Avis buying Zipcar in deal worth nearly $500M

 Avis is leaping into the car-sharing service business by buying Zipcar for $491.2 million, aiming to capture a new type of customer and technology that will vastly expand its car rental options.
Car sharing has become a popular alternative to traditional rentals in metropolitan areas and on college campuses, allowing members to get a vehicle for an hour or two for short trips instead of renting a car for a day or using mass transit. The segment has been growing while traditional car rentals have struggled in the current slow-growth economy.
Zipcar, which was founded in 2000, has more than 760,000 members, triple what it had in 2008. It went public in 2011 and 2012 is expected to be its first-ever profitable year. Avis Budget Group Inc. is the third-largest U.S. rental car company, behind Enterprise Rent-a-Car and Hertz Global Holdings Inc.
"I've been somewhat dismissive of car sharing in the past but what I've come to realize is that car sharing, particularly on the scale that Zipcar has achieved and will achieve, is complementary to our traditional business," Avis' Chairman and CEO Ron Nelson said in a conference call after the deal was announced.
Nelson said the acquisition means Avis will now be able to reach younger, more tech-savvy consumers that prefer sharing services.
Zipcar parks cars throughout cities and college campuses, which allows renters to avoid waiting in lines at traditional car rental counters. Some areas provide reserved parking for the cars, which can be located online or through the companies' smartphone applications. That technology was attractive to Avis, which hopes to expand Zipcar's vast technological capabilities to its own business.
The car-sharing companies pay for fuel and insurance, costs not included in standard car rentals. Although the hourly rental options are quicker and cheaper than renting a car by the day, Zipcar and other car-sharing services are generally more expensive for rentals longer than 24 hours.
To join Zipcar, members pay a $25 application fee and $50 a year. Rates run from $7.50 an hour and include gas, insurance and 180 miles a day.
The acquisition will help Avis better compete with Enterprise and Hertz, which have their own smaller car-sharing services. And having access to Avis' fleet of cars will help Zipcar meet high demand on weekends when most people take a trip to the grocery store or run other errands.
Avis estimates it will save about $50 to $70 million a year through combining the two businesses into one.
Avis Budget Group Inc. will pay $12.25 per share, which is a 49 percent premium to Zipcar's closing price on Friday. The stock lost more than half its value in early 2012 year as its results and outlook spooked Wall Street. But late last year, the stock began to recover as the company saw growth in members and revenue. And on Wednesday, the stock soared 48 percent to close at $12.18.
The boards of both companies unanimously approved the buyout. If Zipcar shareholders approve the deal, it's expected to close in the spring.
Avis, which is based in Parsippany, N.J., said it expects certain members of Zipcar management, including Chairman and CEO Scott Griffith and President and Chief Operating Officer Mark Norman, to help run its day-to-day operations.
Avis also maintained its 2012 adjusted earnings forecast Monday of about $2.35 to $2.45 per share on revenue of approximately $7.3 billion. Analysts predict earnings of $2.42 per share on revenue of $7.3 billion.
Avis shares jumped 4.8 percent to close at $20.77, after earlier hitting a 52-week high of $21.10.

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Microsoft acquires start-up id8: source

 Microsoft Corp bought start-up id8 Group R2 Studios Inc as it looks to expand further in technology focused on the home and entertainment, a person familiar with the situation said on Wednesday.
id8 Group R2 Studios was started in 2011 by Silicon Valley entrepreneur and investor Blake Krikorian. It recently launched a Google Android application to allow users to control home heating and lighting systems from smartphones.
Krikorian's Sling Media - which was sold to EchoStar Communications in 2007 - made the "Slingbox" for watching TV on computers.
Krikorian will join Microsoft with a small team, according to the Wall Street Journal, which reported the acquisition earlier on Wednesday. Microsoft also purchased some patents owned by the start-up related to controlling electronic devices, the newspaper added.
Krikorian and a Microsoft spokesman declined to comment.
Krikorian resigned from Amazon.com Inc's board in late December after about a year and a half as a director at the company, the Internet's largest retailer.

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Boehner agrees to Sandy aid vote on Friday

