A Place in the Auvergne, Thursday, 2nd October 2008

0600

IW:

The arriere saison has ended. This is autumn.

Wind, rain; the first for a long time. We wore sun hats on Sunday, cooked sausages by a bone dry creek on Wednesday, now it runs. Yellow leaves rushing to gold, broken brances, twigs, copper beech shavings on black slippery tarmac; talk of snow tomorrow at 1200 m. It's 7 degrees when I drive down to the market.

I read that in The Shop there is much talk of the markets.

Here's a U.S. market price.

For standing guard while your fellow American soldiers bind, blindfold, shoot and dump four people in a canal, it's eight months in prison.

And a bad conduct discharge from the Army.

At the market in The Valley, the prices discussed are those of wood and fuel.

In The Shop, Pakistan has its own autumn, and there will be winter.

More candy from China, tainted, is in U.S.
SHANGHAI: More contaminated Chinese candy was discovered in the United States on Wednesday, this time in Connecticut, where consumer protection officials issued a public warning against eating the sticky sweet.
In China, meanwhile, a couple filed a lawsuit against the company at the center of the scandal despite efforts by the authorities to keep it out of the courts.
The discovery in Connecticut involved the White Rabbit Creamy Candy brand, which is made in Shanghai and has already been pulled from stores in Britain and many Asian countries. Jerry Farrell Jr., Connecticut's consumer protection commissioner, announced that contaminated candy was found at two stores in New Haven, a market in West Hartford and a store in East Haven. In each case, testing found traces of an industrial additive, melamine, in the candy.
"We're concerned, obviously, there may have been bags sold of these before we got to them," Farrell said Wednesday, according to The Associated Press.
Last month, the Food and Drug Administration warned consumers about White Rabbit candy, and in California, health officials have found traces of melamine after testing samples of White Rabbit. The American distributor of the candy has already ordered a recall, but some candy may still remain in stores.
Melamine is a chemical additive at the heart of China's contaminated dairy scare. It is used to make plastics and fertilizers, but it is sometimes illegally mixed into food products, including milk, because its high levels of nitrogen can help fool tests that measure protein levels.
In September, Chinese authorities acknowledged that more than 53,000 Chinese infants had been sickened after consuming powdered baby formula that had been contaminated with melamine. Of that total, 13,000 were hospitalized and four have died.
Initially, the contamination seemed isolated to powdered baby formula as the state media focused on one company, the Sanlu Group, as the worst offender. But officials then announced that tests had found traces of melamine in formula produced by 21 other Chinese dairy companies.
This week, the list of offenders grew longer as new government tests found traces of melamine in some batches of dairy products produced by 15 other companies, according to news agency reports. And traces of melamine have also been found in limited samples of yogurt and other products made with Chinese dairy ingredients.
The scandal has focused widespread public anger at the government. Beijing has sought to blame dairy companies and local officials, especially in Shijiazhuang, the provincial capital where the Sanlu Group has its headquarters. This week, People's Daily, the authoritative newspaper of the Communist Party, carried an unusual article in which a spokesman in Shijiazhuang apologized but also accused officials at Sanlu of asking for a cover-up of the problem in August, shortly before the beginning of the Olympics.
The People's Daily article never addressed whether city officials participated in a cover-up but stated that they did not inform higher officials in the province of the problem until a month later.
Meanwhile, Caijing, one of China's leading independent magazines, reported this week that the parents of a 1-year-old boy had sued the Sanlu Group because the infant developed kidney stones after drinking the company's powdered baby formula. The parents, who reside in Henan Province in central China, are asking for $22,000 in compensation. However, Caijing reported that the local court had yet to accept their lawsuit, a tactic often used in China's legal system to prevent politically delicate subjects from being litigated.
For weeks, several defense lawyers in Beijing have been besieged with requests from parents to file lawsuits related to the scandal. One lawyer, Li Fangping, said his office had received more than 1,200 inquiries from parents. But Li said that the city's legal association had advised lawyers not to file lawsuits in the matter.

