Thursday, 4 June 2009

A Place in the Auvergne (Holiday rental)

Charming, two-storey, stone holiday cottage with stunning views in one of the most idyllic, least known corners of the Auvergne. (Parc National Livradois-Forez.)

2 double bedrooms; shower-room; kitchen/living room with wood-burning stove.

Fully equipped (dishwasher; linen, travel cot, high chair, walking buggy and backpack for toddlers; maps, walking suggestions, terrific library.) No TV. 

Ideal for walkers, writers, painters, mountain bikers, hang-gliders and skiers in winter (40 mins from Chalmazel; one of the best communes in France for kite-snow surfing and cross-country skiing).

We can also offer (prices on request):
  • Guided farm visits (cheese makers, organic vegetables, honey, beef etc.) all within the same commune. 
  • Creative writing classes
  • Music classes
  • Guided walks by mountain experts and naturalists
  • Special long-weekend walking visits; Pick-up from Lyon airport ( 2hr drive) or Vichy train station (3 hrs by direct train from Paris; 75 min drive)
  • Food and drink arrival box (all local produce)
  • Laundry service

Local bars and markets:

  • Auberge/bar in the commune's bourg (10 min walk).
  • Le Coq Noir (Mountain jasserie museum, resto and concerts - 12 mins drive)
  • 12 mins drive from market town of Ambert (market day: Thursday a.m; one of the best markets in France according Patricia Wells' The Food Lovers Guide to France)
  • Other markets: Montbrison (Saturday, 45 mins) Puy-en-Verlay (Saturday, 75 mins)
  • Chaisse-Dieu: 30 mins

Completely independent from main house but shared courtyard (private access and terrace for holiday cottage).

€300 per week (heating supplement in winter; €50 supplement for 2nd adult couple)

For more pictures, please see below.

For more information please contact belindawalthew AT

To see pictures of the area throughout the seasons, explore the photos on this blog by date.

View from cottage

Wood-burning stove



Main bedroom



Rural France
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Gite Holiday rental Cottage 

Wednesday, 3 June 2009


A PLACE IN THE AUVERGNE was a one year project (2008) to make a photo diary of one year in the Auvergne, mixed with news that interested me personally, taken from the IHT.

I am no longer actively blogging but I'm thinking about Twittering now and again.

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Paris / Montmartre/ Abbesses holiday / Vacation apartment

Thursday, 18 December 2008

A Place in the Auvergne, Wednesday, 17th December 2008

runs from 1st January, 2008 - 17th December, 2008.


runs from 18th December, 2008 - 31st December, 2008.


Hardest freeze of the year; glacial.

To surgeon for knee.



Bush prepares crisis briefings to aid Obama


Obama announces agriculture and interior picks

Luxury downturn hits U.S. beaver trappers



Greenland melt seems to be picking up speed



OPEC agrees to sharp cut in production

EDF seals deal for U.S. nuclear power company

Decision on autos "relatively soon" says Bush

Chrysler to shut factories for a month
Roger Cohen: Pan Am dies, America lives



Economy does little to help unions as they lose influence in France

Regulator voids iPhone deal with Orange in France

French steer away from Islamic militants in bomb scare

France boosts security in cities after bomb scare

BNP Paribas shares plunge after loss

Cleveland surgeons perform first major face transplant in U.S.



Between Obama and the press

Boilerplate approach not a good fit for Obama

Georgia case sets lawmakers scrambling to refine death penalty sentencing

Obama stirs excitement in early childhood education circles

And then there's the rest of the world



H.D.S. Greenway: The drum beating in Kashmir

Indian police to quiz possible Mumbai "scouts"

Pakistan hopeful on India talks despite pause

Rockets fired at Western force supplies in Pakistan

Afghan police must fight crime and not Taliban says report

Bomb aimed at Baghdad traffic police kills 18 people

Gordon Brown, in Iraq, says Britain's mission there to end next year

Latin leaders joke about Bush shoe attack

Book Reviews: 'The War Behind Me'

U.N. court to rule on Rwanda genocide planners

Zimbabwe's neighbors dispute plan to overthrow Mugabe

Activists accuse Sudan of Darfur abductions

China preparing to send navy ships to Gulf of Aden

Chinese ship rescued from pirates in Gulf of Aden

Pirates hijack yacht off Somalia in Gulf of Aden

Eleven killed in fighting in Somalia's capital

U.S. Somalia peacekeeping idea hits resistance at U.N.

Russians intends to test Obama on arms, U.S. official says

Russia offers to equip Lebanon with 10 MIG-29 fighters

Israeli missile kills Palestinian in Gaza

Change they can believe in

Turkey detains 15 suspected al Qaeda members



Dollar's autumn rally proves short-lived
Morgan Stanley posts $2.36 billion loss for quarter

Over $100 billion in U.S. commercial property in trouble

Yale's endowment drops 13.4%

American families will benefit from falling prices

Bargains pop up in the luxury suite

Madoff placed under home detention

Madoff's biggest victim also helped sell the fund to others

European banks tally losses linked to Madoff

Mafia boss hangs himself in Sicily after crackdown against Cosa Nostra

SEC concedes it missed early Madoff warnings

Finding tools to fight corruption in emerging Southeast Asian economies

Australian bank stops share sale and fires manager

Kennedy surrenders privacy in bid for Senate

Blagojevich impeachment inquiry meets resistance

Thomas L. Friedman: The Great Unraveling



Foreign companies still flock to China, study finds
China needs more domestic reforms

China goes on the road to lure "sea turtles" home

Opportunities abound for investors based in Asia



A cheap shot at workers, foreign and domestic



Money from Lockerbie settlement helps New York school

Relatives of Russian crash victims arrive in Israel


Churches welcome quirky approaches to spread their message



U.K. jobless claimants top one million

Bites: London's Flash, a pop-up restaurant


Rural France
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Wednesday, 17 December 2008

A Place in the Auvergne, Tuesday, 16th December 2008


Now, this is annoying. It's also emblematic of all that I have observed this year and that is loss, in this case, a loss of trust.

16 days before the end of this project of a one year photo journal/world news blog, I exceed my photo upload quota with Google.

When I go to upload more photos I received, yesterday, this message:

You have exceeded your total photo upload quota.
We're sorry, but you have exceeded your photo upload quota. For more information, take a look at this Blogger Help page.
So I clicked onto Blogger Help Page and received this message:

How can I get more storage for my images?
Images and photos that are uploaded through Blogger get stored in your
Picasa Web Albums, which are part of your Google Account. The number of images you can upload is therefore dependent on the amount of space you are using on Picasa Web Albums. To find out how much space you have available, please see these instructions.
If you would like to purchase more storage space, the Picasa Web Albums help center can
tell you how.
Indeed I would like to purchase more storage space because "Images and photos that are uploaded through Blogger get stored in your Picasa Web Albums"
So I click onto tell you how.
Purchasing Storage: Purchase additional storage
Picasa Web Albums comes with 1GB of free storage - that's room to post and share approximately 4,000 standard resolution photos. This free storage can't be transferred from one product to another, but you can always
buy extra shared storage.
You can also purchase extra storage by clicking the Upgrade Storage link at the bottom of your Gmail or Picasa Web Albums account. After clicking the link, you'll go to a Google Checkout page where you can select the plan you want. The storage plans are as follows:
10GB $20/yr
40GB $75/yr
150GB $250/yr
400GB $500/yr
Users who have their accounts removed for violating our Terms of Service or Program Policies will not be refunded.
Please be advised that the Google Checkout interface is in English and only supports purchases in U.S. dollars (USD).
Fair enough: I click onto buy extra shared storage.

Purchase additional storage
With a Google shared storage plan, you won't have to worry about deleting files, pictures, or emails. After purchasing a storage plan, some of your individual Google services (e.g. email and photos) will share a single new storage space.
Learn more

Please select a plan:
Your new plan will automatically renew, but we will contact you 30 days prior to charging your credit card.

I don't feel I need to Learn more - I've been told "Images and photos that are uploaded through Blogger get stored in your Picasa Web Albums", that "the number of images you can upload is therefore dependent on the amount of space you are using on Picasa Web Albums" and that I can "purchase more storage space". There is absolutely NO specific reference to the notion that this WON'T SUPPORT BLOGGER; indeed what it says is "After purchasing a storage plan, some of your individual Google services (e.g. email and photos) will share a single new storage space."

Given that e.g. - which means 'for example' - and given the facts of all the above direction from running out of upload quota on blogger to buying new storage and that Blogger is one of Google's key services, I assume that this WILL include Blogger.

So I make a purchase.

I arrive at my desk this morning to verify this.

My Picasa account is credited with 10 GB of storage, my credit card debited and I go to upload more pictures on Blogger.

Which I can't.

I'm confused, so I dig around and find that IF I had clicked on Learn more at the purchase stage I would have read this:

Shared Storage: Purchasing
Google offers a way to purchase more storage space to use with some of its products (currently Gmail and Picasa Web Albums). This extra storage acts as overflow when you run out of free storage space in either product. If you've filled your free storage (5 GB and counting for Gmail or 1 GB for Picasa Web Albums), you'll automatically use your purchased space to store more pictures and messages up to your new storage limit.

So it's not a question of 'e.g email and photos' but quite specifically ONLY 'Gmail and Picasa Web Albums'.

I am extremely annoyed.

Firstly, my one year photo project has run out of space 16 days before its completion December 31st, 2008.

Critically, I always thought I would exceed my photo quota but it had always been suggested to me that I could purchase more storage space.

Indeed, every time I went to upload an image I was told how much free space I had available and next to it appeared a question mark for more information:

If you click on this question mark (which I had done) you arrive at......

How can I get more storage for my images?
Images and photos that are uploaded through Blogger get stored in your
Picasa Web Albums, which are part of your Google Account. The number of images you can upload is therefore dependent on the amount of space you are using on Picasa Web Albums. To find out how much space you have available, please see these instructions.
If you would like to purchase more storage space, the Picasa Web Albums help center can
tell you how.

So I was never concerned about running out of storage space - I could always buy more because it is self-evident from the above message that Blogger images are stored on Picasa and you can purchase more storage space. There is no suggestion that Picasa does not support Blogger, quite the contrary.

Now I find myself, truly, stuffed. With 16 days of this damn year long blog to go.

The second reason I am annoyed is that I feel well and truly ripped off by Google who have lead me down the garden path through clearly misleading information.

Either there is a delay in transferring the capacity I now have with Picasa to my blog accounts with Google OR I have been well and truly conned (not to mention the inconvenience of running out of space on Blogger.)

So let's hope it's a delay. In the meantime, I proceed without images.



Chinese graduates recruited for rural work
By Dune Lawrence

Bloomberg News
Tuesday, December 16, 2008
SONG PENG VILLAGE, China: Liu Hao, who graduated in June with a degree in manufacturing from a Beijing technical school, found a job he loves - in a village of 288 people surrounded by peach orchards.
"Even the villagers think it's surprising," he said. "They say, what's a college graduate doing coming here?"
Forty years after Mao Zedong forced millions of young people to leave their families and schools for a new life in the countryside, China is seeing another migration for very different reasons.
Mao believed that living among the peasants would transform the students into ideologically pure, proletarian laborers. Now the government is encouraging college graduates like Liu, 22, to help transform the countryside by taking their newly minted skills to rural areas where development has lagged behind the affluent cities and coastline.
"For Mao, it was really a political thing: He wanted to create a generation of revolutionaries," said Michel Bonnin, director of studies at the Center for the Study of Modern and Contemporary China in Paris. Now, as the world's fourth-largest economy feels the drag of a global recession and rising unemployment, students need jobs, and "there is a real need in these regions for people with some good education. This is more rational."
Many of China's current senior leaders spent long periods in the country or in remote provinces during Mao's Cultural Revolution. President Hu Jintao was sent to help build a dam on the Yellow River, carrying baskets of gravel for a year and earning 54 yuan a month, $7.88 at the current exchange rate.
Mao's program for high school students - "Shang Shan Xia Xiang," or "climb the mountains and go down to the villages" - did little for the communal farms that absorbed almost 17 million teens between 1968 and 1980. Bonnin, the author of a book on the movement, says the young people had few practical skills.
"I did not help the farmers," said Li Ping, 54, who earned 2 cents a day growing lettuce, string beans and pumpkins in a Sichuan village from 1972 to 1974. "They taught me what to do, because I had to know how to plow a field, how to plant seedlings, how to harvest. I knew nothing before I went."
Li, now the Beijing representative of the Rural Development Institute, a nonprofit based in Seattle, says today's college graduates perform a service by connecting villages to the markets and networks driving China's economy.
Liu Hao has signed on for three years as a cun guan, or assistant to the Communist Party secretary and village head of Song Peng Village, more than 60 kilometers, or 37 miles, northeast of Beijing. He's among some 20,000 people who began working as assistants and teachers this year in the program, which was created in 2006. The government wants to boost the total to 100,000 by 2012 and is offering incentives such as help repaying student loans.
The opportunity appeals to some young people who face a grim employment situation. China's growth has slowed for five consecutive quarters, and its 9 percent third-quarter expansion was the weakest in five years. Last month the World Bank forecast growth next year at 7.5 percent, which would be the slowest pace in almost two decades.
An estimated 6.1 million new graduates will enter the job market in 2009, joining 4 million from previous years who are still looking for work, Zhang Xiaojian, the deputy minister of human resources and social security, said Nov. 20. The unemployment rate for these young people is more than 12 percent, triple the official urban rate, the Chinese Academy of Social Sciences said in a report released Monday.
Liu was one of seven students accepted for the program out of 400 from his school who applied. Those who participate are motivated by practical ambition to further their careers, says Bin Wu, a senior research fellow at the University of Nottingham in Britain who studies sustainable development in China's rural areas.
Liu spends his time reading up on government policies related to medical services, innovative planting techniques and the safe use of firewood. Then he explains the policies to the villagers. Over lunch, he talks with animation about the art of pruning fruit trees and the need to better market the peaches that are his village's main product.
"If you really want to help people, you have to understand the countryside," said Liu, who has ambitions to work in government.
Having "college grads come here is great," said Jiao Shichun, 50, a villager who wandered into Liu's bedroom-office in the village headquarters. Liu "helps us analyze how to do things," he said.
Jiao's two daughters, 27 and 25, live in Beijing. The older one owns a car and an apartment and makes 6,000 yuan a month working for a makeup company.
They reflect a major obstacle to the government's plan: In China's 30-year capitalist evolution, the flow of population has always been from rural to urban, with some 200 million farmers-turned-laborers moving to manufacturing boomtowns such as Dongguan in southern China before the economic slowdown began sending many back home.
While the countryside has benefited from China's years of double-digit growth, per-capita income is still a third of incomes in the cities. Closing that gap requires educated people to stay and work in the rural areas for a long time.
"The problem is the value system," said Wu of the University of Nottingham. The popular perception is that higher education should be a ticket out of the countryside.
Yu Cuihong, 24, has a degree in computer and network engineering. Her mother and father, who are farmers, weren't entirely accepting at first of her decision to work as an assistant in a community near Liu's village.
"So many years of schooling, it was like it was all a waste," she said, describing their attitude.
In her spare time, she's preparing for graduate school and, even though her parents are now more supportive, she says she doesn't plan to return to the countryside if she earns another degree.
"It's not likely," she said. "I'm studying to get a better job."




Can Africa trade its way to peace?
By Herman J. Cohen
Tuesday, December 16, 2008
WASHINGTON: The conflict in eastern Congo over the past 12 years has been as much a surrogate war between Congo and neighboring Rwanda as an internal ethnic insurgency, as a United Nations report underscored last week. The only way to end a war that has caused five million deaths and forced millions to flee their homes in Congo's two eastern provinces is to address the conflict's international dimensions. The role of Rwanda - which borders the provinces and which denied the accusations in the UN report - is of prime importance.
The international community has worked hard to resolve the conflicts among the various parties: the sovereign states of Rwanda and Congo as well as the assorted militias and private armies that are sponsored by these two governments and by opportunistic local warlords.
But despite the deployment of 17,000 United Nations peacekeepers, and many efforts at mediation with constructive American support, the situation appears intractable. The failure of international diplomacy is related to the economic roots of the problem, which began with the 1994 genocide in Rwanda. Until the economic conundrum is addressed, there is little prospect for a solution.
The genocidal war between the majority Hutu and the minority Tutsi in Rwanda spilled into Congo, and the eastern part of that vast country has been unstable ever since. When Tutsi rebel forces took power in Rwanda in June 1994, more than a million Hutu fled to Congo, where they settled into refugee camps on the Rwandan border.
After two years of cross-border raids from the refugee camps by exiled Hutu soldiers who had participated in the genocide, the Rwandan Army attacked and destroyed the camps, with the quiet approval of the United States in the absence of another solution to the violence. Most of the Hutu refugees returned to Rwanda, but about 100,000 of them, along with the exiled Hutu soldiers, moved westward as a disciplined group into Congo's interior.
The Rwandan Army pursued the escaping Hutu and caught up with them near the city of Kisangani at the headwaters of the Congo River. The refugees were massacred, but the former Hutu soldiers escaped to neighboring countries.
The move against the refugee camps was the first step in a well-planned action by Rwanda in 1996 and 1997 to overwhelm the weak Congolese Army and, with the help of the Congolese opposition, overthrow the 30-year dictatorship of Mobutu Sese Seko. With logistical support from Uganda and Angola, the military action succeeded in less than three months. A new government in Congo was installed under Laurent Kabila, an exile handpicked by the Rwandans.
And from 1996 to today, the Tutsi-led Rwandan government has been in effective control of Congo's eastern provinces of North and South Kivu. This control has been maintained through intermittent military occupation and the presence of Congolese militias financed and trained by the Rwandan Army.
During these 12 years of Rwandan control, the mineral-rich provinces have been economically integrated into Rwanda. During this time, Congo's governments have been preoccupied with internal and external wars elsewhere, and have been unable to combat foreign control of the eastern provinces, a thousand miles from the capital, Kinshasa.
But two years ago, Congo held multiparty elections that were judged to be transparent and credible by international observers. For the first time in a decade, there was hope for stability. President Joseph Kabila (the son of Laurent Kabila, who was assassinated in 2001) turned his attention to trying to gain control of the eastern provinces. Unfortunately, this has led to increased conflict and suffering.
The main source of the current violence is an insurgent force of ethnic Congolese Tutsi commanded by Laurent Nkunda, a former general in the Congolese Army. He claims to be fighting to defend the Tutsi community from discrimination and from the former Rwandan Hutu fighters who have returned from neighboring countries and now operate in the forested hills of eastern Congo.
Nkunda's military operations, however, are aimed mainly against the Congolese Army's efforts to restore Congo's sovereignty over its eastern provinces. His force is well armed and financed by the Rwandan government. The armed Hutu presence in the provinces provides the Rwandan government with a pretext to justify its interference there.
Having controlled the Kivu provinces for 12 years, Rwanda will not relinquish access to resources that constitute a significant percentage of its gross national product. At the same time, Congo's government is within its rights to take control of the resources there for the benefit of the Congolese people. This economic conflict must be taken into account.
This provides an opportunity for the incoming Obama administration. Acts of war and military occupation aside, there is a natural economic synergy between eastern Congo and the nations of East Africa, including Rwanda, Burundi, Tanzania and Uganda. The normal flow of trade from eastern Congo is to Indian Ocean ports rather than the Atlantic Ocean, which is more than a thousand miles away.
After his inauguration, Barack Obama should appoint a special negotiator who would propose a framework for an economic common market encompassing Congo, Rwanda, Burundi, Kenya, Tanzania and Uganda.
This agreement would allow the free movement of people and trade. It would give Rwandan businesses continued access to Congolese minerals and forests. The products made from those raw materials would continue to be exported through Rwanda. The big change would be the payment of royalties and taxes to the Congolese government. For most Rwandan businesses, those payments would be offset by increased revenues.
In addition, the free movement of people would empty the refugee camps and would allow the densely populated countries of Rwanda and Burundi to supply needed labor to Congo and Tanzania.
If such a common market could be negotiated, Rwanda and Congo would no longer need to finance and arm militias to wage war over the natural resources in Congo's eastern provinces. Without government backing, the fighting groups would either dissolve on their own or be integrated into legitimate armed forces.
If undertaken with enough will and persistence, a U.S.-led mediation to create a common market in East Africa could end the war and transform the region.
Herman J. Cohen was the assistant secretary of state for Africa from 1989 to 1993.


Land ice melting fast, NASA satellite data show
The Associated Press
Tuesday, December 16, 2008
WASHINGTON: More than two trillion tons of land ice in Greenland, Antarctica and Alaska have melted since 2003, according to new NASA satellite data that show the latest signs of what scientists say is global warming.
More than half of the loss of landlocked ice in the past five years has occurred in Greenland, based on measurements of ice weight by the Grace satellite, said a NASA geophysicist, Scott Luthcke. The Greenland melt seems to be accelerating, he said.
NASA scientists planned to present their findings Thursday at the American Geophysical Union conference in San Francisco. Luthcke said Greenland figures for the summer of 2008 were not yet complete, but the ice loss this year, while still significant, would not be as severe as in 2007.
The news was better for Alaska. After a precipitous drop in 2005, land ice increased slightly in 2008 because of large snowfalls, Luthcke said. Since 2003, when the NASA satellite started taking measurements, Alaska has lost 400 billion tons of land ice.
In assessing climate change, scientists generally look at several years to determine the overall trend. Melting of land ice, unlike sea ice, increases sea levels very slightly. In the 1990s, melting Greenland ice did not make world sea levels rise; now that island is adding about half a millimeter to the sea level a year, a NASA ice scientist, Jay Zwally said.
Melting land ice in Greenland, Antarctica and Alaska has raised global sea levels about one-fifth of an inch in the past five years, Luthcke said. Sea levels also rise from water expanding as it warms.
Other research being presented this week at the geophysical meeting points to more concerns about ice melting because of global warming, especially sea ice.
"It's not getting better; it's continuing to show strong signs of warming and amplification," Zwally said. "There's no reversal taking place."
Scientists studying sea ice will announce that parts of the Arctic north of Alaska were 9 degrees Fahrenheit to 10 degrees, or about 5 degrees Celsius to 6 degrees, warmer this past autumn, a strong early indication of what researchers call the Arctic amplification effect. That is when the Arctic warms faster than predicted, and warming there is accelerating faster than elsewhere on the globe.
As sea ice melts, the Arctic waters absorb more heat in the summer, having lost the reflective powers of vast packs of ice. That absorbed heat is released into the air in the autumn. That has led to autumn temperatures in the last several years that are 6 degrees Fahrenheit to 10 degrees (3.5 degrees to 6 degrees) warmer than they were in the 1980s, said Julienne Stroeve, a research scientist at the National Snow and Ice Data Center in Boulder, Colorado.
That is a strong and early impact of global warming, she said.
"The pace of change is starting to outstrip our ability to keep up with it, in terms of our understanding of it," said Mark Serreze, senior scientist at the snow and ice data center, a co-author of the Arctic amplification study.
Two other studies presented at the conference assess how Arctic thawing is releasing methane - a potent greenhouse gas. One study shows that the loss of sea ice warms the water, which warms the permafrost on nearby land in Alaska, thus producing methane, Stroeve said.
A second study suggests even larger amounts of frozen methane are trapped in lake beds and sea bottoms around Siberia and they are starting to bubble to the surface in some spots in alarming amounts, said Igor Semiletov, a professor at the University of Alaska in Fairbanks. Late last summer, Semiletov found methane bubbling up from parts of the East Siberian Sea and the Laptev Sea at levels 10 times higher than those of the mid-1990s, he said.
The amounts of methane in the region could dramatically increase global warming if they get released, he said. That, Semiletov said, "should alarm people."


EU court backs carbon-trading system
Bloomberg News
Tuesday, December 16, 2008
LUXEMBOURG: ArcelorMittal and other steel makers are not discriminated against under European Union air-pollution rules that exempt industries with similar greenhouse-gas emissions, the European Union's highest court said Tuesday.
ArcelorMittal, the world's biggest steel maker, asserts that EU lawmakers unfairly excluded the aluminum and chemical industries from 2003 legislation that capped emissions of carbon dioxide in line with the Kyoto Protocol, the international global-warming treaty. That exclusion put ArcelorMittal and other steel makers, which are included in the system, at a "complete disadvantage," lawyers for the company had told the European Court of Justice.
Alongside the steel industry, the current system includes electricity, paper and cement. But the court ruled that limiting the scope during the initial stage of the carbon trading system "may be regarded as justified."
"In view of the novelty and complexity" of the system, the EU "could lawfully make a step-by-step approach for the introduction of the allowance trading" system, the court ruled.
The court's decision eliminates concern that the European Union may need to rewrite the rules of its greenhouse gas trading market, the world's largest. Governments, including in the United States, are scrutinizing the program as they consider their own policies to help protect the climate.
The European emissions-trading system, started in 2005, requires companies that exceed their quotas for CO2 to buy permits from businesses that emit less.
ArcelorMittal, which is based in Luxembourg, had no immediate comment.
But Gordon Moffat, director general of the European Confederation of Iron and Steel Industries, said his group was disappointed by the ruling.
"This legislation is discriminatory in our view," he said.
ArcelorMittal had argued that the legislation establishing the EU emissions-trading system should not have differentiated between steel, aluminum and chemical industries, which all emit CO2.
Lawyers for the EU and the French government had argued that including other industries at the start would have complicated the system and harmed its effectiveness.
The court ruled that the European Union avoided difficulties by excluding the chemical industry, which "has an especially large number of installations, of the order of 34,000." Including it would have "increased the administrative burden" of managing the new system, it said.
The European Commission, the executive arm of the European Union, in January proposed adding the aluminum and chemicals industries to the system starting in 2013 as part of a tightening of the regulations.
The case may affect a separate case ArcelorMittal filed at a lower EU court seeking to partly annul the legislation and receive damages. The European Court of First Instance, the second-highest EU court, at a hearing in April said it would wait for a decision in this case before giving its own ruling.Arcelor and KDI are fined
Separately, ArcelorMittal, Klockner Distribution Industrielle and eight other steel companies were fined a record €575.4 million, or $791.2 million, by the French antitrust regulator for price fixing, Bloomberg News reported from Paris.
Three ArcelorMittal units were fined a total of €302 million and KDI was fined €169 million, the Conseil de la Concurrence said. The fine was the highest ever by the regulator.
Clients, which were primarily builders and small and mid-sized companies whose scale prevented them from negotiating better prices, alerted the French Finance Ministry after noticing "suspicious similarities" in the prices they were being quoted, the Conseil said.


Reef patterns show risk off Sumatra for another big quake
By Henry Fountain
Tuesday, December 16, 2008
With coral reefs as their tea leaves, scientists are forecasting that in the next several decades there will be another major earthquake along the Sunda fault off Sumatra like the one that spawned the catastrophic tsunami of Dec. 26, 2004.
Kerry Sieh, formerly of the California Institute of Technology and now at Nanyang Technological University in Singapore, and colleagues write in the journal Science that a 2007 quake along a more southerly stretch of the fault represented only a first, partial rupture of that 400-mile section, which had been quiet for nearly two centuries. The researchers say this part of the fault, called the Mentawai section, is likely to be the site of at least one more major rupture.
As evidence, they point to the growth patterns of coral reefs in the region over the last 700 years. When a quake occurs, the seafloor rises up, effectively lowering the sea level so that shallow coral reefs are now above the surface. The reefs cannot grow upward, but their still-submerged portions grow outward.
The researchers found signs of this growth pattern roughly every 200 years going back to the 14th century, suggesting cycles of earthquake activity. But each cycle consisted of several major events over three or more decades. So the 2007 quake, they say, is just the first of a new cycle.


