BP's share prices rises on back of promises to pay up (+ backgrounder on deepwater drilling); Israel to lift part of Gaza blockade – allows in food but not shelter; new Japanese PM to slash deficit; China insists nuclear deal with Pakistan is peaceful; and more
Top of the Agenda: BP to Pay $20 Billion and Suspend Dividend
In lengthy negotiations with US President Barack Obama, oil giant BP said it would suspend dividends this year and set aside $20 billion (FT) to cover claims relating to the Gulf of Mexico oil spill. BP also agreed to create a $100 million fund to compensate oil-sector workers laid off because of the spill. After the four-hour meeting, Obama emphasized that the $20 billion fund was "not a cap. The people of the Gulf have my commitment that BP will meet its obligations to them." BP will pay the $20 billion into an escrow account over four years, with the first $5 billion payment to be made this year. BP shares rose sharply on the news that White House conditions were not tougher. Claims for economic damages will be assessed by Kenneth Feinberg, the White House "pay tsar."
BP's size, and the fact that its stock is so widely held, makes its troubles felt throughout the investment world (NYT). The company's largest stockholders include insurance companies in Britain, money management companies in the United States, and government-controlled investment funds in Norway, Kuwait, China, and Singapore. Americans own half the company's stock.
In the Christian Science Monitor, Mark Trumbull says it's in the United States' best interest for BP to be healthy enough to pay for the cleanup costs rather than putting the burden on US taxpayers.
In this CFR roundup, four experts discuss the possibility for significant reductions in US oil consumption.
The Gulf of Mexico oil spill spotlights the growth of deepwater drilling and the challenges of balancing strong environmental regulation with efforts to expand US domestic oil production.
PACIFIC RIM: China Says Nuclear Deal with Pakistan Peaceful
China said its civilian nuclear cooperation with Pakistan (BBC) is peaceful and in line with international obligations, after the United States asked for details on China's sale of two new reactors to Pakistan.
Japan: Japanese Prime Minister Naoto Kan's ruling party outlined its plans (AFP) to rebuild the nation's finances and slash its deficit, changing course from his predecessor Yukio Hatoyama, who focused on foreign policy shifts and social welfare.
This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org