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Today's Hot Stories - January 23, 2013

10 Headlines for Today

(1) Two Karnataka BJP Ministers resign
(2) IT raids foil Gadkari’s 2nd term, now BJP choice is Rajnath
(3) Pakistan will not escalate situation along LoC, says Hina
(4) Import duty hiked on gold, platinum
(5) Ghost of GAAR buried: Chidambaram
(6) Google's 4Q earnings rise despite Motorola woes
(7) Anand draws with Leko in ninth round
(8) Williams loses in quarters, Azarenka into semis
(9) Bopanna out of Australian Open
(10) Against all odds, autorickshaw driver’s daughter tops CA exams

5 Stories for Today

(1) SC’s Enrica judgment may restrict action against erring ships
(2) Israeli election ends in dramatic deadlock
(3) Polaris to recast business model
(4) Samsung launches Galaxy Grand
(5) Global unemployment to hit record high in 2013, warns ILO

(1) SC’s Enrica judgment may restrict action against erring ships

The Supreme Court’s judgment on Enrica Lexie last week was unambiguous in declaring that the Italian marines must stand trial in India for now. But the Court’s reasoning may have far reaching consequences for the case as well as for how India can interpret its jurisdiction in waters beyond the 12-nautical mile line from the coast that marks the formal extent of its territory.

The Court has pointed out that India is a signatory to the United Nations Convention on the Law of the Sea (Unclos) and is bound to adhere to it. Article 97 of Unclos says that in case of a navigation incident such as collision in the high seas India cannot detain a vessel registered in another country or initiate proceedings against the crew if they are not Indian nationals. The Court said Article 97 will not apply in the case of Enrica Lexie as the shooting was a criminal action, not a navigation incident.

But the Court calls India’s Exclusive Economic Zone, a distance of 200 nautical miles from the shore, high seas where Unclos 97 could apply for collisions. The judgment likely has direct relevance in the recent case of m.v. Izumo that rammed into a fishing dinghy and sank it some 18 nautical miles off Kerala. The Chinese navigating officer was arrested by the Kerala police after registering cases.

Izumo’s 18 nautical miles falls under the contiguous zone — the region between 12 and 24 nautical miles from the coast. EEZ is further to the contiguous zone. The SC ruling denies any jurisdiction to Kerala to detain vessels or take action against the crew outside of territorial waters.

Trying the marines in Italy

The recent Supreme Court judgment in the Enrica Lexie case set up a Special Court to try the Italian marines. The judgment declares the EEZ of India — the region between the contiguous zone and 200 nautical miles into the sea — as the high seas. Ironically enough, the United Nations Convention on the Law of the Sea (Unclos) defines high seas as the area beyond the EEZ, contiguous zone and territorial waters. But the Court has brought the high seas much closer to India’s coast and no nation can claim sovereignty over the high seas. This may prevent India from taking unilateral action in case of collisions happening just outside of the contiguous zone.

Meanwhile, Article 100 of Unclos says that nations must cooperate to curb piracy. If the Special Court finds that the shooting is an anti-piracy action gone awry then Unclos could bring Italy into the trial process. The Special Court can then be asked to decide if Italy also has jurisdiction over the case.

A case has been filed in Italy against the marines with a maximum punishment of 21 years. As per the judgment, trying the marines in Italy could well become an option.

(2) Israeli election ends in dramatic deadlock

Israel’s parliamentary election ended on Wednesday in a stunning deadlock between Prime Minister Benjamin Netanyahu’s hard-line bloc and center-left rivals, forcing the badly weakened leader to scramble to cobble together a coalition of parties from both camps, despite dramatically different views on Mideast peacemaking and other polarizing issues.

Israeli media said that with 99.8 percent of votes counted, each bloc had 60 of parliament’s 120 seats. Commentators said Netanyahu, who called early elections three months ago expecting easy victory, would be tapped to form the next government because the rival camp drew 12 of its 60 seats from Arab parties who traditionally neither are asked nor seek to join governing coalitions.

A startlingly strong showing by a political newcomer, the centrist Yesh Atid (There is a Future) party, turned pre-election forecasts on their heads and dealt Netanyahu his surprise setback in Tuesday’s vote. Yesh Atid’s leader, Yair Lapid, has said he would only join a government committed to sweeping economic changes and a serious push to resume peace talks with the Palestinians, which have languished throughout Netanyahu’s four-year tenure.

The results were not official, and there was a slim chance of a slight shift in the final bloc breakdowns.