Alcohol and aging adults: Part of the problem or part of the cure?
By Jane E. Brody
Tuesday, December 16, 2008
Is alcohol a tonic or a toxin? The question is especially critical to older people, whose overall medical picture gives alcohol the potential to be a health benefit or a life-shortening hazard.
Yet experts say that doctors rarely ask older patients how much and how often they drink. Not knowing the answers to these questions can result in misdiagnosis, medical complications and life-threatening accidents. Doctors may also fail to recognize the symptoms of alcohol abuse, a problem that is expected to become increasingly common as baby boomers, who have been found to drink more than previous generations, reach age 65 and beyond.
At the same time, older people who are in good health should know that moderate drinking under the right conditions may improve their health in several important ways. In a comprehensive review in the October issue of The Journal of the American Dietetic Association, Maria Pontes Ferreira and M.K. Suzy Weems described the myriad health benefits and risks of alcohol consumption by aging adults.
In summarizing the findings in an interview, Ferreira, a registered dietitian, said that "although there are a lot of benefits from moderate alcohol consumption, you can't make a blanket statement; you have to look at the big picture."
"Moderate alcohol consumption can improve appetite and nutrition and reduce the risk of several important diseases, including cardiovascular diseases and diabetes," said Ferreira, a post-doctoral fellow at Haskell Indian Nations University in Lawrence, Kansas. "But a lot of folks over 50 are already dealing with diseases associated with aging and medication use that can result in possible complications and drug interactions. And older people who abuse alcohol are consuming an inordinate amount of calories that can displace important nutrients."
Furthermore, Dr. Frederick Blow, professor of psychiatry at the University of Michigan Medical School and an expert on alcohol and aging, pointed out in an interview that "even at lower levels of consumption, alcohol can be problematic for older people."
"Because of an increased sensitivity to alcohol and decreased tolerance as one ages, lower amounts of alcohol can have a bigger effect," he said. "Older people get into trouble with doses of alcohol that wouldn't be a problem with a younger person."
Madeline Naegle, professor at the New York College of Nursing, fears that publicity about the benefits of alcohol has dangerously tipped the scales, prompting some people to think that "if one drink is good, two or three must be better."
"Recommendations about drinking must be qualified by the level of a person's health," she emphasized in an interview.
In an article on screening for alcohol use and abuse among older adults in the November issue of The American Journal of Nursing, she noted: "Often clinicians fail to ask, 'Do you drink alcohol?' when obtaining medical histories and performing routine examinations. Because alcohol consumption is such a common practice, questions about drinking are necessarily part of a general health assessment."
Evidence for the benefits of moderate alcohol consumption comes almost entirely from epidemiological, or population, studies that can reveal important associations but cannot prove cause and effect. There have been few randomized controlled clinical trials of alcohol use to definitively show that alcohol consumed in any amount by any group of people benefits health.The Benefits: That said, here is what the studies indicate. It's important to note that most findings refer to moderate consumption, defined as one alcoholic drink a day for women and up to two for men. Also, the benefits are confined to people who do not have ailments, like chronic liver disease, or take medications, like psychoactive drugs, that would render any amount of alcohol risky.
Heart disease. While many studies have emphasized the benefits of red wine to cardiovascular health and longevity, more than 100 studies in 25 countries have linked these benefits to moderate consumption of any type of alcoholic beverage. On average, moderate drinkers 50 and older are less likely to suffer heart attacks and die prematurely than abstainers and heavy drinkers.
Diabetes. Though it may seem counterintuitive, a controlled clinical trial of nondiabetic older women found that insulin sensitivity was improved among those who consumed two drinks a day. In studies of men with diabetes, drinking up to two drinks a day was associated with lower levels of factors linked to an increased risk of heart disease, like markers of inflammation and arterial dysfunction.
Dementia. Although excessive alcohol drinking can raise the risk of dementia in older people, "there are emerging data to suggest that moderate alcohol intake - one to three drinks a day - is associated with a reduced risk of developing Alzheimer's disease and vascular dementia," Ferreira and Weems wrote. In this case, they added, drinking wine confers the primary benefit; drinking beer, on the other hand, appears to raise the risk of dementia.
Osteoporosis. Several studies have suggested that elderly women who drink moderately tend to have better bone density. But chronic heavy drinking "can dramatically compromise bone quality and may increase osteoporosis risk," H. Wayne Sampson of Texas A&M University Health Science Center in College Station has reported for the National Institute on Alcohol Abuse and Alcoholism. Furthermore, skeletal damage from excessive drinking is not reversible.
Psychosocial effects. Although there is relatively little research on the effects of moderate alcohol consumption on mental and social well-being among the elderly, studies in retirement communities have noted an improvement in social interactions, health-related quality of life and survival.
Nutrition. Again, there is not a lot of research, but studies so far indicate that an alcoholic drink taken with meals can improve appetite and the consumption of calories and nutrients needed by many elderly people, Ferreira said.The Risks: Immoderate consumption of alcohol - more than three drinks a day - can be hazardous for people of all ages, but especially so for the elderly, who reach higher levels of blood alcohol faster and maintain them longer than younger people.
Yet, Blow said, "we don't do well identifying older people who are getting into trouble with alcohol."
Potential hazards include an increased risk of falls and vehicular accidents, a decline in short-term memory, a worsening of existing health problems and interactions with medications that may diminish the effectiveness of some drugs and increase the toxic effects of others.
Ferreira called alcohol abuse and alcoholism in aging adults "a silent epidemic." Naegle wrote that "many older people pursue drinking patterns established earlier in life and may not realize that continuing to drink the same amount of alcohol as they did when they were younger may place them at risk for health problems."
She recommended using diet and exercise to reduce cardiac risk; trying alternative relaxation methods like meditation, yoga and exercise; and, for those who drink, cutting down on the amount of alcohol consumed by mixing it with water, taking an hour to finish one drink and alternating alcohol with nonalcoholic drinks.


U.S. report assails decisions on endangered species
By Charlie Savage
Tuesday, December 16, 2008
WASHINGTON: The inspector general of the U.S. Interior Department has found that agency officials often interfered with scientific work to limit protections for species at risk of becoming extinct, reviving attention to years of disputes over the Bush administration's science policies.
In a report delivered to Congress on Monday, the inspector general, Earl Devaney, found serious flaws in the process that led to 15 decisions related to policies on endangered species.
The report suggested that at least some of those decisions might need to be revisited under the Obama administration.
Among the more significant decisions was one reducing the number of streams that would be designated as critical habitat for the endangered bull trout and protected from commercial use. That rule is already the subject of a lawsuit by environmentalists.
"The results of this investigation paint a picture of something akin to a secret society residing within the Interior Department that was colluding to undermine the protection of endangered wildlife and covering for one another's misdeeds," said the chairman of the House Natural Resources Committee, Representative Nick Rahall 2nd, a West Virginia Democrat.
Most of the problematic decisions involved Julie MacDonald, a former deputy assistant secretary for fish and wildlife and parks, who oversaw endangered-species issues and frequently clashed with scientists. The report does not accuse MacDonald of doing anything illegal, but criticizes her conduct severely.
"MacDonald's zeal to advance her agenda has caused considerable harm to the integrity" of the Endangered Species Act programs "and to the morale and the reputation" of the Fish and Wildlife Service, "as well as potential harm to individual species," Devaney said in a cover letter to his report.
Efforts to reach MacDonald by telephone Monday were unsuccessful. She resigned in May 2007 after an earlier inspector general report found that she had run roughshod over agency scientists and violated federal rules by giving internal documents to industry lobbyists.
After MacDonald's resignation, the Fish and Wildlife Service began a review of eight agency decisions that regional officials said MacDonald might have manipulated to reach a result that was not supported by scientific evidence. The review is still going on.
Devaney also criticized several of MacDonald's colleagues at the agency who, he said, aided and abetted "her attempts to interfere with the science" and "the unwritten policy to exclude as many areas as practicable from critical habitat determinations."
Spokesmen for the Interior Department declined to comment, saying they had not yet read the report.
Francesca Grifo, director of the scientific integrity program at the Union of Concerned Scientists, a nonprofit group, portrayed MacDonald's case as a symbol of a broader pattern of manipulation of science under the Bush administration.
"Over and over again, in agency after agency," Grifo said, "we've seen where special interests bump up against scientific determinations, the science is set aside."
The wildlife service report is likely to function as a road map for the Obama administration as it reviews the Bush administration's decisions on whether to add species to the endangered list or to protect habitat.
In some cases, however, the decision has already been changed by a judge or the agency itself. In others, agency scientists prevailed despite efforts at interference, the report said.
The report also recommended new rules to limit the discretion wildlife service officials have on endangered species. Under current law, such officials have wide latitude over their decisions.
Under that "enormous policy void," Devaney wrote, officials are free to make decisions with "a wholesale lack of consistency, a process built on guess-work, and decisions that could not pass legal muster."
As a result, he said, much of what the agency does ends up in court, requiring expensive litigation and effectively creating a system in which lawsuits drive the regulatory process.



David Brooks: Lost in the crowd
Tuesday, December 16, 2008
All day long, you are affected by large forces. Genes influence your intelligence and willingness to take risks. Social dynamics unconsciously shape your choices. Instantaneous perceptions set off neural reactions in your head without you even being aware of them.
Over the past few years, scientists have made a series of exciting discoveries about how these deep patterns influence daily life. Nobody has done more to bring these discoveries to public attention than Malcolm Gladwell.
Gladwell's important new book, "Outliers," seems at first glance to be a description of exceptionally talented individuals. But in fact, it's another book about deep patterns. Exceptionally successful people are not lone pioneers who created their own success, he argues. They are the lucky beneficiaries of social arrangements.
As Gladwell told Jason Zengerle of New York magazine: "The book's saying, 'Great people aren't so great. Their own greatness is not the salient fact about them. It's the kind of fortunate mix of opportunities they've been given."'
Gladwell's noncontroversial claim is that some people have more opportunities than other people. Bill Gates was lucky to go to a great private school with its own computer at the dawn of the information revolution. Gladwell's more interesting claim is that social forces largely explain why some people work harder when presented with those opportunities.
Chinese people work hard because they grew up in a culture built around rice farming. Tending a rice paddy required working up to 3,000 hours a year, and it left a cultural legacy that prizes industriousness. Many upper-middle-class American kids are raised in an atmosphere of "concerted cultivation," which inculcates a fanatical devotion to meritocratic striving.
In Gladwell's account, individual traits play a smaller role in explaining success while social circumstances play a larger one. As he told Zengerle, "I am explicitly turning my back on, I think, these kind of empty models that say, you know, you can be whatever you want to be. Well, actually, you can't be whatever you want to be. The world decides what you can and can't be."
As usual, Gladwell intelligently captures a larger tendency of thought - the growing appreciation of the power of cultural patterns, social contagions, memes.
His book is being received by reviewers as a call to action for the Obama age. It could lead policymakers to finally reject policies built on the assumption that people are coldly rational utility-maximizing individuals. It could cause them to focus more on policies that foster relationships, social bonds and cultures of achievement.
Yet, I can't help but feel that Gladwell and others who share his emphasis are getting swept away by the coolness of the new discoveries. They've lost sight of the point at which the influence of social forces ends and the influence of the self-initiating individual begins.
Most successful people begin with two beliefs: The future can be better than the present, and I have the power to make it so. They were often showered by good fortune, but relied at crucial moments upon achievements of individual will.
Most successful people also have a phenomenal ability to consciously focus their attention. We know from experiments with subjects as diverse as obsessive-compulsive disorder sufferers and Buddhist monks that people who can self-consciously focus attention have the power to rewire their brains.
Control of attention is the ultimate individual power. People who can do that are not prisoners of the stimuli around them. They can choose from the patterns in the world and lengthen their time horizons. This individual power leads to others. It leads to self-control, the ability to formulate strategies in order to resist impulses. If forced to choose, we would all rather our children be poor with self-control than rich without it.
It leads to resilience, the ability to persevere with an idea even when all the influences in the world say it can't be done. A common story among entrepreneurs is that people told them they were too stupid to do something, and they set out to prove the jerks wrong.
It leads to creativity. Individuals who can focus attention have the ability to hold a subject or problem in their mind long enough to see it anew.
Gladwell's social determinism is a useful corrective to the Homo economicus view of human nature. It's also pleasantly egalitarian. The less successful are not less worthy, they're just less lucky. But it slights the centrality of individual character and individual creativity. And it doesn't fully explain the genuine greatness of humanity's outliers.
As the classical philosophers understood, examples of individual greatness inspire achievement more reliably than any other form of education. If Gladwell can reduce William Shakespeare to a mere product of social forces, I'll buy 25 more copies of "Outliers" and give them away in Times Square.


Obama's energy and environment teams face big challenges
By John M. Broder and Andrew C. Revkin
Tuesday, December 16, 2008
WASHINGTON: The team President-elect Barack Obama introduced Monday to carry out his energy and environmental policies faces a host of political, economic, diplomatic and scientific challenges that could impede his plans to address global warming and America's growing dependence on dirty and uncertain sources of energy.
Acknowledging that a succession of presidents and Congresses had failed to make much progress on the issues, Obama vowed to press ahead despite the faltering economy and suggested that he would invest his political capital in trying to break logjams.
"This time must be different," Obama said at a news conference in Chicago. "This will be a leading priority of my presidency and a defining test of our time. We cannot accept complacency, nor accept any more broken promises."
Shortly after Obama spoke, transition officials confirmed that he would select Senator Ken Salazar, a first-term Democrat from Colorado, as interior secretary. Salazar's appointment will complete the team of environmental and energy officials in the new administration.
The most pressing environmental issue for the incoming team will almost certainly be settling on an effective and politically tenable approach to the intertwined issues of energy security and global warming.
The point person for these issues will be Carol Browner, who was named Monday to the new position of White House coordinator for energy and climate. Browner, the administrator of the Environmental Protection Agency under President Bill Clinton, will oversee two former aides, Lisa Jackson, who was selected as the new agency administrator, and Nancy Sutley, who will be the chairwoman of the White House Council on Environmental Quality. Joining the group will be Steven Chu, a Nobel laureate in physics whom Obama designated to lead the Energy Department.
Salazar, a former director of the Colorado Department of Natural Resources and state attorney general, is a farmer and rancher whose family has lived in Colorado for five generations. He is known as a staunch conservationist and an opponent of developing oil shale on public lands.
His appointment will leave a Democratic vacancy in the Senate.
Colorado, which voted for Obama 53 percent to 45 percent, has a Democratic governor, Bill Ritter, who will name a replacement to complete the final two years of Salazar's term. Salazar's brother John, a congressman, is among potential appointees to fill the Senate seat.
The intense ideological and regional rivalries that have stalled climate change legislation in Congress for years have not suddenly melted away. And even though Obama promises to give energy legislation a high priority, he first must stabilize an economy that is shedding jobs by the hundreds of thousands each month.
The new team faces political urgency to deliver on promises made by Obama on the campaign trail. One was his pledge to use a cap-and-trade bill for curbing heat-trapping gases as both the means of shifting investments away from energy sources that cause emissions of such gases and also as the source of the $15 billion a year he promised to invest in advanced energy technology. That figure may be dwarfed by spending on stimulus programs, including so-called green projects like building wind farms and making buildings more energy efficient.
Left unclear on Monday was how the new president's advisers intend to use the levers of government to get to the "new energy economy" Obama described. Also uncertain was what relationship they would forge with his powerful economic advisers.
"In policy terms, I think there are big questions about what priority will be given to direct public infrastructure spending versus tax-based incentives versus environmental markets versus direct regulation," said Paul Bledsoe of the National Commission on Energy Policy, a bipartisan advisory group. "There is still a very profound debate on all of that."
The diplomatic tension is driven by the steps required to work toward a new global climate treaty, which the United States and nearly all other nations have committed to completing by December 2009. The last round of talks ended last weekend in Poland with few signs of progress on the main goal, limiting emissions of heat-trapping gases without hampering economic development.
It is widely felt that if the United States does not demonstrate concrete domestic steps to curb its emissions from burning fossil fuels, fast-growing developing countries will continue to balk at taking on obligations to cut their emissions. And while Obama will enjoy a larger Democratic majority than Clinton did in his two terms, the Senate has long made such steps a prerequisite for its required consent to any climate treaty.
The scientific urgency comes from the unanticipated recent growth in emissions of carbon dioxide in China, India and other countries with fast-expanding economies. This heat-trapping gas is the biggest concern because its long life, once the gas is released, causes it to build in the atmosphere.
Additional pressure comes from growing recognition that market forces alone are unlikely to drive the spread of nonpolluting energy technologies fast enough to matter where all the growth in energy use is at its peak, in the rapidly growing countries of Asia and Latin America.
Nathan Lewis, who leads a team at Caltech pursuing ways to greatly improve solar energy technologies, said the appointment of Chu as energy secretary sent a strong signal that Obama understood that any program on climate-friendly energy had to have three prongs: increasing efficiency, moving existing nonpolluting energy technologies more quickly into the market, and advancing on the frontiers of energy science in search of radical breakthroughs.
"Energy efficiency cannot be seen as Job 1 and the other stuff Job 2," Lewis said. "You've got to do them all as Job 1 because they all have to work."
Chu has spoken of using coal to generate electricity as an environmental "nightmare," but he acknowledges that the nation lacks the technology to replace it or clean it up in the near term. Tom Kuhn, president of the Edison Electric Institute, a trade group for utilities, said that any solution to the climate problem must address these costs and provide consumers and electricity producers time to adjust.
"There will be major costs," Kuhn said. "It's a question of trying to mitigate the costs as much as possible."
John M. Broder reported from Washington and Andrew C. Revkin from New York.Education secretary picked
Arne Duncan, the Chicago schools superintendent known for taking tough steps to improve schools while maintaining respectful relations with teachers and their unions, is President-elect Barack Obama's choice as secretary of education, Sam Dillon reported Democratic officials saying.
Duncan, a 44-year-old Harvard graduate, has raised achievement in the nation's third-largest school district and often faced the ticklish challenge of shuttering failing schools and replacing ineffective teachers, usually with improved results.
He represents a compromise choice in the debate that has divided Democrats in recent months over the proper course for public school policy after the Bush years. Duncan has argued that the nation's schools needed to be held accountable for student progress, but also needed major new investments, new talent and new teacher-training efforts.



OPEC plans further output cut


Energy projects put on hold in response to lower prices
By Jad Mouawad
Tuesday, December 16, 2008
NEW YORK: From the plains of North Dakota to the deep waters of Brazil, dozens of major oil and natural gas projects have been put on hold or canceled in recent weeks as companies scramble to adjust to the collapse in energy markets.
In the short run, falling oil prices are leading to welcome relief for consumers across the globe, particularly in the United States, and even in countries where taxes represent a large share of the cost of gasoline and other fuels.
But the project delays are likely to reduce future energy supplies - and analysts say they may set the stage for another rapid spike in oil prices once the global economy recovers.
Oil markets have just gone through their sharpest-ever spikes and their steepest drops on record, all within a few months this year.
Now, with a global recession at hand and oil consumption falling, the market's extreme volatility is making it harder for energy executives to plan ahead. As a result, exploration spending, which had risen to a record this year, is being sharply reduced.
The list of projects delayed is growing by the week. Wells are being shut down across the United States, new refineries have been postponed in Saudi Arabia, Kuwait and India, and ambitious offshore drilling plans are being reconsidered off the coast of Africa.
Moreover, investment in alternative energy sources like wind power and biofuels that had flourished in recent years could dry up if prices stay low for the next few years, analysts said. Banks have become reluctant lenders, especially to renewable energy projects that may prove unprofitable in an era of low oil and gas prices.
The precipitous drop in oil prices since the summer, coming on the heels of a vertiginous seven-year rise, was a reminder that oil, like any commodity, is a cyclical business. When demand drops and prices fall, companies curb their investments, leading to lower supplies. When demand recovers, prices rise again, starting a new cycle.
As familiar as the pattern may be, the changes this time are taking place at record speed. In June, some analysts were forecasting oil at $200 a barrel; now with prices under $50, no one knows how low they might fall.
"It's a classic - if extraordinarily dramatic - cycle," said Daniel Yergin, chairman of Cambridge Energy Research Associates and author of "The Prize," a history of the oil business. "Prices have come down so far and so fast, it's become a shock to the supply system."
The delays could curb future global fuel supplies by the equivalent of 4 million barrels a day within the next five years, according to Peter Jackson, an analyst at Cambridge Energy Research Associates, Yergin's company. That is equal to 5 percent of current oil supplies.
One reason projects are being shut down so fast is that costs throughout the industry, which had surged in recent years, are still elevated despite the drop in oil prices. Many companies are waiting for those costs to come down before deciding whether to go forward with new projects.
"The global market has been turned upside down since the summer," the International Energy Agency, a leading energy forecaster, said in a recent report.
In today's uncertain environment, a slowdown in spending is inevitable, according to energy executives who are devising their budgets for next year.
Last year, spending on exploration and production amounted to $329 billion, according to PFC Energy, a consulting firm. That figure is certain to fall.
"We're in remission right now," said Marvin Odum, the vice president for exploration and production for Royal Dutch Shell in the Americas. But once the economy picks up, he said, "the energy challenge will come back with a vengeance."
Oil demand growth has weakened throughout the industrial world. The International Energy Agency projects that worldwide demand will actually fall this year, for the first time since 1983.
So much surplus oil is sloshing around the world right now that some companies, including Shell, are using oil tankers for storage.
Prices could fall as low as $25 a barrel, according to Merrill Lynch, if the demand slowdown extends to China next year, which looks increasingly likely.
Different companies have different price thresholds for going forward with drilling projects. But across the industry, a price drop this drastic has "a dampening effect," said Odum, the Shell executive. "The big uncertainty is how long this economic environment is going to last," he said.
The biggest cutbacks so far have been in Canada's heavy oil projects, where some of the world's highest-cost production is concentrated. Some operators there need oil prices above $90 a barrel to turn a profit.
StatoilHydro, a large Norwegian company, recently pulled out of a $12 billion project in Canada because of falling prices. Similarly, Shell, Nexen, and Petro-Canada have all canceled or postponed new ventures in the province of Alberta in recent weeks.
The drop in prices could crimp investments even in places where production costs are low. The Saudi monarch, King Abdullah, recently said he considered $75 a barrel to be a "fair price."
Saudi Arabia, which has invested tens of billions of dollars in recent years to increase its production, recently announced that two new refinery projects, with ConocoPhillips and the French company Total, were being put on hold until costs fall. In Kuwait, the government recently shelved a $15 billion project to build the country's fourth refinery because of concerns about slowing growth in oil demand.
The list goes on: South Africa's national oil company, PetroSA, on Thursday dropped plans to build a plant that would have converted coal to liquid fuel. The British-Russian giant TNK-BP reduced its capital-spending budget for next year by $1 billion, 25 percent less than this year.
In North Dakota, oil drillers are scaling back exploration of the Bakken Shale, a geological formation that was recently seen as promising but that is more expensive to produce that traditional fields.
"People are dropping rigs up there in a pretty significant way already," Mark Papa, the chief executive of EOG Resources, a small natural gas producer, recently told an energy conference.
Another U.S. producer, Callon Petroleum, suspended a major deep water project in the Gulf of Mexico, called Entrada, just weeks before completion because of what it described as a "serious decline in project economics."
According to research analysts at the brokerage firm Raymond James, U.S. drilling could drop by 41 percent next year as companies scale back.
"We expect operators to significantly cut their activity in the coming weeks due to the holiday season, and many of these rigs will not come back to work," the report said.
As scores of small wells get shut down, analysts at Bernstein Research have calculated that oil production in North America could decline by 1.3 million barrels a day through 2010, or 17 percent, to 6.14 million barrels a day.
This decline, rather than cuts by members of the Organization of Petroleum Exporting Countries, "will be the catalyst needed for oil prices to rebound," Neil McMahon, an analyst at Bernstein Research, said during a conference call this month.
The drop in energy consumption could afford some breathing room for producers who had been straining in recent years to match fast-rising demand.
But analysts warn that the world can ill afford a lengthy drop in investment in energy supplies.
To meet the growth in global population and the rising affluence expected over the next few decades, the world will need to invest $12 trillion to increase its oil and natural gas supplies, according to the International Energy Agency.
"If we cut back dramatically on investments, we could end up in a situation where supply growth goes flat when the economy starts to recover," said Jackson, the analyst.
"The steeper the decline, the steeper the response."


Hurdles face an Italian utility as it seeks to expand through mergers
By Ian SimpsonReuters
Tuesday, December 16, 2008
MILAN: The Italian utility Hera finds itself encircled by potential rivals after the collapse of merger talks and with few options for a business combination as a way to spur growth.
Hera, a major multiservice utilities in Italy, faces political hurdles to possible mergers and has fewer prospects to develop its natural gas business in a country that imports 85 percent of its natural gas.
The best merger options for Hera, a big retail distributor of natural gas, include E.ON, the biggest German utility, which seeks to increase its Italian presence, and smaller regional companies like Iride and Enia.
Talks of a three-way combination of Iride, Enia and Hera broke down two months ago. But the companies have said they are open to renewed talks.
"From being a leading operator in north, north-central Italy at least, the company has gone into a situation of being encircled," said Alessandro Bianchi, chief executive of Nomisma Energia, a research group in Hera's hometown, Bologna.
Hera is controlled by the municipalities whose public utilities combined to form the company and it faces political uncertainty as the city of Bologna, its biggest shareholder, heads into municipal elections in April.
Fabio Sciscio, a corporate finance partner at KPMG, said Hera, with its share price halved this year, had been caught in the credit crisis that has halted merger activity.
Until markets revive, those negotiating a merger could be accused of settling a deal from a "weakness standpoint rather than from strength," a politically thorny point, he said.
Hera, which has a market value of €1.57 billion, or $2.17 billion, is the dominant utility in Emilia Romagna, a manufacturing region.
Its gas sales total about 2.3 billion cubic meters a year, or 81.2 billion cubic feet, with power sales at 4.3 gigawatt-hours.
Hera has made acquisitions a big part of its expansion plans, buying five small utilities since 2004.
A three-way deal with Iride, a Genoa-Turin company, and Enia, based in Emilia Romagna, would have created a utility reaching across much of the northern part of Italy.
It also might have given Hera greater access to gas, in part because Iride owns 30 percent of the natural gas group Plurigas, with the Lombardy utility A2A holding the rest. But the talks failed, with Hera citing difficulties over the timetable.
"The failure of the talks was a bolt from the blue." said Bianchi, the Nomisma chief executive. "I think that there is a strategic deficit in terms of size and in terms of supply" of natural gas.
He added that Hera could continue to buy smaller local companies but could be hemmed in by a merged Enia-Iride, the former monopoly Enel and the energy group Eni.
E.ON also is a potential rival, or merger partner, as it takes over the Italian assets of Endesa, a Spanish company, as part of an accord with Enel, which bought Endesa last year.
The management of Hera, however, has always ruled out a foreign partner, Stefano Gamberini, an Equita analyst, said in a research note.
Other options are politically unpalatable, he said.
They include expansion into northeast Italy, with its fragmented utilities sector; Acea of Rome, the biggest water company in Italy; or A2A. But A2A itself has been roiled by political squabbles since it was formed by the merger of the Milan and Brescia city utilities.
Acea has also undergone a management makeover by Italy's new center-right government and has been focused on talks with GDF Suez of France to develop electric power and gas businesses.
A deal with Acea could generate political sparks as well, since Rome's mayor is a former neo-Fascist and Bologna is a center-left stronghold known as the Red City, as much for its political history as for the red tiles on its roofs.
Hera trades at a price/earnings ratio of 9.75 for 2009 earnings, in line with other regional utilities, according to Reuters data. Its dividend yield is 7.35 percent for 2009 earnings, also in line with the sector.


GE wins $3 billion Iraq power deal
The Associated Press
Tuesday, December 16, 2008
NEW YORK: General Electric said Tuesday that it had won a deal to supply power generation equipment to Iraq worth about $3 billion.
The company's GE Energy division said that it would sell multi-fuel gas turbines capable of supplying 7,000 megawatts of electricity in Iraq, which has suffered through years of power blackouts.
That is enough power for about 5,446,000 homes, according to U.S. Department of Energy statistics.
The deal nearly doubles Iraq's electricity-generation capacity from current levels of about 6,000 megawatts per day, GE said.
About 120 GE power turbines currently operate in the country.
GE will also provide technical and management training for the equipment.
Shares of GE rose 44 cents, or 2.6 percent, to $17.39 in pre-market trading.


Diesel, made simply from coffee grounds (ah, the exhaust aroma)
By Henry Fountain
Tuesday, December 16, 2008
In research that touches on two of Americans' great obsessions — coffee and cars — scientists at the University of Nevada, Reno, have made diesel fuel from used coffee grounds.
The technique is not difficult, they report in The Journal of Agricultural and Food Chemistry, and there is so much coffee around that several hundred million gallons of biodiesel could potentially be made annually.
Dr. Mano Misra, a professor of engineering who conducted the research with Narasimharao Kondamudi and Susanta K. Mohapatra, said it was by accident that he realized coffee beans contained a significant amount of oil. "I made a coffee one night but forgot to drink it," he said. "The next morning I saw a layer of oil floating on it." He and his team thought there might be a useful amount of oil in used grounds, so they went to several Starbucks stores and picked up about 50 pounds of them.
Analysis showed that even the grounds contained about 10 to 15 percent oil by weight. The researchers then used standard chemistry techniques to extract the oil and convert it to biodiesel. The processes are not particularly energy intensive, Misra said, and the researchers estimated that biodiesel could be produced for about a dollar a gallon.
One hurdle, Misra said, is in collecting grounds efficiently — there are few centralized sources of coffee grounds. But the researchers plan to set up a small pilot operation next year using waste from a local bulk roaster.
Even if all the coffee grounds in the world were used to make fuel, the amount produced would be less than 1 percent of the diesel used in the United States annually. "It won't solve the world's energy problem," Misra said of his work. "But our objective is to take waste material and convert it to fuel." And biodiesel made from grounds has one other advantage, he said: the exhaust smells like coffee.