http://www.iht.com/articles/2008/10/02/asia/02milk.php

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NATO forces to begin attacks on Afghan drug lords
WASHINGTON: NATO forces in Afghanistan will step up attacks on drug lords and narcotics traffickers who are supporting an insurgency that over the past year has rebounded and is responsible for rising violence, the top American commander in Afghanistan said Wednesday.
The comments by the commander, General David McKiernan, made clear that international troops in Afghanistan were not going to eradicate crops that make Afghanistan the world's top supplier of opium poppies, which are processed into heroin.
But by drawing a clear link between the narcotics trade and its role in the insurgency, McKiernan was outlining what could be an important and expanding role for American and NATO troops as they seek to eliminate a source of money and weapons for the insurgency.
"I think there's a need for increased involvement in ISAF in assisting the Afghan government in counter-narcotics efforts," said McKiernan, commander of NATO's International Security Assistance Force, or ISAF. "Where we can make a clear intelligence linkage between a narcotics dealer or a facility and the insurgency, I consider that a force protection issue and we can deal with that in a military way."
NATO commanders always have the right to take steps to protect their troops. It is under this authority that McKiernan is authorizing attacks on drug lords that are helping the insurgency.
Specifically, McKiernan said that his forces would be authorized to attack narcotics bosses, their foot soldiers and infrastructure if they are linked to the movement of weapons, improvised explosives or foreign fighters into Afghanistan.
Some non-governmental organizations have urged international security forces to take an active role in eradicating the poppy crops. But American and NATO officials have vigorously rejected those proposals, saying such decisions should be left to the Afghan government, which would also have to develop alternate livelihoods for the farmers.
Even so, McKiernan noted that NATO's senior commander, General John Craddock, has approached the alliance to see whether the mandate for Afghanistan should be reopened to determine "if there are some increased authorities that NATO should exercise" to include eradication.
"We should expand our support to that," McKiernan said at one of two separate news conferences he held here on Wednesday.
McKiernan said today's fight in Afghanistan is against more than just Taliban and Al Qaeda fighters, but also "a very broad range of militant groups that are combined with the criminality, with the narco-trafficking system, with corruption, that form a threat and a challenge to the future of that great country."
The general said that the Taliban will take in at least $100 million in heroin proceeds this year alone.
In recent weeks, McKiernan has officially request three additional brigade combat teams for the mission, an increase of more than 15,000 over the 8,500 already approved by President George W. Bush. He said that given the complex terrain, there also is a significant need for more helicopters.
As military commanders and political leaders review the strategy for Afghanistan, McKiernan expressed doubts that a successful effort that enlisted tribal forces to the coalition side in Iraq could be repeated in Afghanistan.
Especially in Anbar Province, a western region of Iraq that was a base of the Sunni-led insurgency, American military officers were able to convince tribal leaders to support the coalition fight against Al Qaeda and other insurgents in a program variously called the Iraq Awakening and Sons of Iraq.
"The difference in Afghanistan is that needs to be an Afghan-led effort to engage the tribes," McKiernan said.
In Afghanistan, there "is a degree of complexity in the tribal system which is much greater than what I found in Iraq years ago," McKiernan added. "And I also find that of the over 400 major tribal networks inside of Afghanistan, they have been largely, as I said earlier, traumatized by over 30 years of war, so a lot of that traditional tribal structure has broken down."
McKiernan, who has been critical of Pakistan's efforts to stem the flow of foreign fighters using safe havens there to carry out attacks against allied forces in Afghanistan, said he was "cautiously optimistic" that an ongoing assault by Pakistani forces against militants in the tribal area of Bajaur could put a dent into extremist operations in the border region.
"I am encouraged by the military operations that the Pakistani army and Frontier Corps have undertaken," said McKiernan, who cautioned, however, "It is probably too early to see if there's been an effect on the sustainment of foreign fighters, of supplies, of facilitation on the Afghan side of the border.
McKiernan also praised the appointment this week of a new head of Pakistan's top spy organization, saying the new director general, Lieutenant General Ahmed Shuja Pasha, is likely to carry out reforms of an agency that the general said has had "institutional and historical" ties to the Taliban and other militant networks.