WASHINGTON (AP) — Under intense pressure from angry Republicans, House Speaker John Boehner agreed Wednesday to a vote this week on aid for Superstorm Sandy recovery.
The speaker will schedule a vote Friday for $9 billion for the national flood insurance program and another on Jan. 15 for a remaining $51 billion in the package, Republican Rep. Peter King of New York said after emerging from a meeting with Boehner and GOP lawmakers from New York and New Jersey. The votes will be taken by the new Congress that will be sworn in Thursday.
King left the session with Boehner without the anger that led him to rip into the speaker Tuesday night.
"It was a very positive meeting," King said, adding that Boehner, R-Ohio, assured the lawmakers present that the money from the two House votes would roughly equal the $60 billion package of aid that passed the Senate.
Since the votes will be taken in the new Congress, the Senate also will have to approve the legislation. If the House, as expected, approves the $9 billion flood insurance proposal, the Senate plans to move quickly in hopes of approving the aid on a voice vote Friday. The flood insurance money will help pay for claims by home and business owners with coverage.
Sandy was the most costly natural disaster since Hurricane Katrina in 2005 and one of the worst storms ever in the Northeast.
"Getting critical aid to the victims of Hurricane Sandy should be the first priority in the new Congress, and that was reaffirmed today with members of the New York and New Jersey delegations," Boehner said in a joint statement with House Majority Leader Eric Cantor, R-Va.
Boehner's decision Tuesday night to cancel an expected vote on Sandy aid before Congress ends its current session provoked a firestorm of criticism from New York, New Jersey and adjacent states where the money will go, including many lawmakers in his own party.
According to King, Boehner explained that after the contentious vote to avoid major tax increases and spending cuts called the "fiscal cliff," Boehner didn't think it was the right time to schedule the vote before the current Congress went out of business.
"What's done is done. The end result will be New York, New Jersey and Connecticut will receive the funding they deserve. We made our position clear last night. That's in the past," King said.
Rep. Chris Smith, R-N.J., added, "We do believe we have an iron clad commitment."
The Senate approved a $60.4 billion measure Friday to help with recovery from the October storm that devastated parts of New York, New Jersey and nearby states. The House Appropriations Committee has drafted a smaller, $27 billion measure for immediate recovery needs and a second amendment for $33 billion to meet longer-term needs.
The $9 billion in flood insurance money to be voted on Friday was originally in the $27 billion measure. The votes on Jan. 15 will be for $18 billion in immediate assistance and $33 billion for longer-term projects, including projects to protect against future storms, King said.
Much of the money in the proposals is for immediate help for victims and other recovery and rebuilding efforts. The aid is intended to help states rebuild public infrastructure such as roads and tunnels and help thousands of people displaced from their homes.
Some $5.4 billion is for the Federal Emergency Management Agency's disaster relief fund, $5.4 billion is to help transit agencies in New York and New Jersey rebuild and another $3.9 billion is for the Housing and Urban Development Department's development fund to repair hospitals, utilities and small businesses.
New Jersey Gov. Chris Christie, a Republican, was among those sharply criticizing Boehner before the speaker changed course.
Christie said he was frustrated after Boehner withdrew the bill Tuesday night and tried to call him four times that night, but none of the calls were returned. Christie complained about the "toxic internal politics" of the House majority. Christie said he had worked hard to persuade House members to support Sandy aid, and was given assurances by GOP leaders that the bill would be voted on before Thursday.
"There is no reason for me at the moment to believe anything they tell me," Christie said before Boehner announced there would be votes this month.
King had branded Boehner's initial decision to pull the bill a "cruel knife in the back" to New York and New Jersey.
King was among an angry chorus of New York and New Jersey lawmakers from both parties who blasted Boehner, with some saying his move was a "betrayal."
In considering the Sandy aid package, the speaker was caught between conservative lawmakers who want to offset any increase in spending and Northeast and mid-Atlantic lawmakers determined to help their states recover more than two months after the storm hit.
The criticism of Boehner on the House floor was personal at times, and reflected in part the frustration among the rank-and-file over the decision to press ahead with a vote on the fiscal cliff deal engineered by the White House and Senate GOP leader Mitch McConnell. Boehner had been struggling with conservatives who complained that the economic package didn't include enough spending cuts.
Reps. Michael Grimm, a Republican, and Jerrold Nadler, a Democrat, said in angry House floor remarks that while they did not agree on much, Boehner's decision amounted to a "betrayal" and a crushing blow to states battered by the storm.
President Barack Obama also called for an immediate House vote. Sen. Kirsten Gillibrand, D-N.Y., raised the political temperature even more. She said Boehner should come to Staten Island and the Rockaways to explain his decision to families whose homes and businesses were destroyed. "But I doubt he has the dignity nor the guts to do it," Gillibrand said.
Obama, meanwhile, called for House Republicans to vote on the Sandy aid "without delay for our fellow Americans." The president said in a written statement that many people in New York, New Jersey and Connecticut are trying to recover from the storm and need "immediate support with the bulk of winter still in front of us."
The White House said Obama spoke Wednesday with Christie about the importance of the disaster aid bill, and that the president's staff was in touch with New York Gov. Andrew Cuomo's team too as Obama lobbied for House action.
Christie and Cuomo, a Democrat, issued a joint statement, saying, "The fact that days continue to go by while people suffer, families are out of their homes, and men and women remain jobless and struggling during these harsh winter months is a dereliction of duty."
Rep. Frank Pallone Jr., D-N.J., blamed tea party lawmakers and conservatives who were reluctant to approve new spending soon after the debate over the "fiscal cliff" budget issues for the sudden move by GOP leaders. He said the move was "deplorable."
More than $2 billion in federal funds has been spent so far on relief efforts for 11 states and the District of Columbia struck by the storm, one of the worst ever to hit the Northeast. The Federal Emergency Management Agency's disaster relief fund still has about $4.3 billion, enough to pay for recovery efforts into early spring, according to officials. The unspent FEMA money can only be used for emergency services, said Pallone.
New York, New Jersey, Connecticut, District of Columbia, West Virginia, Virginia, Maryland, New Hampshire, Delaware, Rhode Island, Pennsylvania and Massachusetts are receiving federal FEMA aid.
Sandy was blamed for at least 120 deaths and battered coastline areas from North Carolina to Maine. New York, New Jersey and Connecticut were the hardest hit states and suffered high winds, flooding and storm surges. The storm damaged or destroyed more than 72,000 homes and businesses in New Jersey. In New York, 305,000 housing units were damaged or destroyed and more than 265,000 businesses were affected.