Did Sarkozy's stint change the EU for good?
By Stephen Castle and Katrin Bennhold
Tuesday, December 16, 2008
BRUSSELS: Six months after France illuminated the Eiffel Tower in a deep cobalt blue to open its European Union presidency, the Czech Republic - which takes over the job in January - asked privately if the French president, Nicolas Sarkozy, would take part in a handover ceremony.
Sarkozy, came the polite but firm reply, does not want to be the person who switches off the giant neon EU symbol on the famous Paris landmark.
The anecdote, relayed privately by an informed official, is telling. With his hyperactive political style, Sarkozy has dominated the European stage at a time of crisis and is making no secret of his reluctance to leave the limelight.
"I have loved this job," Sarkozy told the European Parliament in Strasbourg on Tuesday in his farewell presidency appearance there.
What is less clear is whether his eventful six-month presidency has fundamentally changed the EU - and French attitudes to it - or simply given a restless leader a tool to burnish his image at home and abroad.
"Was it just a parenthesis of bravado? Or will it be seen by historians as the beginning of a new Europe?" asked Dominique Moïsi, senior fellow at the French Institute of International Relations.
Few dispute that the French presidency had its successes. Although Moscow failed to implement the letter of a cease-fire in Georgia negotiated by Sarkozy, it did enough for the EU to resume formal partnership talks with Russia, the bloc's vast neighbor, key energy supplier and trading partner.
Then, as the international economic crisis took hold, Paris filled part of the vacuum left by the outgoing U.S. administration, helping convene a meeting of the most powerful global economies and coordinating a European response.
And last week Sarkozy persuaded all 27 EU nations to sign up to binding laws on how to cut carbon dioxide emissions by 20 percent by 2020. Despite making compromises to industry, this still left Europe in the vanguard of efforts to curb global warming.
Sarkozy's leadership has helped to reconnect the French with the EU, just three years after France - a founding member of the bloc - shocked itself and others by rejecting the EU's constitution in a referendum. In a BVA poll published Tuesday, 56 percent of the French approved of Sarkozy's EU presidency, while his domestic policies remain deeply unpopular.
Sarkozy has also surprised some by forging an alliance with Gordon Brown, the British prime minister, even inviting him to a meeting of countries that use the euro, which Britain has shunned.
Not everyone is pleased of course. Relations between Paris and Berlin are frosty. At a meeting in London with Brown two weeks ago, Sarkozy made clear his exasperation with the German chancellor, Angela Merkel, for her reluctance to bolster government spending further to combat the slowdown, according to one diplomat who attended the meeting but is not authorized to speak about it.
Smaller and newer member states feel intimidated by someone who dispenses with the normal protocol at summit meetings and interrupts other leaders - as he did last week the Hungarian prime minister, Ferenc Gyurcsany, according to a diplomat familiar with minutes of the meeting.
Diplomats complain of Sarkozy's mood changes. "He can be extremely charming," said one diplomat from a smaller member state, "but it is erratic and chaotic, rather as if he has woken up, it's a sunny day, he's in a good mood and he wants to pass that on."
The Czechs have also been angered by suggestions that Sarkozy might somehow stay on. Indeed, at a news conference in Strasbourg on Tuesday, Sarkozy said that "of course" the French "will be taking initiatives" after Jan. 1.
"For six months he felt like the king of the world - Bush was a lame-duck president and he was in the driving seat of the EU," Moïsi said. "Now Obama is coming in and he is no longer president of Europe. He will not accept such a demise."
After January, for example, France will still chair the new Union for the Mediterranean, set up last summer under the French presidency. The idea, floated by Paris, of regular summit meetings for leaders of euro-zone nations, chaired by Sarkozy, has not taken off - though some diplomats say further meetings are not impossible if the economic outlook worsens.
In some ways, Sarkozy has already forged a legacy. By lobbying for the G20 meeting in Washington in November and setting the stage for a follow-up in London in April, he has created a precedent that his successors cannot ignore. If the global economy continues to deteriorate, his ability as crisis manager might be called on once more.
"He is now an important leader in Europe and on the international scene and his positions have weight," said Hubert Védrine, a former French foreign minister under the Socialists, a political opponent who said he was initially skeptical about Sarkozy's ability to lead.
Sarkozy's main challenge, Védrine added, will be to maintain good relations with Britain, repair ties with Germany and then establish a close link with Obama. "Managing that equation will be key to his ability to remain influential beyond the presidency."
There is, however, a debate over what lessons to draw from the last six months. One of the deals struck under the French EU presidency was to pave the way for a second Irish referendum on the Lisbon Treaty - an accord meant to strengthen the EU as a world player that was rejected by the Irish in a first referendum last June.
If the treaty's supporters win the second vote, the EU will gain a beefed-up foreign-policy supremo and a new, permanent, president of the European Council - the body in which national governments meet - to take over the job Sarkozy is now vacating.
Advocates of the Lisbon Treaty have argued that Sarkozy's six-month tenure underlined the need for a permanent presidency. Opponents say that Sarkozy's success under current rules showed that the importance of institutional change is exaggerated.
Denis MacShane, a former Europe minister in Britain, said the French presidency raised the important question of whether leaders "like Sarkozy, Gordon Brown and Angela Merkel, will allow the appointment of a strong, world-respected, president of the council?"
Beyond squabbles, the main question, observers say, is whether recent crises suggest that Europe can operate as a bloc to balance the rise of the growing economic powers in Asia. Persistent divisions have weakened the EU's hand with Moscow. Tensions between France and Britain, and between France and Germany, have strained the EU's response to the economic crisis.
In Paris, diplomats are optimistic. As one senior official put it Tuesday: "The French presidency has shown that when Europe wants, it can have a voice."


Bomb is found in Parisian department store
By Katrin Bennhold and Basil Katz
Tuesday, December 16, 2008
PARIS: A package of dynamite planted in a major department store here at the height of the Christmas shopping season was found by the police Tuesday and removed after a search that threw the streets nearby into confusion.
A group calling itself the Afghan Revolutionary Front said it had planted the explosives in the Printemps men's store. In a message to a news agency, it demanded the withdrawal of French troops from Afghanistan and warned that it would strike again if President Nicolas Sarkozy did not bring the troops home by the end of February.
Although it turned out that there was no detonator with the dynamite, the incident rattled nerves and revived memories of a string of store bombings in Paris in the 1980s.
The three Printemps stores on Boulevard Haussmann in central Paris were hastily evacuated in midmorning after Agence France-Presse told the police that it had received a warning in the mail.
In the half hour that followed, police officers discovered five sticks of dynamite tied together in a restroom on the third floor of the men's store.
A sniffer dog found the dynamite inside a toilet, French news reports said.
Interior Minister Michèle Alliot-Marie and Mayor Bertrand Delanoë rushed to the scene, where bomb-squad vans on the normally traffic-packed thoroughfare looked eerily out of place against a backdrop of colorful Christmas displays.
"For the moment, we have found sticks of dynamite in just one location," Alliot-Marie said. She said that the dynamite was "relatively old" and had no detonator, adding: "From what we know so far, this was not a device that was intended to explode."
Sarkozy, speaking from Strasbourg in eastern France, said that security officials were analyzing the explosives. "Vigilance against terrorism is the only possible option," Sarkozy said in a live television statement.
As it is every year in the Christmas season, security has been tightened in various parts of the French capital. Gérard Gachet, a spokesman for Alliot-Marie, said the Interior Ministry had deployed an additional 1,500 police in the Haussmann district last week.
There was no sense of panic, in part because shoppers and sales staff were initially told that the evacuation was due to a "technical incident."
But as the police barriers were lifted and most parts of the store were reopened, a sense of unease spread as Parisians recalled a wave of explosions in department stores in 1985 and 1986 that killed seven people and wounded dozens.
Leonie Jean-Julien, 52, a seamstress in the Printemps women's store, was working there when Hezbollah bombs exploded on the ground floor and in the adjacent Galeries Lafayette department store on Dec. 7, 1985.
"Since 1985 I take this seriously," she said.
Jean-Julien and other Printemps employees said that the store had been on high alert for several days.
An editor at Agence France-Presse, André Birukoff, said the news agency had received an earlier warning that an attack on Printemps was imminent.
He said that one of AFP's journalists had received an anonymous telephone call on Dec. 10 saying that there would soon be an explosion at the department store. The caller hung up before identifying himself or giving any other information.
The warning statement to AFP on Tuesday said: "Send the message to your president that he needs to withdraw his troops from our country (Afghanistan) before the end of February 2009, or else we will act again in your capitalist department stores, and this time with no warning."
France has about 3,000 troops deployed with the NATO-led force in Afghanistan.
French terrorism officials and experts said they had no previous knowledge of the group, adding that some of the vocabulary it had used was atypical for Afghan and Islamic radical outfits.
But they warned that the incident Tuesday was especially worrying because it hinted that someone could attack an important target in the city with devastating consequences.
"These department stores are the ideal target, much like an airport, with a lot of people coming and going, and the psychological impact of it has already been felt," said Anne Giudicelli, director of Terrorisc, a terrorism consultancy.
Public concern here about the French military presence in Afghanistan grew after 10 soldiers were killed there in a Taliban ambush in August.
The ambush, in which 21 other soldiers were wounded, was the bloodiest attack against French forces since a 1983 bombing in Beirut killed 58 troops.
Sarkozy has strongly defended France's role in Afghanistan alongside its Western allies as part of the fight against global terrorism.
But his promise in April to commit additional French troops, which brought the commitment to nearly 3,000, was not popular.
Meg Bortin and Caroline Brothers contributed reporting.


Iran accuses Sarkozy of pharaonic arrogance
Tuesday, December 16, 2008
TEHRAN: Hard-line Iranian President Mahmoud Ahmadinejad said on Tuesday his French counterpart Nicolas Sarkozy was imitating the "arrogant" style of the pharaohs who ruled ancient Egypt, state television reported.
Sarkozy, an outspoken critic of Iran since coming to office in 2007, said on Monday he could not shake hands with Ahmadinejad because he had said Israel should be "wiped off the map." He also said Ahmadinejad did not represent Iran.
Ahmadinejad, who outraged the West in 2005 by calling Israel a "tumour" to be wiped off the map, accused Sarkozy in a speech at a rally in southern Iran of adopting "an arrogant pharaonic style" towards the Tehran government.
"Sir, no one in Iran has demanded to negotiate or shake hands with you," Ahmadinejad said. "Then why do you set conditions?" he asked in the speech in Khuzestan province, broadcast live on state television.
In Islamic tradition and the Koran, pharaohs are a symbol of arrogance and oppression.
Opposition to Israel is one of the fundamental policies of predominantly Shi'ite Iran, which backs Palestinian and Lebanese Islamic militant groups opposed to peace with the Jewish state.
Ahmadinejad insisted Iran had no intention of recognising Israel. "Whoever wants to negotiate with Iran should know that Iran will never recognise the Zionist regime (Israel)," he said to chants of "Death to Israel" and "Death to America."
"Those who want to negotiate with Iran, should know that Iran is calling for obliteration of crime, aggression, occupation and the genesis of Zionist thinking from the world."
The United States and Israel believe Iran's nuclear programme conceals a military programme.
Iran has been hit by three rounds of U.N. sanctions since 2006 for refusing to suspend its sensitive uranium enrichment work. France, like Washington, wants further international pressure on Iran to persuade it to stop the enrichment.
Tehran rejects Western allegations that it has secret plans to build atomic weapons and refuses to suspend what it says is a civilian nuclear energy programme.
Ahmadinejad said Iran would never yield to international pressure to abandon its nuclear activities. "Iran will not give up its obvious right (to nuclear technology) even one iota," he said.
(Writing by Parisa Hafezi, editing by Tim Pearce)


2008 in Pictures (IHT)


Fed effectively cuts benchmark rate to zero
By Edmund L. Andrews and Brian Knowlton
Tuesday, December 16, 2008
WASHINGTON: The Federal Reserve entered a new era Tuesday, setting its benchmark interest rate so low that it would have to reach for new and untested tools in fighting both the recession and downward pressure on consumer prices.
Going further than analysts anticipated, the central bank cut its target for the federal funds rate to a range of zero to 0.25 percent, a record low, bringing the United States to the zero-rate policies that Japan used for six years in its own fight against deflation. The rate, the interest on overnight loans of reserves between banks, had previously been 1 percent, and a cut of a half-point had been widely expected.
It also means the Federal Reserve will have to reach for new and untested tools in fighting both the recession and downward pressure on consumer prices.
On Tuesday, President-elect Barack Obama echoed that view, saying the Federal Reserve was "running out of the traditional ammunition that's used in a recession."
The Federal Reserve decision, which affects the rate at which banks lend their reserves to one another overnight, was widely expected and to a large degree symbolic. Demand for interbank loans has been so low that the actual federal funds rate has been far below the target for a month and hovered at barely 0.1 percent in the last several days.
With its move, the central bank implicitly acknowledged that recession is more severe than Fed officials had thought at their last meeting in October.
A raft of new data on Tuesday offered fresh evidence that the central bank faced little danger that its easy-money policies would stoke inflation. Indeed, the data reinforced the impression that the much more immediate risk is deflation - a widespread and disruptive decline in consumer prices.
The U.S. government said Tuesday that the prices at the retail level fell 1.7 percent in November, the steepest monthly drop since it began tracking prices in 1947. The decline in the consumer price index was driven largely by the plunge in energy prices, but even the so-called core inflation rate, which excludes the volatile food and energy sectors, was essentially zero.
With less than two weeks before Christmas, U.S. retailers from Saks Fifth Avenue to Wal-Mart have been cutting prices to draw in consumers, who have sharply reduced their spending over the past six months. On Tuesday, Banana Republic offered customers $50 off on any purchases that total $125. DKNY offered customers $50 off for any purchase totaling $250.
Ian Shepherdson, who follows the U.S. economy for High Frequency Economics, said falling energy prices were likely to bring the overall consumer price index to below zero in January.
Ben Bernanke, the chairman of the Fed, has already outlined a range of unorthodox new tools that the central bank can use to keep stimulating the economy once the central bank runs out of room to cut rates further.
Those techniques include buying vast amounts of longer-term Treasury bonds. The Fed has already introduced a slew of lending programs in its effort to revive corporate and consumer lending. Later this month, the Fed will start purchasing $600 billion worth of securities that are backed by Fannie Mae, Freddie Mac and other government-sponsored entities. The Fed and the Treasury are also introducing a joint program to buy up securities backed by consumer debt like automobile loans.
All of the new tools amount to printing money in vast new quantities, and the Fed has already started the process. Since September, the Fed's balance sheet has ballooned to more than $2 trillion from about $900 billion as the central bank has created new money and loaned it out through all its new programs. As soon as the Fed completes its plans to buy up mortgage-backed debt and consumer debt, the balance sheet will be up to about $3 trillion.
"At some point, and without knowing the timing, the Fed is going to have to destroy all that money it is creating," said Alan Blinder, a professor of economics at Princeton and a former vice chairman of the Federal Reserve. "Right now, the crisis is created by the huge demand by banks for hoarding cash. The Fed is providing cash, and the banks want to hoard it. When things start returning to normal, the banks will want to start lending it out. If that much money is left in the monetary base, it would be extremely inflationary."
In announcing its decision, the Fed said it "anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time."
With the Fed cutting short-term rates as much as it can, its normal monetary policy tools cannot be counted on to provide an effective lift to the economy. That is the main reason why most economists say it is important to couple the Fed's efforts to stimulate lending with an expansive fiscal policy in which the Treasury would borrow hundreds of billions of dollars to increase government spending to make up for the decline in private consumption and investment.
While observing, at a news conference in Chicago, that he did not think it wise for a president or president-elect to second-guess the Fed, Obama said, "Although the Fed is still going to have more tools available to it," adding, "it is critical that the other branches of government step up, and that's why the economic recovery plan is so absolutely critical." Obama was meeting with his full economic team Tuesday. They are working with Congress to put together a stimulus package, estimated at $500 billion to $700 billion, that he hopes Congress will approve even before he takes office on Jan. 20.


Goldman Sachs posts $2.12 billion loss
By Ben White
Tuesday, December 16, 2008
NEW YORK: Goldman Sachs's long run of profitable quarters came to an end on Tuesday as the bank announced a loss of $2.12 billion, driven by big markdowns on its large portfolio of proprietary investments in everything from Japanese golf courses to Chinese banks.
It was the first quarterly loss since Goldman went public in 1999 and demonstrated that even some of Wall Street's most skilled operators have not been able to overcome tough markets and sagging economies across the globe.
Goldman sidestepped earlier losses by staying out of the high-risk subprime mortgage market and taking an early bet against the housing industry in the United States.
But the bank has been unable to avoid taking big markdowns after nearly 30 percent declines across global equity markets in its fiscal fourth quarter, which ended in November.
Goldman's quarterly loss, which amounted to $4.97 a share, kicked off a run of what are expected to be poor banking results. Morgan Stanley is expected to announce a loss of around $400 million on Wednesday.
Revenue in Goldman's big trading and principal investment business was a negative $4.36 billion, in contrast to a positive $6.93 billion in the fourth quarter last year.
Goldman said it cut compensation and expenses and benefits by 46 percent in 2008, to $10.93 billion, reflecting lower payments because of poor performance. None of the firm's top seven executives will take a bonus for this year. Morgan Stanley has made a similar decision.
Employment at Goldman, which had been 32,569 at the end of the third quarter, decreased 8 percent.
Goldman Sachs has said it will reduce staffing by 10 percent, but some analysts say they believe that it will need to make deeper cuts to reflect declining revenue and a slowing global economy.
After the announcement, Moody's, the debt rating agency, downgraded the long-term senior debt ratings of Goldman Sachs to A1, from Aa3. Other ratings were affirmed, but the outlook on them remained negative.
Goldman shares, which are down 70 percent this year in the financial crisis, were up 7.6 percent at $74.17 in afternoon trading on Tuesday in New York. Analysts said the stock rose because the loss was smaller than many had expected.
"I think the number on people's radar screen was much bigger as they try to clear the books to start the next year," Tim Smalls, head of U.S. stock trading at Execution, a brokerage firm in Greenwich, Connecticut, told Reuters.
David Viniar, the chief financial officer of Goldman, said in an interview that about $1 billion in losses came in real estate investments, while $600 million came in a stake in Industrial and Commercial Bank of China.
"Over time, a lot of those are great investments," he said.
Viniar also reaffirmed the belief within Goldman that these were largely unavoidable losses that would be reversed as the market improved.
The same cannot be said for banks with huge holdings in subprime mortgages and related securities that may never recover much value, according to Goldman executives.
Viniar said that it was too soon to say when markets might recover but that huge efforts by governments in the United States and around the world should begin having positive effects.
"Economies around the world are quite slow, but governments around the world are throwing in enormous resources," he said.
"You don't know when they will kick in. They may already have kicked in, or they may kick in in a year."
Viniar, reaffirming a view privately expressed by Goldman officials, said he did not believe that the bank needed to make a major acquisition to help its balance sheet.
He noted that the bank reduced its balance sheet to about $885 billion at the end of the quarter, from $1 trillion last quarter. He added that $111 billion of that was free cash.
Goldman Sachs and Morgan Stanley have transformed themselves into deposit-taking bank holding companies that have direct access to borrowing from the Federal Reserve, but are also legally bound to take less risk.
Speculation has centered on Goldman's buying a retail bank or a trust bank that manages money for large institutions and wealthy individuals. Goldman executives have looked at possible acquisitions but found none that were cheap and strategically useful.


Merkel concedes need for more economic stimulus in Germany

European car sales plunged in November
U.S. stocks soar as Fed cuts rate to lowest level ever

U.K. inflation risks falling below 1% in 2009, central bank warns


Paulson does not expect any more major financial institutions to fail during current crisis
The Associated Press
Tuesday, December 16, 2008
WASHINGTON: Treasury Secretary Henry Paulson said Tuesday that he did not expect any more major financial institutions to fail during the current credit crisis.
Paulson also said he had no plans to ask Congress to make the second half of the $700 billion financial rescue fund available before the administration of President George W. Bush leaves office on Jan. 20.
In an interview on CNBC, Paulson said he believed the actions taken by financial authorities in the United States. and other countries would allow all the systemically important institutions to remain viable.
The administration has obligated almost all of the first $350 billion in the financial rescue package approved by Congress on Oct. 3. There had been speculation that the Bush administration would ask for approval to begin using the second $350 billion in the bailout bill before leaving office.
But Paulson said Tuesday he believed the government had a "lot of firepower" at its disposal currently, including the rescue program and multibillion-dollar loan programs being used by the Federal Reserve and other banking authorities. For that reason, he said he did not see a need to request authorization from Congress to tap the second half of the rescue package.
The Fed on Tuesday said it had reduced the federal funds rate, the interest that banks charge each other, to a range of zero to 0.25 percent. That is down from the 1 percent target rate in effect since the last meeting in October. The aggressive move was greeted enthusiastically by Wall Street, and the Dow Jones industrial average closed more than 4 percent higher.
Separately, the Treasury Department announced that it had provided an additional $2.45 billion in direct purchases of bank stock involving 28 more banks.
The new group of banks brings to 116 those that have received government support through stock purchases. The administration announced in mid-October that the stock purchases would be the major way it planned to use $250 billion of the rescue program. The amount distributed to the banks so far totals $167.76 billion, Treasury said.
In his interview, Paulson said a top priority for his remaining weeks in office was making sure the transition to the incoming administration of President-elect Barack Obama flows smoothing during what has turned out to be the country's most serious financial crisis since the 1930s.
The Bush administration is continuing to look at ways to deal with the mortgage crisis, Paulson said, but had not yet decided to implement a proposal to try to boost housing activity by buying bonds and lowering mortgage rates to 4.5 percent.
Paulson said he was spending a lot of time on the effort to fashion a government lifeline for the Detroit auto companies.
The companies that need government loans to avoid bankruptcy "will get the money as quickly as we can prudently do it," Paulson said. "We need to do it, but we need to do it right."
Paulson refused to speculate exactly when the support from the government's $700 billion rescue program might be awarded to General Motors, Chrysler or Ford Motor, but said the administration was working to make sure the taxpayer was protected and that the companies presented a credible plan to achieve long-term viability.


Wall Street fraud leaves charities reeling
By Stephanie Strom
Tuesday, December 16, 2008
NEW YORK: When Jeanne Levy-Church created the JEHT Foundation in 2002 to promote justice, equality, human dignity and tolerance, she tapped into investments run by Bernard Madoff.
Those investments were initially made more than three decades ago by her father, Norman Levy, who entrusted his real estate fortune to Madoff. Funded solely by regular contributions from Levy-Church, the foundation gave away more than $75 million over the next few years.
But on Monday, the young foundation announced that it would cease operations by the end of January - a victim of the same investments that made it a star in liberal philanthropic circles.
"The returns had been steady and strong for all these years," said Robert Crane, the foundation's chief executive. "It was shocking."
Around the United States, the nonprofit community is reeling from the Madoff scandal. At least two other foundations have been forced to close their doors, having lost virtually all their assets to what the authorities describe as a Ponzi scheme that depended on new investment money to pay off earlier investments.
Charities that depended on those foundations for financing, like the Innocence Project and the UJA Federation, and wealthy donors like the real estate billionaire Mort Zuckerman and the founder of the Ascot Partners hedge fund, Ezra Merkin, have now added the Madoff scandal to the list of reasons that fund-raising has been crimped this autumn. In some cases, the foundations had placed their money with Madoff directly; others had invested with funds that turned assets over to him. And some nonprofits relied on a steady stream of money from donors, like Levy-Church, with now vanishing fortunes.
"It's not catastrophic, but it does hurt us," said Madeline deLone, executive director of the Innocence Project, which was supported by JEHT in its work to use DNA evidence to exonerate improperly convicted criminals and to reform the criminal justice system.
The Elie Wiesel Foundation for Humanity, the Ramaz School and Yeshiva University are among the charities that invested in the Madoff funds, often on the advice of wealthy donors on their boards, and are now grappling with the fallout.
"We are just waiting to understand exactly what's going on," Marc Winkelman, secretary of the board of the Wiesel organization, said Friday. "It's of course an upsetting thing."
According to its 2006 tax form, the most recent available, the Wiesel Foundation realized a $310,520 gain that year on some $37 million of securities traded on its behalf by Madoff. It is unclear what portion of the organization's endowment that $37 million represents, and Winkelman did not return a call seeking clarification.
The tax forms show trading of well-known stocks like Johnson & Johnson, PepsiCo and IBM, as well as government bonds, all of which may have led the Wiesel organization to believe that its investment portfolio was adequately diversified.
Yeshiva University lost $100 million to $110 million on investments in Madoff's funds, having already seen its endowment drop to $1.4 billion from $1.8 billion after turmoil in the markets this autumn.
In a letter to donors, the Jewish Federation of Greater Washington said it had $10 million invested with Madoff, or about 8 percent of its endowment as of Nov. 30. The organization said it would work to recover the money.
The North Shore-Long Island Jewish Health System reported that it had a $5.7 million exposure to Madoff Securities in the form of a gift from a donor who insisted that it be invested that way. "The donor who contributed the funds has graciously agreed to reimburse the health system for any financial loss," the organization said in a statement.
The Ramaz School, where Merkin was on the investment committee, lost some $6 million invested with Madoff, according to a letter sent to board members and two parents whose children attend the school.
"It is a small part of our endowment," said Rabbi Haskel Lookstein, the Ramaz principal. "We will be able to continue functioning normally."
Miriam Rinn, a spokeswoman for the Jewish Community Centers Association of North America, the umbrella organization for JCC organizations in the United States and Canada, said it was still working to determine how much it might have lost in the Madoff scandal. "We're shocked," Rinn said. But "we're still going ahead with all of our services."
The Carl and Ruth Shapiro Family Foundation, which supports organizations like the Brigham and Women's Hospital in Boston and the Jewish Federation of Palm Beach in Florida, said it lost $145 million, or 45 percent of its assets at the end of last year, because of investments with Madoff.
"I was stunned and saddened to learn about the allegations against Bernie Madoff," Carl Shapiro said in a statement. "It is devastating to think that so many charities, individuals and institutions that had put their trust in Mr. Madoff have had their lives so negatively impacted."
He said his foundation would work to recover its investment and would honor all its commitments.
The SAR Academy, a Jewish school, had roughly a third of its $3.7 million in assets invested with Madoff, according to an e-mail it sent to donors and parents. That exposure was through the Ascot Fund, a charity to provide wigs for people with the baldness disease alopecia. That fund is run by Merkin, who is also the chairman of GMAC.
And Steven Spielberg's Wunderkinder Foundation, which supports organizations like Cedars-Sinai Medical Center and the charity Children of Chernobyl, had investments with Madoff, although a spokesman said he did not know how much.
The Chais Family Foundation in Encino, California, announced over the weekend that its investments with Madoff had forced it to stop operating, according to the Jewish Telegraphic Agency. The foundation had $178 million in assets in May 2007, according to its tax form.
The Robert I. Lappin Charitable Foundation of Salem, Massachusetts, had about $7 million at the end of 2006, but was forced to shut down at the end of last week.
Jeanne Levy-Church and her husband, Ken Levy-Church, supported JEHT each year with a contribution from their Madoff funds. There will be no more contributions.
"Our programming is totally dependent on the ongoing funding, so for all intents and purposes it has ceased," said Crane, the JEHT Foundation's chief executive. "People with grants currently in hand will keep that money, of course, but we can't make good on pledges and grants that are for multiple years."
The foundation's 24 employees are losing their jobs, and organizations like Human Rights First, the Center for Investigative Reporting and the Juvenile Law Center are losing an important source of revenue.
Elisa Massimino, the executive director and chief executive of Human Rights First, said JEHT had been a "significant" supporter of the organization, particularly its work on national security and civil liberties.
"We are going to work aggressively to identify alternative funding for this work, and I am hopeful that there will be others - foundations and individuals - who will step up and help us meet this challenge," Massimino said.