http://www.iht.com/articles/2008/10/02/asia/02military.php

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Taiwan bans Nestle items as wary of China milk powder
TAIPEI: Taiwan health officials on Thursday ordered stores around the island to remove six types of Nestle dairy products after tests found traces of contamination from China, which is at the centre of a tainted milk powder imbroglio.
The island's Department of Health ordered the removal of Nestle products from Heilongjiang province of north-eastern China following tests that showed more than half of the items contained traces of melamine.
"Although there are no health concerns, our standards were exceeded, and to eliminate the public's suspicions altogether and ensure the rights of consumers, we have asked merchants to carry out a removal," the department said in a statement.
Nestle said its products were safe, but it would remove them from stores in Taiwan following the government order.
A growing list of Chinese milk and milk-related products have been taken off shelves around the world in recent weeks after they were found contaminated with the industrial chemical melamine, sickening tens of thousands and killing four children.
In the capital Taipei and Taiwan's second largest city Kaohsiung, store clerks piled jumbo cans marked KLIM and Nespray, two of the banned products, into carts, leaving shelves bare.
"First of all, we will take these products off the shelf," Taipei-based Nestle spokesman Liang Chia-jui told a news conference as he drank from a mug of one of his products. "Nestle will make consumer interests its top priority."
Nestle officials said their products from China were safe and urged the Taiwan health department to introduce "science-based standards" for melamine tests. Last month Taiwan approved the sale of Nestle items from China, the company said.
Taiwan's standards are now 50 times stricter than the international norm, the Switzerland-based global dairy product manufacturer said.

http://www.iht.com/articles/reuters/2008/10/02/asia/OUKWD-UK-CHINA-MILK-TAIWAN.php

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Cuba faces food shortages after hurricanes
Cuban markets offered a dwindling selection of food and a growing expanse of empty shelves on Wednesday as food shortages the government warned about after hurricanes Gustav and Ike became increasingly evident.
The shortages were exacerbated in the Cuban capital when shipments from food suppliers slowed in a conflict with the government over newly imposed price controls.
In markets around Havana, customers found stretches of mostly vacant vendor stalls and limited supplies of food. A market in the Vedado district offered only papayas, a small stack of melons and a few bulbs of garlic.
Vendors shrugged their shoulders and said nothing else had arrived for them to sell.
A shopper named Yissel, who did not provide her full name, said the situation was the same in other markets and in her neighbourhood grocery store.
"These are difficult times because everything is so affected, so damaged (by the hurricanes)," she said. "In Minimax (grocery store), it was like I'd never seen it. I saw almost nothing, not like other times."
Due to problems in its state-run agriculture, Cuba has long struggled to meet its food needs and imports much of what it consumes.
Hurricanes Gustav and Ike made the problem worse when they ripped through most of the country in a 10-day span starting August 30, causing $5 billion in damage and destroying 30 percent of Cuba's agriculture.
A top agriculture official warned two weeks ago of impending food shortages that he said could last six months. But he said the government had implemented emergency measures to make sure no Cuban went hungry.
On Wednesday, Cuba's state-run press reported that those measures included placing limits on the amount of food to be purchased and putting caps on prices.
One newspaper reported that many food suppliers had not made their usual shipments because the government's price controls would cause them to lose money.
The government in recent days has issued strong warnings against price gouging and through Cuban media has hinted that markets where trade has not been state-controlled may be shut down.
Cubans said food difficulties were to be expected after the devastation of Gustav and Ike, but they should last only a few months as agricultural production is renewed.
Government worker Hernan, who did not give his last name, said he did not expect anything like the harsh deprivation Cubans suffered in what is known as the "special period," the years after the Soviet Union, Cuba's biggest benefactor, collapsed in 1991.
"This is a country that knows how to learn from bad experiences," he said. "I hope the authorities have learned from the special period and won't let it happen again."
The situation would be less dire, said Elsie Perez Martinez, a doctor, if the nearby United States had given Cuba a hand by providing aid or lifting its 46-year-old trade embargo against communist-run Cuba.
"If it were not for the blockade (embargo), it would not have come to this," she said. "They won't let us buy in the United States."
The United States has offered more than $5 million (2.8 billion pounds) in aid, which Cuba rejected. Cuba requested that the U.S. temporarily lift the embargo so it can purchase goods for recovery, but the Bush administration refused. The United States has permitted food sales to Cuba since 2001 but only for cash and not on credit.

