13.5
32.7
Deutsche Telekom
Germany
Mobile Telecommunications
35,461,993
9.21
Telefon L.M. Ericsson B
Sweden
Telecommunications Equipment
9,780,040
79.95
Bayer
Germany
Specialty Chemicals
4,501,891
83.79
-1.19
Roche Holding Part. Cert.
Switzerland
Pharmaceuticals
1,903,899
243.10
Diageo
United Kingdom
Distillers & Vintners
4,272,634
2,028
-8.30%
-1.78
50day
moving average
13100
...And the rest of Europe's blue chips

Company/Country (Industry)
Volume
24,230,425
Tesco
United Kingdom (Food Retailers & Wholesalers)
UBS
13,762,911
Switzerland (Banks)
Financiere Richemont
2,654,280
Switzerland (Clothing & Accessories)
BNP Paribas
7,918,358
France (Banks)
L'Air Liquide
1,778,784
France (Commodity Chemicals)
Schneider Electric
3,147,805
France (Electrical Components & Equipment)
BG Grp
6,347,629
United Kingdom (Integrated Oil & Gas)
Anglo American PLC
3,172,056
United Kingdom (General Mining)
HSBC Hldgs
17,980,369
United Kingdom (Banks)
Banco Santander S.A.
85,667,610
Spain (Banks)
Total
9,759,872
France (Integrated Oil & Gas)
Royal Dutch Shell A
3,113,652
H&M Hennes & Mauritz B
2,426,127
Sweden (Apparel Retailers)
BP PLC
23,206,698
Moet Hennessy Louis Vuitt
1,610,618
France (Clothing & Accessories)
BHP Billiton
5,883,486
ABB
5,525,795
Switzerland (Industrial Machinery)
Rio Tinto
5,142,965
Allianz SE
2,870,473
Germany (Full Line Insurance)
ENI
47,321,773
Italy (Integrated Oil & Gas)
12600
Latest,
in local
currency
STOCK PERFORMANCE
Latest
YTD 52-week
380.80
1.85%
13.3%
21.3%
17.82
1.65
24.9
62.7
90.10
1.46
26.2
56.3
46.49
1.40
9.2
82.5
97.24
1.39
2.3
4.1
60.06
1.37
9.5
41.6
1,226
1.36
21.0
-0.6
1,570
1.36
-17.1
-23.3
758.60
1.28
17.3
45.6
5.51
1.19
-7.9
25.2
39.00
1.17
-0.8
12.7
2,230
1.00
5.1
12.1
237.00
0.94
5.6
11.3
469.95
0.89
10.6
18.5
141.65
0.89
1.6
15.9
1,929
0.89
-9.4
11.8
21.58
0.84
15.1
37.9
2,900
0.75
-17.4
1.6
119.60
0.72
14.1
58.8
18.98
0.69
3.5
19.1
Company/Country (Industry)
Volume
BASF
4,919,943
Germany (Commodity Chemicals)
British American Tobacco
2,196,672
United Kingdom (Tobacco)
Nestle
9,208,886
Switzerland (Food Products)
81,411,547
Vodafone Group
United Kingdom (Mobile Telecommunications)
GlaxoSmithKline
7,252,167
United Kingdom (Pharmaceuticals)
E.ON SE
14,101,789
Germany (Multiutilities)
Telefonica S.A.
26,759,282
Spain (Fixed Line Telecommunications)
Unilever
3,607,840
United Kingdom (Food Products)
Imperial Tobacco Grp
2,493,541
United Kingdom (Tobacco)
Siemens
5,173,799
Germany (Diversified Industrials)
Sanofi SA
5,813,342
France (Pharmaceuticals)
AstraZeneca
2,197,919
United Kingdom (Pharmaceuticals)
Unilever CVA
8,500,647
Netherlands (Food Products)
6,085,775
SAP
Germany (Software)
Banco Bilbao Vizcaya Argn
60,938,875
Spain (Banks)
Reckitt Benckiser Grp
957,332
United Kingdom (Nondurable Household Products)
Anheuser-Busch InBev
3,032,457
Belgium (Brewers)
Novartis AG
4,336,948
Switzerland (Pharmaceuticals)
Zurich Insurance Group
727,296
Switzerland (Full Line Insurance)
National Grid
5,923,261
United Kingdom (Multiutilities)
Latest,
in local
currency
22
STOCK PERFORMANCE
Latest
YTD 52-week
74.42
0.59%
4.6%
3,763
0.49
20.6
22.7
66.95
0.37
12.3
22.8
197.70
0.33
28.0
19.2
1,713
0.29
28.3
21.5
12.91
0.23
-8.4
-15.1
11.20
0.22
9.9
12.9
0.18
20.2
40.1
2,296
0.04
-3.2
-6.7
80.87
-0.01
-1.6
22.5
84.50
-0.14
18.4
56.8
3,383
-0.19
16.3
28.0
32.76
-0.27
13.6
28.8
62.73
-0.40
3.4
35.2
7.41
-0.44
7.5
52.9
4,718
-0.53
21.6
37.5
75.00
-0.54
14.1
36.3
71.75
-0.62
24.9
46.1
259.30
-0.77
6.5
27.8
828.50
-0.78
17.9
22.7
15
22 28
Apr.
12
Credit derivatives
Spreads on credit derivatives are one way the market rates
creditworthiness. Regions that are treading in rough waters
can see spreads swing toward the maximumand vice versa.
Indexes below are for five-year swaps.
Markit iTraxx Indexes
Index: series/version
Mid-spread,
in pct. pts.
Mid-price
Europe: 19/1
Eur. High Volatility: 19/1
Europe Crossover: 19/1
Asia ex-Japan IG: 19/1
Japan: 19/1
Coupon
SPREAD RANGE, in pct. pts.

since most recent roll
Maximum Minimum
Average
Spreads on
ve-year swaps
for corporate
debt; based on
Markit iTraxx
indexes.
Symbol
Volume,
in millions
AT&T
Alcoa
AmExpress
BankAm
Boeing
Caterpillar
Chevron
CiscoSys
CocaCola
Disney
DuPont
ExxonMobil
GenElec
HewlettPk
HomeDpt
Intel
IBM
JPMorgChas
JohnsJohns
McDonalds
Merck
Microsoft
Pfizer
ProctGamb
3M
TravelersCos
UnitedTech
UtdHlthGp
Verizon
T
AA
AXP
BAC
BA
CAT
CVX
CSCO
KO
DIS
DD
XOM
GE
HPQ
HD
INTC
IBM
JPM
JNJ
MCD
MRK
MSFT
PFE
PG
MMM
TRV
UTX
UNH
VZ
16.3
12.5
4.8
106.3
7.4
6.6
6.8
77.8
12.4
9.1
4.8
12.4
40.2
14.3
8.5
35.9
5.6
25.8
11.3
4.0
21.6
59.9
36.7
8.5
4.0
2.2
4.2
5.8
9.2
WalMart
WMT
10.6
Stock
0.01%
1.28
0.90
1.08
0.01
1.84
1.00
1.60
Dixons Retail
3.88
104.83
0.05
4.91
3.71
4.37
Bay Motoren Werke
1.02
99.89
0.01
1.24
0.98
1.12
CODERE Fin LUXEMBOURG
0.78
101.10
0.01
1.16
0.73
0.93
Cr Agricole
Europe Crossover
t
Europe Senior Financials

t
7.00
287
48
41
125
66
...
16
2044
95
597
413
158
44
ROLLSROYCE
61
14
Volkswagen
75
16
Daimler
77
16
101
40
LHR ARPTS
Eurpn Aero Defence Space
Co Eads
3.00
FIAT
Points
$37.44
8.61
73.32
13.43
98.92
87.67
123.42
24.24
42.97
66.58
55.89
91.76
23.46
21.27
76.86
24.04
208.44
52.30
88.09
101.54
45.99
34.87
28.96
80.02
111.39
86.50
97.35
62.84
53.35
0.06
0.11
1.09
0.07
2.34
0.89
0.66
0.35
0.12
0.11
0.40
1.06
0.19
0.09
0.11
0.10
3.75
1.33
0.64
0.42
0.38
0.79
0.29
0.18
0.32
0.37
2.18
0.70
0.15
0.16%
1.29
1.51
0.52
2.42
1.03
0.54
1.48
0.28
0.17
0.72
1.17
0.82
0.42
0.14
0.42
1.83
2.61
0.73
0.42
0.82
2.32
0.99
0.22
0.29
0.43
2.29
1.13
0.28
77.87
0.63
0.80
CHANGE, in basis points
71
28
430
15
13
139
Yesterday Yesterday Five-day 28-day

Kabel Deutschland Vertrieb
und Service
177
10
14
22
Swedbank
99
...
11
BP
61
106
France Telecom
Novartis
25
...
...
ConvaTec Healthcare
484
10
119
ITV
130
Royal Bk of Scotland
155
22
INEOS GROUP Hldgs
105
41
58
...
Reed Elsevier
Source: Markit Group
1.00
1
Source: Markit Group
WSJ.com>>
Follow the markets throughout the day, with updated

stock quotes, news and commentary at WSJ.com.
Also, receive emails that summarize the days trading in
Europe and Asia. To sign up, go to WSJ.com/Email.
CHANGE
Percentage
Latest
And the most deterioration
Yesterday Yesterday Five-day 28-day
5.00
Dec. Jan. Feb. Mar. April May

2012
2013
17
Source: WSJ Market Data Group
CHANGE, in basis points
98.03
Index roll
10
DJIA component stocks
Showing the biggest improvement...
100.30%
Note: Data as of May 16
3
May
At its most basic, the pricing of credit-default swaps measures how much a buyer has to pay to purchase-and
how much a seller demands to sell-protection from default on an issuer's debt. The snapshot below gives a
sense which way the market was moving yesterday.
1.41
In percentage points
26
Credit-default swaps: European companies
0.94
Spreads
19
Note: Price-to-earnings ratios are for trailing 12 months
30.7%
2,845
1
8
Mar.
Sources: SIX Financial Information
Tracking
credit
markets &
dealmakers
13600
Behind Asias deals: Bank revenues from equity capital markets

Behind every IPO,
follow-on or
convertible equity
offering is one or
more investment
banks. At right,
investment banks
historical and yearto-date revenues
from global equitycapital-market
(ECM) deals
n Equity capital markets n Debt capital markets (both in billions, left axis)
ECM as a percentage of total
90%
(right axis)
t
60
30
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: Dealogic
26 | Monday, May 20, 2013
GLOBAL MARKETS LINEUP

