That post-dinner, US-Italian afterglow was short-lived, after all. Observer feels a duty to update on the candle-lit supper between Condoleezza Rice, US secretary of state, and Italy’s Massimo D’Alema, who dropped in at her Washington residence on his way to New York on Monday night.

Even as the candles were being snuffed out, D’Alema told waiting Italian reporters outside that Rice had expressed “sympathy” over the release earlier that day in Afghanistan of Daniele Mastrogiacomo, who writes for La Repubblica and who had been kidnapped by the Taliban.

What she did not know was that the Afghan government had freed five Taliban prisoners in exchange. As news emerged of the circumstances, the Italian press – perhaps with some malice – construed these remarks to mean that the US had given a “green light” to the exchange in contradiction of long-standing US policy of not negotiating with terrorists. “The State Department went ballistic,” says an insider.

Allied forces in Afghanistan – particularly the British and the Dutch – were also in uproar.

It didn’t exactly help that Rome defended the exchange, arguing that Israel did exactly the same to get its soldiers released. On Wednesday, a senior official at the state department called up Italian reporters to vent US anger.

If the deeper US intention was to further destabilise the government of Romano Prodi – which almost fell on the Afghan issue before – and get back the US-friendly Silvio Berlusconi, then Washington may have miscalculated.

A more likely outcome is that Italy will end up withdrawing all its forces from Afghanistan. On Thursday morning, Rice and D’Alema spoke again (by phone). Tempers are said to be cooling. A statement was expected.

Mandy’s tall order

Peter Mandelson, Europe’s roving trade commissioner, said on Thursday he would be giving up his bloated air miles account in 2009 when his five-year term in Brussels expires.

“It’s a demanding but enjoyable job,” he tells Observer. “But the idea of anticipating another five years at this stage is a very tall order indeed.”

In fact there’s not much chance that Mandy would have been nominated for a second term in any case, now that his friend Tony Blair looks set to be replaced as prime minister by his arch-enemy Gordon Brown.

Brown and Mandelson (along with Blair) were the architects of “New Labour” in the 1990s but have long since fallen out.

In fact the two men have only spoken once – by telephone – since Mandelson arrived in Brussels. On that occasion last September the talks were “neither extensive nor detailed”, Observer’s mole reveals.

In fact Mandelson would stand more chance of getting a second term (if he wanted one) if Conservative leader David Cameron won the next British election, which is expected in 2009.

While Mandelson and Brown may not have met each other face to face for years, the EU trade chief is said to have had several “useful and friendly meetings” with fresh-faced Cameron.

Butting out?

Germany strode boldly towards a smoking-free future on Thursday with its decision to ban cigarettes from cafes, restaurants, hospitals, schools and lots of other places – even kindergartens.

But a look at the small print suggests that, at least for restaurants, the decision is a little more complex – and a little more German – than meets the eye. Germany prides itself on its regional variations, and since the 16 regions were responsible for Thursday’s decision, there is also a list of exceptions to the ban.

So those who love Bavarian beer festivals, where you often drink beer and smoke in large tents, will be able to keep on smoking. And customers of small street-corner pubs in north-west Germany – the country’s traditional working class heartland – will also be able to keep on puffing away.

Hardly a kid

The rift between Li Ka-shing, Hong Kong’s richest man, and his second son Richard has long been one of the territory’s worst kept secrets. But it finally burst into the open last year after Richard’s attempt to sell his controlling stake in PCCW, the city’s largest telecoms company, to foreign investors fell apart because of objections from Beijing.

Li led a hastily assembled consortium that attempted to rescue the situation, but succeeded only in further irking his son. That deal also failed. “Who here has a son or daughter who is 16?” asked Li at a press conference, sitting next to his model first-born, Victor. “Then you’ll know that it’s quite natural for a father and son to have different opinions. Maybe you are not married and have no kids and that is why you asked.” A fair statement, but also odd given that Richard is not a teenager any more. He turned 40 last year.

Waxing lyrical

The grand declaration that will mark the European Union’s 50th birthday party in Berlin on Sunday has been rumoured to be a “lyrical” ode to the great venture. There was even talk that Günter Grass might give it a literary gloss. Well, if that’s true, Günter must be losing his touch.

A draft of the top secret declaration suggests the bureaucrats have been hard at work, possibly aided by one of those computer programs to do the translation from German into English.

It proclaims that the euro has “made us strong enough to mould increasing economic interlinkage”. It adds with a flourish that the EU will benefit “from member states’ co-operation in consolidating the EU’s internal development”, before concluding: “We, the peoples of Europe, are aware that Europe is our good fortune!”

Some countries – Poland and Britain included – feared the text might be controversial. But it seems clear that even if anybody bothers to read the declaration, they won’t understand it.

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