http://www.iht.com/articles/reuters/2008/10/02/america/OUKWD-UK-CUBA-FOOD-SHORTAGES.php

How green is your computer?
Reusable tote bag? Check. Prius? Check. Rooftop solar panels? Check. In the bid to secure your green bragging rights, you have the usual suspects covered.
But what about your personal computer?
After all, the object that, via the Internet, can provide you with more information on how to lead an environmentally sound life can also be one of the things that contributes to the very same problem.
Consider the following: A standard-issue PC, left on all the time (a not-uncommon situation) consumes 746 kilowatts per hour a year, according to estimates from the U.S. Environmental Protection Agency. By comparison, a refrigerator uses about 500 kilowatts a year. Surely there are things that users can do to reduce their computer's environmental footprint. Read on to learn ways to run your PC more efficiently, make environmentally-intelligent purchasing decisions and to dispose of an old computer properly.Power corrupts
The first piece of advice is the simplest: Don't leave your computer on all the time. Shutting it down at night should reduce its power consumption by around 500 kilowatts annually. In addition, your computer should be set to go to sleep after periods of inactivity. Different parts of your system can be set to sleep at different times: Setting your energy-saving preferences to put your hard drive to sleep after 15 minutes of inactivity is a good benchmark; your entire computer (which takes more time to wake up) should be set to go to sleep after 30 minutes.
And ditch your screensaver. Screensavers can use your hard drive to power up and photo screensavers require the extra use of a graphics card, which means you'll have the hard drive, graphics card and monitor all in use.
Screensavers are "a throwback from the days of really old-school CRT monitors," Barbara Grimes, spokeswoman for the Climate Savers Computing Initiative, said of cathode-ray tubes. "It's never been an energy-saving feature."
There's also the issue of "phantom" or "vampire" power: Just because your computer or laptop is shut down doesn't mean it's not using energy. Almost every piece of electronics uses power even when it is turned off. For example, your television turns on instantly because it is actually a little bit on already. In the case of your desktop, your computer stays in standby mode so it can keep data in its memory, its clock accurate and other functions. This means the average desktop PC wastes half its power.
To combat the vampires, take your computer (and peripherals) and plug it into a master power strip like the Smart Strip Power Strip, which can sense which devices have been turned off and then cuts all power to them.
Finally, download a free power-management tool. These applications will show you how much energy you can save by adjusting various settings and will make those adjustments for you in one click. Google's Energy Saver will, in addition, show you the collective energy savings of all users of the product; it also integrates into the Google's own Desktop application. Verdiem's Edison software, released in August, shows users estimated annual savings in terms of money, energy and carbon dioxide emissions. Edison's power management tool lets users choose how aggressive they want their energy savings to be by letting them slide the bar towards or away from the "save more" or "save less" tabs.Out with the old?
If you do decide to purchase a new computer, make sure that you choose both a computer and monitor that are Energy Star complaint. Energy Star computers must meet energy-use guidelines established by the environmental agency in three areas: standby, active, and sleep modes.
The Electronic Product Environmental Assessment Tool, or Epeat, is another environmental certification that evaluates electronic products according to 51 environmental criteria. To qualify for Epeat registration, the product must meet all 51.
In general, laptops are greener than desktops because they have been designed with power sensitivity in mind, so they tend to use less power when plugged in than desktops. But desktops are easier to upgrade, and therefore may last longer.
Newer computers tend to be more energy efficient than older models. For example, Energy Star-qualified computers starting from July 2007 come with power management pre-enabled.
As for whether Macs are greener than PCs? "It's system by system," said Grimes, the Climate Savers Computing Initiative spokeswoman. "Apple is one manufacturer and when you say PC, there are dozens. They're all using Intel processors or AMD processors. Apple is not using a proprietary processor anymore so they're getting a lot more similar at the hardware level."
One place where there is a difference is in how certain manufacturers' products are made. Apple, for example, has said it will "completely eliminate the use of polyvinyl chloride (PVC) and brominated flame retardants (BFRs) in its products, and arsenic in the glass of flat-panel displays by the end of 2008." Unfortunately, that effort has not spread as quickly across the industry as some would like.
"I wish I could say that a lot of companies have eliminated their chemicals or had made some significant improvements, but that's just not where the industry is," said Barbara Kyle, national coordinator of the Electronics Take Back Coalition.Reduce, reuse, recycle
When it comes to recycling your computer, picking the right program is key. If done right, recyclers should reuse the parts they can and manage waste responsibly, which means making sure that parts don't go to countries with poor eco-track records, like China, and that items that do get exported (like circuit boards and leaded glass) go to green-friendly sites.
In 2005, used or unwanted electronics amounted to about 1.9 million to 2.2 million tons of waste. Of that number, about 1.7 million tons were disposed of in landfills, and only 345,000 to 379,000 tons were recycled, according to the environmental agency.
The problem is that it's hard to figure out who's dumping and who's not. "There's no such certification program," said Kyle, which would help promote responsible recycling and green design in the electronics industry. Her organization, Computer Take Back, conducts initial screenings. Will people know 100 percent? No, but it's a start. For Computer Take Back's list of recyclers, go to tinyurl.com/5yrb9k.
Computer manufacturers like Apple, Hewlett Packard and Sony offer recycling programs, but Dell goes even further: It will recycle any Dell brand product - no matter when it was bought - free (including pick up). Dell will also pick up other product brands for free if the consumer purchases a new Dell. Concerning manufacturer recycling programs, Kyle added that with a number of manufacturers, "you have to either pay them or you have to buy a new computer to get them to take your old PC back for free. There's a huge disconnect between what people want to do and what they can do, and that's where the manufacturers need to step up."