Major stock market indexes
Stock indexes from around the world, grouped by region. Shown in local-currency terms.
PERFORMANCE
Percentage change
Yr.-to-date
PREVIOUS SESSION
Region/Country
Index
Close
Net change
EUROPE
Stoxx Europe 600
308.72
Stoxx Europe 50
Euro Zone
Euro Stoxx
52-wk.
Region/Country
Russia
PREVIOUS SESSION
Index
RTSI
Close
1405.34
Net change
24.76
0.75
0.24%
10.4%
29.2%
2823.22
8.43
0.30
9.5
25.5
Spain
IBEX 35
8582.4
40.10
283.43
0.89
0.31
8.7
31.4
Sweden
OMX Stockholm
389.45
2.55
Euro Stoxx 50
2817.99
11.29
0.40
6.9
31.4
Switzerland
SMI
8280.25
24.10
91924.84
-21.90
6723.06
35.26
Austria
ATX
2499.83
15.06
Belgium
Bel-20
2732.29
4.78
Czech Republic
PX
982.78
-2.50
0.61
0.18
-0.25%
4.1
32.0
Turkey
ISE National 100
10.4
31.7
U.K.
FTSE 100
-5.4
13.1
ASIA-PACIFIC
DJ Asia-Pacific
147.51
-0.38
SPX/ASX 200
5180.80
15.10
21771.72
320.76
Denmark
OMX Copenhagen
504.34
-1.09
-0.21
11.5
25.2
Australia
Finland
OMX Helsinki
6421.75
-13.41
-0.21
10.7
26.7
China
CBN 600
France
CAC-40
4001.27
22.20
9.9
33.0
Hong Kong
Hang Seng
23082.68
Germany
DAX
8398.00
28.13
10.3
33.9
India
Sensex
20286.12
38.79
Hungary
BUX
18779.57
6.13
0.03
3.3
14.0
Japan
Nikkei Stock Average
15138.12
100.88
Ireland
ISEQ
4004.57
7.27
0.18
17.9
32.9
Singapore
Straits Times
3449.30
-2.98
Italy
FTSE MIB
17604.61
60.60
8.2
34.9
South Korea
Kospi
1986.81
Netherlands
AEX
368.08
2.71
7.4
27.5
AMERICAS
DJ Americas
424.90
3.72
Norway
All-Shares
Poland
WIG
Portugal
PSI 20
0.56
0.34
0.35
0.74
531.17
Closed
46078.68
86.65
6115.53
52.08
0.19
0.86
Price-toDividend earnings
yield*
ratio* Dows Jones Index
2.50%18.97
2.78 23.49
3.11 14.91
3.40 19.69
2.51 19.87
9.78 13.80
3.49 19.02
3.55 19.86
4.16 18.42
2.76 8.80
2.02 19.57
16.6
Brazil
Bovespa
55164.27
391.65
23.7
Mexico
IPC
41806.73
45.62
8.1
28.4
Note: Americas index data are as of 5:00 p.m. ET.
1641.06
226.30
1262.18
1200.07
1278.61
427.30
0.93% 26.4%
1.02 23.0
0.26
0.37
0.50
1.19
29.4
32.2
25.5
10.6
PERFORMANCE (U.S.dollars)
Last
Daily
52-wk.
2975.80
2235.02
216.75
2947.25
2951.42
268.83
1453.86
1400.87
1741.38
522.42
17389.25
205.85
0.30%
0.20
0.29
-0.45
0.33
-0.11
-0.37
-0.26
-0.23
0.46
1.02
-0.42
yield*
ratio* Dows Jones Index
27.2%
27.4
23.9
30.7
28.5
16.6
30.4
33.2
26.5
11.5
29.7
13.2
6.17%22.22
5.80 16.95
2.99 15.76
2.27 17.65
2.69 16.48
3.45 20.87
4.04 21.45
1.81 13.70
PERFORMANCE (euros) PERFORMANCE (U.S.dollars)

Last
Daily
52-wk.
Last Daily 52-wk.
Turkey Titans 20 -c
Global Select Div
Asia/Pacific Select Div
U.S. Select Dividend -d
S&P Glb Nat Resources
Islamic Market
Islamic Market 100
Islamic Turkey -c
Sustainability Europe
S&P Glb Infrastructure
Luxury
DJ-UBS Commodity -p
209.38
325.15
1183.40
2087.71
2485.61
102.36
1520.61
1744.23
116.73
935.46
-0.03% 17.1% 229.79
-0.43 22.6
356.85
1.75
1133.42
0.60
8.0 2662.53
2505.27
0.98
21.6 2727.90
4767.55
0.11 30.4
144.28
0.77
2204.81
15.9
1.05 28.0
1896.31
0.61
131.70
-3.6
*Fundamentals are based on data in U.S. dollar. Footnotes: a-in US dollar. b-dividends reinvested. c-in local currency. Note:All data as of 2 p.m.ET.
Cross rates
0.29
-0.02%
0.53
-0.26
0.29
1.50
0.19
0.67
-0.09
10.7
26.5
11.4
28.0
4.7
1.6
1.9
20.2
4.4
25.6
45.6
75.8
8.9
24.1
7.7
26.8
0.72
-9.5
1.2
-4.3
13.4
0.11
Sources: SIX Financial Information; WSJ Market Data Group
0.02%
-0.75
-1.15
1.02
-0.03
0.29
0.25
0.02
-0.61
0.14
0.33
0.61
64.3%
18.1
23.6
29.2
9.0
21.4
22.6
35.9
31.5
17.0
29.1
-3.2
yield
ratio Morgan Stanley Index
Source: S&P Dow Jones Indices
LOCAL-CURRENCY
Last
14.6%
2.60
16
World (Developed Markets) 1,508.02
0.19
12.7
16.5
2.40
16
World ex-EMU
185.79
0.26
13.6
16.3
2.50
16
World ex-UK
1,517.34
0.25
13.3
17.3
3.10
16
EAFE
1,772.81
-0.16
10.5
16.9
2.80
12
Emerging Markets (EM)
1,046.33 -0.02
-0.8
2.0
3.50
14
EUROPE
105.61 -0.07
9.7
18.8
166.49
-0.33
5.9
18.2
111.13
-0.11
10.1
22.4
3.70
15
EMU
3.50
16
Europe ex-UK
4.60
12
Europe Value
104.33
-0.10
7.6
19.1
2.50
19
Europe Growth
102.98 -0.04
11.7
18.4
Europe Small Cap
226.28
0.44
13.2
21.9
EM Europe
306.93 -0.98
-1.1
2.9
1,978.01 -0.09
13.2
16.5
17.2
2.70
26
3.80
3.60
13
UK
Nordic Countries
189.50
-0.10
9.6
Russia
728.18
-1.17
-5.0
-6.1
1,018.58
0.64
0.7
14.8
CHF
SEK
RUB
NOK
JPY
ILS
EUR
DKK
CDN
AUD
3.70
15
0.1533
0.0327
0.1751
0.0100
0.2800
1.3166
0.1767
1.0001
...
3.70
Canada
1.0270
1.5581
1.0552
0.1533
0.0327
0.1751
0.0100
0.2800
1.3165
0.1767
...
0.9999
3.30
15
Denmark
5.8134
8.8199
5.9734
0.8675
0.1849
0.9911
0.0564
1.5852
7.4523
...
5.6608
5.6603
Euro
0.7801
1.1835
0.8015
0.1164
0.0248
0.1330
0.0076
0.2127
...
0.1342
0.7596
0.7595
2.90
14
AC ASIA PACIFIC EX-JAPAN 481.06
1.70
23
Japan
3.10
10
1.30
15
1.10
10
Korea
3.30
20
Taiwan
3.6674
5.5641
3.7683
0.5473
0.1167
0.6252
0.0356
...
4.7013
0.6309
3.5712
3.5708
102.9992
156.2673
105.8337
15.3704
3.2762
17.5596
...
28.0850
132.0367
17.7176
100.2962
100.2860
Norway
5.8657
8.8992
6.0271
0.8753
0.1866
...
0.0569
1.5994
7.5193
1.0090
5.7117
5.7112
Russia
31.4387
47.6979
32.3039
4.6916
...
5.3598
0.3052
8.5725
40.3019
5.4080
30.6137
30.6105
Sweden
6.7011
10.1667
6.8855
...
0.2131
1.1424
0.0651
1.8272
8.5903
1.1527
6.5253
6.5246
Switzerland
0.9732
1.4765
...
0.1452
0.0310
0.1659
0.0094
0.2654
1.2476
0.1674
0.9477
0.9476
U.K.
0.6591
...
0.6773
0.0984
0.0210
0.1124
0.0064
0.1797
0.8449
0.1134
0.6418
0.6418
U.S.
...
1.5172
1.0275
0.1492
0.0318
0.1705
0.0097
0.2727
1.2819
0.1720
0.9738
0.9737
Source: ICAP Plc.
Currencies
Prices of futures contracts with the most open interest
EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.MDEX: Bursa Malaysia
Derivatives Berhad; LIFFE: London International Financial Futures Exchange; COMEX: Commodity Exchange; LME: London Metals Exchange;
NYMEX: New York Mercantile Exchange;ICE-EU: ICE Futures Europe *Data as of 5/16/2013
ONE-DAY CHANGE
Commodity
Exchange
Last price
Net
Percentage
CBOT
CBOT
CBOT
CME
ICE-US
ICE-US
ICE-US
ICE-US
LIFFE
LIFFE
LIFFE
COMEX
COMEX
COMEX
LME
LME
LME
LME
LME
LME
NYMEX
NYMEX
NYMEX
NYMEX
ICE-EU
ICE-EU
653.25
1448.75
682.75
118.675
2,308
137.05
16.89
86.37
435.00
1,550
2,035
11.75
21.25
-5.00
-1.050
14
-2.80
0.06
0.34
-1.50
21
-11
3.3145
1357.60
22.200
1,834.50
20,700.00
7,125.50
1,968.00
1,820.50
14,900
0.0200
-29.30
-0.459
-0.50
50.00
-19.50
7.00
-4.50
-5
96.33
2.9297
2.8870
4.107
104.63
879.75
0.88
0.0292
0.0241
0.125
0.85
8.00
1.83%
1.49
-0.73%
-0.88
0.61
-2.00
0.36
0.40
-0.34
1.37
-0.54
Year
low
738.75
1,483.50
813.25
132.325
2,437
163.30
19.92
94.20
442
1,583
2,217
610.00
1,336.50
664.75
118.375
2,046
132.70
16.81
75.58
413
1,400
1,926
3.8155
3.0425
1,702.00 1,321.50
32.510
21.120
2,165.50 1,828.50
25,150.00 19,775.00
8,286.00 6,842.00
2,455.00 1,961.00
2,214.00 1,820.50
18,665
14,850
0.61
-2.11
-2.03
-0.03
0.24
-0.27
0.36
-0.25
-0.03
0.92
1.01
0.84
3.14
0.82
0.92
Year
high
99.79
3.2205
3.1804
4.4990
115.93
992.75
86.16
2.7277
2.6750
3.3340
96.76
820.25
Sources: SIX Financial Information; WSJ Market Data Group
Follow the markets throughout the day with updated stock quotes, news and
commentary at WSJ.com. Also, receive email alerts that summarize the days trading in Europe
and Asia. To sign up, go to WSJ.com/email.
South Africa
0.12
3.2
9.0
772.95
-0.51
45.8
56.5
China
61.46
-0.11
-2.2
2.2
India
793.43
0.44
3.8
17.2
566.14
1.05
-2.4
-2.9
302.84
0.83
9.5
12.6
2.00
17
US BROAD MARKET
1,864.64
0.50
16.0
18.4
1.50
26
US Small Cap
2,750.32
0.40
16.8
21.9
3.30
16
EM LATIN AMERICA
3,700.92
0.38
-2.6
-5.7
*Twenty-three developed and 26 emerging markets
Source: MSCI Barra
London close on May 17