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Ex-directors of Satyam win ruling in U.S. class-action suit

NEW YORK (Reuters) - A U.S. federal judge dismissed claims against seven former directors of Satyam Computer Services Ltd in shareholder lawsuits stemming from the massive fraud at the heart of India's largest corporate scandal.
U.S. District Judge Barbara Jones in New York ruled on Wednesday the lawsuits failed to allege that the ex-directors recklessly failed to discover the fraud, which came to be known as "India's Enron."
The lawsuits center on the revelation by Satyam's founder and former chairman, Ramalinga Raju, that what had been India's fourth-largest outsourcing firm had for several years inflated its revenue, income and cash balances by more than $1 billion.
In her decision Wednesday, Jones said the allegations primarily focused on the actions of a small group of insiders, reinforcing an inference the audit committee's members "were themselves victims of the fraud."
Lawyers for the directors welcomed the decision.
"It was truly unfortunate that these directors, diligent individuals of the highest integrity, were ever named as defendants," said Irwin Warren, a lawyer for five of the seven directors involved in the case.
Gordon Atkinson, a lawyer for former board member Vinod Dham, in an email said the decision would hopefully help vindicate his client and the other outside directors, "who were themselves victims of the Satyam fraud, not perpetrators or otherwise responsible for it."
Lawyers for the plaintiffs did not respond to requests for comment.
Satyam shareholders began filing lawsuits in 2009 after the scandal broke.
In 2011 Satyam, now called Mahindra Satyam Ltd, and its auditor, PricewaterhouseCoopers, agreed to pay $125 million and $25.5 million, respectively, to settle claims filed by shareholders.
That same year, Satyam and PwC agreed to pay a combined $17.5 million to settle claims made by the U.S. Securities and Exchange Commission and Public Company Accounting Oversight Board.
The 2011 settlements did not include Satyam's former directors, who continued to litigate the case that ultimately ended in Wednesday's ruling.
In her ruling, Jones also said the investors could not file claims arising from stock purchases made on the National Stock Exchange of India, citing a 2010 U.S. Supreme Court case restricting investor claims in U.S. courts involving stocks bought on overseas exchanges.
Investors had also filed claims involving Satyam American depositary shares, which were not impacted by the Supreme Court ruling.
The lead plaintiffs include Public Employees' Retirement System of Mississippi, Mineworkers' Pension Scheme, SKAGEN AS and Sampension KP Livsforsikring A/S.
Jones also dismissed claims brought by a former Satyam employee on behalf of employees who exercised stock options. The judge also voided claims on jurisdictional grounds against two companies owned by the Raju family - Maytas Infra Ltd. and Maytas Properties.
Adam Finkel, a lawyer for Maytas Properties, in an email said his clients were pleased with the decision.
The case is In re Satyam Computer Services Ltd. Securities Litigation, U.S. District Court, Southern District of New York, 09-2027.

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DoubleLine launches stock management division