Louis Vuitton drops plans for flagship store in Tokyo
Tuesday, December 16, 2008
TOKYO: LVMH Moët Hennessy Louis Vuitton, the world's biggest luxury goods company, has scrapped a plan to open a Louis Vuitton flagship store in the Ginza, the Tokyo shopping district, as a spreading recession takes the luster off designer brands.
LVMH has broken off talks over opening a store in a building that was scheduled to be completed in 2010, an executive for the developer, Hulic, said Tuesday.
An LVMH spokesman said the company had withdrawn from the project but declined to explain the decision or comment on its plans.
"We have not been able to reach an agreement with Hulic on a store development project in Ginza," said Yuri Matsueda of Burson-Marsteller, a public relations agent for Louis Vuitton Japan.
Awash with cash from a global luxury boom, fashion and jewelry brands poured money into lavish retail spaces in districts like the Ginza and Omotesando over the past two years.
News reports this year referred to a 10-floor Louis Vuitton emporium and restaurant to rival opulent new Armani and Bulgari towers in the Ginza.
A weak yen also encouraged such investments, tempting wealthy Japanese consumers to shop at home rather than Europe, luring buyers from all over Asia to Tokyo and offering foreign brands bargains on real estate.
While luxury goods companies gave optimistic sales forecasts as recently as May, banking on the wealthy to keep spending despite the economic slowdown, the mood has turned sour as the impact from the global financial crisis has grown.
Japan, the United States and much of Western Europe is in recession, and growth is slowing in emerging markets like China.
Several luxury companies have cut their outlooks and expect a grim Christmas season followed by an even gloomier 2009.
LVMH had appeared to be weathering the downturn better than others. It said in October that sales had risen sharply in the first week of that month, and sales in emerging markets were holding up.


Inquiry finds no signs family helped Madoff with fraud
By Alex Berenson and Diana B. Henriques
Tuesday, December 16, 2008
NEW YORK: U.S. investigators have found no evidence so far that members of Bernard Madoff's family helped him carry out what may be the largest financial fraud in history, according to a person briefed on the case.
Madoff's sons, Andrew and Mark, and his brother, Peter, all occupied senior positions at his firm, Bernard L. Madoff Investment Securities, whose assets were frozen after Bernard Madoff told law enforcement agents Thursday that he had defrauded investors of up to $50 billion.
Although the enormous scale of the fraud prompted widespread questions about whether one person could concoct all the necessary paperwork such a scheme would entail, Madoff, 70, had insisted that his family was not involved in the Ponzi scheme. He said it was "all his fault," according to a criminal complaint filed last week.
And so far, investigators have not uncovered evidence that contradicts those statements, according to the person briefed on the case, who was not authorized to comment publicly on it.
The person cautioned that the investigation was in its earliest stages, and that examiners could still unearth evidence that Madoff's family knew about the fraud or even helped carry it out.
But employees have said that Madoff's sons and brother all seemed shocked Thursday after the fraud was disclosed and Madoff was arrested. One of Madoff's sons had a substantial amount of money invested in the accounts that Madoff managed, investigators said.
John Wing, a lawyer for Peter Madoff, said Monday that investigators had not advised Peter that he was a target in the case, and that he was expected to cooperate with investigators.
Peter Madoff, 62, reported to work on Monday to help investigators and a court-appointed receiver take control of the firm's assets and examine its books, Wing said. "As far as I know, Peter Madoff has been 100 percent cooperative," Wing said. Peter Madoff was general counsel, while Andrew, 42, and Mark Madoff, 44, supervised the firm's stock-trading desks, which have so far not been implicated in the fraud. Both have worked at the firm since their 20s.
A person with direct knowledge of the information who was not authorized to speak for the sons said that Andrew Madoff and Mark Madoff had been told by the law enforcement authorities that they were not targets in the case.
"They are considered to be fact witnesses only, neither subjects nor targets," the source said. "They are cooperating totally."
A lawyer for Frank DiPascali, another senior Madoff employee, declined to comment on whether his client was being investigated or cooperating with the authorities. Madoff employees have said that DiPascali was the most important figure in the separate staff that worked closely with Bernard Madoff on the 17th floor of the firm's office at the Third Avenue building known as the Lipstick Tower in midtown Manhattan. That operation also had its own computer systems, and did not process its trades through the Madoff firm, they said.
Bernard Madoff told his sons that the trading was being done by European counterparties, said several people familiar with the history of the firm. The firm's stock traders and other support staff members worked on the 18th and 19th floors, where they were supervised by Peter, Andrew and Mark Madoff.
The complaint filed last week states that Bernard Madoff told two unidentified senior employees on Dec. 10 that he had defrauded investors. Those senior employees were Andrew and Mark Madoff, according to several people knowledgeable about the case who were not at liberty to discuss it publicly.
They then called a friend, Martin Flumenbaum, who is a partner at the law firm of Paul, Weiss, those people said. After they told Flumenbaum about their father's confession, he called U.S. government prosecutors and the Securities and Exchange Commission.
On Thursday morning, Andrew and Mark Madoff met with government officials. The FBI then sent two agents to their father's apartment to interview him. He confessed and was arrested, according to documents filed in the case.
Since Thursday, Andrew and Mark have not been able to talk to their uncle or their father because they are considered witnesses in the case and must avoid pretrial discussions that might touch on their experiences.
One of Madoff's sons had "a meaningful amount of money" invested with his father and got statements that were no different from those received by other investors, the people said. Andrew and Mark have told associates that their father's confession suggested to them that the fraud had been going on for several years, one said.
Monday afternoon, a U.S. District Court judge appointed a trustee to liquidate Bernard L. Madoff Investment Securities, the broker-dealer that was the core of Madoff's business. The trustee, Irving Picard, was appointed at the request of the Securities Investor Protection Corp., the government-chartered fund set up to help protect investors of failed brokerage firms.
"It is clear that the customers of the Madoff firm need the protections available under federal law," said Stephen Harbeck, the president of the agency.
But in a statement, the agency warned that "the scope of the misappropriations and the state of the defunct firm's records will make this more difficult than in most prior brokerage firm insolvencies."
Normally the agency can simply transfer a failing firm's customer accounts to a solvent brokerage house. That may not be possible in this case, Harbeck said. Moreover, since the agency does not know how much money is actually missing, it cannot determine how to apportion any customer assets that are recovered. The protections provided through the agency are available on its Web site,


Tax deduction may help duped Madoff investors
By Lynnley Browning
Wednesday, December 17, 2008
For the legions of investors who appear to have been swindled in Bernard Madoff's giant Ponzi scheme, there may be a little relief.
U.S. tax rules allow investors who fall prey to criminal theft perpetrated by their investment advisers or brokers to claim a tax deduction stemming from their losses.
The rules, which are in part tied to definitions under state theft laws, could potentially put hundreds of millions or even billions of dollars, in the form of tax breaks, back into the pockets of Madoff's stunned investors, including Mort Zuckerman, the publishing magnate; Fred Wilpon, the owner of the New York Mets baseball team; and wealthy investors from Florida to Europe.
But it is unclear whether the Internal Revenue Service will see things that way. The agency, which never comments on issues specific to individual taxpayers or cases, declined on Monday to discuss whether it would allow Madoff's investors to use the theft loss rule.
Gary Zwick, a tax lawyer at Walter & Haverfield in Cleveland, said, "It's fair to say that many people will take the position that the theft loss rules will apply, but the government may not take that approach."
Under the rules, investors may deduct their losses against 90 percent, and in some cases all, of their adjusted gross income. So an investor who lost $1 million to Madoff and whose adjusted gross income is $600,000 can claim a tax loss of $939,900. That is the result of $1 million reduced by 10 percent of the adjusted gross income, and minus a $100 fee that is applicable under Internal Revenue Service rules, according to Robert Willens, a tax and accounting authority who provided the example.
The rules permit losses stemming from theft to be deducted in the year in which the loss is discovered by the investor. They also allow investors to carry back such losses for three years - one more year than under the rules for capital losses - and to carry forward losses for 20 years. Investors must compute losses according to the adjusted basis in their investment, not the fair-market value.
For elite clients, the tax write-off may be the only positive outcome from what prosecutors have charged may be the biggest financial pyramid scheme in history.
But before investors can claim the deduction, they have to pass several hurdles.
First, they have to be reasonably certain that they will not recover their losses. Because proving that could take months, if not years, investors may have to wait until next year or later to be able to claim any losses on U.S. federal income tax returns. Investors who file claims for reimbursements are typically deemed to be in the process of seeking monetary recoveries.
It is not known whether Madoff put any of his investors' money in personal bank accounts outside the United States or used it to underwrite a lavish lifestyle. Any such assets could be a source of recovery for investors that the court-appointed receiver for Madoff's operations would try to find - and that could dilute any tax write-offs.
A formal declaration that Madoff's funds were bankrupt would help investors on the tax front. "Embezzlement followed by bankruptcy is a pretty good indication that you're not going to get your money back and have a theft-loss claim," said Mathew Richardson, a tax lawyer at Sheppard Mullin Richter & Hampton in Los Angeles.
Investors who paid taxes on their Madoff investments in previous years might also try to seek refunds from the Internal Revenue Service.

****************** Banker fails to practice what he preaches
Tuesday, December 16, 2008
Emilio Botín spoke too soon. After collecting the prize for "Bank of the Year" at a recent awards dinner in London, Botín, the chairman of Banco Santander, delivered a witty speech to the global banking elite. The chance to rib a captive audience of humbled rivals was too great to resist. Botín's theme? How to be a good banker.
The assembled finance professionals, representing the likes of Goldman Sachs and UBS, laughed and squirmed as Botín explained how Santander had managed to dodge the subprime bullet. He distilled his wisdom into three simple lessons:
One, if you don't fully understand a product, don't buy it.
Two, if you wouldn't buy a product for yourself, don't sell it.
And three, if you don't know your customers very well, don't lend them any money.
That was all very well - until the Madoff scandal broke on Friday.
Santander's own anticipated losses from the Madoff affair are tiny, at just €17 million, or $23 million. The bank hasn't been a big lender to funds of hedge funds invested with Bernard Madoff, a former chairman of Nasdaq. But it seems to have forgotten Botín's second piece of advice, as Santander's clients could lose €2.3 billion in the alleged fraud.
Moreover, Botín concluded his advice with a nod to Rudyard Kipling's poem "If," saying: "and if you do these three things, my son, you will be a better banker." As it happens, Botín's son and son-in-law are also victims of Madoff's apparent collapse. They run the Spanish fund manager M&B Capital Advisers, which also had exposure to Madoff.
At least Botín is in good company. Other so-called "winners" from the subprime banking crisis - HSBC, BNP Paribas and Unicredit - also have egg on their faces courtesy of Madoff. But none of them set themselves up for a fall quite so brazenly as the patriarch of Spanish banking. - Christopher Hughes


Kidnapping expert is abducted in Mexico
By Marc Lacey
Tuesday, December 16, 2008
MEXICO CITY: A U.S. security consultant who has helped negotiate the release of scores of kidnapping victims in Latin America was himself kidnapped last week in northern Mexico after delivering a seminar there on how to avoid that fate, officials said Monday.
The FBI and Mexican law enforcement officials are investigating the abduction, which took place on the evening of Dec. 10 in Saltillo, an industrial city that is a three-hour drive from the Texas border.
The consultant, Felix Batista, was giving security seminars for business owners in the state of Coahuila when he was abducted by a group of armed men. He is a former U.S. Army officer credited with helping to free hostages abducted by Colombian rebels.
Batista met with a group of police officials on Dec. 10 and later in the day was in a restaurant when he received a call on his cellphone that prompted him to get up and leave, officials told the media. A group of men then took him away, officials and local newspapers said.
"I do a lot of security consulting, and the last thing I think of is being a victim in the process," said Jon French, a former U.S. State Department official who runs his own security company, Problem Solvers, in Mexico City. "Talk about turning the tables."
Batista works for ASI Global, a security company in Houston. It operates a 24-hour hot line that aids clients with, among other things, responding to kidnappings.
"We're still gathering information on what occurred," said Charlie LeBlanc, president of the company. He confirmed that Batista had been kidnapped, but declined to say whether a ransom had been demanded.
LeBlanc said the company and relatives of Batista were working with colleagues and law enforcement officials for his release. "Our thoughts and prayers are with Felix and his family at this time," LeBlanc said in a statement.
Coahuila has not been among the most violent places in Mexico, a country where killings and kidnappings have soared, often associated with drug traffickers moving narcotics to the United States.
But Coahuila has not been immune. Two of its anti-kidnapping chiefs have been abducted in recent years.


Lawyers question whether case against Blagojevich is airtight
By David Johnston
Tuesday, December 16, 2008
WASHINGTON: When Patrick Fitzgerald, the U.S. attorney in Chicago, announced the arrest of the Illinois governor, Rod Blagojevich, Fitzgerald said he had acted to halt a political crime spree that included what he called an "appalling" effort to sell off the Senate seat vacated by President-elect Barack Obama.
But some lawyers are beginning to question whether the juiciest part of the case against Blagojevich, the part involving the Senate seat, may be less than airtight. There is no evidence, at least none that has been disclosed, that the governor actually received anything of value - and the Senate appointment has yet to be made.
Ever since the country's founding, prosecutors, defense lawyers and juries have been trying to define the difference between criminality and political deal-making. They have never established a clear-cut line between the offensive and the illegal, and the hours of wiretapped conversations involving Blagojevich that prosecutors recorded, filled with crass, profane talk about how to benefit from the Senate vacancy, may occupy that legal gray area.
Robert Bennett, one of Washington's best-known white-collar criminal defense lawyers, said Blagojevich faced nearly insurmountable legal problems in a case that includes a raft of corruption accusations unrelated to Obama's Senate seat. But Bennett said the case raised some potentially thorny issues about political corruption.
"This town is full of people who call themselves ambassadors, and all they did was pay $200,000 or $300,000 to the Republican or Democratic Party," said Bennett, referring to a passage in the criminal complaint filed against the governor suggesting that Blagojevich was interested in an ambassadorial appointment in return for the Senate seat. "You have to wonder, how much of this guy's problem was his language, rather than what he really did."
In presenting his case, Fitzgerald said Blagojevich had crossed the line from deal-making to criminality, citing an example in the complaint in which the governor discussed with an aide obtaining a $300,000-a-year job from the Service Employees International Union in return for naming a candidate to the seat.
"We're not trying to criminalize people making political horse trades on policies or that sort of thing," Fitzgerald said. "But it is criminal when people are doing it for their personal enrichment."
But politicians routinely receive political contributions in return for their decisions, whether they involve making appointments or taking a stand on legislation.
And while prosecutors have brought increasing numbers of political corruption cases in recent years, they have done so using laws that make it a crime for an official to deprive the public of "honest services." They are based on statutes that never define exactly what conduct might be illegal, but what they do require is evidence that an official at least tried to seek something of value in return for an official action.
In the case of Blagojevich, it would be legal for the governor to accept a campaign contribution from someone he appointed to the Senate seat. What would create legal problems for him is if he was tape-recorded specifically offering a seat in exchange for the contribution. What would make the case even easier to prosecute is if he was recorded offering the seat in exchange for a personal favor.
The government has asserted that the wiretaps show that Blagojevich told his aides that he wanted to offer the seat in exchange for contributions and for personal favors, including jobs for himself and his wife. But talk is not enough. Any case will ultimately turn on the strength of the tapes, and whether the governor made it clear to any of the candidates for Senate that he would only award the seat in exchange for the favor or favors.
Several lawyers cautioned that the complaint presented last week was a snapshot of the evidence that Fitzgerald had amassed so far, in an investigation that is continuing. By arresting Blagojevich on Dec. 9, Fitzgerald acted without having presented his case before a grand jury. He is now likely to use such a panel to obtain more witness testimony.
Fitzgerald's decision to bypass a grand jury initially could signal a belief on his part that he did not yet have a fully prosecutable case on his hand, though it appears to have been prompted at least in part by the publication in The Chicago Tribune on Dec. 5 of an article that tipped off Blagojevich that investigators were listening in on his conversations.
Fitzgerald has also said he was worried that if he did not intervene, Blagojevich might go ahead with some of his schemes - including appointing a successor to Obama.
Christopher Drew contributed reporting from Chicago.
Illinois body votes to impeach
The Illinois House of Representatives voted unanimously on Monday evening to begin efforts to impeach Rod Blagojevich, the Democratic governor arrested last week in a web of corruption, including, prosecutors say, efforts to make money off the Senate seat vacated by President-elect Barack Obama, Monica Davey and Susan Saulny reported from Springfield, Illinois.
Michael Madigan, the House speaker, appointed a committee to begin gathering evidence and testimony on Tuesday in an "abuse of power" case against Blagojevich. The lawmakers voted 113-0 to go forward with Madigan's plan.


Questions rise about Caroline Kennedy's experience
By David M. Halbfinger
Tuesday, December 16, 2008
NEW YORK: She has not held a full-time job in years, has not run for even the lowliest office and has promoted noncontroversial causes like patriotism, poetry and public service.
Yet Caroline Kennedy's decision to ask New York Governor David Paterson to appoint her to Hillary Rodham Clinton's Senate seat suggests that she believes she is as well prepared as anyone to serve as the next senator from New York - and is ready to throw her famously publicity-averse self into the challenge of winning back-to-back elections in 2010 and 2012.
Some columnists, bloggers and even potential colleagues in Congress have already begun asking if she would be taken seriously if not for her surname. Representative Gary Ackerman, a Democrat from Queens, told a radio host on Wednesday that he did not know what Kennedy's qualifications were, "except that she has name recognition - but so does J. Lo," the singer.
Aside from a 22-month, three-day-a-week stint as director of strategic partnerships for the New York City schools, her commitments generally involve nonprofit boards: the NAACP Legal Defense and Educational Fund, the American Ballet Theater, the Commission on Presidential Debates and the John F. Kennedy Library Foundation.
But friends and associates say that Kennedy, 51, is no dilettante, and that her career is replete with examples of the kind of hands-on policy work and behind-the-scenes maneuvering that could serve her well.
Last spring, she joined the search committee for a new director of the Harvard University Institute of Politics, where she and Senator Edward Kennedy, her uncle, are members of an advisory panel. The university wanted a big-name politician. But Kennedy argued for someone who would view the post as a career maker, not a career ender, others involved said.
Her choice was Bill Purcell, a two-term Nashville mayor. Her uncle, whose voice carried the greatest weight on the board, had fallen ill with brain cancer, and might have gone in a different direction, one insider said. But over six weeks, she patiently made her case and eventually won over members of the institute's board and Harvard officials.
"She's not shy about pushing people in a direction, and very good at doing it in a way that people don't even realize they're being pushed," said Heather Campion, a board member.
As one might expect, she is also the consummate insider: When Rupert Murdoch's young daughter was applying to the Brearley School, Kennedy, a board member who had attended the school and sent her two daughters there, wrote a letter of recommendation, according to a News Corp. spokesman.
Kennedy's work with the city's public schools has won much attention, but has not been widely understood. Hired in October 2002 to overhaul the schools' private fund-raising, she took on a haphazard operation and gave it a new mission: privately raising seed money to test new reforms, while trying to persuade New Yorkers to get involved in the schools in meaningful ways. Her $1 salary meant she did not have to fill out financial disclosure forms.
A rock concert in Central Park raised $2 million; a tag sale there drew tens of thousands of bargain hunters. Some of them, unwittingly, walked off with evening bags that had belonged to her mother, Jacqueline Kennedy Onassis, said Ann Moore, the chief executive of Time Inc., which sponsored the event. By the time she left in August 2004, she had raised more than $70 million for an academy to train reform-minded principals. Nearly 200 city school principals are graduates, the majority in high-poverty schools.
One of the more interesting hurdles Kennedy faces would be in telling her story to voters, and to interviewers. Like her mother, she has carefully guarded her privacy.
Yet Kennedy spent about six weeks barnstorming battleground states for Barack Obama and took to it with gusto: An aide recalled her strolling into a Republican headquarters near Ocala, Florida, and peppering voters with questions at every turn.
But in brief interviews during the Democratic National Convention, and on "Meet the Press" after she had helped Obama vet his potential running mates, Kennedy easily deflected the few serious questions she was asked.
She deadpanned to Tom Brokaw that his own name had come up in the vetting. And she dryly told Wolf Blitzer, "I just want to be with the best political team on television as much as I possibly can."
As a candidate or senator, she would presumably have a tougher time dodging questions.
Away from the cameras, Kennedy immersed herself in the vice-presidential search, joining Eric Holder, who became Obama's choice for attorney general.
"Eric was the quiet one, and she was the one that, really, when I said something, asked, 'Who? Why? How come?"' said Representative Joe Baca, chairman of the Congressional Hispanic Caucus, who met with them to analyze the contenders. "She did most of the talking."
Kennedy also took it upon herself to write a lengthy memo for Obama, a senior campaign adviser said. "I think she sized up the field in a way that was thoughtful and sophisticated and right," he said. "And I think it weighed heavily with him."
True to form, Kennedy declined to be interviewed for this article.
Kennedy has said that it was her children who got her to give Obama a look last year.
Elaine Jones, a retired head of the NAACP fund, speculated that Kennedy's children - her two daughters are in college and her son is in high school - were also the reasons she had not entered public life sooner.
"A fishbowl can adversely affect a child," Jones said. "Her mother found a way to keep her children real. Caroline, I think, wanted that for her children. So I think, without knowing it, subconsciously, she was trying to get her kids to this point."


Nervy investors spur rush at Swiss gold refiners
Wednesday, December 17, 2008
By Arnd Wiegmann and Lisa Jucca
Sealed off by grey concrete walls and barbed wire, the workmen in protective glasses and steel-toed boots at this smelter cannot work fast enough to meet demand from the nervous rich for gold.
This refinery near Lake Lugano in the Alps is running day and night as people worried about recession rush to switch their assets into something that may hold its value.
"I have been in the gold business for 30 years and I have never experienced anything like this," said Bernhard Schnellmann, director for precious metal services at the refiner Argor-Heraeus, one of the world's three largest.
"Production has dramatically increased since the middle of the year. We cannot cope with demand," said Schnellman, wearing a gold watch on his wrist.
Spot gold hit a record $1,030.80 an ounce on March 17. It fell below $700 in late October, partly because investors sold their holdings to cover losses in equity and bond markets hit by the credit crisis, and is now around $830 an ounce.
The trigger for the price to rise again could come from a much weaker dollar, making gold cheaper for holders of other currencies, and a renewed aversion to paper assets as governments and central banks pump large amounts of cash into the economy, stoking inflation.
Smoke billows as the molten gold, like glowing butter, is poured. To cool it, the worker drops it into water. It hisses as it hits. Once hardened in moulds, the gold bars are embossed with the refinery's seal. Workers wearing white gloves stack them into boxes like domino pieces.
Though Switzerland is not a gold miner, it is home to some of the world's largest refineries, which process an estimated 40 percent of all newly mined gold.
Argor-Heraeus is part-owned by the Austrian Mint and a subsidiary of Germany's Commerzbank. Commercial and central banks are its chief customers and it says it processes some 350-400 tonnes of gold and 350 tonnes of silver per year.
Customers buying gold bars, which can weigh more than 10 kg each, have to wait roughly a month, taking into account the year-end holiday season.
For those buying coins or ingots, which can fit into the palm of a hand, the delay is six to eight weeks. A year ago, these small products could be had within a couple of days.
Worries about the banking system globally have boosted worldwide demand for physical gold, the Gold Council said.
"Many (people) are afraid of leaving their money in banks," said Sandra Conway, managing director at ATS Bullion in London, which sells bullion and gold coins to institutions and the retail market.
"It's difficult to quantify, but I would say our turnover over the last three months has certainly doubled compared to the previous three months," she said.
Other Swiss gold refiners also say business is booming.
"Since the summer we have experienced a sharp rise in demand for certain gold products. The one-kilo bar has become very popular," said Fiorenzo Arbini, in charge of health and safety at Pamp, another large Swiss refiner.
"People used to buy certificates, now they want physical gold."
Schnellmann said the Argor-Heraeus smelter is operating at full capacity, three eight-hour shifts a day. Conquering the backlog by hiring is difficult, because each candidate has to undergo a security check.
Gold refiners were established in Switzerland to supply the watch industry and, later, jewellery-makers in Italy.
Switzerland's largest banks stepped in to replace a void in gold trading while the London gold market was shut after World War Two and again during a brief closure in 1968.
The former Soviet Union, another top gold producer, chose Zurich banks to handle most of its gold sales in the 1970s and 1980s.
"Gold has an image of being the asset of last resort. This could be viewed as old-fashioned but this is how enough people with enough money to matter think," said Stephen Briggs, a metals strategist at RBS Global Banking & Markets.
India, China and the Middle East remain the biggest gold importers, particularly for jewellery. But demand for physical gold has exploded also in Europe, the Gold Council said.
In Switzerland, home to the world's largest private banking industry, demand for gold bars and coins shot up six-fold to 21 tonnes in the third quarter of 2008, more than in any other European country.
Retail investment in gold rose 121 percent in the third quarter of 2008, an important contributor to the overall increase in global demand, the Gold Council said.
In that period purchases of gold bars by retail investors, who often buy through commercial banks, rose nearly 60 percent, notably in Switzerland, Germany, and the United States.
There was a surge of interest among professional investors shortly after the collapse of Lehman Brothers in September.
Private bank Julius Baer in October launched a fund to invest exclusively in gold bars stored in highly secured vaults in Switzerland.
"The fascination with gold has been there since the beginning of civilisation," said Schnellmann. "It cannot be explained: you can't eat gold, you cannot build anything resistant with it and yet people want to hoard it."
(Additional reporting by Pratima Desai in London; Editing by Catherine Bosley and Sara Ledwith


HSBC may need to raise billions, some analysts say
Fiat plant closures may be signal to Rome


The mysteries that linger over Lehman's bankruptcy
By Andrew Ross Sorkin
Wednesday, December 17, 2008
NEW YORK: It's a $138 billion mystery. In the early hours of Sept. 15, after the U.S. government refused to rescue a foundering Lehman Brothers, something odd happened. The Federal Reserve lent tens of billions of dollars to a subsidiary of the newly bankrupt bank.
In other words, government officials who had refused to risk taxpayers' money on Lehman before it collapsed did just that after it collapsed.
In the ensuing days, the Fed's initial $55 billion loan ballooned to $138 billion. That is more than the government spent propping up American International Group.
This mystery loan is just one piece of the larger Lehman puzzle. Who lost Lehman? Why, and how? Three months later, those questions still nag - and new ones keep coming.
A series of court documents that detail the Fed's loan have dribbled out in recent weeks, but they raise more questions than they answer.
Lehman might seem like ancient history by now, some ghost of a crisis past. Lehman - that was before AIG, before the Big Three automakers, before Madoff Securities. But no one, least of all government officials, has fully explained why Lehman, one of the grand old names of Wall Street, was allowed to fail while so many others were rescued.
Many people, at least on Wall Street, have come to view the decision to let Lehman die as one of the biggest blunders in this whole financial crisis. Christine Lagarde, the French finance minister, called the decision "a genuine error."
Judge James Peck, who approved the sale of Lehman's carcass to Barclays, the British bank, said it was a shame that Lehman had failed.
"Lehman Brothers became a victim," Peck said in bankruptcy court when he approved the sale. "In effect, the only true icon to fall in the tsunami that has befallen the credit markets. And it saddens me."
The authorities are investigating whether Lehman executives misled investors about the firm's financial condition before it failed. But the authorities might be asking similar questions about executives at other banks if, like Lehman, those institutions had been allowed to go under.
The recently disclosed documents detailing the Fed's loan to Lehman's subsidiary cast some light on a failed effort to prevent Lehman's implosion from cascading through the financial system.
The loan, according to these documents, was a "carefully thought-out decision" to stabilize the market by propping up Lehman's broker-dealer business, LBI New York, so it could stay afloat long enough to "facilitate an orderly wind-down" of tens of thousands of trades with the other Wall Street firms. The unit was kept out of the Lehman bankruptcy.
That might seem like a reasonable explanation. But Henry Paulson Jr., the Treasury secretary, and Ben Bernanke, the chairman of the Fed, have said they did not have legal authority to lend any money to Lehman. The firm, officials said, did not have enough collateral.
"We didn't have the powers," Paulson insisted. He also said Lehman's bad assets created "a huge hole" on its balance sheet, adding that he had actually tried to find a way for the government to provide money to help support a deal between Lehman and Barclays, but legally could not. His explanation has evolved over time, however. He said the day after Lehman went bankrupt: "I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers."
Whatever the case, the Fed's loan to the Lehman subsidiary makes all these explanations increasingly hard to square. Paulson said Lehman had lacked the collateral for the government to backstop a deal between Lehman and Barclays. But then the Fed turned around and lent a Lehman subsidiary billions, based on that same collateral.
People involved in the process said the Fed had lent the money only as part of the "orderly wind-down," which would have been different from lending money to an ongoing concern, or in this case, an insolvent one.
Fed officials are not talking much about the loan. Bernanke and Timothy Geithner, the president of the Federal Reserve Bank of New York and the nominee for Treasury secretary, have kept quiet on the topic. A spokesman for the New York Fed, which orchestrated the loan, declined to comment.
The Fed's loans were made through JPMorgan Chase, which, as a clearing bank, acted as a conduit for the money. JPMorgan, if you recall, was the bank that bought Bear Stearns, with the government's help, as that company was collapsing in March.
If there's a silver lining in this mysterious cloud, it is that Lehman paid the Fed back. Taxpayers did not lose a dime. As part of Barclay's deal to buy Lehman out of bankruptcy, Barclays agreed to take over the Fed's lending role and "step into the shoes of the Fed." (The Depository Trust and Clearing Corp. ended up staying open late to make the transfer.)
Still, Barclays and JPMorgan had a brief fight over the collateral posted for the loan, according to court documents. They eventually reached an agreement, but the values of the collateral and the specifics of the deal are confidential, making it difficult to determine exactly what happened.
Maybe the Fed's belated loan to Lehman helped avoid an even deeper crisis. As Barney Frank, chairman of the Financial Services Committee of the House of Representatives, said Sunday on the CBS News program "60 Minutes": "The problem in politics is this: You don't get any credit for disaster averted, going to the voters and saying: 'Boy, things really suck. But you know what? If it wasn't for me, they would suck worse."'
But until officials explain what happened, it will remain a mystery.