Addressing his supporters early on Wednesday, when an earlier vote count still gave his bloc a one-seat parliamentary margin, Netanyahu vowed to form as broad a coalition as possible. He said the next government would be built on principles that include reforming the contentious system of granting draft exemptions to ultra-Orthodox Jewish men and the “responsible” pursuit of a “genuine peace” with the Palestinians. He did not elaborate, but the message seemed aimed at Lapid.

Mr. Netanyahu called Mr. Lapid early on Wednesday and offered to work together. “We have the opportunity to do great things together,” Likud quoted the prime minister as saying.

The prime minister’s goal of a broader coalition will not be an easy one, and will force him to make some difficult decisions. In an interview last week with The Associated Press, Mr. Lapid said he would not be a “fig leaf” for a hard-line agenda on peacemaking. A leading party member, Yaakov Peri, said Yesh Atid it would not join unless the government pledges to begin drafting the ultra-Orthodox into the military, lowers the country’s high cost of living and returns to peace talks.

“We have red lines. We won’t cross those red lines, even if it will cost us sitting in the opposition,” Peri told Channel 2 TV.

That stance could force Mr. Netanyahu to make overtures perhaps far more sweeping than he imagined to get negotiations moving again.

Conversely, a coalition joining parties with dramatically divergent views on peacemaking, the economy and the military draft could easily be headed for gridlock and perhaps a short life at a time when Israel faces mounting international isolation, growing economic problems, and regional turbulence.

The vote tally gave Mr. Netanyahu’s Likud-Yisrael Beitenu alliance 31 parliamentary seats, 11 fewer than the 42 it held in the outgoing parliament and below the forecasts of recent polls. Yesh Atid had been forecast to capture about a dozen seats but won 19.

Under Israeli law, the party with the best chance of putting together a coalition is given six weeks to do so, and Netanyahu is expected to be handed the task. In the event he fails to form a government, another party presumably Mr. Lapid’s would be asked to try.

(3) Polaris to recast business model

Polaris Financial Technology has kick-started an exercise to revamp its business model.

This board-blessed move, it is learnt, is aimed at improving the shareholder value.

Facing some sort of an identity crisis, Polaris board apparently feels the company is largely undervalued by the investors.

A quarter of the company’s revenue comes from product business. The rest is accounted for by the services business.

According to Arun Jain, Chairman and CEO of Polaris, the board is worried over the underestimation of Polaris by the investing community, and, hence, sought the help of an outside consultant (BCG) to suggest the way forward. The consultant felt Polaris “has huge undiscovered value.’’ The consultant, he explained, saw “huge value sitting in products, services and client businesses.’’ In the light of the findings of the consultant, the board, he said, had asked the management team to explore options, including appropriate restructuring, which would provide “an impetus to the company for the next stage of its growth’’ even while maximising the shareholder value.

Mr. Jain told The Hindu that a seven-member management team had been entrusted with the task of exploring all options to revamp the business model of the company. “We will form a task team, and assign the job,’’ he added. The board, he said, had given the management team a 90-day time to come out with its proposal, which would then be placed before the board in its next meeting. Mr. Jain said Polaris was somehow unable to communicate to investors that the DNA of its two businesses (products and services) were completely different, and, hence, the company could not be viewed from the prism of “`quarter-to-quarter performance.’’ As a consequence, it was commanding only half the value vis-à-vis its peers in the industry, he pointed out.

Polaris, in the meanwhile, reported a flat growth in its revenues for the three months ended December 31, 2012 at Rs. 572.88 crore against Rs. 572.53 crore in the same period in the previous year. The profit after tax declined sharply to Rs. 40.67 crore from Rs. 61.07 crore in the year-ago period, mainly due to the loss of Rs. 11.89 crore suffered by the IdenTrust division.

Mr. Jain said, “This has been a challenging quarter. However, we continue to build momentum with 16 new business wins. These wins will lead to revenue accruals in the coming quarters.” Govind Singhal, President and COO, said, “Service business has been steady barring a $800,000 negative impact due to Hurricane Sandy. As regards our product business, though we won nine deals, the slowdown in Europe has impacted three deal closures and revenue recognition this quarter. “Our overall operational improvement agenda is on track and costs were contained at the levels of the previous quarter.”

(4) Samsung launches Galaxy Grand

Intensifying competition in the smartphone market, Samsung Electronics has announced the launch of Samsung Galaxy Grand, a new high-end smartphone at a price of Rs.21,500.

This model will be available across India from February, and is targeted at the youth and company executives in the age group of 18 to 35 years, a top company official said. This device was being simultaneously launched in key markets across the world, the official added.

The handset is powered by Android 4.1.2 (Jelly Bean) operating system, and runs on a 1.2 GHz dual core processor. The device with a 5 inch screen is slim and comes with an ergonomic design which makes it comfortable to hold. It has borrowed features from Samsung’s flagship devices such as the Samsung Galaxy S3 and Note 2.