NEW YORK (Reuters) - DoubleLine Capital LP, the $53 billion firm run by star bond investor Jeffrey Gundlach, said on Wednesday it is now managing stock portfolios in a new division called DoubleLine Equity LP.
The firm, which surpassed $50 billion in bond assets last year after launching in 2009, said in a news release that it has tapped former TCW Group Inc portfolio managers Brendt Stallings and Husam Nazer to expand its stock division.
In an interview on Wednesday, Gundlach, DoubleLine's chief executive officer and chief investment officer, said stock mutual fund strategies suffer from a lack of new ideas.
"We think the equity business is ripe for creative thinking," he said.
Gundlach said he plans to start with one or two mutual funds that offer a strategy focusing on U.S. stocks, and quickly follow with a hedge fund whose strategy would focus on "best ideas" in international stock investing.
"We're really not prepared to do a lot of individual stock selection outside of the United States," he said.
Gundlach had hinted at the firm's move into stocks in a webcast on September 11, citing the broad disinterest in equities and their potential as a hedge against inflation.
He said on Wednesday that some of the stock funds he plans to offer will have a strategy that focuses on specific sectors among small and mid-cap stocks, while others will have a broader strategy that could vary widely in its stock selection.
Gundlach said DoubleLine's business plan had been to build the firm's bond management side to between $50 billion and $60 billion in assets before diversifying into areas such as stocks, a goal it has achieved.
"This is our first move to diversify. There's very likely to be one if not two more over the course of 2013," Gundlach said. He said he is seeking to reach a maximum of about $10 billion in assets within DoubleLine's equity division.
Gundlach has made pointed calls on stocks in the past, including one at the Ira Sohn investing conference in May to buy natural gas while betting on a decline in the shares of Apple Inc, the world's most valuable technology company.
On Wednesday, Gundlach recommended trading the volatility in Apple's stock price.
"Apple's flopping around like a fish in a boat. When it has a big rally, you should probably sell it. When it goes down a lot, you should probably buy it," he said, and reiterated a call he on CNBC in November that its stock price may drop to $425 a share. Apple's stock was up 3.2 percent to $549.03 at the close of trading on Wednesday.
DoubleLine Total Return Bond Fund, the firm's flagship, earned a return of 9.2 percent in 2012, beating 97 percent of other U.S. mortgage-focused funds, according to Lipper. The fund, which oversees $37.1 billion, took in $19.7 billion last year, making it the most popular mutual fund by asset growth.
Pacific Investment Management Co, the world's largest bond fund manager with $1.92 trillion in assets as of September 30, 2012, began moving into equities when it launched its first actively managed stock mutual fund in 2010.
Gundlach told Reuters that his foray into stock investing could also come with a downturn in the stock market, which he said he could overcome through active management.
"There's a really good argument that you could have a major correction in the S&P 500 in 2013," he said. He cited the heavy influence of U.S. policymakers on markets.
Stallings and Nazer were previously group managing directors at TCW, the highest title for managers at the firm, where they oversaw $5 billion in assets in stock portfolios.
Gundlach founded DoubleLine after a nasty split with TCW, where he was fired as chief investment officer in December 2009. The two sued one another in 2010, but settled in December of that year without disclosing terms.
Private equity firm Carlyle Group struck a deal in August to buy a 60 percent stake in TCW from French bank Societe Generale. TCW management and employees will own the remaining 40 percent stake in the Los Angeles-based investment firm, which has $135 billion in assets.
DoubleLine, which is also based in Los Angeles, employs more than 80 people. Stallings and Nazer plan to hire at least five investment professionals this year, the news release said.
Nazer said in an interview on Wednesday that dividend-paying stocks in general and consumer staple stocks are particular bright spots.

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UN envoy: Without deal in Syria, think Somalia not Yugoslavia

• A daily summary of global reports on security issues.
After a week of attempting to craft a peace plan that both President Bashar al-Assad and the Syrian opposition would agree to, the United Nations' envoy to Syria said the situation will not stabilize on its own and that a political deal is no closer.
“People are talking about a divided Syria being split into a number of small states like Yugoslavia,” Lakhdar Brahimi said, according to The New York Times. “This is not what is going to happen. What will happen is Somalization – warlords."
“The situation is bad and it’s getting worse,” Brahimi also said, according to Bloomberg Businessweek. “I can’t see anything other than these two paths: Either there will be a political solution that will meet the ambitions and legitimate rights of the Syrian people, or Syria will turn into hell.”
He warned that the violence could claim as many as 100,000 lives in 2013.
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According to the New York Times, Mr. Assad did not respond to Mr. Brahimi's proposals and a Syrian opposition leader declined an invitation to Moscow to meet with Russian officials. Sergei Lavrov, Russia's foreign minister, said Assad could not be convinced to leave the country, which the opposition has insisted is a precondition for talks.
Speaking about the yawning gap that has to be bridged for the two sides to sit down for talks, CNN reports that Brahimi said, "The Syrians disagree violently. On one side, the government says we are doing our duty to protect our people from ... terrorists. On the other side, they say the government is illegitimate," Brahimi said. "They are not talking about the same problem. They are talking about two different problems."
Brahimi's comments came the day after what CNN said might be the bloodiest day in the uprising – on Dec. 29, at least 399 people were killed.
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According to Reuters, Mr. Lavrov pinned the blame for continuing violence on the opposition, even though the US, European countries, and most Arab states back the opposition's demand that Assad's removal from power come first.
"When the opposition says only Assad's exit will allow it to begin a dialogue about the future of its own country, we think this is wrong, we think this is rather counterproductive," he said. "The costs of this precondition are more and more lives of Syrian citizens."
But the Syrian opposition's calculus has changed over the last couple months. A string of victories has made it optimistic abut winning the war in the end, and therefore less flexible in negotiations, according to Reuters.
REGIME STILL HAS STRENGTH
But despite their recent success, "the government still has the bigger arsenal and a potent air force. It controls most of the densely populated southwest of Syria, the Mediterranean coast, most of the main north-south highway and military bases countrywide," Reuters notes.
Russia appears to be making an effort to secure a meeting, agreeing to meet the opposition representative outside of Russia if he insists. Bloomberg reports that, according to RIA Novosti, the foreign ministry said talks could be held in Geneva or Cairo instead.
Meanwhile, Brahimi is rapidly losing ground support in Syria, Reuters reports.
The envoy's credibility with the rebels appears to have withered. In the rebel-held town of Kafranbel, demonstrators held up banners ridiculing Brahimi with English obscenities.
"We do not agree at all with Brahimi's initiative. We do not agree with anything Brahimi says," the rebel chief in Aleppo province, Colonel Abdel-Jabbar Oqaidi, said on Friday.