James Carroll: Windows and doors
Tuesday, December 16, 2008
'We're here and we're not going anywhere," said the protest leader last week, "until we get what's fair and what's ours." With that, 200 laid-off workers began the occupation of the Republic Windows & Doors factory on Chicago's North Side.
The company owners, perhaps in violation of federal labor laws, had abruptly closed the plant. They had no choice, they said, citing the credit crunch. The workers claimed they were owed severance and vacation pay, and they were not ending their sit-in until they got it.
It was a throw-back moment. How many times had aggrieved protesters taken action, mounting illegal occupations, despite threats to good order and risks of arrest? Very quickly, protests expanded to target the banks that had left Republic Windows & Doors high and dry. "You got bailed out," picketers chanted at Chicago offices of Bank of America, "we got sold out."
The anger of workers would grow through the week, especially when this local grievance was followed by the Senate failure to rescue auto companies, with unions scapegoated. Hundreds of billions to bail out bankers, nothing for workers? The larger context transformed the Republic Windows & Doors contest into a kind of parable - a window on something larger.
Another parable unfolded last week, across the Atlantic. Before becoming the foreign minister of France, Bernard Kouchner was the founder and head of Doctors Without Borders, one of the most admired human-rights organizations in the world. But Kouchner now shocked his old allies by abandoning the humanist dream of decency-joined-to- power when he declared,
"There is permanent contradiction between human rights and the foreign policy of a state, even in France." When an idealist accepts a role of political power, he inevitably joins the ranks of realism. "To lead a country," Kouchner explained, "obviously distances one from a certain Utopianism."
The words from France were like a warning to the ardent supporters of Barack Obama. Don't expect so much. Power compromises; power corrupts; power is not so powerful; etcetera. Yesterday's "change" is today's utopianism.
Meanwhile, however, Obama was displaying something else. Within a day of the occupation of the window factory in Chicago, the president-elect was asked about it at a news conference. One imagines the reporters' pencils poised to write down the predictable reply, something along the lines of, "Whatever the workers' grievance, no good purpose is served by unauthorized take-over ... violation of property rights ... law and order must be first ... etcetera." But that is not what Obama said. Instead, without hesitating, he declared, "The workers who are asking for the benefits and payments that they have earned - I think they're absolutely right. ..."
As if anticipating the failed rescue of automobile manufacturers, he added firmly, "... and understand that what's happening to them is reflective of what's happening across this economy."
Obama's unambiguous affirmation of the trespassers had an instant consequence. Now politicians and civic figures had cover, and a legion of them leapt to the defense of the laid-off workers.
In the past, American society has drawn a bright line between acceptable protests launched in the name of civil rights and unacceptable demands made in the name of economic rights, but Obama blurred that line with a simple statement: Workers have a right to what they have earned. That transparent truth trumped the usually controlling categories of legality, procedure and decorum.
Family members joined the workers in occupying the plant. Their determination was redoubled. After six days, the Bank of America and J.P. Morgan Chase restored the financing that the company needed to meet its obligations to the workers. A deal was made, and the occupation ended. The workers left the factory chanting, "Yes, we did."
And where does that leave utopianism? A few rescued workers are not the U.S. manufacturing base, which remains at risk. The constraints on Obama become clearer by the day, but so does what makes him different. His gut instinct is aligned with his supremely cool analysis. He is capable of choice and action. But among the various factors he is prepared to weigh in making policy, nothing ranks higher than simple fairness. That transparent truth defined the president-elect last week - a window and a door at once.


How we got into this mess
By Felix G. Rohatyn
Tuesday, December 16, 2008
New leadership is coming to the United States and it is none too soon.
When President Clinton sent me to France as his ambassador at the end of 1997, our economy was booming, the stock market was at an all-time high, our budgets were in surplus, the dollar was strong and our debt was shrinking.
Today, all that has been turned upside down. The United States, the richest nation in the world, has been nearly ruined. Our economy is not providing work for all Americans who need it; jobs continue to go abroad by the millions, and we are running huge deficits that grow exponentially day by day. The financial crisis in our markets has caused the credibility of our economic system to be challenged. Our currency has been devalued and we have taken on a staggering $10 trillion of debt.
What went wrong?
Barack Obama has already begun to improve our global standing and restore the admiration of America once held by millions of people around the world. But the economic problems he faces - at home and globally, for the two are inseparable - are daunting.
Looking back at how we got to where we are, I would say that two different phenomena transformed American economic behavior: the anti-tax, anti-government revolution of the '70s and '80s; and the culture of runaway greed.
The anti-tax revolution, conceived by conservative think tanks under the Reagan administration, and the steep tax reductions of the Kemp-Roth laws in the 1980s, created major deficits and provided rationale for a broad-based attack on domestic spending.
Active government became the enemy, deregulation became the economic religion and the market was left to deal with major problems and deficiencies in public services. Major weaknesses, such as our dependency on foreign oil and our loss of manufacturing competitiveness, went unattended.
Gradually, the stock market - and not real assets - became the bellwether of the U.S. economy. Paper wealth was the new standard and the concentration of wealth at the upper end of the income scale became astounding. As we entered the 1990s, the financial profile of America was dramatically changed.
These were the years of the stock market bubble, and they were followed by its collapse and the financial scandals that followed: Enron, WorldCom, Tyco and many others. They all had the same characteristics: Hundreds of thousands of employees lost jobs and savings, stockholders lost their capital, senior executives made fortunes and many of those charged with protecting the interests of investors and employees failed to do so.
Speculation, encouraged by the financial media, gradually replaced investment, with disastrous results. Coupled with the events of 9/11, a serious economic downturn brought into question the role of key components of our system, both legal and financial.
But while warnings were sounded, our economic policy continued to veer away from principles that had been followed by American presidents throughout the last half of the 20th century. Despite political pressures from the anti-tax campaigners and the political rhetoric of small government, all recent administrations - Democrat and Republican - had maintained a balance between the role of the government and that of the private sector. While the private sector remained dominant, a large role in economy policy-making was reserved for the government.
This concept was not supported by the Bush administration. Rather, the financial mores of the 1980s prevailed; greed overcame fairness and the creation of wealth became a fever that knew no limits.
It started with the compensation structure of corporate chief executives, it was driven by the stock market, and it persevered despite the disclosure of scandals and the economic hardship that millions had suffered when the market bubble burst.
In a book written some years ago, Kevin Phillips reported that in 1981 the average compensation of the top 10 American chief executives was about $4 million. By 2000 their pay was 50 times greater, averaging $200 million. Meanwhile, the average worker's pay increased by slightly more than the inflation rate; credit card debts piled up and people were sold mortgages they could not pay. Those trends could not be sustained.
For a year now, America has been in a recession that continues to deepen. In November, employers cut more than half a million workers, the largest monthly loss of jobs in 34 years. The government has had to rescue our largest banks, insurers and mortgage companies by providing unprecedented financing with necessary haste but apparently without strict controls or certainty as to outcomes.
As I write, the government is preparing to loan tens of billions of dollars to the auto industry - as it should do, but with careful oversight and regulation. It also seems likely that the Treasury secretary, Henry Paulson Jr., will use the remaining $350 billion of the financial industry bailout fund. Hopefully, a significant part of that money will be used to help struggling families stay in their homes.
The bright spot in this mess is that our leaders seem to be rethinking many of the economic and social assumptions that got us where we are - especially the notion that only a minor role is appropriate for the government in our economy.
There are other encouraging signs. Barack Obama's first act will probably be to sign a stimulus bill that includes major investment in public infrastructure. This is a long overdue investment that will create new jobs and make America more competitive. A stimulus package that finances "ready-to-go" projects is important, but in due course the new administration and Congress also should consider the possibility of setting up a special financing entity, such as a development bank, to deal with large infrastructure projects that are regional and national in scale.
Encouragingly, Obama also seems intent upon reducing our dependence on foreign energy and curtailing the economic and security risks that come with it. We must make government an active partner with business to shrink this dependence by penalizing excessive energy use and investing in energy-saving technologies.
Our dependence on foreign capital, as well as the huge budget deficits we are incurring, also must be reduced through greater fiscal discipline at home.
Finally, tax reform must provide a more equitable balance between the contribution of wealthy Americans and those of more limited means.
I am a capitalist and I believe that market capitalism is the best economic system ever invented. But it must be fair, it must be regulated and it must be ethical. Hopefully, we are ending an era when finance capitalism and modern technology were abused in the service of naked greed. I believe that only capitalists can kill capitalism and, sadly, in recent times they have come awfully close to doing so.
We're not out of the woods by any means. But with a leadership that knows we cannot stand more of the abuses of recent years or of the financial and social polarization that was their hallmark, our country will right itself.
Calvin Coolidge once said, "The business of this country is business." Today, that is truer than ever. It imposes on business and on our political leadership the responsibility of remembering that the basis of our democracy is fairness.
Felix G. Rohatyn, an investment banker and former ambassador to France, played a key role in preventing the bankruptcy of New York City in the 1970s.



The bear's market
By Viktor Erofeyev
Tuesday, December 16, 2008
My wife and I will soon stop visiting our Moscow friends. It's too frightening. We can't even eat. They all talk about the financial crisis. A real epidemic of verbal panic has broken out.
Who spent us into this crisis? That's the secret question among Russia's rulers. They don't believe in chance, or predictability, or conscience. They do believe in plots. Against Russia. The Orange Revolution was a plot, and the Rose Revolution. And behind them stands America.
And for our Holy Russia, the financial crisis is a mortal threat, similar to AIDS. Why? Because it is developing against the backdrop of another crisis - a crisis of confidence in the state.
The state in recent years has become, as in Soviet times, impenetrable. The actions of the powers on high are unpredictable; they change or violate the rules of the game, and the only logic that can be surmised is that they do things to strengthen the state - or at least they think they do.
This creates suspicion. The Kremlin says there is no financial crisis in Russia, and the population is supposed to accept this. The Kremlin partly believes itself because historical reality in Russia is usually constructed through words, not actions. To bolster its words, the Kremlin needs a foreign source for the crisis: Americans are to blame!
If words fail to cause the crisis to disappear, then it must be blown up to universal proportions to scare the population so the country can be turned into a military camp - again, for the good of the state. In this way, the issue is not the crisis but how to use it for the good of the state.
The target of these efforts - Russians - comes in three categories:
First are those who understand what the financial crisis is all about. These are the entrepreneurs, bankers, businessmen and oligarchs. They don't trust the state; they know the state will sacrifice them the moment it needs to. Private business will do everything to defend its interests, making deals with the state only for tactical reasons. Its primary response is to send its capital abroad. For that matter, the state itself, in the face of its hugely wealthy elite, is doing the same thing.
Therein lies the weakness of the "vertical of power" that our liberals are always going on about: When petrodollars are plentiful and the stabilization fund is a treasure chest, the state talks from a position of strength. When finances are sick, the state loses its voice.
The state, of course, explains our financial AIDS by yet another national affliction: corruption. But while officials express holy horror as the money they throw at the crisis disappears into a black hole, the fact is that the state itself is the father of corruption, because corruption is the sum total of its political and economic mistakes.
The population is also ambivalent about corruption. On the one hand, it sucks up the people's money; on the other, it's the only way to get anything done, a sort of black market of services. In a financial crisis, as in war, the role of corruption loses all limits.
The other two categories are larger than the business community. The second is the people who live in fear for their standard of living. Recently, preparing for a trip abroad, I stopped at a state bank to exchange rubles for euros. Some people overheard what I was doing and rushed over to ask me, Why are you changing money? Should we do the same?
This category includes the middle class and salaried workers - people scorned in Soviet times as petit bourgeois. They also distrust the state. They may not have regarded the state as their enemy up to now, but they do not trust in its competence or in its motives. They know there's a crisis - indeed, it's hard not to. Factories are closing or reducing their workforce. Ads are vanishing from television and magazines. The ruble, popularly known as "wood," is falling every day. And all the while global oil prices - on which Putin's myth of prosperity and stability was based - are falling.
The average Russian has a genetically negative memory. He knows that if you don't steal, you won't earn, and that if you earn, it will be taken away. He knows that one war ended yesterday and a new one starts tomorrow. He is neither liberal nor conservative; he has a philosophy all his own, a philosophy of the apocalypse. When he smells smoke, he jettisons all patriotic responsibilities. These are the breeding ground for future revolution - which, of course, will not spare these people, but will rob them once again.
The panic of this category is no less threatening to the state than the discontent of the business elites.
The state, however, does have a vast and irresponsible ally. This is the third category, the people who simply don't care. They have nothing to lose because they own close to nothing. They're not aware of the crisis because they live in a perpetual crisis, which they treat with vodka and indifference.
This is the ancient category known to this day as the "narod" - "the people." The narod believes in plots no less than its rulers do, and state television can convince it of just about anything. In essence, the narod is Holy Russia, unshakable in its eternal righteousness and holy patience, and also in its animosity to outsiders (including Europeans) and the rich.
The narod can be convinced that the crisis afflicts only the rich, and this is enough to fill them with malicious satisfaction. Obviously, the narod must be under the constant care of the state and the church, lest it degrade into a wild herd susceptible to the ideas of communism, fascism or anarchism.
But the narod, however venerable, is losing its standing. People who have emerged from the narod are no strangers to modernization and have grown in strength.
So the state cannot escape the fact of mutual distrust: It does not believe its people, and people don't believe the state. This is not easily changed in time of crisis; in the long run, it can lead to regime change or ruin.
More likely, since the state controls the political field in Russia and the opposition is in disarray, such a lethal outcome will be postponed, and the financial AIDS will lead only to a further impoverishment of the population and a harsher control by the state.
Viktor Erofeyev is a Russian writer and television host. Translated from the Russian by the IHT.


Greek PM vows to fight corruption after 11-day protest
Tuesday, December 16, 2008
By Dina Kyriakidou and Daniel Flynn
Greek Prime Minister Costas Karamanlis pledged on Tuesday to tackle corruption after 11 days of violence triggered by the police killing of a teenager and fuelled by public anger at scandals and a slowing economy.
About 100 youths attacked a police station in Athens, setting fire to a bus and four cars belonging to officers. Students briefly occupied state TV, interrupting the news, and violence flared in the northern city of Thessaloniki.
Also, for a second day farmers protesting at low prices cut off the main highway to northern Greece for several hours.
Karamanlis said helping Greeks -- a fifth of whom live in poverty -- was a priority but his options were restricted by the country's onerous debt, made worse by the riots that quickly spread across Greece and to some other European countries.
Greece's worst violence in decades was sparked by the December 6 shooting of a 15-year-old but fed off anger at high youth unemployment and unpopular economic measures as the global crisis buffets its 240-billion-euro (214.3 billion pound) economy.
"Long unresolved problems disappoint young people: the lack of meritocracy, corruption in everyday life, a sense of social injustice," Karamanlis told his parliamentary team. "The fight against them is hard and constant and we are committed to it."
Karamanlis, under fire for his hands-off reaction to the riots, said he underestimated the public backlash and the scale of a monastery land scandal besetting his government for months.
A parliamentary enquiry failed on Monday to seek any prosecutions for the deal, where a Mount Athos monastery got valuable state property in exchange for cheap rural land, costing the state millions of euros.
With more protests planned as the budget goes to parliament this week, Karamanlis said income-tax cuts will go ahead. But he warned against high expectations, saying Greece will spend 12 billion euros, about 5 percent of GDP, just to service its debt.
"Our top priority is to support those hurt the most ... (but) this debt is a huge burden that reduces the government's flexibility at a critical time," he said.
The opposition socialists, however, said Karamanlis and his party did not understand the severity of the economic situation.
"It is obvious they don't understand they've lost the trust of the people and, in these cases, the solution is always given by the people," said PASOK spokesman George Papaconstantinou.
Political analysts said the riots raised the prospect of snap elections and Karamanlis was likely to sacrifice some ministers to inject new blood into his conservative government.
"Today the prime minister accepted partial political responsibility," said Theodoros Livanios, director of research at pollster Opinion. "Karamanlis will soon announce a reshuffle of his government and will wait to see the success of this."
The spread between Greek debt and German benchmark bonds -- a measure of perceived risk -- reached its widest point in nearly a decade, at more than 2 percent. Analysts said the riots had compounded concerns over to the global economic downturn.
Shops and cars were smashed and looted in Athens and other cities for days. The National Confederation of Commerce estimates 565 shops were damaged in Athens alone, costing 200 million euros and ruining the Christmas shopping period.
About 20 student protesters occupied state television on Tuesday, interrupting the broadcast of the afternoon news for around 20 seconds and holding a banner reading: "Against State Violence." A state TV executive apologised to viewers and said the students threatened employees unless they were put on air.
Scores of schools and university buildings remain occupied by students in protest at the killing. The policeman who shot Alexandros Grigoropoulos was charged with murder and jailed pending trial, while his partner was charged as an accomplice.
Karamanlis' New Democracy party swept to power in 2004, vowing to clean up politics, but was soon hit by scandals. Weekend polls showed strong disapproval of the its handling of the riots, strengthening PASOK's ratings lead.
(Additional reporting by George Georgiopoulos and Tatiana Fragou, Writing by Daniel Flynn, Editing by Michael Roddy)


Naval patrols fail to deter pirates
By Jeffrey Gettleman
Tuesday, December 16, 2008
ON THE ARABIAN SEA: Rear Admiral Giovanni Gumiero is going on a pirate hunt.
From the deck of an Italian destroyer cruising the pirate-infested waters off Somalia's coast, he has all the modern tools at his fingertips - radar, sonar, infrared cameras, helicopters, a cannon that can sink a ship 10 miles, or 16 kilometers, away - to take on a centuries-old problem that harks back to the days of schooners and eye patches.
"Our presence will deter them," the admiral said confidently.
But the wily buccaneers of Somalia's seas do not seem especially deterred - instead, they seem to be getting only wilier. More than a dozen warships, from Italy, Greece, Turkey, India, Denmark, Saudi Arabia, France, Russia, Britain, Malaysia and the United States, have joined the hunt.
And yet, in just the past two months, the pirates have attacked more than 30 vessels, eluding the naval patrols, going farther out to sea and seeking bigger, more lucrative game, including an American cruise ship and a 1,000-foot, or 305-meter, Saudi oil tanker.
The pirates are recalibrating their tactics, attacking ships in beelike swarms of 20 to 30 skiffs, and threatening to choke off one of the busiest shipping arteries in the world, at the mouth of the Red Sea.
UN officials recently estimated that Somali pirates had netted as much as $120 million this year in ransom payments - an astronomical sum for a country whose economy has been gutted by 17 years of chaos and war. Some shipping companies are now rerouting their vessels to avoid Somalia's waters, detouring thousands of miles around the Cape of Good Hope, at the southern tip of Africa.
The pirates are totally outgunned. They continue to cruise around in fiberglass skiffs with assault rifles and at best a few rocket-propelled grenades. One Italian officer said that going after them in a 485-foot-long destroyer, bristling with surface-to-air missiles and torpedoes, was like "going after someone on a bicycle with a truck."
But the pirates - true to form - remain unfazed.
"They can't stop us," said Jama Ali, one of the pirates aboard a Ukrainian freighter packed with weapons that was hijacked in September and is still being held.
He explained how he and his men hid out on a rock near the narrow mouth of the Red Sea and waited for the big gray warships to pass before pouncing on slow-moving tankers. Even if foreign navies nabbed some members of his crew, Jama said, he was not worried. He said his men would probably get no more punishment than a free ride back to the beach, which has happened several times.
"We know international law," Jama said.
Western diplomats have said that maritime law can be as murky as the seas. Several times this year, the Danish Navy captured men they suspected to be pirates, only to dump them on shore after the Danish government decided it did not have jurisdiction.
The American warships surrounding the hijacked Ukrainian freighter have intercepted several small skiffs going to the freighter, but let the men aboard go because U.S. officials said they did not want to put the freighter's crew in danger.
This seeming impunity is especially infuriating to the new cadre of private security guards, fresh from the battlefields of Iraq and Afghanistan, hired to tag along on merchant voyages as an added layer of protection. Burly men with tattooed forearms and shaved heads sipping Heineken and checking their watches are now common sights on the beaches of Oman, Kenya and Djibouti. They have their own ideas for dealing with seafaring outlaws.
"We should make 'em walk the plank," one British security guard said.
Despite tough talk, the guards are unarmed (because most countries do not allow them to bring weapons into port), so they are often forced to confront machine-gun-toting pirates with fire hoses.
Or worse. There was even a recent case, according to several security contractors, in which Filipino crew members pelted pirates with tomatoes in an attempt to stop them from scaling the hull of their ship. It did not work.
The Italian naval officers say the piracy patrols are helping: Already the Italians have rescued several merchant vessels surrounded by pirate skiffs. The Italian destroyer is part of a NATO mission that began in October.
"But the answer is to have a good, strong government on land," Gumiero said. "That's the only way to end this, for sure."
Yet strong government is nowhere to be found. The piracy epidemic is not so much a separate problem as a symptom of the failed state of Somalia - a place crawling with guns, gangs and criminals that has not had a functioning central government since 1991.
Many Somalia analysts think that it is about to get even worse. The Ethiopian military, which has been shoring up a weak and unpopular transitional Somali government, says it will pull out within a month.
The transitional government, split by poisonous infighting, seems on the brink of collapse. Islamic militants with links to Al Qaeda are poised to take over. Famine is steadily creeping toward millions of people, many withering away in plastic huts that are no match for the intense sun or the drenching rains.
UN officials are swinging into crisis mode, calling high-level meetings in East Africa and New York to address piracy and the greater Somali mess. Some UN officials are pushing to send in peacekeepers, but no countries are rushing to offer troops.
Some U.S. officials have proposed chasing the pirates on the shore and raiding their dens, which are well known but so far untouched. Somalia's transitional leaders, eager for any help, said they would welcome that.
"This is a cancer, and it's growing," said Abdi Awaleh Jama, an ambassador at large for the transitional federal government. "We have to extract it once and for all."
More than 100 ships have been attacked off Somalia's coast in 2008, far more than in any previous year on record. The economic costs are piling up, with higher insurance payments for shippers, higher fuel costs because of detours and new private security bills, not to mention the million-dollar ransom payments.
The cash-starved Egyptian government is poised to lose billions of dollars if ships from the Middle East and Asia stop using the Suez Canal, one of Egypt's biggest foreign-exchange earners, and go around Africa instead.
But the end of piracy could be an economic catastrophe for many Somalis. Their country exports almost nothing these days, and more legitimate forms of business have largely died off.
Entire clans and coastal villages now survive off piracy, with women baking bread for pirates, men and boys guarding hostages, and others serving as scouts, gunmen, mechanics, accountants and skiff builders. Traders make a nice cut off the water, fuel and cigarettes needed to sustain such oceangoing voyages.
Maritime experts say that the naval efforts will take time.
"Let's wait and see," said Pottengal Mukundan, director of the International Maritime Bureau in London. "You must appreciate it's a very large stretch of water, a massive area," he said, referring to the several hundred thousand square miles of sea where the naval ships are patrolling.
Then there is the nettlesome question of what to do with the pirates. Italian officers on pirate patrol seemed uncomfortable at the thought of actually capturing a real live pirate. There is not even a brig or place to hold the pirates on the destroyer.
"Our main goal is providing safe passage," said Fabrizio Simoncini, the destroyer's captain.
So far, they have done a decent job at that, escorting at least eight humanitarian ships with 30,000 tons of badly needed aid for Somalia.
The Indian Navy recently announced that it had arrested 23 pirates, though it is not clear where the suspects would be prosecuted. At an anti-piracy conference in Nairobi last week, British officials outlined a plan for their navy to capture Somali pirates and hand them over to Kenyan courts.
But according to Kenneth Randall, dean of the University of Alabama School of Law and an international law scholar, "Any country can arrest these guys and prosecute them at home, under domestic laws that apply."
"I'm actually surprised people think it's unclear," he said. "The law on piracy is 100 percent clear."
He said that international customary law going back hundreds of years had defined pirates as criminals who robbed and stole on the high seas. Because the crimes were committed in international waters, he said, all countries had not only the authority but also the obligation to apprehend and prosecute them.
Mohammed Ibrahim contributed reporting from Mogadishu, Somalia.