http://www.iht.com/articles/2008/10/01/technology/PTBASICS02.php

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Floods kill 30 in Algerian town
Floods caused by heavy rains have killed at least 30 people in and around the Algerian oasis town of Ghardaia, authorities said Thursday.
The official APS state news agency quoted a senior local official as saying 50 people had been injured.
The rains died down Thursday and water appeared to be subsiding but some streets were still submerged and residents feared more flash floods in the town of 100,000 on the northern edge of the Sahara.
Groups of youths busily shovelled sludge from the doorways of shops after two days of downpours. Some cars lay overturned by the roadside, apparently up-ended by the force of floodwaters that churned through the town.
Troops had been deployed to ensure traffic was able to move and to prevent looting, APS said, adding that eight of the 13 districts of the surrounding Ghardaia province had been affected by the floods.
Earlier Interior Minister Noureddine Yazid Zerhouni said between 300 and 600 homes had been inundated in the town, 700 km (440 miles) south of the capital Algiers.
He said gas and electricity had been cut and food stores had been waterlogged, probably spoiling them.
Ghardaia is one of several fortified Mozabite Berber medieval settlements in the M'Zab valley, a region listed as a U.N. World Heritage Site and frequented by European tourists.

http://www.iht.com/articles/reuters/2008/10/02/africa/OUKWD-UK-ALGERIA-FLOOD.php

As governor, Palin focused on developing Alaska's resources
ANCHORAGE, Alaska: When Governor Sarah Palin meets Senator Joseph Biden Jr. on Thursday in the vice-presidential debate, even her fellow Alaskans might hear for the first time some of her views on health care reform, education policy and other issues of state government.
In her 22 months in office, Palin has not addressed many of those matters in a significant way, pursuing a narrower agenda rooted in Alaska's resource-based economy. Palin has approved increased spending for education and the elderly, sued the federal government for listing the polar bear as a threatened species, and pushed for a bill that would have reduced state regulation of new medical facilities.
But by and large, oil and gas issues have dominated her tenure.
"You can't think of another area where there's been another drive or initiative coming out of the administration with the same level of intensity," said Scott Goldsmith, a professor of economics at the Institute of Social and Economic Research at the University of Alaska Anchorage.
Well before she became the Republican vice-presidential nominee, Palin was positioning herself nationally on resource development and energy issues. She is the chairwoman of the natural resources committee of the National Governors Association, after serving as vice chairwoman until July. The committee has not yet taken action under Palin, but a spokeswoman for the association said committees usually did not take up business until later in the autumn.
Palin's work on oil and gas issues was part of a wider effort at overturning the work of her predecessor, Governor Frank Murkowski, also a Republican. She has pushed through measures to increase taxes on oil companies in addition to a $500 million subsidy to encourage construction of a pipeline that would tap trillions of cubic feet of natural gas beneath the North Slope.
Palin has long said that a pipeline - the construction of which remains uncertain - would transform Alaska's image from that of a state known for receiving more federal money per capita than any other to one that is finding ways to meet the country's energy needs.
A review of her public statements, signed and vetoed bills, and interviews with people in state government provide insight into Palin's positions on other statewide issues:
Health care: Palin proposed eliminating a requirement that new medical facilities receive a "certificate of need" from the state before opening. She argued that the certificate program had the effect of driving health care costs up by not allowing more competition and potentially better health care in newer facilities.
The bill, opposed by hospitals, did not make it out of the Legislature.
Trade: Palin does not appear to have made any trade missions since taking office, and former state officials said the state's trade staff had been reduced under her watch.
Alaska has also sharply reduced its role in the Northern Forum, an association of state and regional governments from countries including Canada, Russia, Japan and China that works on common issues in northern regions like economic development, flooding and global warming.
Education: In March, Palin approved a widely praised legislative effort that would increase education spending by about $200 million over five years, an increase made possible by revenue surpluses from the rising price of oil.
She largely took her education spending proposal from the recommendations of a special task force created by lawmakers to address an issue that had long divided the capital.
The final product increased money for rural schools but also nearly tripled the per-student allocation for students with intensive special needs in districts like Anchorage, where enrollment has increased from students moving in from rural Alaska for services.
Palin's son Trig, born in April, has Down syndrome. The special-needs students served by the increase in spending includes those with Down syndrome, said Carol Comeau, superintendent of the Anchorage School District.
Environment: Palin has taken positions that reflect her support for developing natural resources in Alaska. Her views are largely in line with those of voters in her state, but not with environmentalists.
Like most other Alaskans, Palin supports drilling for oil in the Arctic National Wildlife Refuge, while her running mate, Senator John McCain, is opposed. She has been ambiguous about whether she believes humans are causing climate change, while McCain has embraced science linking climate change to human activities.
The most contentious environmental issue within Alaska recently has been the fight over the proposed Pebble Mine, one of the largest discoveries of gold and copper in the world. The proposed mine would be at the headwaters of Bristol Bay, home to one of the largest runs of wild salmon.
In response to a candidate questionnaire two years ago, Palin told The Anchorage Daily News, "As part of a Bristol Bay fishing family, I would not support any development that would endanger the most sensitive and productive fishery in the world."
This year, in August, a ballot initiative before state voters would have made it more difficult to open mines that could damage salmon streams. Palin came out against the measure just days before it was defeated.
Supporters of the measure believe the governor's public opposition may have broken ethics laws prohibiting state officials from advocating for ballot initiatives. State ethics officials are reviewing the matter.
Budget: Even with the state enjoying a multibillion-dollar surplus because of high oil prices, Palin has vetoed about $500 million in capital spending projects requested by state lawmakers in two consecutive budgets. She also supported putting about $7 billion of surplus revenue into state savings over two years.
A chunk of that surplus, about $2 billion, came from the governor's effort to increase taxes on the oil industry.
Social Issues: Palin has been open about her conservative views, which include opposition to same-sex marriage and opposition to the use of embryonic stem cells for research.
Even so, she has passed over chances as governor to take bold legislative stands on conservative social issues. She declined calls by abortion opponents this year to hold a special session to pass a measure requiring minors to get parental consent before having abortions.