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Obama's pivot to Asia? Middle East will still demand attention in 2013.

Nearly four years ago, President Barack Obama addressed a packed, enthusiastic crowd at Cairo University and promised a "new beginning" between the United States and the Muslim world.
In that speech, Mr. Obama outlined a vision for a new era of economic cooperation in the Middle East, one of steadfast US support for democracy, and of reset priorities.
"I've come here to Cairo to seek a new beginning between the United States and Muslims around the world, one based on mutual interest and mutual respect," he said then.
While Obama ended the war in Iraq on a schedule provided to him by his predecessor, George W. Bush, many of the promises in that speech went unfulfilled. The Guantánamo Bay military prison was never closed. Progress on peace between Palestinians and Israelis was not made. The promised economic development of Afghanistan, beset by a war that Obama now looks set to end in 2014, never took root.
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Nevertheless, four years later, he's got his new beginning – not by his own hand, and not the one he would have either imagined or wanted when he made his series of stirring promises in Cairo.
The self-immolation and death of Mohamed Bouazizi in Tunisia in December 2010 led to the sharpest change in the politics of the Middle East since the 1960s. The events of the past year in Egypt, Syria, Tunisia, and Libya have cemented a radical new reality that Obama will have to contend with in his second term.
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For all the talk of a US strategic "pivot" to Asia, a dramatically changed Middle East looks set to suck up a huge portion of American diplomatic energy and attention in the coming years. Old, comfortable patterns of dealing with regional dictators like Egypt's Hosni Mubarak and Tunisia's Zine El Abidine Ben Ali have been severely disrupted. Islamists, long feared by the US, have since won power in free elections in Egypt and Tunisia, and are among those fighting the secular regime in Syria.
SYRIA'S DENOUEMENT
In Syria, the civil war has claimed more than 40,000 lives, and there are threats to US interests in both the demise of Bashar al-Assad's regime there, if it comes, and in his survival. As this year draws to a close, the US has edged closer to full-fledged support for elements of the uprising against Mr. Assad even as it labeled one of the opposition's most effective fighting groups, the jihadi Jabhat al-Nusra, a foreign terrorist organization.
The denouement there, when it comes, could well have destabilizing ripples for neighboring Lebanon and Iraq. Syria's chemical weapons stockpiles are a reality that can't be ignored, and the prospect of those weapons falling into the hands of jihadi groups has the Obama administration drawing up contingency plans for possible intervention.
Israel, while it's had a long cold war with Assad's Syria and continues to occupy the Golan Heights, nevertheless is frightened by the prospect of yet another Sunni Islamist regime, rather than a secular nationalist one, on its doorstep.
TROUBLES AT HOME FOR ISRAEL
The Israeli-Palestinian conflict is also moving into new, dangerous waters. The so-called peace process that began with the Oslo Accords in 1993 has petered out completely. In 2009, Obama called for an end to Israeli settlement construction in the West Bank and early in his presidency leaned hard on Israeli Prime Minister Benjamin Netanyahu for at least a temporary freeze. But expansion has continued unabated, and the Obama administration appears to have lost interest in pressing the issue.
In the West Bank, Palestinian Authority President Mahmoud Abbas has been weakened by his failure to negotiate an end to the encroaching Israeli settlements, and in Gaza the Islamist movement Hamas remains as entrenched as ever.
In November, Israel was a hairbreadth away from an invasion of Gaza that was only avoided at the last minute by a negotiated cease-fire. A key figure in heading off that crisis was Egypt's president, Mohamed Morsi, the Muslim Brotherhood stalwart whom the US turned to as intermediary with Hamas.
BROTHERLY RELATIONS
The rise to power of the Islamist Muslim Brotherhood in Egypt captures the peril for the US of this new beginning. Mr. Morsi was elected in a free election, but the country's new constitution, which is set to pass a referendum this month, is filled with alarming elements in terms of personal freedoms and minorities' rights.
The state of that country's economy has deteriorated sharply thanks to the political turmoil of the past two years, with clashes in Cairo between supporters of Morsi and his opponents in November being the latest reminder that the authoritarian stability of the Mubarak years has been replaced by something fluid and hard to predict.
Many of the Egyptian liberals and secularists who listened to Obama's Cairo speech so appreciatively now grumble that he's backing the Brothers as they seek to cement their power and influence over the country. In the year ahead, and beyond, Obama will have to weigh criticism of Egyptian suppression of civil liberties on the one hand against a desire for Egyptian cooperation in keeping Hamas, an offshoot of the Muslim Brotherhood, contained in Gaza.
There are still other shoes to drop in the region. Libya is struggling to create a new order after decades of one-man rule by Muammar Qaddafi, with weapons smuggling rife along its desert borders and sharp clashes there still to be worked out over the role of Islam in the country's political life. In Bahrain, a close US ally and home to the US Navy's Fifth Fleet, a Sunni monarchy is contending with the simmering political discontent of the country's Shiite majority, which is challenging Obama's earlier assertion of a personal commitment to advocating "governments that reflect the will of the people."
EAST OF THE MIDDLE EAST
The one constant from four years ago is hardly reassuring: the slow, steady progress of Iran's nuclear program. Obama has spearheaded an effort among Western governments to financially isolate Iran, with restrictions on its oil sales and the financial transactions of its central bank, which have taken a heavy toll on Iran's economy but have done little to lessen the commitment of Ayatollah Khamenei, the country's supreme leader, to what he insists is a peaceful nuclear program.
For now, Iran continues to insist on its right to nuclear enrichment, which the US argues is producing material that could be eventually used in a nuclear bomb.
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The situation in Afghanistan and Pakistan is as fraught as ever. Yes, Osama bin Laden was killed in a daring raid in Pakistan by US troops in 2011. But, notwithstanding billions of dollars in annual US aid, that country continues to provide a home to militants, and Shakil Afridi, a Pakistani doctor who helped the US track Mr. bin Laden to his compound in Abbottabad, remains in a Pakistani jail.
In Afghanistan, the Army is completely reliant on US financing and technical support to operate, and the Taliban appear no weaker than they did when Obama took office.
As the Obama administration looks ahead to 2013 and its new challenges, it is looking over a Middle East landscape transformed from four years ago. The old ways of doing business in the region aren't going to work anymore. How Obama must miss them.