Per
U.S. dollar
In
U.S. dollars
AMERICAS
Argentina peso-a
Brazil real
Canada dollar
Chile peso
Colombia peso
Ecuador US dollar-f
Mexico peso-a
Peru sol
Uruguay peso-e
U.S. dollar
Venezuela bolivar
6.7060
0.1491
2.6105
0.3831
1.3165
0.7596
616.67
0.001622
2357.44 0.0004242
1.2819
0.7801
15.7886
0.0633
3.3739
0.2964
24.286
0.0412
1.2819
0.7801
8.14
0.122847
5.2313
0.1912
2.0364
0.4911
1.0270
0.9738
481.06 0.002079
1839.00 0.0005438
1
1
12.3164
0.0812
2.6320
0.3799
18.945
0.0528
1
1
6.35
0.157480
ASIA-PACIFIC
Australia dollar
1-mo. forward
3-mos. forward
6-mos. forward
China yuan
Hong Kong dollar
India rupee
Indonesia rupiah
Japan yen
1-mo. forward
3-mos. forward
6-mos. forward
Malaysia ringgit-c
New Zealand dollar
Pakistan rupee
Philippines peso
Singapore dollar
South Korea won
Taiwan dollar
Thailand baht
1.3166
0.7595
1.3196
0.7578
1.3252
0.7546
1.3332
0.7501
7.8696
0.1271
9.9512
0.1005
70.3773
0.0142
12505 0.0000800
132.04 0.007574
132.02 0.007575
131.98
0.007577
131.89 0.007582
3.8740
0.2581
1.5867
0.6303
126.263
0.0079
52.839
0.0189
1.6114
0.6206
1433.69 0.0006975
38.500
0.02597
38.289
0.02612
1.0271
1.0294
1.0337
1.0400
6.1390
7.7627
54.9000
9755
103.00
102.99
102.95
102.88
3.0220
1.2377
98.495
41.219
1.2570
1118.40
30.033
29.868
Per euro
52-wk.
0.16% 10.9%
1.0553
Israel
YTD
ALL COUNTRY (AC) WORLD* 376.74
GBP
Japan
PERFORMANCE
Daily
2.60% 15
1.5582
WSJ.com>>
61.5
27.6
14.5
USD
Crude oil ($/bbl.)

Heating oil ($/gal.)
RBOB gasoline ($/gal.)
Natural gas ($/mmBtu)
Brent crude ($/bbl.)
Gas oil ($/ton)
17.5
14.0
0.88
1.0271
Copper ($/lb.)
Gold ($/troy oz.)
Silver ($/troy oz.)
Aluminum ($/ton)*
Tin ($/ton)*
Copper ($/ton)*
Lead ($/ton)*
Zinc ($/ton)*
Nickel ($/ton)*
42.8
-0.5
Australia
Corn (cents/bu.)
Soybeans (cents/bu.)
Wheat (cents/bu.)
Live cattle (cents/lb.)
Cocoa ($/ton)
Coffee (cents/lb.)
Sugar (cents/lb.)
Cotton (cents/lb.)
Rapeseed (euro/ton)
Cocoa (pounds/ton)
Robusta coffee ($/ton)
29.4
21.4
Developed and emerging-market regional and country indexes

from MSCI Barra as of May 17, 2013
U.S.-dollar and euro foreign-exchange rates in global trading
Commodities
30.7
13.2
MSCI indexes
PERFORMANCE (euros)
Last
Daily 52-wk.
Global TSM
Global DOW
Global Titans 50
Dev Europe TSM
Developed Markets TSM
S&P BMI Emg Markets
S&P Europe 350
S&P Euro
Europe Dow
BRIC 50
U.S. TSM
Kuwait Titans 30 -c
0.66
Closed
8.3
52-wk.
9.0
5.1
0.47
Closed
-2.9
Dow Jones Indexes
PERFORMANCE
Percentage change
Yr.-to-date
-8.0
1.79%
In euros
0.9737
0.9715
0.9674
0.9615
0.1629
0.1288
0.0182
0.0001025
0.009709
0.009710
0.009713
0.009720
0.3309
0.8079
0.0102
0.0243
0.7956
0.0008941
0.03330
0.03348
EUROPE
Per euro
In euros
Per
U.S. dollar
In
U.S. dollars
Euro zone euro
0.7801
1.2819
1-mo. forward
0.9998
1.0002
0.7799
1.2822
3-mos. forward
0.9994
1.0006
0.7796
1.2827
6-mos. forward
0.9986
1.0015
0.7789
1.2838
Czech Rep. koruna-b
26.060
0.0384
20.329
0.0492
Denmark krone
7.4523
0.1342
5.8134
0.1720
Hungary forint
291.17
0.003434
227.13
0.004403
Norway krone
7.5193
0.1330
5.8657
0.1705
Poland zloty
4.1821
0.2391
3.2624
0.3065
Russia ruble-d
40.302
0.02481
31.439
0.03181
Sweden krona
8.5903
0.1164
6.7011
0.1492
Switzerland franc
1.2476
0.8015
0.9732
1.0275
1-mo. forward
1.2472
0.8018
0.9729
1.0278
3-mos. forward
1.2464
0.8023
0.9723
1.0285
6-mos. forward
1.2449
0.8033
0.9711
1.0297
Turkey lira
2.3640
0.4230
1.8441
0.5423
U.K. pound
0.8449
1.1835
0.6591
1.5172
0.8451
1.1833
0.6593
1.5169
1-mo. forward
3-mos. forward
0.8454
1.1829
0.6595
1.5163
6-mos. forward
0.8458
1.1824
0.6598
1.5157
MIDDLE EAST/AFRICA
Bahrain dinar
0.4833
2.6525
2.0692
0.3770
Egypt pound-a
8.9361
0.1119
6.9709
0.1435
Israel shekel
4.7013
0.2127
3.6674
0.2727
Jordan dinar
0.9079
1.1014
0.7083
1.4119
Kuwait dinar
0.3668
2.7266
0.2861
3.4953
Lebanon pound
1943.20
0.0005146
Saudi Arabia riyal
4.8073
0.2080
3.7501
South Africa rand
12.0660
0.0829
9.4125
0.1062
4.7085
0.2124
3.6730
0.2723
United Arab dirham
a-floating rate b-financial c-government rate c-commercial rate d-Russian Central Bank rate.
Source: ICAP Plc.
1515.85 0.0006597
0.2667
Monday, May 20, 2013 | 27
PERSONAL JOURNAL
In-Flight Texting Makes Pilots :-)
Systems Helps Avoid Miscommunication, the Biggest Source of Air-Traffic Control Errors
Montreal
Pilots and air-traffic controllers
texting each other? OMG! Your airline flight is finally starting to
communicate the way the rest of
the world does.
Controllers and pilots arent
using their cellphones to text,
even though many pasTHE
sengers now do using
MIDDLE apps and in-flight WiSEAT
Fi. Instead, planes with
modern cockpit systems can log on to new systems at
air-traffic control centers and link
digitally. Rather than sometimes
difficult radio calls, pilots and controllers simply send each other
text messages to change altitudes,
routes and hand off from one controller to the next.
The system has been in use for
flights across oceans for several
years. Canada now has it active
across its domestic skies and European controllers have it in use in
two large regions. But the U.S. is
way behind.
By texting instead of talking,
controllers have more time to process requests for airlines. Pilots
sometimes request shortcuts or
more-preferential routes based on
wind shifts. And as planes burn
fuel and lighten, pilots often want
to climb to higher altitudes for
smoother rides, faster speed and
better fuel burn. Sometimes those
requests dont get made or get put
off or denied simply because controllers dont have time to coordinate new altitude and route assignments with other controllers
along a planes flight path. The
chatter on radio frequencies can
get intense.
If texting while flying sounds
scary, relax. This isnt like texting
while driving, because planes have
two pilotsone flies, one communicates. And flying an airplane is
all about working dials and reading instruments.
Air-traffic controllers say the
best benefit is safetymiscommunication is the biggest source of
air-traffic control errors. Over
long-distance radio transmissions,
numbers and instructions can easily be misheard. Sometimes pilots
are preoccupied and miss radio
calls for their flight. Sometimes
instructions get read back inaccurately and must be repeated by the
controller and read back again by
the pilot. Sometimes transmissions get blocked because two
people try to talk at the same time
over the radio.
Controllers say it frequently
can take two or three tries to get
simple instructions to a flight
crew, especially if English, the universal language of air-traffic control, isnt the pilots primary language.
If you look at a lot of accidents and incidents, you see multiple events. This is an opportunity
to eliminate one of them. Youre
eliminating a source of potential
error, said Sid Koslow, chief technology officer for Nav Canada, the
privatized air-traffic control services provider for Canada.
This new system is expected to
boost capacity and reduce delays,
people in the industry say. Planes
often must wait to take off so airtraffic controllers dont get overloaded with too many planes at
Nav Canada
BY SCOTT MCCARTNEY
The 34,000-Foot Text
A typical conversation conducted via text message between a pilot

in the air and an air-trafc controller.
1. A download link is a message coming from a plane to air-traffic control.
TIME DOWNLOAD LINK MESSAGE
Pilot
19:14
D/L Request climb to FL340 due

to aircraft performance
2. The pilot requests allowing the plane to climb to an altitude of

34,000 feet above sea level. The plane performs more efficiently at higher
altitudes and can go higher as it gets lighter through the burning of jet fuel.
3. Air-traffic control grants

permission for the climb in
an upload link to the plane.
Pilot
U/L Standby
Climb to and maintain FL340 Control
D/L WILCO
Source: Nav Canada
once. Eurocontrol, the agency that

coordinates and plans air-traffic
control throughout Europe, says
that once half of all airline flights
in Europe are equipped to communicate by text message, controllers
will be able to handle 8% more
flights because their workload will
be reduced by 16%. When 75% of
airplanes have the equipment, 11%
more planes will be able to fly simultaneously as a result of a 22%
4. The pilot responds that

she will comply.
controller workload reduction.