U.N. council allows Somali anti-piracy fight on land
Tuesday, December 16, 2008
By Patrick Worsnip
The U.N. Security Council on Tuesday authorized countries fighting piracy off the Somali coast to take action also on Somalia's territory and in its airspace, subject to consent by the country's government.
The United States said for the first time that the United Nations should deploy a peacekeeping force to war-torn Somalia and that Washington would push for a Security Council resolution by the end of the year to authorise one.
A surge in piracy in one of the world's busiest shipping lanes has pushed up insurance costs, brought pirates in the Horn of Africa country tens of millions of dollars in ransom and prompted foreign navies to rush to the area to protect merchant shipping.
But analysts say the international action has done little to deter the pirates, partly because the forces chasing them have not had the authority to take the battle onto land, where the pirates are based.
Tuesday's U.S.-drafted resolution, passed unanimously by the 15-nation council, extends that authority to countries that Somalia's interim government has told U.N. Secretary-General Ban Ki-moon are cooperating with it to combat piracy.
States "may undertake all necessary measures in Somalia, including in its airspace, for the purpose of interdicting those who are using Somali territory to plan, facilitate or undertake acts of piracy and armed robbery at sea," it says.
The Security Council session was attended by U.S. Secretary of State Condoleezza Rice, Russian Foreign Minister Sergei Lavrov and Foreign Secretary David Miliband, who were at the world body for talks on a range of world issues.
Although the role of the Somali government was repeatedly stressed in the resolution, that government is weak and divided. The country has been in virtual anarchy since the collapse of a dictatorship 17 years ago. Islamists control most of the south and feuding clan militias hold sway elsewhere.
It was also not clear what kind of forces would engage in land or air operations against the pirates or whether the U.S. military would participate.
The resolution called on states to "take part actively" in the fight against piracy off Somalia.
It urged them to make agreements with countries willing to take custody of captured pirates to take law enforcement officials from those countries onboard their naval vessels to aid the investigation and prosecution of those detained.
On the day the resolution was passed, pirates hijacked an Indonesian tugboat used by French oil company Total off Yemen and a Turkish cargo ship was also reported captured. Around a dozen ships and nearly 300 hostages are being held in Somalia.
Rice told the council Washington would set up a contact group to promote anti-piracy efforts, including through sharing intelligence.
But, like other speakers, she said the piracy crisis was inseparable from the turmoil in Somalia. The United States "does believe that the time has come for the United Nations to consider and authorise a peacekeeping operation," she said.
"We believe that by the end of the year we should try and have such a Security Council resolution," Rice told reporters later. African countries favour such a force and South African envoy Dumisani Kumalo said, "It's what we've always wanted."
But U.N. officials fear a blue-helmet force would fail unless the situation in Somalia calms down.
Ban has proposed a multinational force with a wide mandate to pacify Somalia ahead of a U.N. peacekeeping force, but acknowledged that of 50 countries and three international organizations he had approached none had offered to lead one.
He told the council on Tuesday plans announced by Ethiopia to withdraw by the year's end its forces supporting the Somali government "could easily lead to chaos."
He suggested bolstering a so-far ineffectual African Union force in Somalia, helping the Somalis themselves to restore security and looking at setting up an international maritime task force to launch operations into Somalia.
(Editing by Mohammad Zargham)


Man who threw shoes at Bush appears before judge in Baghdad
Tuesday, December 16, 2008
BAGHDAD: The Iraqi television reporter who threw his shoes at President George W. Bush at a news conference appeared before a judge Tuesday and admitted "aggression against a president," a judicial spokesman said.
The television reporter, Muntader al-Zaidi, became an instant sensation when he called Bush a "dog" at a news conference with Prime Minister Nuri Kamal al-Maliki on Sunday and tried to hit him with both of his shoes.
"Zaidi was brought today before the investigating judge in the presence of a defense lawyer and a prosecutor," said Abdul Satar Birqadr, a spokesman for Iraq's High Judicial Council. "He admits the action he carried out."
The court decided to keep Zaidi in custody. After the judge has completed his investigation the court may send him for trial under a clause in the Iraqi penal code that makes it an offense to attempt to murder Iraqi or foreign presidents. The sentence for such a crime could be up to 15 years in prison, Birqadr said.
Dheyaa Saadi, head of the Union of Lawyers in Iraq and one of its most high-profile attorneys, said that he had volunteered to defend Zaidi.
"I will introduce myself as his lawyer and demand the case be closed and Muntader be released because he did not commit a crime," said Saadi.
At a news conference with Bush and Maliki on Sunday evening in Baghdad's Green Zone, Zaidi, a reporter for Al Baghdadia, a satellite television network, rose from his seat and threw one of his shoes at Bush's head. He shouted: "This is a gift from the Iraqis. This is the farewell kiss, you dog!"
Bush ducked and the shoe missed him. Zaidi then threw his other shoe, shouting, "This is from the widows, the orphans and those who were killed in Iraq!" The shoe hit the wall behind Bush.
According to The Associated Press, Al Baghdadia reported that Zaidi had been "seriously injured" during his detention and called on the government to allow lawyers and the Iraqi Red Crescent to visit him. Later, however, one of his brothers said that he had spoken by telephone with Zaidi, who told him, "Thank God, I am in good health," The AP reported


U.S. plot suspects had no intent to kill say lawyers
Wednesday, December 17, 2008
By Jon Hurdle
Five Muslim men accused of planning an attack on a U.S. army base had no intention of following through even though they shared Muslim anger towards America after September 11, defence attorneys said on Tuesday.
The men, all born outside the United States, plotted but did not execute an attack on Fort Dix in New Jersey and discussed attacks on other installations including Dover Air Force Base in Delaware and the U.S. Coast Guard in Philadelphia, prosecutors say.
They were arrested in May 2007 and face life in prison if convicted.
In closing arguments after a seven-week trial in federal court, attorneys said two FBI informants who infiltrated the group tried to manipulate the defendants into planning the attack and buying guns.
One of the FBI's cooperating witnesses, Besnick Bakalli, told defendant Dritan Duka, that he wanted to "kill someone" but Duka rejected the provocation, Duka's attorney Michael Huff told jurors.
"We are good the way we are. We are not going to kill anything," Duka said in a conversation recorded by Bakalli.
But Assistant U.S. Attorney William Fitzpatrick, in his closing rebuttal, held up an M-16 and an AK-47 that the men are accused of buying and said: "They cannot credibly argue that these weapons are anything other than weapons of war."
The defendants are Mohamad Shnewer, a Jordanian-born taxi driver from Philadelphia, ethnic Albanian Duka and his brothers Shain Duka and Eljvir Duka, who ran a roofing business in Cherry Hill, New Jersey, and Serdar Tatar, a convenience store clerk born in Turkey.
With the exception of Dritan Duka, 30, the defendants are in their 20s.
Huff said his client had no knowledge of the discussions about jihad between defendant Shnewer and Mahmoud Omar, the other cooperating FBI witness.
Dritan Duka was mostly concerned about being victimized because he was a Muslim in post-September 11 America, Huff said. That fear was fanned by Omar who told him "this country, look, they catch you for anything," the court heard.
Troy Archie, an attorney for Eljvir Duka, argued that the defendants were caught up in Muslim anger towards America in the wake of September 11, but had no plans to kill American soldiers.
"Were they angry? Yes. Were they blowing off steam? Yes. Did they have an intent to kill? Absolutely not," Archie said.
The jury will be sequestered when it begins deliberations on Wednesday morning.
(Editing by Michelle Nichols and Xavier Briand)


Three Guantánamo detainees sent to Bosnia
The Associated Press
Tuesday, December 16, 2008
An attorney for three Guantánamo detainees said Tuesday that they have been sent to Bosnia and were expected to be released to their families.
The attorney, Stephen Oleskey, said it was "a very happy ending," and "we are absolutely thrilled."
An unscheduled flight has delivered the men to police in Bosnia, where they were rushed into armored cars and taken to police headquarters. Oleskey says the transfer to police was a formality.
The transfers were the first releases from the prison made by the Bush administration because of a court order. There have been years of legal challenges over the detention camp at the U.S. naval base at Guantánamo Bay, Cuba, which accepted its first detainees seven years ago next month.
The Algerian-born men had obtained citizenship from Bosnia and Herzegovina by the time they were detained in 2001. At the time, the U.S. government said it had evidence that they and three other Bosnians also originally from Algeria had been planning a bomb attack on the U.S. Embassy in Sarajevo.
The transfer was a signal that the administration was acknowledging its defeat in the first habeas corpus case to reach a full factual hearing since the Supreme Court ruled in June that detainees at Guantánamo had a constitutional right to contest their detentions in federal court.
After hearing a week of secret evidence in the case of the six Bosnians, a federal district judge in Washington, Richard J. Leon, ruled last month that the evidence presented by the government had not been sufficient to prove that five of the men were enemy combatants.
Leon urged the administration to free the men, and not to appeal the ruling, saying that seven years was long enough for them to get a court decision. The ruling drew international attention, in part because it was the first full court test of the government's detention evidence and because Leon, considered a conservative, was an appointee of President George W. Bush.
"It's tragic that it took seven years and the ruination of their lives to accomplish this," Oleskey said this week.
But he said it appeared the administration was continuing to resist a full acknowledgment of its legal defeat by continuing to hold two of the men ordered released.
The three men released were Mohamed Nechle, Mustafa Ait Idir and Hadj Boudella, a defense official said earlier this week.
The detainee for whom the Supreme Court ruling was named, one of the six Algerians who had been living in Bosnia, Lakhdar Boumediene, was not to be among the three released, evidently because he had been stripped of his Bosnian citizenship at the time of his detention because of questions about how he obtained it.
The Supreme Court ruling opened the door for more than 200 habeas corpus claims by other detainees, which are pending in federal court in Washington.
The case against the six men offered the latest example of the administration's pattern of changing strategy in its legal defense of the detention camp. On the eve of the hearing before Leon, the Justice Department said it was abandoning its claims about the embassy bombing plot. Instead, it claimed in court that the men had been planning to go to Afghanistan to fight Americans.
The Justice Department has not said whether it plans to appeal Leon's ruling. The transfer, which was expected to be completed Monday night, was the first indication that the government had concluded it could no longer fight to keep the men detained.


Security flaw found in Microsoft browser
The Associated Press
Tuesday, December 16, 2008
SAN FRANCISCO: Users of all versions of Microsoft's Internet Explorer browser might be vulnerable to having their computers hijacked because of a serious security hole in the software that had yet to be fixed Tuesday.
The flaw lets hackers commandeer victims' machines merely by tricking them into visiting Web sites tainted with malicious programming code. As many as 10,000 sites have been compromised since last week to exploit the browser flaw, according to Trend Micro, a maker of antivirus software.
The sites are mostly Chinese and have been serving up programs that steal passwords for computer games, which can be sold on the black market.
But the hole could be "adopted by more financially motivated criminals for more serious mayhem - that's a big fear right now," Paul Ferguson, a security researcher for Trend Micro, said.
Internet Explorer is the default browser for most of the world's computers. Microsoft said that it was investigating the flaw and that it might issue an emergency software patch outside of its normal monthly updates, but declined to comment further.



A policy for preventing genocide
Tuesday, December 16, 2008
Darfur, Congo, Rwanda and, before that, Bosnia. It is hard to contemplate man's capacity for inhumanity without feeling despair. The world usually pays attention only after the killing has spun out of control, when ethnic, religious and political divides are rubbed so raw that the furies are infinitely harder to calm. By that point, the United States and others are faced with the agonizing choice of either intervening militarily or allowing the killing to go on.
A report by a task force headed by former Secretary of State Madeleine Albright and former Defense Secretary William Cohen offers some hope, arguing that it is possible to prevent genocide before it spins out of control. It offers practical policy suggestions - what Albright calls a "mechanism for looking at genocide in a systematic way" - for the next administration.
The report says that early warning and prevention are key and calls on the White House to create a senior-level interagency committee directed by the National Security Council to analyze threats of genocide and mass atrocities around the world and consider appropriate preventive action.
When initial signs of mass atrocities are detected, the task force would also require the intelligence community to do a full policy review and prepare a crisis response plan. The goal is to engage leaders, institutions and civil society in affected communities urgently, and at an early stage when talk and other help may defuse the situation.
The task force urges the U.S. to spend an additional $250 million annually on crisis prevention and response efforts, with a portion going to help international partners, including the UN and regional organizations, build their capacity.
It is hard to generate political will to fix a problem before it has crested. But if there is any doubt about the need for a new policy and structure, consider the Bush administration's desperate failure in Darfur.
Four years after President Bush declared the mass killings there genocide, the horrors continue. As many as 300,000 people have been killed and 2.7 million driven from their homes. With the region increasingly engulfed in interrebel warfare, a political settlement appears to be further out of reach.
We hope President-elect Barack Obama and top aides will consider the report's recommendations before they, too, find themselves grappling with such agonizing choices.


Rwanda denies U.N. panel charge it aids Congo rebels
Tuesday, December 16, 2008
By Louis Charbonneau
The Rwandan government has rejected a report by a U.N. panel of experts that accuses Kigali of supporting Tutsi rebels in eastern Democratic Republic of Congo, describing it as inaccurate and biased.
The government's rebuttal was contained in a seven-page document, obtained by Reuters on Tuesday, that attacked the main points in a report from the U.N. Group of Experts, which recommended expanding a list of individuals and firms facing U.N. sanctions for supporting rebels in Congo.
The report, which the U.N. Security Council is scheduled to discuss later this week, accuses Rwanda of supporting rebels loyal to renegade Congolese Tutsi Gen. Laurent Nkunda and the Congolese army of backing Rwandan Hutu rebels, some of whom are accused of participating in Rwanda's 1994 genocide.
"This report is a calculated move to shift blame away from the government of DRC (Congo) and the international community -- both of whom have failed to resolve the conflict in the eastern DRC despite numerous bilateral, regional and international initiatives in the last 14 years," Rwanda said.
The experts' report "contains dangerous inaccuracies and ill-intended information regarding the alleged support of the government of Rwanda to the CNDP," it said, referring to the rebel group led by Nkunda.
It also accused the experts of "downplaying the despicable genocidal ideology" of the Rwandan Hutu rebels in Congo.
The Rwandan rebuttal rejected the notion that the government has supported Nkunda and his rebels. Kigali had implemented "stringent measures to prohibit any form of support to CNDP from the Rwandan territory," it said, adding that some 67 of Nkunda's recruits are presently detained in Rwanda.
It also rejected the suggestion that Rwanda had been helping Nkunda's rebels recruit child soldiers and that Rwandan soldiers had been active in Nkunda's ranks. It said Kigali "was not aware" of any Rwandan bank accounts CNDP rebels might own.
Accusations that the Rwandan army had provided military uniforms, military hardware and support to Nkunda's rebels were unfounded, the statement said. It acknowledged, however, that Kigali had informed the panel it had arrested someone attempting to ship Rwandan uniforms to the rebels.
The Rwandan statement did not touch on one of the most damning charges in the U.N. report -- that among those accused of providing support to rebels loyal to Nkunda is Tribert Rujugiro, an adviser to Rwandan President Paul Kagame.
More than 250,000 civilians have fled fighting in eastern Congo between Nkunda's insurgents, Congo's army, local militia and Rwandan Hutu rebels since clashes broke out in August.
(Editing by Eric Walsh)


India-Pakistan talks seen stalled after attacks
Tuesday, December 16, 2008
By Sheikh Mushtaq
Tentative peace talks between India and Pakistan have stalled after the Mumbai attacks, India said Tuesday, and can only resume if Islamabad takes more decisive action against militant groups on its soil.
The talks, known as the composite dialogue, began in 2004 after the nuclear-armed neighbours almost came to the brink of war two years earlier over an attack on the Indian parliament blamed on Pakistan-based militant groups.
Those talks were thrown into jeopardy last month by the Mumbai attacks, which killed at least 179 people and which India has blamed on Islamist militant group Lashkar-e-Taiba.
"There is a pause in the composite dialogue process because of the attack on Mumbai," Indian Foreign Minister Pranab Mukherjee told reporters in the disputed region of Kashmir.
The peace process has brought better diplomatic, trade and sporting ties but little progress has been made on major disputes such as the divided Jammu and Kashmir region.
A Foreign Ministry spokesman in Islamabad said Pakistan was committed to the peace process while resigned to a pause in it.
"It's in the larger interests of the whole region," said the spokesman, Mohammad Sadiq. "If Mr Mukherjee says there's a pause, then there's a pause."
India, the United States and Britain have blamed Lashkar-e-Taiba and other affiliated groups for the Mumbai attacks, saying Pakistan must do more to stamp out militants.
Lashkar was set up to fight Indian rule in Kashmir and has been linked by U.S. officials and analysts to Pakistan's powerful Inter-Services Intelligence military spy agency, who they say use it as a tool to destabilise India.
Pakistan in turn has promised to cooperate in investigations and has denied any official links to the Mumbai attacks, but has also said anyone caught in Pakistan will be tried in Pakistan.
India and Pakistan have fought three wars since independence from Britain in 1947. Fearing another conflict, Western leaders have urged India to show restraint and Pakistan to act decisively against militants.
Indian Prime Minister Manmohan Singh has been under domestic pressure to respond robustly to the Mumbai attacks.
"We are not planning any military action," Defence Minister A.K. Anthony told reporters in New Delhi.
"But at the same time, unless Pakistan takes actions against those terrorists who are operating from their soil against India and also against all those who are behind the Mumbai terrorist attack, things will not be normal," he said.
Washington has intensified diplomatic pressure to keep India-Pakistan relations from worsening and to keep Pakistan committed to the U.S.-led war on terrorism.
Pakistan has arrested scores of activists from an Islamic charity India says is a front for Lashkar-e-Taiba, and says it will abide by a U.N. decision to put the group's founder Hafiz Saeed on a sanctions list of people and organizations linked to al Qaeda.
But a similar Pakistani crackdown on Lashkar and Jaish-e-Mohammad after the 2001 attack on the Indian parliament was widely regarded as a sham.
Mukherjee said it would be difficult to resume the peace process with Pakistan unless Islamabad demonstrated a firm resolve to stamp out such groups.
"Words must be followed by actions," he said.
(Additional reporting by Robert Birsel in Islamabad; editing by Paul Tait and Andrew Roche)


British troop casualties surge in Afghanistan
Tuesday, December 16, 2008
By Jonathon Burch
More British than U.S. soldiers have been killed in Afghanistan in the past six weeks, despite America having four times more troops in the country.
The steadily rising death toll comes as violence in Afghanistan has reached its highest levels since 2001, with Afghan and foreign forces locked in daily battles with an increasingly deadly and resilient Taliban insurgency.
Some 4,000 people, a third of them civilians, were killed in the first half of this year alone.
Since the beginning of November, 12 British soldiers have died, compared to only three U.S. soldiers in the same period, according to U.S. and British military statements. Three British soldiers were killed in a single suicide bomb blast.
A spokesman for the NATO-led force in Afghanistan said increased engagements and the tactics used by insurgents, such as roadside bombs and suicide attacks, were to blame, but the rise in British casualties could be attributed to no one cause.
"Over the past few weeks the Brits have been engaging the enemy pretty hard. If you engage the enemy, you come into contact with them," said British Navy Captain Mark Windsor.
"We've been having a bad time. I don't think there's any specific reason for it, apart from the fact that it's tough down there," he said, referring to Helmand, a province in southern Afghanistan where the Taliban have a strong presence.
Since the Taliban were toppled in 2001, the U.S. military has suffered more casualties than all the other 40 foreign countries with troops in Afghanistan put together, but it also now has nearly half the 65,000 international soldiers there.
The number of British soldiers to have died since 2001 is 133 compared to 629 from the U.S. military. The U.S. has 31,000 U.S. troops based in Afghanistan while Britain has 8,300, making it the second highest force-contributing nation.
The latest British soldier to die was hit by insurgent gunfire on Monday at a base in Helmand. Forty-seven British soldiers have died this year, more than a third of total British fatalities since 2001.
One criticism levelled at the British military is that it uses insufficiently up-armoured vehicles to protect its soldiers on patrol, making them vulnerable to roadside bombs.
Thirty-seven British soldiers have been killed in Iraq and Afghanistan while travelling in lightly armoured "Snatch" Land Rovers, the most commonly used troop-carrying vehicle.
Despite that heavy death toll, the Ministry of Defence said on Tuesday it would go on using the vehicles, despite persistent concerns raised by troops about their safety, while gradually introducing a slightly better protected version of it.
A retired British officer said that if British troops wanted to stay close to the Afghan people, and win them over, they would always face risks from mines and suicide bombers. And he said better armoured vehicles wouldn't necessarily work.
"There is almost no protection against a serious amount of plastic explosive," Colonel Bob Stewart, former commander of U.N. forces in Bosnia, told Reuters.
"If there is a requirement for British soldiers to be out on the ground with the population, doing the hearts and minds stuff, which there is, then there is going to be a greater risk," he said.
The number of wounded British soldiers has also reached its highest levels, with 59 troops very seriously or seriously wounded in the first 11 months of this year, Britain's MoD said.
In 2007, 63 British soldiers were seriously wounded, and only four were killed during all of November and December.
While the cold winter months in Afghanistan usually see a drop in fighting, U.S. military commanders have said there will be no let up this winter in the battle with Taliban insurgents.
(Additional reporting by Luke Baker in London; Editing by Charles Dick)


Pakistan militants kill rival and bring fear to valley
Tuesday, December 16, 2008
By Junaid Khan
Pakistani Taliban have killed one of their chief opponents in a north-western valley -- once a tourism centre -- where they are trying to impose a reign of terror, residents and officials said on Tuesday.
Violence has surged in the Swat Valley, 120 km (80 miles) northwest of Islamabad, since August when government forces launched a fresh offensive to clear militants from what was until recently one of Pakistan's main tourist destinations.
But residents of the scenic mountain valley and a senior government politician said increasingly brazen militant attacks were raising fear the military was losing control.
The militants killed one of their biggest rivals in the valley on Sunday. Samiullah Khan was a pir, or spiritual leader, who had raised a militia to fight the Taliban.
"They were chasing him for some time and found him at home. An exchange of fire took place in which the militants killed Pir and seven of his followers," said Gul Noor, police chief in the valley's Matta town.
The militants also captured 24 of Khan's men.
In a grim show of defiance, the militants dug up Khan's body on Monday and strung it up in Matta's main square, residents said.
A spokesman for the Taliban in the valley, Muslim Khan, said a Taliban council would decide the fate of Khan's 24 supporters.
The army has also been battling militants in the Bajaur region on the Afghan border, to the west of Swat.
Pakistan says it is committed to uprooting terrorism and has rejected Indian accusations levelled after last month's attacks in Mumbai that it is not doing enough to stop the militants.
In the latest violence in Swat, militants attacked the home of Afzal Khan Lala, a leader of the Awami National Party (ANP) late on Monday night, police said.
The ANP is a liberal, ethnic Pashtun-based party and since February elections, it has ruled in North West Frontier Province and is part of Pakistan's ruling coalition government.
Khan was not at home and even his servants had fled in fear of the militants, Noor said.
Valley residents and another ANP politician complained the army wasn't doing enough.
"We called the army for help but they did not come and left us to the mercy of Allah," said resident Khaista Gul, referring to the Sunday attack on Khan.
Haji Muhammad Adeel, an ANP vice president, said the police were all but powerless to tackle the well-armed militants.
"We don't know who's controlling the region but at least we're not. The militants are operating openly," Adeel said.
"Police don't have the capacity to fight an insurgency and all this is happening in the presence of a well-trained army. What's going on?"
A senior military official in Swat acknowledged the insurgency being waged from remote mountains had intensified, but he said the army had a strategy.
"We're fighting a guerrilla war. They operate in small groups. They're not in towns but do use population as a shield," said the officer, who declined to be identified.
"They are trying to create a reign of terror among the local population and we have to tackle it and we're on it."
Separately, insurgents attacked a security check post in the Mohmand region on the Afghan border on Tuesday and seven militants and one soldier were killed, paramilitary officials said.
(Additional reporting by Shams Mohmand; Writing by Kamran Haider; Editing by Robert Birsel and Jerry Norton)


The city bolsters its effort to shelter homeless veterans
By Leslie Kaufman
Tuesday, December 16, 2008
On any given night, a virtual army of 150,000 veterans are homeless across the nation, including an estimated 1,200 in New York City.
Bracing for the return of thousands of soldiers from the wars in Iraq and Afghanistan in the midst of a deep recession, city officials have taken some unprecedented steps to prevent a next wave of veterans from also sleeping on its streets.
During the past year, the city has spent $2.3 million to remodel a dingy veterans shelter in Long Island City, Queens, replacing a large room filled with cots with 243 military-style prefabricated living cubicles, and given $14.8 million to build two apartment buildings, where residents will have access to on-site counseling within a mile of the James J. Peters VA Medical Center in the Bronx. It has also lobbied to transform empty annex buildings at a veterans medical center in suburban Montrose into 96 units of two-year transitional housing, the first of its kind in the state.
And, perhaps most important, the city's Department of Homeless Services and the federal Department of Veterans Affairs have integrated with Project Torch, where veterans can pursue short- and long-term housing as well as other services, all in the same office — something no other city has done, according to the Department of Veterans Affairs.
The moves are being watched closely in Washington as a possible model for other communities hoping to avoid a homeless debacle like the one that followed Vietnam, and even those who have long been critical of the federal bureaucracy's handling of homeless veterans are cautiously optimistic. Rosanne Haggerty, whose group, Common Ground, pioneered the model of supportive housing — in which counseling and other services are provided to enable residents to function independently — and is running the Montrose project, said, "There is a lot to suggest that what New York is doing is really setting the standard."
Haggerty added, "We don't know if the perfect system has been built yet, but the relationships have been put in place so we don't repeat the shameful patterns of the past."
Peter Dougherty, director of homeless programs for the Veterans Affairs Department, said that over the past three and a half years, the department has worked with about 2,000 homeless veterans of the current wars; the city's Department of Homeless Services said that there have been a few dozen filtering though its system.
Dougherty predicted that there would be fewer homeless veterans from this war than from Vietnam, noting, "It is a very different demographic." The volunteer service members in Iraq and Afghanistan, he said, particularly those in the National Guard, are older, more likely to be married and have attained higher levels of education — and have stronger social networks to lean on.
But some advocates look at the crumbling economy and the high number of warriors with post-traumatic stress disorder and see an approaching tsunami of need. And they point out that Vietnam veterans did not appear on the streets in any large numbers until the mid-1980s, about a decade after the war ended.
New York, like many cities, at first treated the rise in homeless veterans as a short-term crisis. But the city estimates that on any given night, 625 veterans remain scattered across the shelter system and another 560 or so live on the streets (local homeless advocates say that number is low).
Mayor Michael Bloomberg, who made reducing chronic homelessness a priority upon his election, created a task force two years ago that focused on homeless veterans and was headed in part by Robert V. Hess, who retired as an army sergeant in 1979 and is the commissioner of the city's Department of Homeless Services.
A first goal was remodeling the city's veterans-only shelter, on Borden Avenue in Queens, a cavernous space that once housed 400 veterans on cots in communal rooms. Now, the rows of cots have been replaced by 10-by-6-foot cubicles with room for a bed, a dresser and a desk. The cubicles are subject to military-style spot inspections in which neatness can earn occupants privileges like the right to have a television or a radio.
Annie Belton, who served in the army from 1989 to 1992, called the remodeled shelter one of the best in the system, which she has used periodically for years. "I like the fact that I close my door and lock it," she said.
Next month, Jericho Project, a New York-based nonprofit organization, will break ground on the first of the two low-rise apartment complexes near the James J. Peters VA Medical Center, in the Kingsbridge Heights neighborhood of the Bronx, designed with copious amounts of blond wood and stainless steel doors.
Sixty percent of the 132 units, which will be subsidized by government grants and private donations, will house currently homeless veterans; the rest are reserved for veterans on the verge of trouble. "We are looking to focus on Iraq and Afghanistan veterans," said Victoria Lyons, Jericho's executive director. "We think we can catch them before they hit the street."
The most fundamental change, and the most challenging, has been coordinating efforts between Hess's operation and the sprawling Veterans Affairs bureaucracy.
The federal government has never provided permanent supportive housing — the main tool now used by New York and other cities to keep mentally ill or addicted populations off the street. Conversely, New York generally has done well at providing housing, or at least short-term shelter, but has long waiting lists for substance-abuse and other counseling programs — automatic entitlements for veterans.
Since early this year, any veteran who attempts to enter New York's vast municipal shelter system, or who is known by a Veterans Affairs medical facility to be in need of housing, has been sent to the same place: Project Torch, a few blocks from the Brooklyn Bridge, where four people from the city and at least eight from the federal veterans' agency work side by side to match people and needs, whether for hot showers, hot meals, doctors or housing advice.
Harold Edmonds, who served on the aircraft carrier Intrepid as a jet mechanic in Vietnam, took advantage of the service over the summer after he tired of sleeping in the band shell in Prospect Park in Brooklyn. Over Thanksgiving, Edmonds, 62, said he moved into an apartment that Project Torch found for him on White Plains Road in the Bronx. "It's on the first floor. Everything is new."