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On cusp of new year, Chavez's health keeps Venezuleans fixated on future

Dec. 31 is typically a time to recap the biggest events of the year. But in Venezuela this year, news that President Hugo Chavez has suffered “new complications” after surgery on Dec. 11 has kept Venezuelans anxiously fixated on what’s to come in 2013.
In downtown Caracas, an annual free concert in Plaza Bolivar to welcome the New Year has been canceled, government officials said. They instead called on Venezuelans to unite in prayer for the prompt recuperation of President Chavez, according to the Venezuelan daily El Universal.
President Chavez underwent surgery in Cuba on Dec. 11 for a recurrence of cancer. Since then, the nation has been faced with uncertainty about his chances for recovery, whether he’ll be able to attend his Jan. 10 inauguration – after winning a fourth presidential election in October – and if not, who will be Venezuela’s new president.
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That uncertainty increased a notch after Venezuelan Vice President Nicolas Maduro went on television to say the following (translated into English by VenezuelanAnalysis): “Nineteen days after having undergone his surgical intervention, President Chavez’s state of health continues to be delicate; he has presented complications that are being attended to with treatment that is not without risk.”
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Venezuela is, of course, not alone in looking at what lies ahead in 2013. US President Barack Obama and US Congress are scrambling to avoid the so-called “fiscal cliff,” as they try to hammer out an agreement on taxes for the wealthy and budget cuts. And across the world, as the Monitor wrote in a round-up, nations are hoping that in 2013 they can bridge such political divides, some of them deadly. Venezuela, in hoping for more unity, was included on that list. But for now it is a nation holding its breath.
David Smilde, a guest blogger for the Monitor, told the Associated Press that the fact that Nicolas Maduro, the nation’s vice president, traveled to Cuba to personally meet with the president in recent days is itself telling. “The situation does not look good. The fact that Maduro himself would go to Cuba, leaving Hector Navarro in charge, only seems understandable if Chavez’s health is precarious,” said Mr. Smilde, who runs a blog on Venezuela for the Washington Office on Latin America.
The trip likely gave Mr. Maduro a chance “to be able to talk to Chavez himself and perhaps to talk to the Castros and other Cuban advisers about how to navigate the possibility of Chavez not being able to be sworn in on Jan. 10,” Mr. Smilde said. “Mentioning twice in his nationally televised speech that Chavez has suffered new complications only reinforces the appearance that the situation is serious.”
If Chavez does not recover, there are many questions about what is next for the oil-rich, Andean nation that has been dominated by Chavez since he took office in 1999.
According to the Venezuelan constitution, translated into English by the BBC, here is what should happen:
Article 231: The president-elect shall take office on January 10 of the first year of their constitutional term, by taking an oath before the National Assembly. If for any reason, (they) cannot be sworn in before the National Assembly, they shall take the oath of office before the Supreme Court.
Article 233: (...) When an elected President becomes absolutely absent prior to inauguration, a new election...shall be held within 30 days.
Article 234: When the President is temporarily unable to serve, they shall be replaced by the Executive Vice-President for a period of up to 90 days, which may be extended by resolution of the National Assembly for an additional 90 days.
But recently, a Chavez ally and head of the national assembly, Diosdado Cabello, said that the inauguration should be delayed – a move that the opposition has declared unconstitutional and casting doubt on what will happen. In the meantime, all of the problems that face Venezuela are on hold, as another guest blogger for Caracas Chronicles describes in his own personal experience here.
Chavez and his government, however, are trying to maintain a semblance of order – with Maduro sending out New Year’s greetings and avoiding mention of the radical changes that could await the nation in the year to come.
“Commander Chavez wanted us to transmit a special end of year greeting to Venezuelan families, who are gathered together over this period throughout the country; in particular he wanted to send a warm embrace to the children of Venezuela, and remind them that they are always in his heart," he said. "The embrace was extended to all of our people, so that they see in the year 2013 with love; a year which should bring the greatest of happiness to our homeland, as well as the definitive consolidation of our independence and national unity.