Direct data communications between planes and pilots is a crucial part of air-travel modernization, and its an upgrade the U.S.
has been trying to implement for
more than a decade without success. U.S., European and Pacific
controllers do text message with
pilots out over oceans beyond regular radio range. But over land,
where skies and radio frequencies
are more congested and the need

for better communications is
strong, the switch has been painfully slow.
Controller-pilot data links were
well on their way in the U.S. in
2002. American Airlines equipped
several airplanes that conducted
airborne tests with the Federal
Aviation Administrations Miami
air-traffic control center. But the
program was canceled. A 2004
FAA report cited cost growth and
schedule delays.
Earlier this year, the FAA
launched a limited test in Memphis, Tenn., to text instructions to
planes waiting to take off, with
plans to expand it later this year
to Newark, N.J., and Atlanta. The
agency says it will begin deploying
Data Comm, as the program has
been renamed, in all control towers in 2016 and in all high-altitude
control centers in 2019.
Canada offers a taste of the future for U.S. pilots close to home.
Pilots there text with controllers
both over oceans and over domestic skies. U.S. airlines that frequently use Canadian airspace for
trips to and from Europe and Asia
are making use of the texting technology. Cross-country domestic
flights that entail flying over Canada also benefit.
We love the technology. Its
accurate and quickthe same reasons why people like texting on
their phones so much, said Capt.
Joseph Burns, managing director
for flight standards and technology at United Airlines, which has
texting capabilities on most of its
wide-body fleet. It does seem to

make the world a bit smaller.
Europe also has controller-pilot
text messaging in use at two airtraffic control centers, and should
have its system fully implemented
by 2015.
Aircraft delivered from Boeing
and Airbus over the past decade
or so come with the right gear installed. Canadian authorities say
50% of the planes flying in the
eastern part of the country can
make use of Controller-Pilot Data
Link Communications.
On a recent day in the Montreal
control center, Delta Air Lines
Flight 41 sent a request by CPDLC.
A blue message box popped up on
controller Caroline Herouxs large
radar screen.
Request climb to FL360,
meaning the pilot wanted to take
the flight from London to Minneapolis up a bit to 36,000 feet
above sea level. Ms. Heroux, 51
years old and a veteran controller,
confirmed she could clear that
flight level. With a couple of quick
mouse clicks, she transmitted a
message back: Climb and maintain FL360. The pilot responded
by text with Wilco, short for
will comply.
Its rather easy, Ms. Heroux
said. Its a great benefit for the
traveler and a great benefit for the
controller. This is the biggest step
forward, because human error is
taken away.
Controllers have pop-up windows with various choices of standard messages for altitude
changes, frequency changes and
some re-routings. Colored squares
on the data tags for airplanes on
the controllers radar screen
change as pilots respond so that
controllers get an extra visual cue
in case a pilot doesnt see a message. Secure computers verify
identity of the aircraft and make
sure the links stay active.
Its not rocket science, but it
has to be done right, Mr. Koslow
said.
Like many projects in air-travel
modernization, theres a chickenand-egg question: Should airlines
spend money on equipment before
air-traffic control agencies prove
they can work with it, or should
Europe also has

controller-pilot text
messaging in use at two
air-traffic control centers
air-traffic control service providers spend first and then wait for
airlines to catch up? In many projects, one side or the other has
backed out or balked.
Nav Canada decided to push
ahead with the technology years
ago in part because it handles so
many airplanes coming off the
oceans from Asia and Europe that
it knew would be equipped with
data-link capabilities. The company thought if airlines saw the
benefits in action, they would get
planes equipped faster.
To us, its better to just do it
rather than planning 10 years
ahead and telling everybody what
they need to do, Mr. Koslow said.
28 | Monday, May 20, 2013
BOOKS
Margaret Thatcher
By Charles Moore
Allen Lane, 896 pages, 30
BY DANIEL HANNAN
All Britons remember where they
were when Margaret Thatcher resigned in 1990. It was our equivalent
of the Kennedy assassination
events that, curiously enough, both
fell on Nov. 22. No British politician
in living memory had provoked such
strong feelings. At Thatchers funeral
in April, 23 years after she left office
and a decade after her last intervention in public life, the battles she
had so enjoyed were re-enacted:
Many threw flowers before her coffin, while a few, their faces twisted
in unfeigned loathing, yelled abuse.
The funeral was a reminder of
what conviction politics looks like.
These days, our leaders consult their
pollsters, weigh their words, fret
about how they are coming across.
Margaret Thatcher, as Charles
Moore shows in the magisterial first
volume of his authorized biography,
had a healthy interest in public opinion, but she never lost sight of
where she wanted to go. While others drifted with the current, she was
like a shark swimming only forward:
focused, patriotic, slightly humorless
and needing remarkably little sleep.
These were, happily, just the attributes that the times demanded. It
is hard to convey the sheer wretchedness of the nation she was elected
to govern in May 1979. Since World
War II, Britons had seen their empire vanish, their standing deteriorate, their credit expire. Successive
governments had inflated away their
debts, with a disastrous effect on
competitiveness and productivity.
Female, Methodist, provincial

and literal-minded, she never
acquired, nor wanted to
acquire, the amused cynicism
that is the hallmark of the
educated Englishman.
By the mid-1970s, the U.K. had
reached its lowest point. These were
the years of double-digit inflation, of
power cuts, of shortages. There were
constant strikes, and trade-union
leaders were better known household names than elected ministers. A
Conservative governmenta government of which Thatcher was the despairing education ministerwas reduced to passing laws regulating
prices and incomes.
Mr. Moore, the former editor of
the Daily Telegraph newspaper, captures the atmosphere of these years
beautifully: the worsening trade figures, the collapse in industrial output, the IMF bailout. Britain is a
tragedy, Henry Kissinger told President Gerald Ford in 1975. It has
sunk to begging, borrowing, stealing
until North Sea oil comes in. An editorial in The Wall Street Journal in
April of that year was more pointed:
Good-bye, Great Britain. It was nice
knowing you.
Thatcher, almost alone, would
not accept what was happening. I
cant bear Britain in decline, I just
cant, she blurted shortly before she
became prime minister. Nowadays,
those words sound unremarkable
which is the ultimate tribute to what
she achieved. For, at the time, the almost unanimous view of the Establishment was that the slide was irreversible and that the purpose of
politics was to make it as painless as

possible.
Born in Grantham in Lincolnshire
in 1925, Margaret Thatcher was
never part of the Establishment. Female, Methodist, provincial and literal-minded, she never acquired, nor
wanted to acquire, the amused cynicism that was the hallmark of the
educated Englishman. One of the
reasons that she had such a deep affection for Americans was that she
recognized in them the qualities that
set her apart from most of her fellow MPs: enthusiasm, optimism,
guilelessness, self-belief.
Where did it come from, her selfbelief? We find it in her character
from the beginning. When she won a
school prize at the age of 9, her
principal congratulated her on her
luck. I wasnt lucky, I deserved it,
replied the young Margaret Roberts,
who, with her tendency to simplify
everything, genuinely couldnt understand what luck had to do with it.
Her single-mindedness, her obsessive self-improvement, took her to
Oxford, despite the resistance of her
secondary-school headmistress, who
thought she should attend the local
university. That headmistress was
the first of many who were to find
themselves knocked aside by sheer
force of personality: Trade-union
leaders, Tory grandees, Eurocrats
and Argentine strongmen were to
experience the same thing.
Willpower is not unusual in politicians, of course. What is unusual is
the marriage of ambition and ideology. Many elected representatives
work extraordinary hours for reasons that have to do with personal
psychology. Think of, say, Lyndon
Johnson, whose drive came from the
humiliation of watching his family
going bankrupt when he was 13. Every day that I spend in politics convinces me of the truth of P.J.
ORourkes observation that many
candidates are running for office, as
he imagines one of them admitting,
in order to even the score with
those grade-school classmates of
mine who, thirty-five years ago, gave
me the nickname Fish Face.
Margaret Thatcher, by contrast,
was animated by ideasideas from
which she never deviated. Her father, Alf Roberts, a shopkeeper and
popular Methodist preacher, was a
local councilor whose main preoccupation was to reduce the burden of
taxes and regulations on the shopkeeping class. A model of conservative decency, he would send his
daughters with loaves of bread to
the families he knew to be needy,
carefully telling them that he had
baked too much, so that the pride of
the recipients should not be hurt. He
was not perfect: There are tantalizing hints in Mr. Moores narrative
that he may have been something of
a ladies man. Still, in his mind,
thrift, sobriety and industry were
not abstract Protestant virtues but
active political principles.
Thatcherism was, in many ways,
just a refinement of those core beliefs. Thatcher herself was no intellectual, though she diligently read
up on the works of the great thinkers who ennobled her prejudices, including Frdric Bastiat, Edmund
Burke, Joseph Schumpeter, Alexis de
Tocqueville, C.S. Lewis and, in particular, F.A. Hayek, whose Constitution of Liberty she used to pull
from her handbag, declaring: This
is what we believe. Still, Hayek can
be heavy going, and she was more
comfortable with the homespun patriotic conservatism of Rudyard Kipling, whose poetry she had recited
aloud as a girl in competitions. (Her
accent, which detractors took as evi-
Peter Marlow/Magnum Photos
The Woman Who Saved Britain
dence of social climbing, was, Mr.

