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A Spoonful of Reform
The long, sweet deal for Europe's sugar producers seems to be coming to an end. The European Commission has announced plans to cut the guaranteed prices paid to sugar producers by 39% over the next two years. That should shave some €1.6 billion off the E.U. budget, and lower prices for consumers. This change to the 40-year-old sugar policy was widely anticipated after the World Trade Organization last year decided that the E.U. was infringing international trade rules by giving subsidies to its sugar exporters that distort the world market. But the cuts announced by E.U. Commissioner Mariann Fischer Boel were deeper than expected, and prompted a sour reaction from Europe's sugar industry, which accounts for 13% of world production.

Shares in Britain's Tate & Lyle tumbled after it warned that profits could be reduced by more than $150 million over the next two years. Other losers are the least efficient E.U. sugar growers, mainly in Greece, Ireland, Italy and Portugal, as well as 18 countries in the Caribbean that have a duty-free deal with the E.U. that allows them to sell raw sugar at fixed prices. "This is a devastating proposal that must be fought tooth and nail," said Ian McDonald, chief executive of the Sugar Association of the Caribbean. The Commission's proposal must still be approved by E.U. governments, but Fischer Boel insisted there's no alternative. Any failure to act, she said, "would mean a slow and painful death for the European sugar sector." One consolation: European confectionery and biscuitmakers say the new prices will make them more competitive. How sweet it is. — By Peter Gumbel

Getting Posh In Prague
Thanks to the likes of Easyjet and Sky Europe, the flow of budget-conscious tourists into Central and Eastern Europe is becoming a flood: visitors to Budapest are up 37% during the first quarter of 2005; international arrivals in Warsaw in March were up 35% to 509,000; and Serbia has announced $2.8 billion in subsidies to kick-start tourism there. But having skimped on the fares, it seems many tourists want to swank it up in style. Warsaw now has eight five-star hotels — twice as many as in 2002. Hungary is building two of them a year and Bulgaria already has 23. Particularly popular are the five-star spas and "wellness" centers.

For now, supply is outpacing demand, meaning typical room rates of 3200 a night can be halved by package deals. "They aren't typical Hilton guests in jackets and ties," says Paul Kovacs, spokesman for the Hilton Budapest, which gets heavy weekend traffic. "These are young people, 25 to 40, mainly couples. They go on travel tours. They drink beer. It's leisure," he says. Look out, though, when the British stag parties start arriving, says Marketa Sebkova of the Hilton in Prague."They are loud. They get drunk." On fine champagne, no doubt. — By Michael Brunton

The Bottom Line
	Oil prices aren't really going to turn down until the global economy turns down. I could see oil at $90 a barrel
		PHILIP K. VERLEGER, Jr., senior fellow, Institute for International Economics in Washington, as oil prices neared $60 a barrel