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Egypt's opposition still hopeful, despite many defeats

When a controversial constitutional draft went to a vote earlier this month, the Egyptian opposition was, as usual, in disarray.
It waffled for weeks between boycotting the referendum and calling for a no vote. When it finally chose the latter only days before the first round of voting on Dec. 15, it was too late to overcome the Muslim Brotherhood and their salafist allies’ strong campaign for a "yes."
But the backlash facing President Mohamed Morsi and the Muslim Brotherhood for rushing the constitution through without input from the opposition has given his opponents new hope for electoral success.
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“The divisions are a thing of the past now and we have Mr. Morsi to thank for that,” says Mostafa El Guindi, who was an independent member of the now-dissolved parliament and played a role in organizing the main facets of the opposition into a new coalition, the National Salvation Front.
“The marriage between ElBaradei and Hamdeen Sabahi is now fact,” he says, referring to two politicians with often clashing policies. That the Nobel prize winner and former head of the International Atomic Energy Agency, Mohammed ElBaradei, and Hamdeen Sabahi, the leftist candidate who came in a surprising third in June’s presidential elections, have come together shows the strength of the determination to create a united front against the Brothers.
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This gives the opposition new hope heading towards parliamentary elections which, according to Egyptian law, must happen within two months of the approval of the constitution.
REJECTING POLITICAL GAMES
But there are also those who say the opposition has only itself to blame for its failure to chip away at the electoral successes of the Muslim Brotherhood.
“Many people wanted to vote no in the referendum about the constitution, but they were looking for a good reason to do so,” says Fady Ramzy, who runs the think tank Messry. “The problem is that the opposition doesn’t have a political product to sell. They should have spent their time convincing people that this constitution is [a waste] for any number of reasons, and that we should do a better job. Because what we have now is just a bunch of nice words with no mechanism to hold those in power to the promises contained in the constitution. Instead, the opposition chose to make a lot of noise about the influence of sharia in the new constitution.”
Mr. Ramzy’s assertion was echoed by voters in some of the districts in the Nile Delta last week. Most Egyptians voting "yes" cited a desire for stability as their main reason, while most "no" voters had very specific reasons to be against the constitution. Among them were the absence of a minimum wage in Egypt –wages are instead linked to productivity – or the fact that free health care is subject to a "certificate of poverty," which many see as humiliating.
Not a single voter cited the role of sharia, or Islamic law, as a reason to vote either for or against the document, despite the fact that both sides had campaigned mainly on this issue.
“The religious factor is decreasing with every election,” says Ramzy. “People realize that political games are being played with religion, and they are starting to refuse being put before the choice of voting for or against Islam.”
DISILLUSIONED BY DEMOCRACY'S SLOW PACE
There is also a growing belief that Egypt’s chaotic path since the overthrow of Mubarak in February 2011 was perhaps an inevitable one.
For all the criticism of the opposition, “it is unreasonable to expect Egypt to have a healthy political landscape just two years after the fall of a dictatorship,” political activist Alfred Raouf says.
“We need at least five years to get to that point, especially with a Muslim Brotherhood that is not really intent on having a diverse political landscape, but rather wants to take the place of the NDP,” he says, referring to Mubarak's former National Democratic Party.
Writing in the Egypt Independent this week, Mr. Raouf said that even if the revolutionaries had been the ones to assume power, they would have "quickly oppressed the people." What happened instead – military rule followed by a landslide for the Muslim Brotherhood – “seems to most people like a catastrophic outcome to a very hopeful revolution," but is actually "the best course for the revolution,” Raouf wrote.
Nevertheless, Raouf, a founding member of ElBaradei’s Dostour (Constitution) party, sees an opportunity for the opposition to make inroads in the next parliamentary elections, even if the current opposition coalition dissolves before then.
Mostafa El Guindi believes the opposition has a chance to win a majority in parliament. But Raouf is more conservative. “I think we have a good chance of getting 45 percent of the seats in parliament, up from around 30 percent, provided there is no rigging,” he says.
What worries him most is voter turnout, which is lower with every election or referendum.
“It suggests that people no longer believe in democracy because they don’t see it helping them in their daily lives.”