Syria's Assad seeks Israeli stance on Golan
Tuesday, December 16, 2008
By Khaled Yacoub Oweis
Syria has drafted a document defining the boundaries of the occupied Golan Heights and was waiting for an Israeli reply through Turkish mediators, sources familiar with the talks said this week.
President Bashar al-Assad recently told Western officials that Damascus wants Israel to take a clear position on the territorial problem between the two countries before agreeing to push stalled peace talks forward.
The Syrian document sets the boundaries with reference to six geographical points, the sources told Reuters.
"The president was clear that Syria wants to know the Israeli view about what constitutes occupied Syrian territory before progress could be made," one of the sources said.
"According to Syrian thinking, Israeli agreement on the six (geographical) points could help seal a peace deal next year. But Israel may not be able to provide a response any time soon, when it is in such political turmoil," a second source said.
Indirect talks between Syria and Israel, which were suspended about three months ago after Israeli Prime Minister Ehud Olmert decided to resign over a corruption scandal, centre on the fate of the Golan Heights.
Israel captured the plateau in the 1967 Middle East war and annexed it more than a decade later -- a move unanimously rejected by the United Nations Security Council.
The two countries held almost 10 years of direct talks under U.S. supervision that collapsed in 2000 over the scope of a proposed Israeli withdrawal from the Golan.
Bashar's late father, President Hafez al-Assad, refused to sign a deal that did not include the north-eastern shore of the Sea of Galilee, a main water reservoir.
The late Assad regarded the north-eastern shore as an integral part of the Golan and said that Syria was in control of it before the war broke out on June 4, 1967.
Israel captured the whole eastern shore along with the surrounding plateau in the war. The shoreline has been receding for decades. Under the Israeli proposal, Syria would have been only metres short of the north-eastern shore.
Bashar has stuck to his father's line on the Golan.
A Syrian official said that the paper sent to Turkey includes reference to geographical points on the present north-eastern shore of the lake. "The document puts us on the water," the official said.
Syrian Vice President Farouq al-Shara said last month that "the Syrian definition of the June 4 line means the restoration of the north-eastern shore of the lake to Syria" and described Israeli arguments about the shoreline receding as invalid.
Diplomats in the Syrian capital said that even if the two sides make progress on the territorial question a deal might not follow easily because Israel now wants Syria to reduce its alliance with Iran and cut support for the Lebanese Shi'ite movement Hezbollah and Palestinian Islamist groups.
"The situation is more complicated than in 2000 with Syria's external ties coming into play. Syria also wants agreement on the six points without direct negotiations, which might be difficult," one of the diplomats said.
Syrian officials have said Israel has no right to set conditions regarding its foreign policy but acknowledged that the political map of the region would change if Damascus and Israel sign a deal.
Assad told his visitors that Syria had received a document from Israel through Turkey with queries about Syrian relations with neighbouring states after a possible peace, according to the sources. "The president said Syria has responded, but he did not say how," one said.
Olmert, who is still caretaker prime minister, has said he wants to renew the talks. Turkey also wants the talks to move to a direct mode from the four indirect rounds that have been held since April, the diplomats said.
A foreign official who has met Assad said the Syrian leader was not enthusiastic about holding a fifth round before the Israeli parliamentary elections in February, although European leaders have urged him to agree to one before then.
(Editing by Nadim Ladki and Samia Nakhoul)


Israel kills Palestinian militant in West Bank
Tuesday, December 16, 2008
By Wael al-Ahmed
Israeli troops killed a Palestinian militant from the Islamic Jihad group on Tuesday in the occupied West Bank, then warned of possible military steps in Gaza after gunmen there launched retaliatory rocket strikes.
Palestinian witnesses and security forces said Israeli undercover troops shot the militant, who was 20, outside a shop near the town of Jenin. They said he died on the way to hospital.
An Israeli military spokeswoman said troops had gone to arrest the militant on suspicion he was plotting to carry out attacks, and opened fire at him as he tried to flee arrest. Another 22 Palestinians were also arrested, a statement said.
Islamic Jihad issued a statement in Gaza vowing to retaliate using "all possible means," and saying it launched five rockets at Israel as its first response.
Three rockets struck near an Israeli town, causing no damage or casualties, Israel's army said, and Israel responded by shutting all border crossings with Gaza, and cancelling a planned shipment of humanitarian aid to the blockaded area.
Israeli Defence Minister Ehud Barak said Israel's military was "not deterred from taking action in Gaza, but not racing" to do so.
"Quiet will be answered with quiet, but if the situation requires, we will act, and at the time and place and in the manner see deem appropriate," Barak told reporters while viewing a military exercise in the occupied Golan Heights.
A senior Israeli security source told reporters separately Israel has "all kinds of military plans that go from small operations to taking over Gaza," and that if rocket attacks from Gaza persisted "something will happen."
Hamas Islamists who seized control of Gaza a year ago from Western-backed Palestinian President Mahmoud Abbas's Fatah group have said they may not renew an already fraying truce with Israel, Hamas sees as due to expire later this week.
Israel sees the truce as open-ended, but has responded to a rise in cross-border violence since early November by tightening a blockade of Gaza it had ratcheted up when Hamas rose to power last year, often shutting vital border crossings.
These border closings have restricted vital fuel and food supplies to many in the impoverished coastal zone, home to some 1.5 million Palestinians.
(Additional reporting by Nidal al-Mughrabi in Gaza; Writing by Allyn Fisher-Ilan; Editing by Dominic Evans)


Six powers consult Arabs on Iran's nuclear plans
Tuesday, December 16, 2008
By Claudia Parsons
The five permanent members of the U.N. Security Council and Germany agreed with Arab diplomats to consult regularly on Iran's nuclear program, U.S. Secretary of State Condoleezza Rice said on Tuesday.
Rice was speaking to reporters after the six powers met representatives of Bahrain, Egypt, Jordan, Kuwait, Iraq, United Arab Emirates and Saudi Arabia to discuss what Washington says are Tehran's plans to build a nuclear bomb -- a charge Iran denies.
"All there expressed their concern about Iran's nuclear policies and its regional ambitions," Rice said, adding that they all expressed support for efforts by the U.N. Security Council, the six powers and the U.N. atomic agency on Iran.
"Noting the utility of the consultations, the states present agreed that they will want to continue their meetings on a regular basis," Rice said.
Iran, which was not invited to the meeting at U.N. headquarters in New York, said Washington was "distorting the realities about Iran's peaceful nuclear program and about Iran's constructive role in the region."
Iran rejects Western allegations that it is secretly amassing the capability to build atomic weapons and refuses to suspend what it says is a civilian nuclear energy program.
The six powers -- Britain, the United States, France, China, Russia and Germany -- have led negotiations on three rounds of U.N. sanctions against Iran for refusing to suspend its uranium enrichment program.
The Iraq war, which brought to power a Shi'ite-dominated government in Baghdad with close ties to Iran, has shifted the balance of power in the Gulf region, raising concerns among some Gulf Arabs about Shi'ite Muslim Iran's growing influence.
In recent years a number of Arab states have announced plans to develop nuclear programs for civilian purposes.
In a statement criticizing Tuesday's meeting, Iran's mission to the United Nations said the real concern for regional stability was not Iran but "the interference of the United States in the region and its tired divisive policies."
Asked whether the six powers, referred to as the "P5+1," and Arab diplomats had discussed further sanctions on Iran, Rice said the point had been to hold a first large meeting to build on informal consultations in the past.
"I think there's concern that there will need to be a way to finally (motivate) Iran to make a different choice concerning its nuclear ambitions, but this was not an effort to develop a common strategy," Rice said.
"I think what really did come through here was that these are countries that have very deep interests in how this issue gets resolved, and they want to continue consultations with the P5+1 on how this is all going to come out," Rice said.
The outgoing U.S. administration has suggested that a new round of sanctions against Iran would be justified since Tehran has not responded positively to an offer of economic and political incentives from the six powers.
Diplomats from some of the six powers say the process of negotiating new U.N. sanctions is on hold until U.S. President-elect Barack Obama takes office in January.
Obama, a Democrat, has said he plans a new approach to Iran and its nuclear program, including direct talks if needed, a break from President George W. Bush's isolation strategy.
(Editing by David Wiessler)



Saving the world's 'orphans'
By E.J. Graff
Tuesday, December 16, 2008
It's the time of year when we are deluged with appeals to save the world's millions of orphans. On TV, in the newspaper, in our mailboxes, we see sad-eyed children who are starved for food, clothes and affection. Surely only Ebenezer Scrooge (or his Seuss-ical incarnation, the Grinch) could turn away with a hard heart.
But when these appeals are combined with glamorous examples like Angelina Jolie and Brad Pitt's world adoption tour, would-be humanitarians can arrive at a dangerous belief: Western families can and should help solve this "world orphan crisis" by adopting.
It's true that, sometimes, international adoption can save a child's life. But be very careful. By heading to a poor, underdeveloped, or war-torn country to adopt a baby, Westerners can inadvertently achieve the opposite of what they intend. Instead of saving a child, they may create an orphan. The large sums of money that adoption agencies offer for poor countries' babies too often induce unscrupulous operators to buy, coerce, defraud, or kidnap children from families that would have loved, cared for, and raised those children to adulthood.
How does this misunderstanding happen? One problem is the word "orphan." Unicef reports 132 million orphans worldwide. Unicef's odd definition includes "single orphans" who have lost just one parent, and "double orphans" being cared for by extended families. Admirably enough, Unicef is trying to raise money to offer assistance and support to these children's families, and to build functioning child welfare systems that will benefit entire communities. But few Westerners would think of these children as "orphans."
Another problem is that the abandoned or orphaned children who actually do need homes are rarely the healthy infants or toddlers that most Westerners feel prepared to adopt. The majority of children who need "forever families," as the adoption industry puts it, are five or older, disabled, chronically ill, traumatized, or otherwise in need of extra care. The exception is China, where the one-child policy led to an epidemic of abandoned girls. But China's abandoned babies are historically unique. In Africa, for instance, children may be orphaned because their parents have died of AIDS or malaria or TB. In the former Soviet bloc, the parents may have died or lost custody because of alcohol-related illnesses or domestic violence. In Asia, the children themselves may be HIV-positive or suffer from chronic hepatitis B.
But from an adoption agency's standpoint, these needy orphans are not very "marketable." So here's the bad news: to meet Western families' longings to adopt healthy babies, many adoption agencies pour disproportionately enormous sums into poor, corrupt countries - few questions asked - in search of healthy children ages three and under. Those sums can induce some locals to buy, coerce, defraud or kidnap children from their families. Traumatically, these children are deprived of their families, and families are deprived of their children.
Consider that, after the fall of Nicolae Ceausescu in 1989, institutionalized Romanian children desperately needed families. Thousands of generous Westerners went to Romania to adopt - but were swindled into buying babies directly from families who would not otherwise have relinquished. Similarly, for more than a decade in Guatemala, few Westerners were adopting needy abandoned children; far too often, they were effectively - albeit unintentionally - buying healthy babies solicited (in some cases, apparently, conceived) specifically for the adoption trade. Guatemala and Romania have halted international adoption because of widespread corruption. As the respected nonprofit World Vision UK put it, "The urge to adopt across continents is well meaning but misguided."
Don't harden your heart to those sad-eyed "orphans" - but don't feel guilty if you can't (or don't want to) become a Jolie-Pitt world adoption mission. Rather than trying to rescue a single child, which can induce trafficking, invest in and rescue a community, thus preventing children from being orphaned by poverty or disease. Buy supplies for underprivileged schools. Invest in clean water or housing. Go on a medical mission. And remember that most families - like your own - would do almost anything to keep their babies home and to raise them well.
E.J. Graff is associate director at Brandeis University's Schuster Institute for Investigative Journalism.



China discovers its future
By Jack Ma
Tuesday, December 16, 2008
On a trip to Beijing just a month after the Olympics, I encountered the bluest skies I'd seen in years. Although the Games had ended weeks before, their legacy was still apparent. The clear skies reminded me of the China I'd grown up in, in the '60s, before rapid industrialization obscured the mountains surrounding the city.
I knew some haze might return soon, but I also realized that 2008 would be remembered as the year China looked in the mirror, understood itself and changed for the better.
Many people outside China were surprised by the physical changes the Olympics brought to Beijing - a modern skyline and breathtaking architecture, like the Bird's Nest and the Water Cube. But the legacy of the Olympics is not in the buildings, but in the transformation of the collective consciousness of ordinary Chinese.
This transformation marks a turning point as China moves into 2009 and beyond. China is now powered by youth and looks toward the future, not to the ways of the past. Technology plays a part in this transformation, but a renewed sense of idealism and spirit play a bigger role.
It is impossible to understand China's future without looking back on the last 12 months. As China entered 2008, the focus was on the Olympics. But before we could get to the Games, we had to clear some unexpected hurdles.
Early in the year, snowstorms crippled much of the country. Coming during the Chinese New Year holidays, the storms shut down transport and business at a critical time. To many, it was an ominous sign for 2008.
We faced another catastrophe on May 12, with the Sichuan earthquake. Once, we may have relied on the government to provide relief. But an overwhelming grassroots response to the tragedy surprised even the most cynical observers. It was the first time since the Cultural Revolution that I'd seen so many citizens selflessly helping others.
By the time the Olympics arrived, the country was unified in a way I'd not seen since my childhood. Even with China's imperfections, we were proud of our country. And, as the Beijing 2008 Games came to a close, we showed that we could deliver on our promise to host a successful Olympics.
A renewed idealism has emerged here. Though the young people of my generation were steeped in the ideals of building a stronger country, when the Cultural Revolution ended and we discovered that our ideals were based on false foundations, we largely turned inward.
In 2008, Chinese looked beyond themselves and learned to respect one another, respect the environment and respect life. As we banded together to help earthquake survivors and to volunteer for the Olympics, we rediscovered the values our parents shared when modern China was founded. In contrast to the excesses of the Cultural Revolution, our idealism was based on pragmatism, not ideological fervor.
Perhaps the most significant development was the emergence of China's youth in a culture that has traditionally looked to its elders for leadership. But in 2008, younger Chinese showed they could rise to the challenges, devising new ways to support earthquake relief efforts and to assist at the Olympics. They claimed a voice of their own.
The world should cheer this development. When I look at my generation, born in the 1950s and '60s, they often seem so different from their counterparts in the West. But Chinese who were born in the '80s and '90s and came of age in the Internet era seem much closer to young people in the West. Through the Internet and information sharing, they have common interests, support the same basketball teams, share ideas and develop friendships around the world.
The gap dividing China from the West continues to narrow, and the Internet plays a very strong role. In early 2008, China leapfrogged the United States to become home to the world's largest online population. China now has over 250 million Internet users, up from just 20 million in 2000. Yet that represents an Internet penetration rate of less than 20 percent, compared to 70 percent in the United States.
So far, China's rapid Internet growth has been fueled by its young people and their huge appetite for online games, instant messaging and music and video sharing. But as these users enter their 30s, their attention will shift to business applications, like e-commerce. I believe that e-commerce will be the next boom sector in China, as businesses and retailers take advantage of the mass market of consumers already online. Even now, the Internet connects Chinese businesses and consumers to those in the West. This is just the beginning. E-commerce has the potential to unite the business world, just as the Olympics united the sporting world.
The pace of change in China continues to accelerate. For a culture rooted in the traditions of thousands of years, this is truly revolutionary. Yet, after looking in the mirror of 2008, China is a changed nation. Our soul has been strengthened, a new idealism has taken root and a hopeful generation of Chinese is more prepared than ever to carry the torch into the future.
Jack Ma is known as the man who introduced the Internet to China. He is founder and chief operating officer of Alibaba Group, the world's leading B2B e-commerce company.



The global political awakening
By Zbigniew Brzezinski
Tuesday, December 16, 2008
A new president is assuming office in the midst of a widespread crisis of confidence in America's capacity to exercise effective leadership in world affairs. That may be a stark thought, but it is a fact.
Though U.S. leadership has been essential to global stability and development, the cumulative effects of national self indulgence, financial irresponsibility, an unnecessary war and ethical transgressions have discredited that leadership. Making matters worse is the global economic crisis.
The resulting challenge is compounded by issues such as climate, health and social inequality - issues that are becoming more contentious because they have surfaced in the context of what I call "the global political awakening."
For the first time in history almost all of humanity is politically activated, politically conscious and politically interactive. Global activism is generating a surge in the quest for cultural respect and economic opportunity in a world scarred by memories of colonial or imperial domination.
This pertains to yet another fundamental change: The 500-year global domination by the Atlantic powers is coming to an end, with the new pre-eminence of China and Japan. Waiting in the wings are India and perhaps a recovered Russia, though the latter is very insecure about its place in the world.
In this dynamically changing world, the crisis of American leadership could become the crisis of global stability. Yet in the foreseeable future no state or combination of states can replace the linchpin role America plays in the international system. Without a U.S. recovery, there will be no global recovery. The only alternative to a constructive American role is global chaos.
It follows that the monumental task facing the new president is to regain U.S. global legitimacy by spearheading a collective effort for a more inclusive system of global management. Four strategically pregnant words define the essence of the needed response: unify, enlarge, engage and pacify.
To unify pertains to the effort to re-establish a shared sense of purpose between America and Europe. To that end, informal but frequent top-level consultations are badly needed, even though we are all aware that there that there is no such thing yet as a politically unified Europe. The only practical solution is to cultivate a more deliberate dialogue among the United States and the three European countries that have a global orientation: Britain, France and Germany.
For many years, Europeans have complained they are excluded from decision-making, yet they are perfectly willing to let the United States assume the burdens of implementation. Differences over Afghanistan are but the latest example of that dilemma. It is to be hoped that the new U.S. president will make a deliberate effort to revitalize the U.S.-European dialogue.
To enlarge entails a deliberate effort to nurture a wider coalition committed to the principle of interdependence and prepared to play a significant role in promoting more effective global management. It is evident, for example, that the G-8 has outlived its function. Accordingly, some formula for regular consultations ranging in composition from G-14 to G-16 should be devised to bring together countries with geopolitical significance as well as economic weight.
To engage means the cultivation of top officials through informal talks among key powers, specifically the U.S., the European Triad, China, Japan, Russia and possibly India. A regular personal dialogue, for example, between the U.S. president and the Chinese leader would be especially beneficial to the development of a shared sense of responsibility between the only superpower and the most likely next global power. Without China, many of the problems we face collectively cannot be laid to rest.
Admittedly, China is economically nationalist, but it is also a fundamentally cautious power. It was Deng Xiaoping who best articulated how China defines its international approach: "Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership."
This underlines a significant distinction with Russia. Like Beijing, Moscow wishes to revise international patterns, but it tends to be impatient, frustrated and sometimes even threatening. Nonetheless, it is in the interest of the United States and of Europe to engage Russia. In so doing, America should seek agreements that enhance global stability, promote nuclear weapons reduction and deal with such regional problems as Iran.
America and Europe will have to find a way of reaffirming their commitment to the integrity of Ukraine and Georgia while conveying to Russia that their interest in these two states relates to the gradual construction of a larger democratic Europe and is not designed to threaten Russia itself.
To pacify requires a deliberate U.S. effort to avoid becoming bogged down in the vast area ranging from Suez to India. Urgent decisions need to be made, with Europe's help, on several potentially interactive issues.
The Israeli-Palestinian peace process needs to be a priority. The new president should state on the record that a peaceful accommodation between the two parties must: first, involve a demilitarized Palestinian state, perhaps with a NATO presence to enhance Israel's sense of security; second, the territorial settlement has to be based on the 1967 lines with equitable exchanges permitting Israel to incorporate the more heavily urbanized settlements on the fringes of the '67 lines; third, both parties have to accept the fact that Palestinian refugees cannot return to what is now Israel, though they should be provided with some compensation and assistance for settling preferably in the independent Palestinian state; and last, the Israelis will have to accept the fact that a durable peace will require the genuine sharing of Jerusalem as the capital of two states.
The United States will also have to undertake seriously reciprocal negotiations with Iran. That means abandoning the current U.S. posture that Tehran make a one-sided concession as a precondition to talks.
Finally, America's strategy regarding Afghanistan and Pakistan needs a basic reassessment. The emphasis should be shifted from military engagement to a more subtle effort to seek a decentralized political accommodation with those portions of the Taliban who are prepared to negotiate. A mutual accommodation should involve Taliban willingness to eliminate any Al Qaeda presence in return for Western military disengagement from the pertinent territory. The process should be accompanied by intensified reconstruction.
Let me conclude on a parochial note: Unfortunately, the American public is woefully undereducated about the wider world. Barack Obama will have to strive to make Americans understand the novel dimensions of global realities. Without sounding overly partisan, I believe that he has unique intellectual and rhetorical gifts for doing just that.
So let me end my remarks by asserting simply, "Yes, we can."
Zbigniew Brzezinski, President Jimmy Carter's national security adviser, is trustee and counsellor at the Center for Strategic and International Studies (CSIS). This article is based on his 2008 John Whitehead lecture at Chatham House, London. The complete text will be published in the January issue of International Affairs (London).



Expectations: What's in store for 2009?
Tuesday, December 16, 2008

The International Herald Tribune contacted a spectrum of smart people with three questions about what's in store in 2009:
What do you expect?
What do you hope for?
What do you fear?

AYAAN HIRSI ALI Somali-born feminist and writer
Given the gloomy state of the economy, I expect that 2009 will be a year of distress for many. Poverty is a relative matter. Some in the West will feel deprived if they do not get the big bonus they expected. Others will find themselves without jobs and will be faced with foreclosure and all the misery it entails. For many in those parts of the world that are truly poor, scarcity will pinch harder. Bitter conflicts over land, food and clean water will swell the numbers of the displaced and the starving. Funds once allocated for education, health care and sustainable development will be spent on emergency relief.
Although I fear that all of this will be blamed on the failure of capitalism, I hope for faith in free-market principles, wise fiscal policy and restrained spending.
I fear that 2009 will bring us closer to a nuclear war provoked by Iran's Islamic administration led by Mahmoud Ahmadinejad. It is unlikely that Ahmadinejad will be stopped by reason, diplomacy, economic sanctions or other peaceful means. The real challenge here - and he senses it - is that the West is reluctant to use military force to stop him. I hope that every nation that rejoiced at Barack Obama's election, especially the Europeans, will support his administration's efforts to prevent further nuclear proliferation. We should be prepared to use force against Iran if necessary, but only as a measure of last resort.
Another issue is the subjugation, rape and murder of women and young girls in the Third World - those who, in times of scarcity, are valued less. Realistically, I do not expect that defending the human rights of women and young girls will enjoy the same priority as, say saving the planet or the war on terror. But I would like to hope it might. I fear that if we don't stop gendercide against women, the attainment of these goals will prove to be a hollow victory.
The world needs to have the courage to ensure that policymaking meets the high-stakes challenges of the era. The economic crisis demands unprecedented regulation of the international financial system, and this implies courage on the part of our leaders. But there are other contemporary challenges, notably the environment, for which each nation is responsible, and the food crisis, which requires financial resources and profound change in the North-South relationship. The world is at a crossroads: Without political will, without real awareness, we risk the plague of nationalism and an ebbing of democracy, and with this the prospect of more conflicts of greater violence. So we must act now. And it is clear that the role of the United States will be decisive, with a new president, Barack Obama, whose success gives birth to much hope.
What I most hope for, as a citizen of the world, is that we make progress on the road toward peace in places where conflicts are bringing grief to our planet: that the Middle East may find a path toward reciprocal recognition of legitimate sovereignties; that Africa may free itself from endless wars; that India and Pakistan may move toward a reasonable reconciliation. And I hope that we may move forward in the essential combat against terrorism, which is a fanatical passion for death.
What I fear is that nothing, or almost nothing, of what I have just sketched out comes to pass. I fear that violence may increase despite the confidence in progress held by all those who wish to work for greater justice. I fear we will be unable to close the era that opened on Sept. 11, 2001. Doing so is, however, essential.
TZIPI LIVNI Israeli foreign minister
In 2009 I expect fateful choices. Free nations will need to find the inner strength to shape our common future or the forces of destabilization and extremism will shape it for us. This is especially true for the Middle East. Our region is undergoing dramatic changes, and conventional approaches will simply not suffice. Despite all the difficulties, I believe the peoples of the Middle East can reconcile the need to protect their distinct identities with the imperative of embracing our common humanity. I believe that an alternative peaceful reality for our region is attainable. But the people of our region and their leaders will need the collective wisdom, and courage, to choose it.
I hope for peace. I hope we can all take the decisions and actions necessary to make peace - and the vision of two states for two peoples - a reality. Not just a piece of paper, but a real peace for our children that will survive for our grandchildren. At the global level, I hope we can learn together how to harness new talents in areas such as green technology, agricultural innovation and the capacity to adapt to changing environments in order to address the challenges of the 21st century. From fundamentalist terrorism to food shortages, from global warming to the current financial crisis, we all have a responsibility to transform this period of global uncertainty into one of global creativity and renewal.
I fear that we will wake up to too late. There is a troubling asymmetry in the ideological battle being waged today. Those opposed to democracy and freedom regularly exhibit both passion and sacrifice, while too many democracies are complacent and pursue narrow self-interest. My people's history has demonstrated the high price of indifference. I have no doubt that the forces of extremism will be overcome. But I worry about the dangers of waiting too long before people remember that the freedom and opportunity we take for granted are precious ideals worth protecting and worth fighting for.
BAN KI MOON United Nations secretary general
I expect a new era of multilateralism. From my conversations with Barack Obama, I know that we can look forward to a new era of global cooperation. We will see a new and close partnership between the United States and the United Nations. With all nations working together, we will restore the global economy to health, whatever hardships might come. And I believe that we will do so in a spirit of fairness and solidarity. We will not retreat from our commitments to fight poverty and disease. We will defend the right of the poorest nations to grow and share in a renewed and truly global prosperity.
Let us be practical and put aside fanciful hopes for what might be, and focus on what must be. This will be the year of climate change, the one truly existential threat to the planet. We have 12 short months to Copenhagen, where world leaders will gather to hammer out a comprehensive deal to curb global warming. Amid our financial troubles, some ask whether we can afford to tackle climate change. The real question is: How can we afford not to? I hope to send a global climate change treaty to the world's governments - and see it ratified, by the U.S. Senate, among others, by the end of 2010.
Like Roosevelt, I believe the only thing to fear is fear itself. If we give in to fear - if we lose our political will and long-term perspective - we will see a cascading series of crises, spilling from nation to nation. If we turn inward, we will lose chances to make a difference in places like Ivory Coast or Bangladesh, both trying to organize democratic elections, or the Democratic Republic of the Congo, where war and peace are so delicately balanced. If we turn inward or embrace protectionism, trade and global growth will suffer. If we turn inward, we will miss generational opportunities. This coming year, we have a chance to pick up where Mikhail Gorbachev and Ronald Reagan left off so many years ago, a hair's breadth away from abolishing nuclear weapons. We must not let fear cloud our vision of the future.
MIRA NAIR Indian filmmaker
I expect that Barack Obama will reverse George Bush's response to 9/11. Instead of punishing the world, Obama will proceed on the assumption that America not only needs the world, but it is a part of it. Because of the financial crisis, I expect people will learn to make do with less. And necessity, as we know, is often a great recipe for invention. So I expect great art to emerge from stripping away the excess.
I hope for India and Pakistan to talk to each other. The region must realize that we share a common danger. There are two ways to proceed: force or mediation. My hope is that the region - India, Pakistan, Afghanistan, Bangladesh, Sri Lanka, Iran - will come together to settle the major issues of Afghanistan and Kashmir. It's time the region looks to itself, rather than to the United States, for solutions to its problems.
In the realm of creativity, I hope for a greater comfort with hybridity in storytelling. The mainstream is no longer white. The interconnectedness of the world, the inspiration of Obama being from everywhere, the vigor of the movie industry outside Hollywood, all lead me to hope for a multiplicity of stories on screen in the future. At Maisha, our film school in East Africa, every young man and woman believes that he or she is walking in the footsteps of one of their countrymen, young Barack Obama.
What I fear is another war. The war psychosis since 9/11 has so strengthened the warmongers that I fear the possibility of another. And that would be devastating to my hopes and dreams of a new world led by Obama.
CHRISTINE OCKRENT French political commentator
I expect 2009 to be a year of considerable turmoil - economic, social and political. It will be more difficult than ever for people in charge to lead and prioritize issues. The perverse effects of globalization will be aggravated: nationalism, protectionism, unemployment in the rich countries.
I hope for Europe to play its part, and a decisive one. I hope our political and business leaders will make good use of the world crisis. The time could be ripe for a common or at least a coordinated agenda to prevent markets from going berserk again, to limit environmental damage, to fight the growing imbalance between the very rich and the very poor, to better feed and cure the people in need.
I fear the shortsightedness of our politicians, the selfishness of our wealthy societies, the flaring up of religious extremism as an answer to social anxieties, the inability to foster hope. And do you know what ? I am still an optimist.
ELLEN JOHNSON-SIRLEAF President of Liberia
I expect that the world will be a safer place in 2009, that war and carnage will be contained, and that the newly elected leadership of the United States will do more to ensure an interconnected world striving for peace through power sharing and consensus building in a new international order.
I hope that my administration will achieve more in restoring basic social services to our citizenry, and that our poverty reduction strategy will lift the spirits of ordinary citizens to dream the impossible. I hope that, as I promised in my 2006 inaugural address to the Liberian people, Liberian children who are smiling again can be assured of a future of hope and promise. On the international front, I hope that the global financial crisis that has shaken our faith in the invisible hand of capitalism will be resolved, and that there will be a return to the scaling up of investment in developing countries and frontier states such as Liberia.
I fear that if raised expectations from the new U.S. administration are slow in being realized, the wars in Afghanistan and Iraq could lead to deeper international cleavages and a return to the geopolitical rivalries and fissures of the Cold War, thus undermining multilateral approaches to global cooperation. Closer to home, I fear that uncertainties in certain countries in West Africa could lead to political turmoil and threaten progress in the consolidation of peace and development.
GARRISON KEILLOR American humorist
The rain will rain and the snow will fall and the seasons change and the small birds call and the compass will still point north and we will often recall November 4th which was a great day in so many ways - electing a good man regardless of race, yes, but I voted for Barack because he represents American civility, a combination of curiosity, ambition, humor and generosity, and I expect that the new administration will lift the spirits of our countrymen. I believe in heroes. I think we will all walk taller thanks to Barack's steadfast march to the White House.
I hope for a renaissance in America. So many people spent so much time stewing about and dreading the naked emperor and the miasma he created and now they can turn their minds to happier things, educate the young, exercise ingenuity, revive American manufacturing, move toward a green economy, lighten the work week, breathe deep, enjoy our good fortune living in this glorious land.
What I fear is blind violence, of course, such as in Mumbai, and its effect on civility. The thrashing of the banking system and the terrible losses inflicted on our friends and neighbors. The death of newspapers. The demise of literature, thanks to the arrogant idiocy of English departments. Prostate cancer, impotence, celibacy, spiritual purity.
ANNE-MARIE SLAUGHTER American academic
In 2009 I expect that Guantánamo Bay will be closed and that the United States will return to full compliance with the Geneva Conventions covering all citizens and subcontractors carrying out U.S. business anywhere in the world.
I hope for a reforging of the American social contract. Government would provide health care, expanded unemployment benefits to allow for extensive retraining, a higher minimum wage, and the equivalent of a GI bill for middle-class kids who can't afford college fees, in return for universal national service. There would also be much higher gasoline taxes and other incentives to move to a low-carbon economy, immigration reform and a renewed commitment to free trade. Not all of this can happen in the first years of an Obama presidency, but the foundations could be laid.
I fear rising social instability in China and Russia as a result of declining growth and increasing unemployment and hardship. In both cases, although particularly with regard to Russia, I worry that the government will seek to deflect domestic discontent by inventing, magnifying, or provoking a foreign threat and marshaling a nationalist response. I also fear a full-blown Islamist insurgency in Pakistan. Finally, I fear that Iranian leaders will create a crisis that will make Obama look very weak if he or his administration sits down to negotiate with them but that will allow them to paint him as "just like Bush" if he does not.


Ian Walthew:

2009: What do you expect? What do you hope for? What do you fear?