The device also sports a multi-window feature that allows seamless multitasking and running of multiple applications simultaneously without having to switch screens.

The Grand is also one of the world’s top performing dual SIM smartphones. Its smart dual SIM feature provides total communication flexibility, allowing users to manage two phone numbers from a single phone.

It is possible to receive calls on one SIM number while taking a call from the other, ensuring efficient management of personal and work commitments without ever missing a call.

“We are beginning the year 2013 with the launch of Galaxy Grand and we have lot of expectation from it. Many more launches will follow. The Galaxy Grand is revolutionary not only in terms of the great smartphone experience that it provides but also in terms of its value proposition,” said Asim Warsi, Vice-President, Samsung Mobile.

“I feel the Galaxy Grand will further fuel the growth of the smartphone market in India and will especially delight consumers looking for a great smart dual SIM phone. The Galaxy Grand best meets the growing consumer preference for a large screen device that gives them a great multimedia experience and superior performance,” Mr Warsi added. He said the device had various intuitive features that enable consumers to seamlessly engage with the device.

This launch comes days after Nokia introduced its high-end Lumia 920, 820 and 620 and announced plans to aggressively grow in the smartphone market. Apple is also aggressively promoting its iPhone 5 through various offers and it will be interesting to watch the turf war in the coming months.

(5) Global unemployment to hit record high in 2013, warns ILO

The U.N. job watchdog also spotlights the problem of youth unemployment, noting that there are 73.8 m young people unemployed worldwide.

More than 197 million people worldwide are jobless, and an additional 39 million have simply given up looking for work, a U.N. agency said on Monday, warning that government budget-balancing was hurting employment and would probably lead to more job losses soon.

With global growth stalling five years after the financial crisis upended much of the world economy, the number of jobless is expected to rise by 5.1 million this year, to more than 202 million, the International Labor Organization said in a special report. And it predicted there would be a further three million newly jobless people next year.

High unemployment rates in the developed world — 7.8 per cent in the United States, 11.8 per cent in the eurozone — weigh on demand and hold back economic growth. Global gross domestic product will probably expand about 3.6 per cent this year, the International Monetary Fund said in October, below its previous forecast.

The ILO's revised figures mean global unemployment has risen by 28 million since 2007, before the start of the financial crisis, said ILO Director-General Guy Ryder, at a press conference on Monday.

The ILO found that macroeconomic imbalances “have been passed on to the labour market to a significant degree.’’ With aggregate demand weakening, employment “has been further hit by fiscal austerity programmes in a number of countries, which often involved direct cutbacks in employment and wages, directly impacting labour markets.’’

More troubling, it said, was that while governments had sought to counter the effects of the financial crisis with fiscal stimulus, the later austerity measures in some countries appeared to be reinforcing the downturn.

Recession effects

The effects of the recession in Europe are being felt elsewhere through “a spillover effect,’’ the ILO found, mostly through the mechanism of reduced demand for goods from elsewhere, but also in the form of volatile capital inflows in places such as Latin America and the Caribbean. These forces have pushed up local foreign exchange rates and left policymakers with difficult choices about how to keep soaring currencies in check without strangling economic growth.

The agency said that it was common for the rate of job creation to be slow by historical standards after a financial crisis, but that there had been “a short-lived respite’’ for developed countries beginning in 2010. That period has now ended, and once again “further job restructuring is likely before a stronger rebound can be expected in labour markets.’’

More people were simply leaving the job market altogether, particularly in the developed world, with labour force participation rates falling ‘dramatically,’ it said, “masking the true extent of the jobs crisis.’’

The ratio of employment-to-population ratio has fallen as much as 4 percentage points or more in some areas, it noted, and even where jobless rates have eased, the participation rate ‘has not yet recovered.’

Youth unemployment

The ILO also spotlighted the problem of youth unemployment, noting that there were 73.8 million young people unemployed worldwide. It estimated that an additional half million would join the ranks of the jobless this year. The youth unemployment rate, currently at 12.6 percent, will probably rise to 12.9 per cent by 2017, the agency said.

“The crisis has dramatically diminished the labour market prospects for young people,’’ the agency said, “as many experience long-term unemployment right from the start of their labour market entry, a situation that was never observed during earlier cyclical downturns.’’

The agency said employment tapered off in 2011 before turning negative in 2012, with another four million people added to global unemployment rolls last year, about one-fourth of whom were in advanced economies where austerity measures had been the most pronounced.

But even countries in which jobless rates have not risen "often have experienced a worsening in job quality," the ILO said, "as vulnerable employment and the number of workers living below or very near the poverty line increased."

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