Additionally, the rise of Islamism threatens to disrupt the flow of oil and natural gas from the region - a significant share of the world market - while discouraging investment in untapped reserves that could lessen dependence on Middle East supplies.

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Big London-based investment banks already are looking at ways to lessen the impact of the potential new rules, such as sharply boosting base salaries, industry officials said.

WSJ: EU Reaches Deal to Curb Bank Bonuses

In the long run, reform would also encourage foreign investment in Japan, steer firms towards the most profitable investments and lessen the influence of the tax code on companies.

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