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Happy new year, Cairo?

I'm back in Cairo after well over a year away, and my first thought was that little has changed.
Getting out of Cairo airport is still a chaotic mess of taxi and hotel touts, though easy to navigate if you know the drill. Traffic was worse than I'd have expected for midday on Saturday, but Cairo zahma hardly has a predictable rhythm anyway. Parts of the city are always one flat tire away from being turned into a parking lot.
As I pulled into my old haunts, one thing that struck me was the apparent absence of the over-the-top commercialization of Christmas I was used to when I lived here years ago. Friends agreed, saying shops and hotels had reined in their use of the holiday, on the reasoning of "why take a chance?" Referring to bearded President Mohamed Morsi from the Muslim Brotherhood as "Morsi Claus" was apparently de rigeur, however, in certain activist and secular circles.
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But enough with first impressions. Egypt had a tumultuous 2012 that was disillusioning, to put it mildly, for many of the young revolutionaries who supported the January 2011 uprising against Hosni Mubarak. While you can't see the economic pain of the past year by walking the streets of Cairo, just a few early conversations with friends and acquaintances make it clear that it's very real. In the fashionable districts of Cairo, shopkeepers say business is down. In more working class neighborhoods, the guys selling vegetables or clothing say likewise. Men who paint houses or fix plumbing say work is less steady, with customers putting off non-essential work.
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And while in my few brief conversations with Egyptian contacts the focus has been disappointment with the new Muslim Brotherhood-backed constitution, or anger at Morsi and the Brothers' apparent accommodations to a military hierarchy that has cast a shadow over Egyptian politics for a generation, it is economic conditions that will make or break the emerging new Egyptian political order in 2013.
The two, of course, are not mutually exclusive. While Morsi has spoken of a need to restore a battered Egyptian economy, neither he nor anyone else has been better able to provide stability or bread than the military was when it was running Egypt from February 2011 until June of this year.
On one level, they can be forgiven. The past year has seen certain post-Mubarak assumptions (or hopes) seriously ruptured. A popular Egyptian view of the military as protector of the nation was eroded. In February, more than 70 people died following a soccer match in Port Said at which security, the responsibility of the army, was conspicuous by its absence.
There was an elected parliament, one packed with Islamists, the results of which were later annulled. There was a presidential election that pitted President Morsi against former Mubarak Prime Minister Ahmed Shafiq that saw Morsi walk off with the spoils. Neither option was enticing to Egypt's young revolutionaries, and in Morsi's victory – which was made possible by the Brotherhood breaking a promise not to run a candidate for president – there was evidence that the Islamist movement could not be taken at its word.
And, of course, there were clashes between protesters at Tahrir and at the presidential palace in Cairo, in the industrial towns of the Nile Delta, and once again in Port Said, along the country's economically vital Suez Canal. The constitution, which Egyptians were promised would be written by a truly representative body, was rushed through by Morsi and his allies over serious opposition towards the end of the year. When it came time for Egyptians to vote on it, it passed – but with less than 40 percent of the Egyptian electorate participating, many voters having lost hope that the political process was going to deliver anything of any tangible value to them or their families.
ATTEMPTS NOT MADE
While fixing Egypt's economic problems would be the work of years under even the best of circumstances, serious attempts to address how the national budget is administered, rampant corruption that makes being either a simple wage-earner or an entrepreneur a minefield, or the heavy-hand of the military in business, were not made. The average Egyptian was financially worse off at the end of 2011, and worse off still at the end of 2012. This simple reality is how Egyptians are judging recent events, and why so many of them are so deeply worried.
Now the country is less than two months away from electing a new parliament, extending a period of political uncertainty. A new political reality will be created by that election – the fifth national vote in two years – and will lead to more political uncertainty as factions in parliament are formed, and Egyptian politicians test the new rules of the game. Local and foreign investors will stay on the sidelines for awhile yet, hoping for some clarity as to the new rules –clean ones or dirty ones, new ways of doing business or the same old rent-seeking of the past – before they put any more skin in the game.
Meanwhile, Egyptians are watching, and worried. The Egyptian pound plunged to an eight-year low against the dollar in the past month, and the Egyptian government's foreign reserves now stand at about $15 billion, less than half of what they were at the time of Mubarak's ouster. That exchange rate – and the soaring interest the Egyptian government pays on international borrowing – has a host of implications for the subsidized bread, cooking fuel, and gasoline that millions of Egyptians rely on.
A random walk through Cairo can't show how finely poised Egypt's situation is. But if you stop to talk for a few hours, you can feel it.
It's the economy, stupid, as a US political hack had it 20 years ago. And it's the economy that Egypt needs to focus on in 2013.

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