Moore shows, the product of teenage
elocution lessons.)
What surprised me most in reading this biography was the extent to
which Thatchers politics were informed by her Christianity. Without
ever renouncing the Methodism of
her girlhood, she drifted into attending Church of England services
punctiliously and quietly. British politicians, unlike their American counterparts, almost never mention God.
This is partly because our electorate
is less churchgoing than yours and
partly because even the most devout
Britons are uncomfortable discussing religion. Thatcher occasionally
broke this rule, horrifying the leaders of the Church of Scotland in
1988, for instance, when she told
them that the Good Samaritan
wouldnt have been of much use if
he hadnt had money to help the injured traveler.
Yet so successful has been the
caricature of Thatcher as a mechanical free-marketeer who thought only
of economics that even her supporters have lost sight of the extent to
which her doctrines had a moral
base. As Mr. Moore notes, her father,
had believed in what Gladstone
called effort, honest manful effort, and it was a combination of
Gladstonian economic views of
retrenchment and reform with
Methodism which animated Mrs.
Thatcher. Denis Thatcher shared
this analysis of her attitudes. He
believed that some of what people thought of as his wifes
right-wingery actually came
from her religious upbringing:
She cant find a sustainable argument that people should be
paid for not doing any work.
Like all successful leaders, she
used speechwriters who could express her instincts in suitably elevated language. In New York in 1975,
she brilliantly described the thenprevalent egalitarianism as an undistinguished combination of envy
and what might be called bourgeois
guilt. But her natural language was
blunter. Why does he keep talking
about the boojwah? she once asked
of a sympathetic journalist. Why
not find a good plain English word
for the good plain English people?
The boojwah live in France.
Like her close ally Ronald Reagan, Thatcher was often attacked for
her failure to grasp nuance. After listening to a talk by the distinguished

historian Edward Norman, rightly
predicting, as Mr. Moore writes,
that the issue of nuclear weapons,
which had fallen comparatively quiet
since the early 1960s, would soon reappear as a great moral struggle in
the West, she declaimed above the
hubbub: I agree with Doctor Norman: we must defend Christian values with the ATOM BOMB.
Yet, as Mr. Moore shows, uncompromising beliefs could go hand in
hand with tactical flexibility. The
Pentagon, perhaps surprisingly, was
reluctant to deploy intermediaterange nuclear missiles in Europe in
the early 1980s, regarding them as
an unnecessary expense when the
U.S. already had a massive arsenal.
Those Americans who favored the
deployment, above all Reagans first
secretary of state, Alexander Haig,
knew that the best way to convince
the doubtful president would be
through Thatcher. We then see her
in these pages playing the unlikely
role of a bridge-builder between the
U.S. and Europe, securing American
concessions on the sanctions Reagan
had imposed on the U.S.S.R.sanctions that disproportionately hurt
Western European companiesin
exchange for agreement to deploy
the missiles in Great Britain, West
Germany and Italy. Thank heaven
she did: That deployment set in motion the events that were to lead to
the rise of Mikhail Gorbachev and
the end of the Cold War.
This biography gives us plenty of
new material on Thatchers relationship with Reagan, who privately
called her the only European leader
I know with balls. The Gipper chivalrously allowed her to browbeat
him, first over the missiles and later
over American attempts to mediate
during the Falklands War. She was
right on this latter occasion, too:
The State Department feared that
the humiliation of Gen. Galtieris
junta would lead to communism in
Argentina. In fact, it led to democracy.
Mr. Moore also reveals, extraordinarily, that the prime minister was
in contact with the Irish Republican
Army during the hunger strikes by
prisoners in the early 1980s. She always denied this fact, even to herself, hiding behind a piece of casuistry: The contact was through an
intelligence officer and was therefore necessarily unofficial. Thatcher
had sought, reasonably enough, to

find a formula that might save the
hunger strikers lives without compromising the principle that democratic governments dont deal with
paramilitary organizations. Nonetheless, had the facts emerged at the
time, her reputation would have suffered gravely and, to the end of her
days, she could not bring herself to
admit that she had had dealings
with terrorists.
Such revelations are characteristic of Mr. Moores penetrating and
honest work. Broadly supportive of
the Thatcher project, he is nonetheless careful never to let his politics
color his story. Though this is,
oddly, his first book, he is arguably
the outstanding British journalist of
his generation, one whose Tory
sympathies go hand in hand with a
determination to write from first
principles, disregarding conventional wisdom. This biography was
written on the understanding that
its subject would never see it, which
gave the author a freedom that he
might not have enjoyed had he felt
her presence over his shoulder. For
example, Thatcher never admitted
to having any boyfriends before
Denis, but Mr. Moore unearths four,
including one Scottish farmer whom
she liked but never fancied and so,
briskly, paired off with her sister,
Muriel, who was happily married to
him ever after.
Mr. Moore combines great narrative sweep with telling details. Following a false report of the sinking
of a Royal Navy vessel during the
Falklands campaign, Denis found his
wife sitting on the end of the bed in
tears: Oh no, oh no, another ship!
All my young men! Denis, who had
served in Italy during World War II,
quietly took her hand. Thats what
wars like, love. His military record
made her depend even more heavily
than usual on his advice during that
campaign, and he emerges as a hero
from these pages.
Thatcher, who published her
memoirs in two volumes in 1993 and
1995, treated the 1979 election as the
obvious dividing point. Mr. Moore
found that this would place too
much material in the second volume
of the biography and so carried the
first up to the moment of victory in
the Falklands in 1983. He ends with
a celebratory dinner at No. 10 Downing Street that, he says, may well
have been the happiest moment of
Please turn to next page
Monday, May 20, 2013 | 29
BOOKS
The Reluctant American
Americanah
By Chimamanda Ngozi Adichie
(Fourth Estate, 477 pages, 20)
BY SAM SACKS
Two-thirds of the way into Chimamanda Ngozi Adichies Americanah, an African-American woman
named Shan, while slightly in her
cups, delivers a diatribe against the
publishing worlds timid dealings
with black writers who candidly
confront the topic of racism. You
cant write an honest novel about
race in this country, she says. If
you write about how people are
really affected by race, itll be too
obvious. Black writers who do literary fiction in this country . . . have
two choices: they can do precious or
they can do pretentious.
Its an astute bit of meta-commentary on the stumbling blocks
that Ms. Adichie, who divides her
time between Nigeria and the U.S.,
needed to navigate while writing her
book: calls for blurry sentimentality
on one side, doctrinaire preaching
on the other. Yet the unhappy irony

is that, for all its prodding intelligence, Shans rant appears after
Americanah has already crashed
against one of the obstacles it
names. You wont find a trace of
preciousness in this novel, but, dear
Lord, is it pretentious.
The novel is race-blind in its

condescension. Even
Michelle Obama is rebuked
for appearing clamped,
flattened and tepidly
wholesome.
Born and raised in Nigeria, Ms.
Adichie came to the U.S. in 1996, at
age 19. Ifemelu, the main character
of Americanah, is in much the
same circumstance. We read of her
upbringing among Nigerias middle
class and of her early courtship with
a gentle young scholar named
Obinze. The two seem destined for
marriage and promising careers, but

when the countrys universities go
on strike in protest against the corrupt military regime, Ifemelu joins a
crowded exodus of students hoping
to complete their degrees in America.
She moves in with her Aunt Uju
in Philadelphia, and the novel comprehensively charts her struggles
over the next 13 years. She cuts off
contact with Obinze and has a series
of intense but unsatisfying relationships with American men. She finds
work as a nanny for obnoxious limousine liberals. And even after she
establishes herself, attending Yale
and then receiving a fellowship to
Princeton, she remains ambivalent
about America, attracted to its opportunities and repelled by its attitudes about race, which strike her as
strange. I came from a country
where race was not an issue, she
comments. I did not think of myself
as black and I only became black
when I came to America.
Such observations inform a blog
that Ifemelu begins while in school
called Raceteenth or Various Obser-
Never Mind
vations About American Blacks

(Those Formerly Known as Negroes)
by a Non-American Black. Her
pointed and contentious posts are
excerpted throughout the novel and
are broadsides against unconscious
American tribalism: Diversity
means different things to different
folks. If a white person is saying a
neighborhood is diverse, they mean
nine percent black people. (The minute it gets to ten percent black people, the white folks move out.) If a
black person says diverse neighborhood, they are thinking forty percent black.
Ifemelu is a natural blogger
confrontational, inflexible in her
opinions and relentlessly judgmental
(the blog is both a hit and financially rewarding). But what makes
for a successful blogreinforcing
the beliefs of readers who, in Ifemelus words, get it and browbeating everyone elsehas nothing to do
with good fiction. The lethal
problem in Americanah is that it
establishes little authorial separation from Ifemelu. Her snap verdicts
go unchallenged; while devoting so
much time to calling out prejudices
in others, the novel unquestioningly
endorses those of its protagonist.
Throughout Americanah there
is a sense that Ms. Adichie believes
the world requires a good lecturing
and that she is the person to deliver
it. The story balloons with unearned
smugness. Virtually every secondary
character seems to have been introduced for no other reason than to be
scolded or belittled. Aunt Uju, we
are told, possessed a strange navete with which she covered herself like a blanket. Ifemelus employer in Philadelphia shows the
hypocritical nationalism of liberal
Americans who copiously criticized
America but did not like you to do
If you want to sign up for the

latest literary cult, this lurid and
monstrously eloquent autobiographical novel is the place to start.
It is the first of what ended in 2011
as the Melrosiad, five interlocked
installments in the life of well-born
and miserable Patrick Melrose. To
explain the addictive brilliance of
the Melrose saga, it would be all
too easy to quote from the reptilian
expectorations of Patricks father,
David, an alcoholic doctor who sodomized his young son. But it is really the detached and elegantly horrifying voice of Patrick that is the
draw. Here he is thinking himself
into the mind of his mother: She
imagined vodka poured over ice and
all the cubes that had been frosted
turning clear and collapsing in the
glass and the ice cracking, like a
spine in the hands of a confident
osteopath. Follow Patrick through
drug addiction, marital collapse and
other exquisitely rendered unhappiness. He survives, battered, sobered
up and still acidly articulate.
Continued from previous page

her life.
It was a happy moment for the
entire country. The military triumph
put the seal on an economic transformation that had already begun.
Having been outperformed by every
Western European state during the
1960s and 1970s, Britain outgrew
them all in the 1980s (except Spain,
which was bouncing back from an
even lower place). Thatchers faith in
her countrymen was amply vindicated. She emerges from this book
more subtle, more layered than either her supporters or her opponents tend to believe. But the singlemindedness for which she is most
remembered was real.
Stubbornness in itself, however,
is no virtue. Thatchers achievement
lay in having got the big calls right:
She saw that there could be no compromise with the prevalent social-
Raymond Sokolov
[ Five Best ]
Joy in the Morning
By P.G. Wodehouse (1946)
Wodehouse wrote his masterpiece while interned in Upper Silesia as an alien enemy. If this is Upper Silesia, he said, what must
Lower Silesia be like? Then, to
show his American fans he was
keeping a stiff upper lip, he agreed
to participate in a couple of chipper
German broadcasts aimed at the
still-neutral U.S. In Britain, they
were seen as traitorous betrayals.
The stink never abated and turned
him into an exile from the homeland he never stopped recasting as
a comic heaven of harmless pranks
and pastoral misdoings. He was officially cleared of aiding the enemy
and no sane observer has ever believed that Wodehouse understood
the moral mess he was so blithely
creating. With his feckless Bertie
Wooster and his omniscient mans
man Jeeves at the center of the
sublime foolery, Wodehouse, in
novel after novel, just kept on letting us smile at a world of privilege
and big houses, upstairs and downstairs going gently topsy-turvy.
Joy is the story of a country
weekend from hell at Steeple Bumpleigh. Engagements crumble, jewelry is mislaid, tempers are lost,
drinks drunk. Jeeves saves the day,
really he saves the world and now
has time to read the latest scholarly
edition of Spinoza.
Jorrocks Jaunts and