I expect that the financial crisis is going to get worse, not least of all because investors and banks and regulators still don't know exactly what it is they are dealing with. I expect a depression, not a prolonged recession, although if the latter it will go on well into 2010. I think there is a one in 10 chance of a major nuclear terrorist attack in a major Western city, and those are pretty high odds of expectation. I don't expect Iraq to get better, but worse, and I expect Afghanistan to become a quagqmire just as it was for the Soviets. If those two things happen I expect either complete U.S. military withdrawal or the draft. I do not expect to follow the news at all next year because I can't watch a train crash. I'm ready.

I hope that Obama will not bail out the auto intustry but use a more intelligent stimulus plan. I hope for less corruption in business, from the markets to price fixing cartels to vested interests and elites in politics. I hope that the ICC is given some muscle to apprehend indicted criminals and that Europe, Russia and China step up to the plate to provide real military intervention for Darfur, Zimbabwe, the Congo and Somalia, to name but 4. I hope that the world turns its attention to the real global crisis, which is not the Western economy but the 2 billion people living on less than $2 a day. I hope that Obama moves decisively within 12 months to resolve both the Kashmir and Palestine disputes. I hope Obama realises that his intelligence services are the equivalent of GM.

I fear none of the above will happen and that Afghanistan, or rather Kabul and its Mayor, will fight a futile war, with NATO and India as its allies, a war already declared, against Pakistan (or rather its military and the ISI who may or may not bother with the pretense of a civilian government.) I fear Pakistan and India will go to war, especially if Pakistan becomes a fundamentalist state with an Afghan refuge to its rear; I fear Iran may aid Pakistan, I fear the Americans may become involved, as perhaps Israel. I fear that the neglected global food crisis will become worse and the fate of the 2 billion will move from horrific to catastrophic. I fear Obama cannot possibly fulfil the hopes and expectations vested upon him, nor solve the world's many pressing problems. I fear we are to enter a period of war, dissruption and personal survival where we will have to completely reorganise our lives here in the Auvergne. I am not personally fearful, because I know we can.



A leader who gives hope
By Roger Cohen
Tuesday, December 16, 2008
LONDON: Mankind has received a jolt that might in the past have produced a war. More than $28 trillion has been lost from stock markets in the last nine months. That's the equivalent of about $4,300 for every man, woman and child on the face of the earth. Millions of people have lost their jobs; millions more will. Yet here in a major world financial capital, there is no blood on the streets and there are even shoppers at Harrods.
Gloom is certainly widespread as the city's masters of the universe bump down to earth. A flogged financial system has given up the ghost, revealing with its death throes that what's junk on the way in is junk on the way out. From New York to Paris, retail is buckling, restaurants are emptying and jobs are vulnerable. One in 10 U.S. homeowners with a mortgage is either delinquent or in foreclosure. Banks, however cajoled, still won't lend to each other. Economies, deprived of the credit that lubricates them, are jammed.
As Barack Obama, the U.S. president-elect put it, "There's a big problem, and it's going to get worse." One thing is certain about 2009: It will be ugly.
How ugly? Gasoline prices are down, but the bright side ends there. David Hale, a Chicago-based economist, described the U.S. economy as being in a "free fall." A further 3 million jobs could be lost next year, on top of the 1.9 million already shed in 2008, bringing the unemployment rate "to easily 8.5 percent." Recessions in the United States, Europe and Japan may lead to GDP declines of 1 to 1.5 percent. Collapsing commodity prices will slash African growth by half, to about 3 percent, while the Indian and Chinese growth rates will be cut by several points to about 7 and 8 percent respectively.
"The rest of the world has very good cause to be angry with the United States," Hale said. "This is an American-made crisis magnified by U.S. incompetence. Bush and Paulson will leave office in disgrace."
I have no qualms with that verdict on the U.S. president and Treasury secretary: They've been behind the curve throughout the great de-leveraging. The decision to let Lehman collapse turned a slow-motion financial crisis into a meltdown. But a strange thing happened on the way to bankruptcy court: While the world has redoubled cause for ire toward America, it is less angry today than it has been in a long time. Obama's election has turned people warm and fuzzy.
How the positive energy from that political change meets the negative energy of a deepening financial crisis will determine in large measure just how bad 2009 proves to be. Two wars and the global economy hang in the balance. The quality of Obama's leadership will be decisive to their course.
"If the United States can't get out of the recession in a reasonable period of time, it will be very hard to accomplish other foreign policy objectives because it won't have the resources or the will," Robert Hormats, the vice chairman of Goldman Sachs International, told me.
Obama has to wield U.S. power to restore confidence. Decoupling was a nice idea but the past months have shown that the world's fortunes are still heavily "coupled" with America's. The president-elect has assembled a strong economic team; he has gambled on a secretary of state, Hillary Clinton, who has the energy to break the diplomatic logjam on several fronts; and he has promised a robust stimulus package. All this conveys a welcome sense of urgency. In the best scenario, the addition of fiscal action to monetary easing will begin to assuage fears by the second half of 2009. The housing sector will stabilize. Credit will begin to flow. Consumers will exit their funk.
Still, with Americans deluged in debt, and stock-linked U.S. retirement savings decimated, recovery will be slow. Here's where the rest of the world can help. China, France, Britain and Russia have already announced significant stimulus and stabilization packages. But Germany, with an economy big enough to make a difference in global demand, has been sitting on the sidelines.
Credit-card wielding U.S. consumers, who have been shelling out $10 trillion a year on the made-in-China universe, can no longer sustain the global economy; others, even in conservative Bavaria, are going to have to step into the breach. Brazil, the Gulf states, India and China all face tests of whether their increased wealth will now be matched by an increased sense of global responsibility.
Their emergent middle classes probably hold the key to long-term economic growth now that the industrialized world's indebted and aging consumers have run out of cash. If the new powerhouses do not deliver, a wave of disastrous protectionism could ensue. The jury is still out.
As it is on Obama, who comes to power with enormous hopes vested in him. He's already made mistakes - committing to a 16-month withdrawal from Iraq and opposing the U.S. free-trade agreement with Colombia come to mind - but he's also shown remarkable political acumen.
If he can change the lexicon, he will begin delivering on the hopes he has aroused. Language inspires; Obama wields it better than any recent president. I do not think the phrase "war on terror," which is in effect war without end, will fall often from his lips. The phrase contained within it the seeds of Guantánamo and an imperial presidency: Obama wants to close those chapters. The "with-us-or-against-us" paradigm is dead.
Obama spent only 10 years of his adult life in the split world of the Cold War, double that in a post-Berlin Wall world of growing interconnectedness. MAC - mutual assured connectivity - has replaced the MAD, or mutual assured destruction, of Cold War days. In our age, everything has been globalized - except politics. I expect Obama to be the first U.S. leader to govern with a strong sense of the global conversations that make online sociability a powerful political force.
Where Bush bridled, Obama will reach out. In 2009, it is possible that new initiatives aimed at engaging Iran and resolving the Israel-Palestine conflict will begin to redraw the map of the Middle East. The 30-year silence between Tehran and Washington is a devastating anomaly. Most Iranians are pro-American. Meanwhile, the main elements of an Israeli-Palestinian settlement are known: Extremists on both sides should no longer have a veto over it. If there is significant movement on either of these fronts, the world will become less dangerous.
But dangers persist, as recent events in Mumbai have shown. Nobody knows whether Al Qaeda terrorists will succeed in hitting the United States again. Extremist Islamist ideologies that preach death to Americans, Hindus, Jews, infidels of every stripe, democracies, tolerance, pluralism, open societies - in short that preach death to the modern world - are not in short supply.
They exist in Karachi, just as they exist in Algiers and the suburbs of French cities. The very modernity these ideologies despise ensures their spread through the Internet. But they are still minority ideas, confined to the fringes, and the world has learned a new vigilance.
What has become clear is that prevailing in this battle is not an affair of the United States but an affair of the world. There's little these days that can be solved alone: The global financial crisis has been another illustration of that. America, until now, has not taken on the full implications of this interconnectedness. Since it was barrier breaking that helped deliver the United States to the post-Cold-War zenith of its power, it has been hard to grasp in Washington that the same forces have now democratized power. America is less dominant than it was.
Understanding this power shift, and using it to his advantage, will be a fundamental test of Obama and will determine what he can accomplish in 2009 and beyond. He has to be the jujitsu president, using apparent weaknesses as new forms of strength.
Roger Cohen writes the Globalist column for the IHT.


Arise and shine, America
By Serge Schmemann
Tuesday, December 16, 2008
PARIS: After Barack Obama was elected in November, I and many other Americans living in Europe had the curious experience of being congratulated by total strangers in the street.
Certainly George W. Bush has been enormously unpopular abroad, and Obama was an overwhelming favorite around the world. But the congratulations were not simply about having "their man" elected; they also reflected a satisfaction - a relief - among many people that "their America" was back.
That got me thinking about the feelings toward America I have encountered in the many years I have lived and worked around the world - in Asia, Africa, the Middle East, Europe East and West, Russia. I vividly remember entering a classroom in the black shantytown of Crossroads outside Cape Town, in white-ruled South Africa, when the teacher had the children rise and say in unison, "God bless America!" Another time, in Soviet Moscow in the 1980s, my children's riding instructor suddenly vaulted onto his horse from behind and galloped wildly around the riding arena with the reins in one hand. "Is that how Americans ride?" he asked me eagerly. "I learned it from 'Magnificent Seven'!" That was one of the few American movies allowed into the Soviet Union in those days - its theme of downtrodden people rising up against exploiters was evidently deemed ideologically acceptable. In reality, the film served only to reinforce a widespread adulation of America as a place that had to be the opposite of whatever Soviet propaganda said about it. America was the shining city upon a hill, in John Winthrop's prophetic words.
But if America fails to live up to this calling, Winthrop warned in that same sermon, "We shall open the mouths of enemies." I've encountered that, too: Palestinians burning the Stars and Stripes out of fury that Americans remain oblivious to their suffering; post-Soviet Russians cursing the United States for treating them dismissively as a defeated nation (a grievance Vladimir Putin has successfully exploited); Romans who light up the Colosseum every time a death sentence is commuted in the United States; and, of course, the global outcry over Abu Ghraib and Guantánamo.
To be sure, there are many different sources of feelings for America, both pro and con. But those I've encountered most often boil down to America as a symbol of great hopes, and therefore, when it fails, as a profound disappointment. That disappointment is not "anti-American." It is the same as the shame many Americans have felt in recent years over the violation of so much of what we stand for in the world. It is, essentially, the other side of pro-Americanism - a belief that America can and must be better.
That is the meaning of the congratulations Americans have heard on European streets. The praise is both heartening, and worrying. Obama has already done a great deal to revive America's standing by his decency, eloquence, wit, idealism and multicultural roots. But the worry is that too many people have placed too many hopes in him. The first sign of that was the day after Obama's election, when Georgians flooded into the streets of Tbilisi urging him to stop supporting their president, Mikheil Saakashvili, who has been a favorite of Washington. There are bound to be more disappointments. America cannot emerge from its Middle Eastern wars and the global financial crisis either quickly, or with its powers and influence intact.
How Obama, the Americans and the world deal with these problems and expectations will be the theme of 2009, a year that is destined, or doomed, to be a pivotal one. On these pages, we have asked a variety of people to tell us what they expect, what they fear, and what they hope to applaud a year from now.
Serge Schmemann is the editorial page editor of the IHT.


Italian police stage a big anti-Mafia operation
By Elisabetta Povoledo
Tuesday, December 16, 2008
ROME: A sweeping anti-Mafia operation in Palermo on Tuesday dealt a serious blow to the Sicilian criminal organization as it was preparing to form a commission that would have coordinated high-profile crimes, officials say.
Nearly 100 arrest warrants were issued and more than 1,200 carabinieri were involved in the operation, which began at dawn, using helicopters and dog units. The arrests were the culmination of a nine-month investigation by Palermo anti-Mafia prosecutors into Mafia association, extortion and international drug and arms trafficking.
The operation Tuesday - called Perseus, after the mythological hero who beheaded Medusa - "severed all the strategically important heads of a new ruling structure that had to deliberate, as it once did, on all serious acts," the chief anti-Mafia prosecutor, Pietro Grasso, said, according to The Associated Press.
Footage provided by the carabinieri to Italian TV showed cars and police officers storming homes, with masked officers climbing gates and tearing down walls, while helicopters hovered above. Hours later, dozens of handcuffed suspects, some of them grinning defiantly, were shown being escorted out of a police station in Palermo and taken to prison.
Grasso said evidence from wiretaps and reports from at least three informants in recent months suggested that top mobsters from the Palermo area wanted to create a new commission that would deliberate on "serious matters" and criminal strategies with other Sicilian crime bosses.
"We don't know what they were planning," this time around, Grasso said. But investigators suspected it would be big.
The previous commission, known as the "cupola," was headed by Salvatore (Totò) Riina, known as the "boss of bosses," until his arrest in 1993. Under Riina, the commission adopted a strategy of attacking the authorities that culminated with the back-to-back killings of the top anti-Mafia fighters Giovanni Falcone and Paolo Borsellino in 1992.
Bernardo Provenzano, who took over from Riina, pursued a less violent strategy and focused on traditional activities like infiltrating public projects or extortion from local businesses.
Public attention shifted to organized crime groups elsewhere in Italy: The Neapolitan Camorra became the subject of the best-seller "Gomorrah," now an award-winning film; and the 'Ndrangheta, based in the southern region of Calabria, made headlines with the 2007 killing of six Italians outside a pizza restaurant in Germany.
The crackdown Tuesday was the most important anti-Mafia operation since 2006, when several top bosses, including Provenzano, were arrested in Sicily over a period of several months. "If that operation brought the Mafia to its knees, Operation Perseus has ensured that it won't get up again," Grasso said.
Among those arrested Tuesday are the alleged heads of nine Mafia families as well as 14 area bosses, which control more than one family. All were from the Palermo area. Several were well known to investigators, because of both their criminal past and their age. "They re-exhumed older bosses for the commission," said Grasso, who added that up-and-coming criminals still looked up to the older generation. "They have the authority and are reliable."
The police intervened before the commission was constituted, and that may have prevented bloodshed between bosses vying for the top spot in the provincial commission. "We stopped them because they could carry out bloodshed and crimes," Grasso said.
They will be held without bail until a judge rules on the validity of the arrest. Carabinieri in Tuscany were also involved in the operation.


A senior aide to Mugabe is shot
By Celia W. Dugger
Tuesday, December 16, 2008
JOHANNESBURG: A Zimbabwean military commander who belongs to President Robert Mugabe's inner circle and is widely regarded as a key organizer of the brutal crackdown on the political opposition this year was shot in the hand Saturday during a nighttime ambush, the state-controlled media reported Tuesday.
The Mugabe government alleged that the shooting was an assassination attempt and part of a broader effort to destabilize the country, while a senior opposition official said in an interview that he believed it arose from an internecine battle within ZANU-PF, the ruling party, over who will succeed Mugabe, 84, who has been in power for 28 years.
In the feverish atmosphere of Harare, the capital, the shooting added yet another ominous and opaque episode to an unfolding political drama, sent a jolt of fear through opposition and civic circles, and sparked a fresh round of rumors that a state of emergency or military coup could be in the offing.
A cholera epidemic is now raging throughout the country, hyperinflation has rendered the Zimbabwean currency virtually worthless, and abductions of opposition and civic activists have spiked. This month, about 100 soldiers rioted in Harare to protest their inability to withdraw even their meager salaries from banks short of cash.
The article Tuesday in the state-run Herald newspaper did not offer evidence that the attack on the air force commander, Air Marshall Perence Shiri, was politically motivated, nor did it explain why the Saturday shooting had not been reported earlier.
Home Minister Kembo Mohadi was quoted as saying in a statement that the shooting was part of "a build-up of terror attacks targeting high profile persons, government officials, government establishments and public transportation systems."
His statement cited bombings in August of the main Harare Central station, road and rail bridges, as well as November bombings of the Criminal Investigation Department's headquarters in Harare and, again, the central police station.
Officials in the opposition Movement for Democratic Change dismissed the idea that the party had been involved in any of the incidents, saying the party remained committed to nonviolence.
Tendai Biti, the MDC secretary general, said in an interview that he was worried that Mugabe intended to use the shooting of Shiri - and the general environment of conflict and fear - to go after the opposition, as well as the faction in his own party that is out of favor. Biti said he believed Shiri's shooting was a result of internal battles within the ruling party.
"Mugabe can kill two birds with one stone," Biti said. "He can use it as a way of attacking us, and then attacking whatever faction of ZANU-PF he wants to decimate."
The MDC candidate, Morgan Tsvangirai, won more votes than Mugabe in March elections but quit before a runoff in June after thousands of his supporters were beaten and more than 100 were killed.
Mugabe and Tsvangirai signed a power-sharing deal three months ago, but remain deadlocked over the division of ministries. The opposition insists on oversight of the police because Mugabe has retained control of all branches of the military. Both the police and the military have long been crucial to Mugabe's repression of his rivals for power.
Shiri himself has played a pivotal role in that story. In the 1980s, he was commander of the notorious, North Korean-trained Fifth Brigade, which historians say waged a campaign of terror and murder aimed at civilians in Matabeleland, the stronghold of Joshua Nkomo, a nationalist leader Mugabe saw as a rival. At least 10,000 people are thought to have been murdered.
Officials close to Mugabe said in interviews in October that Shiri was among the military commanders who feared that the power-sharing deal with the opposition failed to protect them from prosecution for their roles in political violence.


Detroit papers to trim home delivery
The Associated Press
Tuesday, December 16, 2008
DETROIT: Beset by falling revenue, two Detroit newspapers said Tuesday that they planned to offer only three days of home delivery and would push their online editions instead, making the city the largest in the United States to have its daily papers undergo such a makeover.
The Detroit Media Partnership, which runs The Detroit Free Press and The Detroit News, said it expected to cut about 9 percent of its work force but "hopefully" less, and there will be no job reductions in the newsrooms of either paper, said David Hunke, Free Press publisher and chief executive of the partnership.
"We're here because we're fighting for our survival," Hunke said at a news conference. "We're also here because we have an absolute resolve to not only save but rethink and rebuild two of the greatest newspapers in this country."
Hunke described the moves as "a geometric leap forward."
It is unclear where the job cuts would fall, said Ron Renaud, secretary-treasurer of Teamsters Local 372, which represents drivers and other delivery personnel for the papers. He spoke after a meeting Tuesday morning with Detroit Media Partnership executives.
"Our decision to limit home delivery to three days a week reflects the reality that major newspaper markets are facing daunting economic challenges," Hunke said in a statement ahead of the news conference. "Advertising in this economy is down and costs are up. We can't live in the past."
The Detroit Media Partnership, which includes business and editorial operations for the newspapers, has 2,151 employees.
"They took a long hard look," Renaud said. "They feel they need to do something to maintain two newspapers."
The Free Press will be delivered Thursdays, Fridays and Sundays starting in March, while the News will be delivered Thursdays and Fridays. The News does not have a Sunday paper.
Renaud said the papers would still be printed and sold at newsstands every day. The partnership said subscribers would have daily access to electronic editions that would be copies of the printed edition.
Detroit would be the largest metropolitan area to have its daily papers changed so thoroughly. The Daily Tribune in Royal Oak, a Detroit suburb, recently cut its print edition to four days a week from six. In Arizona, The East Valley Tribune in suburban Phoenix next year plans to have print editions on four days instead of seven while regularly reporting news on its Web site.
The Christian Science Monitor will become the first national newspaper to drop its daily print edition and focus on publishing online.
"I'm skeptical," said Lou Mleczko, president of Local 22 of the Detroit Newspaper Guild, which represents 350 newsroom employees at the papers. "This is a sea change. No one has done it on this scale in North America."
Mleczko said not all readers will be able to change their habits and read the paper online.
A Detroit Media Partnership spokeswoman, Michelle Bassett, said the Free Press was the 20th-largest daily in the country, with a circulation of 298,243; the number doubles on Sunday. The News, which does not publish on Sunday, had circulation of 178,280 at the end of September.
The Free Press is owned by Gannett and the News by MediaNews.



British doctor is convicted in attack on Glasgow airport
By John F. Burns
Tuesday, December 16, 2008
LONDON: A terrorism trial centering on the use of a bomb-laden Jeep to crash into the main Glasgow airport terminal in June 2007 ended Tuesday with the conviction of a 29-year-old British doctor with family roots in Iraq who was one of the two men who mounted the attack.
A jury found the man, Bilal Abdulla, a passenger in the Jeep Cherokee, guilty of two charges of conspiracy to commit murder and conspiracy to cause explosions in a series of three bungled car bombings in Glasgow and London over a 24-hour period that caused widespread alarm in Britain. The judge in the case will sentence Abdulla on Wednesday. Both charges carry potential life sentences.
The driver of the jeep, Kafeel Ahmed, an Indian-born engineer who made the bombs, died of burns received in the Glasgow airport attack, which failed when the flaming gasoline did not ignite gas canisters in the back of the Jeep. Two Mercedes-Benz sedans, also laden with gas canisters designed to be ignited by blazing gasoline, failed to detonate in the West End theater district of London the previous night.
A third man, Mohammed Asha, 28, a Jordanian-born doctor who, like Abdulla, worked in the National Health Service, was acquitted of all charges. Asha had been accused of providing cash and advice to Abdulla, but his defense counsel said that he had been duped into cooperating with the two bombers and that it was Abdulla who had loaded incriminating documents indicating terrorist sympathies onto Asha's laptop computer.
The trial, at Woolwich Crown Court in London, was one of a series of sensational terrorism trials in the past two years that have combined to foster widespread public anxiety in Britain about the risk of a major terrorist attack.
Only one such attack, the quadruple suicide bombings on the London transit system in July 2005, succeeded, killing 56 people, including the 4 bombers. But the British intelligence agencies have repeatedly warned that the country remains at high risk of new attacks.
Abdulla contended in his trial that he and Ahmed, the driver of the Jeep that crashed at the Glasgow airport, had intended only to "scare" people and to draw attention to what Abdulla described as the outrages committed by the foreign troops in Iraq.
But prosecutors said the intention of the Glasgow and London attacks had been to kill hundreds of people and to cause chaos throughout Britain. Experts at the trial testified that the fuel-air bombs, though amateurishly constructed, had the capacity to cause widespread death.
A notable feature of the trial was that it did not directly involve Islamic militants with family ties or training in Pakistan, in the pattern of many of recent terrorist trials in Britain.
Prime Minister Gordon Brown said during a weekend visit to the Indian subcontinent that three-quarters of all terrorist plots investigated by the British intelligence and security agencies involved links to Pakistan, the ancestral homeland of about two-thirds of the Muslims in Britain.
The 2005 London transit bombings, as well as an alleged plot in 2006 to bomb at least seven trans-Atlantic airliners in midair with liquid bombs disguised in soft-drink bottles, involved extensive ties to Pakistan. The airliner bombing trial ended in September with a jury convicting three men of conspiring to commit mass murder through suicide bomb explosions, but failing to reach verdicts on charges that the men had conspired to attack aircraft.
A new trial on those charges will begin early in 2009.
In the case of the Glasgow and London attacks, the plot had its origins in Iraq. Abdulla, the man convicted Tuesday, was born in Britain as the son of an Iraqi physician who had migrated from Baghdad.
The prosecution said he had masterminded the attacks as a revenge for the role of British and American troops in the invasion and occupation, including the bombing onslaught on Baghdad in March 2003 that began the war, witnessed by Abdulla on a visit to his family in the Iraqi capital.
The prosecution said Abdulla had also been influenced by links to the Sunni insurgency in Iraq that began shortly after the overthrow of Saddam Hussein. In a tape recording played to the court, Abdulla was heard condemning coalition troops for what he described as their indiscriminate attacks on Iraqi civilians. "The soldiers killed the young and the old," he said. "They do not discriminate between men and women, so why should we?"


Capello tries to change the way the English think
By Rob Hughes
Tuesday, December 16, 2008
LONDON: "When I arrived," Capello said. "I did not understand why the same players were successful in their clubs, but not with England. After one game, I understood the problem completely."
A lifetime ago, a young golfer was told by his father "Don't tell anybody how good you are, show them."
Arnold Palmer, you could say, became as good as his father Deacon's words. Throughout most of that period of sporting history, the England soccer players have tended to do the reverse. They have talked a better game than they played.
Perhaps that is changing. Precisely a year ago, after England failed to reach the Euro 2008 finals, the country hired a foreigner to change the ways of players who were fabulously rich celebrities going nowhere as a national team.
Fabio Capello, a proven winner as a coach in Italian and Spanish club soccer, could barely string together a sentence in English last December. However, like Palmer senior, he knows that the first maxim of sport is that action speaks louder than words.
"When I arrived," Capello told journalists at a lunch in London on Monday. "I did not understand why the same players were successful in their clubs, but not with England. After one game, I understood the problem completely.
"I realized that the problem was in the mind of the players. Now we are better."
Better is an understatement. England has run up four straight victories in qualifying games for the 2010 World Cup, including a sound beating of Croatia, the team that ended its European qualification last year.
Capello brought some old-fashioned disciplines. He told his players how to dress, how to behave around his team camp. He introduced a dietary regimen so strict that some players' wives and girlfriends smuggled snacks inside their men's travel bags.
They think the Italian "Mister" didn't know this? It reminds me of João Saldanha, the supposedly strict Brazilian coach of the late 1960s, laughing in the knowledge that curfews on wine, women and song were there to be broken, just so long as he, the coach, was not confronted with the evidence of the breaches.
Players, Saldanha would argue over the very drinks that were confiscated from their rooms, will dare to be men given half a chance. But a team needs an aura of common purpose and togetherness.
So maybe, 40 years on, Capello is working the same routine? Maybe he is playing the father-figure, slightly detached from players who, after all, are there to perform in the same sport he once successfully played, for Italy against England?
His observation seems to be that England needed a psychologist more than a coach. For one or two, perhaps, a psychiatrist would not go amiss. They were paper tigers, boasting about their lifestyles, but inwardly afraid of the expectation heaped upon them.
England, the mother nation of organized soccer, has only once, in 1966, won the World Cup. That was at Wembley Stadium, which has been dismantled and rebuilt. Capello observed that it is in this new arena, packed to its 90,000 capacity, that the crowd and the players seem to have grown disillusioned with one another.
Capello himself uses the word psychology. He says now that the greater part of his first year has not been separating the good players from the bad, but convincing the players that with work, with a group spirit, with confidence, they could be better than they think.
A psychologist in a track suit bearing the three lions, England's crest?
"Good psychologist, bad players," retorts Capello, "makes it impossible to win. It is important to change the mentality of the players, but we need to have good players to win."
Once that penny dropped, the victories flowed. England beat Andorra, Croatia, Kazakhstan and Belarus in World Cup qualifiers, and ended 2008 by outplaying Germany to win 2-1 in Berlin. However, Capello believes that the turning point came not in victory, but in a defeat against France, in Capello's second game as England's savior.
"We lost, but in the dressing room I said to the players that I was happy because they made a step forward." The players, he remembers, thought him crazy. "But I told them I am happy because we played against the World Cup runner-up, in Paris, and for half an hour we played well. If we can play well here for half an hour, we can play the whole game like that."
Capello's problem is time with the players, and continuity. He has no game until a friendly in Spain next February; his time working with the players is confined to a handful of days around each international match often months apart.
All Capello's triumphs so far have come through drumming his mentality into players he could work with every day at AC Milan, Juventus and Real Madrid.
At 62, this is as much a challenge to Capello's adaptability. The language, which he understood better than he let on, matters less than the personality.
He watches players in their clubs, and stores up memories of errors from watching video recordings of England games.
"We have to eliminate mistakes," he said. "We want to get better, but we need time."
He is clear, uncomplicated and, at times, ruthless. And he looks for fresh talent.
"I am very happy for players that play with Aston Villa," he says. "They are young and are performing." He singled out two players who have appeared for England - Gaby Agbonlahor and Ashley Young - and one who has not, James Milner.
"He is a very interesting young player. He scored two goals for the Under 21 team against the Republic of Ireland, and these Villa players impress me for the future."
They are all forwards, all quick, and capable of playing on the wings. Their rise threatens Michael Owen and David Beckham, the icons of the past.
Owen has yet to be selected by Capello, and Beckham's chances of gaining the 108th cap he needs to equal England's former captain Bobby Moore depend entirely on what progress he makes at AC Milan.
Beckham is due to start a three- month loan with Milan. It will surprise nobody that his first sessions come on tour, on a commercial break in Dubai starting Dec. 29.
"I will watch him if he plays for Milan," Capello said. "If he doesn't play, he will not be in the squad. I will decide after talking to the coaches - not on sympathy." David Beckham, like Arnold Palmer, will have to show them if he can still be good.

ALL PHOTOGRAPHS {that I can no longer post} COPYRIGHT IAN WALTHEW 2008

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