Jollities
By R.S. Surtees (1838)
If you have bought a fine English bone china coronation mug

from the Prince of Wales Charitable
Foundation and, like Gina Lollobrigida in Beat the Devil, have always kept up your subscription to
Country Life, there is still hope that
you can be rescued from your naive
Anglophilia. In Jorrocks Jaunts
and Jollities, Surtees provides satirical views of a down-market Britain unglimpsed on Downton Abbey. He makes fond fun of the
religion of fox hunting, with the
substantial grocer Jorrocks at the

center of this antiheroic chronicle.
The comedy here is broad: Someone
defends his menu against the charge
of having too few fish (a defishency). All levels of society mix in
vainglorious, inept chasing of the
wily fox, with mongrel dogs and addled strategy. Instead of a stately
home, the hapless Nosey builds himself his idea of a castle, with a door
so broad that it lets in winter blasts
every time its opened. Surteess
motley crew drink like lords at Jorrockss groaning board. Anticipating
W.C. Fields, Jorrocks boasts:
Theres all sorts of drench, in fact,
except watera thing I never
touchrots ones shoes, dont know
what it would do with ones stomach if it was to get there.
No More Parades
By Ford Madox Ford (1925)
This is the second volume of the

best war novel not by Tolstoy.
Fords whole great tetralogy Parades End was recently compressed into a TV miniseries, which
did a fine but ultimately inadequate
job of re-creating the inner world of
the decent, self-lacerating Edwardian Tory intellectual Christopher
Tietjens, who is too good to be true
but true anyway to his vile, evil, unfaithful, endlessly seductive wife,
Sylvia. The marriage withers, as
does his civil-service career. Tietjens soldiers on, literally, in the
trenches and, figuratively, at country estates and in the upper reaches
of British politics. But the real action, thanks to Fords deft application of the then-hot technique of internal monologue, occurs in
Tietjenss stoical mind. The committed reader will acquire the re-edited
and (very usefully) annotated edition of 2011.
The Complete Poems

By Philip Larkin (2013)
Solitary, dour, detached, sour,

creepy, Philip Larkin detested the
world of abroad and recoiled from
much of what he saw at home. Yet
he embraced jazz and wrote, in a
mostly traditional manner, the most
acclaimedand chillingEnglish
poetry of the 20th century. That po-
etry, collected here in what must be

its totality, with every scrap of hitherto unpublished, lost or hidden
verse now shivering in full view, is
exhaustively commented upon by
the editor, Archie Burnett. This
marmoreal treatment only serves to
underline the strangeness of Larkins triumphant status, especially
in the U.K., as a major writer. His
unhappy view of his country is mordantly on view in The Whitsun
Weddings. The poet sits on a train
to London as newly married couples
board at station after station. He is
at first repelled by the dreary urban
landscapes passing by (Canals with
floatings of industrial froth). Then
he notices the wedding parties with
disdain (the perms, / The nylon
gloves and jewelry-substitutes),
ending with a note of guarded exaltation. The train halts, and newly
joined lives begin (And as the
tightened brakes took hold, there
swelled / A sense of falling, like an
arrow-shower / Sent out of sight,
somewhere becoming rain). They
will not be setting that to music for
the next royal wedding.
By Edward St. Aubyn (1992)
so. The mother of one of her boyfriends is the kind of wealthy person who did not tip well. The only
thing we learn about one of her colleagues during a short-lived job at a
magazine is that she has ashy skin,
and Ifemelus first urge, when they
met, was to suggest a good moisturizer. The novel is race-blind in its
condescensioneven
Michelle
Obama is rebuked for appearing
clamped, flattened, made to sound
tepidly wholesome in interviews
but it is especially disparaging of
women.
Ifemelu is somewhat shallowly
preoccupied with forms and appearance, and in black womens hairstyles she finds what she believes is
the perfect metaphor for race in
America. She herself favors braids
or, even better, letting her hair grow
out naturally in an Afro. She remembers her mother chopping her own
hair short in Nigeria, and this is portrayed as evidence of religious zealotry. When Aunt Uju gets a weave
and extensions, it is a symbol of
frivolousness. Worst of all are black
women who relax their hair, which
brands them as sellouts sucking up
to straight-haired white America.
Theres something strangely oldfashioned about the strain of intolerance that runs through this book
artistically, its no different than
tendentious Victorian novels in
which women of loose virtue are
identified by their immodest apparel
and saucy table manners. In both
cases, morality is confused with
moralizing.
In the last act of Americanah,
Ifemelu, feeling homesickweighed
down by the cement in her soul
returns to Nigeria and re-connects
with Obinze. In her absence, he has
become rich as a consultant on
shady real-estate deals. He has also
gotten married and had a child with
a woman whom Ms. Adichie gratuitously slags as being vain and stupid. The wife and daughter prove to
be little impediment, however, to
the reunited lovers. This doesnt
feel like cheating to me, Obinze
says, pathetically. When he does fret
about his marriage vows, Ifemelu
taunts him for his cowardice. Its
typical of this exasperating novel
that it expects such a narrow, selfserving romance to kindle interest.
Americanah uncritically esteems
these two characters and thinks
harshly of everyone else. The reader
will have the opposite reaction.
Mr. Sacks writes the fiction
chronicle for the Saturday Journal.
Thatcher: Not for Turning
democratic consensus, or with the

trade-union militants, or with the
Soviet Union, or with Gen. Galtieri.
Though she showed more subtlety
and suppleness on all these matters
than most realized at the time, she
knew that her opponents would have
to be defeated. And so, in the end,
they were.
That, ultimately, is what the left
cant forgive. She took a country
that they had made bankrupt, dishonored and demoralized and left it
prosperous, confident and free. She
did it all without ever losing an election to them. She ended up transforming, not just her party, but the
Labour opposition, too, which had to
accept her economic settlement to
become electable. That, perhaps,
was what pleased her most of all.
Mr. Hannan is a British
Conservative member of the
European Parliament.
30 | Monday, May 20, 2013
SPORT
HEARD ON
THE PITCH
Arsenal Beats Tottenham
In Champions League Race
Arsenal edged out Tottenham

by a point to claim the fourth and
final spot in next seasons Champions League as both sides held on
to 1-0 victories Sunday afternoon.
Arsenal, which won a tense game
at Newcastle with a goal by Laurent Koscielny, will have to play a
two-legged qualifying match in August to guarantee its place in the
competitions group stage.
The Gunners result rendered
Tottenhams home victory over a
dogged Sunderland side academic.
Spurs will now appear in next seasons Europa League, but the clubs
big question this summer is
whether Gareth Bale will stick
around. Bale, who scored the 89thminute winner on Sunday, is widely
considered one of the most
sought-after players in Europe.
Arsenal trailed its North London
rival by as many as seven points in
late January, but an unbeaten run
of 10 games to finish the season
erased the gap. It also preserved
manager Arsne Wengers streak
of qualifying for the Champions
League in each of his 16 full seasons in London.
We needed to be resilient because we played against a very
strong Tottenham team, a very
strong Everton team and we
needed to be really special to come
back and get in front of them,
Wenger told Sky Sports.
Chelseas 2-1 victory over Everton sealed third place. And meanwhile, the curtain came down on
Alex Fergusons career with a crazy
5-5 draw at West Bromwich Albion. Joshua Robinson
Getty Images
HEARD ON
THE FIELD
Manuel Pellegrini offers a hand during Malagas La Liga match against Real Madrid at Santiago Bernabeu stadium in Madrid on May 8.
Pellegrini Eyes Senior Citizenship
Chilean Manager Has the Experience and Sophistication to Suit Manchester City
BY GABRIELE MARCOTTI
Roberto Mancini and Manchester
City parted ways last week, which
means that one of the best resourced, most desirable jobs in the
game is now up for grabs. The Premier League club, after years of
playing second banana to Manchester United, is now a legitimate force,
having finished third, first and second in the past three seasons and
winning an FA Cup along the way.
Whats more, club owner Sheikh
Mansour bin Zayed Al Nahyan has
shown a willingness to spend heavily
when needed.
Speculation abounds over who
will succeed Mancini as City manager, but the smart money seems to
be on Malagas Chilean manager,
Manuel Pellegrini.
On paper, hes an excellent fit. He
hasnt won much in the way of European silverwarethough he did win
two league titles in Argentina and
one in Ecuadorbut his sophisticated, creative style of play has won
him many plaudits.
Pellegrini spent five years at Villarreal, an ambitious, yet still provincial and relatively underfunded club
in Spains Liga, guiding it to four topfive finishes, as well as the Champions League semifinal in 2005-06.
Since November 2010, Pellegrini
has been at Mlaga, a team on the
verge of financial oblivion. (UEFA,
the governing body of European soccer, has banned it from the next continental competition it qualifies for
because of violations of its financial
regulations.)
He took over a team in the relegation zone and guided it to ninth
place, following up with a fourthplace finish. This season, despite los-
ing a number of top players in the

summer, Mlaga is sixth and came
within seconds of reaching the
Champions League semifinals.
In between, in 2009-10, Pellegrini
had a crack at Real Madrid, the one
European club where silverware was
expected. He came up short, but still
finished second to Barcelona, despite
racking up 96 points, the secondhighest total ever in the history of La
Liga at the time.
But beyond the results, Pellegrini
comes across as intelligent, educated
(he has a degree in civil engineering)
and charismatic, in a statesmanlike
sort of way. After Mancini, who was
prone to the occasional postgame
outburst, he seems a logical choice.
His sophisticated, creative

style of play has won him
many plaudits.
And yet there is one little wrinkle
that doesnt bode well. Or, rather,
one statistical precedent that suggests that if he does well in the medium-term at City, he will truly be a
trailblazer capable of rewriting history.
Pellegrini turns 60 in September.
In the past 20 years, in Europes top
four leagues, only five managers that
age or older were appointed to clubs
in nations where they had never
played or coached before. None
lasted more than a season.
Only two of the five won silverware: Bobby Robson, who guided
Barcelona to a Spanish Cup and European Cup Winners Cup in 1996-97
and Guus Hiddink, who spent four
months at Chelsea in 2008-09 and

won the FA Cup. (Even then, Hiddink
is something of a special case. He
was a short-term appointment with
a clear mandate and, in any case, he
is a natural born globe-trotter who
was on his 10th job in three different
continents by that point.)
Even more telling is if you use the
same criteriaforeigner, no previous
soccer experience in the country
and widen the net to include everyone over the age of 50 at the time of
their appointment, then the search
yields 20 managers.
Just three lasted more than 12
months: Louis Van Gaal at Bayern
Munich, Reynald Denoueix at Real
Sociedad and Bert Van Marwijk at
Borussia Dortmund. Only Denoueix
completed his second season. Only
six of the 20 improved the teams
league position in their first full seasonor part-seasonand just four
left the team higher up the table
than when they took over (and two
of them are Hiddink and Avram
Grant, who were never meant to be
permanent managers).
Note that the list includes some
of the finest managers of the past
few decades. In addition to the aforementioned Van Gaal, Robson and
Hiddink, you also have the likes of
Giovanni Trapattoni (Bayern), Dick
Advocaat (Borussia Moenchengladbach), Cesar Menotti (Sampdoria),
Luiz Felipe Scolari (Chelsea) and
Carlos Bianchi (Atletico Madrid). Yet,
as a group, they all fell short of expectations.
Understanding why is tricky. Its
not merely a question of age: The
men who won the league titles in
Germany and England this year, Jupp
Heynckes and Alex Ferguson, are 68
and 71 respectively. Rather its the
mixture of age and having to adapt

to a soccer culture which is different
and unfamiliar.
In some ways, these men are victims of their own success. Foreign
clubs turn to them because what
they do has worked very well over a
long time. Yet it also means they
tend to be more set in their ways.
Experience, of course, is a valuable commodity. But when youre
thrown into an entirely new environment, it can take time to adapt and
to grasp the subtle, though important nuances that still differentiate
Europes soccer cultures.
None of this, of course, means
that Pellegrini wont be a success if
he is appointed at City. In fact, he
has a number of things going for
him, beyond his ability as a manager.
He speaks excellent English, for a
startthough, again, many of those
on the list didnt have to deal with
language barriers either. He will have
been handpicked by Citys high command and recent history shows they
can be a patient bunch. Most of all,
the fact that he has only ever
coached two top clubs before (Argentinas River Plate and Spains Real
Madrid, each for just a year) suggests he may bring a certain humility
and pragmatism; hell be less prone
to thinking he can simply replicate
what worked elsewhere.
Still, the past two decades suggest City would be taking quite a
leap of faith in picking a man of Pellegrinis age. And if he does last
more than two seasons, he willin
terms of longevity alonehave made
history.
Gabriele Marcotti is the world
soccer columnist for the Times of
London and a regular broadcaster
for the BBC.
England Tops New Zealand

In First Test at Lords
A dominant bowling performance by Stuart Broad at Lords on

the fourth day of Englands Test
match against New Zealand gave
the home side a victory by 170
runs Sunday afternoon. Broad took
a stunning seven wickets in 11
overs as the Kiwis were held to
just 68 runs in their second innings.
Broads bowling was just the response England needed after its
own second innings ended with a
whimper. The last four wickets fell
in quick succession Sunday morning to complete a collapse that
saw the final eight wickets go for
54 runs. Broad finished the game
with a total of eight wickets for an
average of 13.50. The second Test
as England gears up for this summers Ashes will begin Friday at
Headingley. J.R.
Stuart Broad salutes the crowd

after one of his seven wickets.
Monday, May 20, 2013 | 31
OFF THE WALL
In Berlin, Activists Target Barbie

BY MARY M. LANE
Berlin
bout 15 leftist radicals

gathered over stale coffee
on a recent Friday night in
the German capital to plan their
next communist plot. We must
take care not to sound elitist, as if
were outside the mainstream, because the mainstream is the proletariat, said a young man dressed
in black clothes, a tattered green
copy of Friedrich Engelss 1884
book, The Origin of the Family,
Private Property and the State, at
his side.
The object of the groups ire
wasnt the European Central Bank
or Angela Merkel. Instead, the
three-hour discussion focused on
a perky blonde from Wisconsin
Barbara Millicent Roberts, better
known as Barbie.
It would be a huge danger for
capitalism if working men and
women were united, so one of the
best ways to divide and conquer
the workers is by enabling men to
over-sexualize women and by preoccupying women with sexualizing
themselves, said group leader
Michael Koschitzki, 27 years old.
This is why we need to oppose
Barbie.
The group, a faction of the
Junge Linkeheirs to East Germanys main communist organ
organized a march through Berlin
on Thursday to the Barbie Dreamhouse, one of two interactive, lifesize dollhouses launched recently
as Barbie maker Mattel Inc.s latest effort to expand the dolls
franchise.
The smell of pot wafted
through the air at Berlins famous
Alexanderplatz, as Junge Linke
leaders gave speeches to a clapping crowd of about 200. Three
teenagers with raccoon-like eyeliner watched, holding bags reading Shopping is better than a
psychiatrist.
The anti-Barbie crowd then
traversed to the Barbie Dreamhouse, guarded by police.
With punk music playing, one
protester brandished a sign reading Ill pull you out of the house
of horror! as a little girl in heavy
turquoise eye shadow told her
mother that she wanted to go
back inside the Dreamhouse.
The demonstrationdubbed Occupy Barbie
Dreamhouse
was a culmination
of weeks of planning, visiting
schools and distributing over
7,000 hot pink fliers with a
clenched fist
punching through
the phrase The
Merkel
Barbie Dreamhouse Experience.
Many Berliners have been befuddled by the brouhaha. Barbie
has been around for over 50
years. Can you show me thats really held back society with all the
positive changes for women?
asked Jrg Niepraschk, a father of
two girls he brought to the
Dreamhouse for a preview on
Tuesday.
The Junge Linke adamantly say
yes, arguing that Barbie is a

symbol of proletariat repression
and a consumerist society set in
place by power-hungry capitalists.
Their outcry against the
50,000-square-foot Dreamhouse
and outdoor cafe comes as increasing tourism to Berlin is softening the edges of a once gritty
city. Four years ago, Berlins tourist population was buoyed by
hard-partying youth who flew in
for a few days of clubbing. More
recently, Berlins affordable prices
have drawn more families.
Mattel hopes the Dreamhouse
will attract summer visitors in
Berlin before it moves on to Hannover and Munich. Barbie has
and always will be a lightning rod
for cultural conversation, said
Stephanie Cota, 42, senior vice
president of Girls Global Brand
Marketing at Mattel.
Barbie is a familiar face in Germany, where she was first available in 1959. Germany is one of
the largest European markets for
her, according to Mattel.
I like Barbie because shes
pretty and wears pretty clothes. I
play with my Barbie a lot, said 3year-old Charlotte, Mr. Niepraschks daughter.
Inside the Dreamhouse, girls
dance around a 3-meter-tall diamond ring and look into cases featuring 15-centimeter, red-sequined, platform heels. Each room
is bathed in neon pink light, and
pictures of Barbie and her boyfriend, Ken, hang on the walls.
Parents have the option to remain
standing or sit on plush chairs
shaped like stilettos.
Kids under 4 get in free, while
older children are charged 22 (or
$28); adults pay 15. The children
can choose between two career
tracks to act out on their visit:
model or pop star. Models learn to
prance down a mini-catwalk, while
pop stars belt out tunes on a Lilliputian stage.
The Junge Linke argue that
Barbies pinkified personality
cultivates a desire in girls to focus
on looks instead of careers and
spend their cash on expensive
beauty products.
Christoph Rahofer, 47, works
for EMS Entertainment, which
created the Dreamhouse with Mattel. Mr. Rahofer, who has three
daughters ranging
in age from 8 to
20, said it is absurd to argue that
Barbie can ruin a
girls career ambitions.
Baking a digital cupcake on a
touch screen in the
Dreamhouse
kitchen wont confine you to stand
by an oven for the
Barbie
rest of your life,
he said.
In an open letter to Mr. Rahofer titled Peddling Porn in Germany that was published in Spiegel, Germanys leading political
magazine, columnist Silke Burmester asked How do I bake tasty
cupcakes? How do I strut sexily
on a catwalk? And how do I draw
attention to my anorexic body?
I feel sorry about how some
people interpret our giant pink
Getty Images
Group Protests Life-Size Dreamhouse

And Pinkified Icon; Stiletto Chairs
A protester yells slogans outside the Barbie Dreamhouse in Berlin. Many Berliners have been befuddled by the brouhaha.
playground, Mr. Rahofer said in
response to Ms. Burmesters column. I have looked into so many
kids eyes cheering and having a
wonderful time.
At the final Occupy Barbie
meeting Tuesday, Franziska Sedlak, 25, wondered why the Dreamhouse lets girls act out careers
like model and pop star, instead of
jobs like engineer and mathematician. Mattels Ms. Cota said the
decision was one of logistics and
entertainment. Pretending to be
an engineer is a hard concept for
a 4- or 6-year-old to play out,
she said. She notes that the
Dreamhouse has a space where
children can impose their faces on
outfits for Barbies 135 careers, including astronaut, engineer, doctor and chancellor.
Yet even Mattels attempts to
portray Barbie as a quantum
chemist who leads the euro zone
have been mocked in Germany.
MORE
FINANCE.
MORE IDEAS.
Online:
Find the full report at WSJ.com
In Print:
Special pull-out section:
Tues May 21
On Twitter:
Follow us @WSJeurope
Credit: Illustration by WILLIAM RIESER

2013 Dow Jones & Company, Inc. All rights reserved. 3DJ2038
Mattel introduced a special

edition Angela Merkel Barbie in
2009, complete with one of Ms.
Merkels practical pantsuits, which
was promptly mocked by Philipp
Rsler, her current economy minister. So, now theres a Merkel
Barbie, said Mr. Rsler in a televised speech at the time. The
only downside is it costs 300.
The actual doll is only 20, but
those 40 pantsuits sure are expensive.
Discover
Europes
Best
Analysts
Which analysts outsmarted
their rivals in 2012? In the first
Europe-wide survey of its kind,
The Wall Street Journal has
teamed up with FactSet
Research Systems to reveal
the master stock pickers of the
yearand their current top
stock choices.
32 | Monday, May 20, 2013
HEARD ON THE STREET
Email: heard@wsj.com
FINANCIAL ANALYSIS & COMMENTARY
Seven years ago, Yahoo

tried to buy a social network
for $1 billion. But Mark Zuckerberg wasnt interested in
selling Facebook.
Still seeking credibility
with the kids, Yahoo now
plans to buy social blogging
company Tumblr for a similar
price tag: $1.1 billion. As consolation prizes go, it wouldnt
be a bad one, provided Yahoo
can monetize its potential.
The sites and mobile apps
Tumblr, Instagram, Snapchat
and Facebook are similar in
that they enable teens,
twenty-somethings and others
to create and share photos,
links or blogs. Such navel gazing can be big business, as
Facebook has shown. Twitter
has also been successful. It is
expected to generate worldwide advertising revenue of
$580 million this year, according to eMarketer.
Tumblr is actually far
larger in terms of users than
Facebook was in 2006, hosting more than 100 million
blogs. Facebook had just 10
million or so users when Yahoo came waving its checkbook.
Though Tumblr began as a
desktop destination, it also
has a solid presence on mobile devices. At No. 63 among
iPhone apps in the U.S., as
Bloomberg News
A Tumblr of Opportunity
Out of Site
Yahoos share price

$30
25
20
15
10
2012
13
Source: WSJ Market Data Group

ranked by App Annie, Tumblr

is ahead of all Yahoo apps. On
Android smartphones, App
Annie ranks Tumblr 85th; the
only Yahoo app ranking
higher is Yahoo Mail.
Indeed, the shift to mobile
presents an existential challenge for more mature web
companies like Yahoo. Even
nine-year-old Facebook finds
its business at risk. But Facebooks mobile app has been a
big hit, and Facebook gobbled
up top photo-sharing app Instagram in a deal worth just
over half a billion dollars.
So Tumblr boasts a huge
base of users and would be a
useful weapon in mobile wars.
Hidden Costs
Of Ocados Deal
Online U.K. grocer Ocado

Group always wants more
customers to take advantage
of its high-tech delivery service. Friday, it landed its biggest catch to date: rival Wm.
Morrison Supermarkets.
Ocados shares surged 36%
after it announced a deal with
Morrison to give the chain a
quick entry into the fast-expanding online-grocery market. Essentially, Ocado will
handle the magic behind the
scenes, including order processing and distribution logistics. But Morrison customers
may never know. They will
use a Morrison website and
have groceries delivered in
Morrison-marked trucks.
Whats in it for Ocado?
The company, which hasnt
earned an annual profit since
listing its shares in 2011, gets
a cash payment of about 165
million ($250 million), three
times its 55 million net debt.
Ocado also expects a
roughly 15 million annual
boost to its bottom line, a
welcome cushion, as it struggles to generate revenue to
offset infrastructure investment. While sales surged 28%
in 2010, they rose at about
half that rate in 2012.
Yet the deal also involves
sacrifices. First, Morrison

may disrupt Ocados relationship with Waitrose, whose
products are available on Ocado.com alongside its own-label groceries. That contract
expires in 2017, after which
Ocado may have to rely on its
own brand strength.
Also, a big chunk of Ocados work will be done anonymously. Morrison plans to
process about 500 million of
annual sales through Ocados
second facility, which just
opened.
Ocados entire sales last
year were 674 million. Until
now, many customers have associated their shopping experiences with Ocado. Such
brand strength can help a retailer expand faster and increase margins.
There is no doubt Ocados
deal helps its near-term profitability, but its long-term
prospects may have dimmed.
Adjusting for the benefits of
the new arrangement, Ocados
share price indicates an enterprise value of about 25 times
consensus earnings before interest, taxes, depreciation,
and amortization.
At that price, Ocado looks
likely to go on sale soon.
John Jannarone
Marissa
Mayer,
CEO
of Yahoo
But could Yahoo wring profits

from it?
Tumblr has only just
started generating revenue,
but it has lots of potential.
Here again, Facebook and
Twitter are good models. Both
are structured so that users
see their friends posts stream
by as a news feed. And both
have found success by passing
ads intermittently through
these feeds. Similarly, Tumblr
users see a stream of posts
from those they follow, so the
site is a logical candidate to
run the same kinds of ads.
With its advertising chops
and huge computing infrastructure, Yahoo can help
Tumblr exploit these opportunities. Yahoo can also promote the service to its hundreds of millions of users.
Google bought do-it-yourself blogging tool Blogger in
2003 when the latter had just
250,000 users. Today, Blogger
has more than 400 million.
Google has also enjoyed success with another user-generated content site: YouTube.
Yahoos relatively new
chief executive officer, Marissa Mayer, needs to show
progress turning around the
company. Granted, shares
have soared 70% since Ms.
Mayer took over last July. But
little of that can be credited
directly to her.
The stocks rise began in
October, when Yahoo boosted
stock buybacks. Since then it
has repurchased about 10% of
its shares outstanding for
$2.3 billion. A bigger bump
may have come from excitement over Chinese e-commerce giant Alibaba Group, in
which Yahoo has a 24% stake.
The Tumblr deal would be
Ms. Mayers first big move to
revitalize Yahoo. The $1.1 billion price tag seems expensive
on conventional metrics.
But Tumblrs price will
prove cheap if Yahoo gets its
cool back with the kids.
Rolfe Winkler
OVERHEARD
The pirates are being
kept at bay.
BitTorrent is a file-sharing site that has often
played host to unauthorized
copyrighted material. In the
past six months, it accounted for 9.2% of peak-period traffic on North American fixed-access broadband
networks, according to networking-equipment company
Sandvine. That is down from
17.2% in 2011.
Meanwhile, the tide
seems to be turning in favor
of authorized video sources.
Netflix has retained a
roughly 29% share of peakperiod traffic. Googles YouTube climbed to 15.4% from
13.8% over the past year.
This doesnt mean BitTorrent is going away. Its volume in North America continues to expand, Sandvine
says.
What is happening is
that overall North American
broadband usage is also increasing rapidly, with mean
usage up 39% over the past
year. BitTorrent clearly isnt
keeping pace.
The pirates may not yet
be walking the plank. But as
Internet video expands, content owners are claiming
more of the spoils.
overheard@wsj.com
Finding Exit Ramp for TomTom
One of the most compelling reasons to own a smartphone is simply to tell you
where you areand where
youre going.
Thats why mapping-software companies are potential
takeover targets. Facebook
may be willing to pay up to $1
billion for Waze, according to
recent reports, including in
The Wall Street Journal.
Closely held Waze doesnt
generate much revenue, but
its primary asset consists of
real-time maps and traffic information.
That should pique interest
in one of Wazes publicly
traded rivals: TomTom.
If Waze is sold, Netherlands-based TomTom would
be the last independent provider of digital maps that
cover much of the globe.
These have become a valuable
asset. As smartphones become ever more similar, distinguishing the app ecosystems on them becomes
critical to companies ranging
from Apple to Samsung Electronics to Microsoft. Even
Amazon.com is developing its
own smartphones.
The importance of maps
was underlined by Apples
bungled replacement last year
of Google Maps on the iPhone
with its inferior alternative.
Meanwhile, Google announced
updates for its maps last
week, putting them further
ahead of rivals.
But there are only four
sources of high-quality maps.
Google has its own, and Facebook may grab Waze. Navteq
is owned by Nokia, with
whom
Microsoft
works
closely. That leaves TomTom,
whose maps are licensed by
Apple, Samsung and BlackBerry, among others.
Building
maps
from
scratch is capital intensive.
Yet this scarcity value seems
only partly reflected in TomToms shares, down more
than 90% from their 2007
peak. The company now has
an enterprise value, including
net debt, of about 850 million ($1.1 billion), or about
six times this years consensus estimate for earnings before interest, taxes, deprecia-
Road Rage
TomToms market capitalization

$12 billion
9
6
3
0
2007 08 09 10 11 12 13
Source: FactSet
tion and amortization, or

Ebitda.
The low valuation reflects
the impact smartphones have
had on sales of personal navigation devices. These represent about half of TomToms
revenue, are down by twothirds over the past five
years, and continue to fall
rapidly. TomTom also provides navigation systems for
car companies, but these, too,
are vulnerable to smartphone
substitution over time.
Cutthroat
competition
among TomToms customers
might be the best thing going
for it. Able to play TomTom
and Navteq against each
other, Apple and others dont
pay a lot to license maps. But
the risk of them falling into
rival hands could spark a bidding war. A potential suitor
like Apple could finance a
deal with trapped offshore
cash.
The big obstacle is that
TomToms four founders control 47% of the company and
arent eager to sell. For other
shareholders, though, TomToms lackluster stand-alone
prospects make a compelling
case to at least explore an
exit. It would be a brave
shareholder activist who
would take on such a challenge. But it may offer the
best route to realizing the
companys full value.
Rolfe Winkler
WSJ.com/Heard
Risks Rise
As Turkey
Moves Up
A Grade
It has been a long road

back for Turkey.
Cut to junk by Moodys
in 1994, the country won a
credit-rating upgrade back to
Baa3 Thursday. Turkey now
has two investment-grade ratings, a development that
should expand the pool of potential buyers of its sovereign
debt.
This is welcome news for a
country that has to finance a
current-account deficit that
was 6% of gross domestic
product last year. But it could
put further pressure on the
central bank, which is trying
to balance capital inflows, inflation, growth and the exchange rate.
On some indicators, Turkey has long punched above
its rating. Debt stands at 36%
of GDP and has fallen by 10
percentage points since the
beginning of 2009. The budget deficit in 2012 was just
1.4% of GDP. Turkey has been
extending the maturity of its
debt, reducing its exposure to
interest-rate increases. It is
also less reliant on foreigncurrency debt: just 27% of the
total last year, down from
46% in 2003.
Turkeys Achilles heel has
been its dependence on potentially fickle investment
flows.
Moodys upgrade is a double-edged sword. It should expand Turkeys investor base
and potentially make it more
stable. In an environment in
which investors are hunting
for yield, Turkish paper could
be attractive. Moodys notes,
too, that the government is
encouraging savings through
pension overhauls.
That is all good news. But
there is also a risk that a rush
of foreign investment puts
upward pressure on Turkeys
currency, particularly as many
central banks continue printing money.
The Central Bank of Turkey is already watching this.
It cut rates Thursday to 4.5%
from 5%, specifically noting
strong capital inflows. Further cuts may be needed, raising the risk that the central
bank will miss its inflation
target of 5%. Inflation stood
at 6.1% in April.
Lower rates will also require management of domestic-lending growth, one of a
multitude of factors the central bank targets.
Moodys upgrade generated immediate results. Turkeys main stock index hit a
record, and bond yields
dropped. More upgrades may
follow. But Turkey will have
to savor its success carefully.
Richard Barley

The Wall Street Journal

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BUSINESS & FINANCE 17

VOL. XXXI NO. 76

MONDAY, MAY 20, 2013

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Business & Finance

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1. Opinion: StrasselThe IRS

Middle East Real Time

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Its good for

Vote online at europe.wsj.com/polls

Eurovision fan Johann Soerensen.

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WASHINGTONThe U.S. is seeing a spike in al Qaeda-related terror

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European Pressphoto Agency

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fiscal base underpinning actions to

lieves an independent Scotland

ral resources as a bargaining chip in

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