http://www.iht.com/articles/2008/10/02/america/palin.php

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Decline in oil prices holds the prospect of wide relief
NEW YORK: For the past year, rising oil prices have taken a toll on the global economy, driving up gasoline and food prices, punishing airlines and automakers and ripping a large hole in people's pockets.
But lately, nearly lost amid the chaos in the markets, oil prices have been dropping sharply from their triple-digit peak in July. If that trend continues, billions of dollars and euros could be put back into consumers' pockets, providing some support for an economy that needs all it can get.
In recent testimony before the U.S. Congress, Ben Bernanke, the chairman of the Federal Reserve, pointed to the drop in energy prices as "a positive note," even as he warned of the many other stresses facing the U.S. economy in particular.
Oil has been volatile in recent weeks amid wild swings in the markets, bobbing between $110 and $90 a barrel. But with oil demand falling in many Western countries and demand growth weakening even in some of the booming economies of Asia, the overall price trend is downward.
Oil was at $94.75 a barrel in Thursday afternoon trading in New York.
While consumers welcome the decline, oil producers are reacting warily.
Mexico said it might have to cut its budget next year as petroleum revenue drops. Countries like Russia and Venezuela, which have been riding a wave of energy-fueled nationalism, may have to scale back their ambitions, and energy projects that require big financing could be delayed.
And the Organization of Petroleum Exporting Countries, led by Saudi Arabia, might step in forcefully to stem the slide in prices, analysts said.
But whatever OPEC does, a growing number of experts believe that a combination of weaker global growth and slumping demand is likely to keep pushing oil prices down in coming months. That in turn would provide a break for an economy battered by tightening credit and slumping stocks.
"The fall in oil prices is equivalent to a new stimulus package for consumers," said Lawrence Goldstein, an energy analyst at the Energy Policy Research Foundation. He calculated that each $10-a-barrel drop in the price of oil lowers the annual U.S. energy bill by about $70 billion.
Because of high energy costs, consumers have reduced their gasoline use at the fastest pace since the oil shock of the late 1970s. As prices peaked, oil consumption in the United States fell by 6 percent in July to its lowest level in five years. Meanwhile, gasoline demand had its steepest monthly decline since 1983, according to the latest figures from the U.S. Energy Department.
Oil consumption in most developed economies is also falling. The French oil company Total, for example, indicated last month that demand for its fuels in France had declined by 6 percent this year. For the industrialized world, which accounts for about 60 percent of global oil demand, consumption fall by 1.3 million barrels a day this year, the steepest decline since 1982, according to analysts at Bernstein Research. That would more than offset growth in consumption from developing countries like China, the analysts said.
"A study of the 1980s reaffirms our pessimism about oil demand in 2008 and 2009," the analysts said in a recent research note. "Recent data suggests we may finally be reaching the point of negative demand."
Many analysts agree. Lawrence Eagles, JPMorgan's oil expert, said, "This is the weakest fundamental situation we've had since 2002. "
Yet oil prices remain high by historical standards. Many businesses had not managed to raise their prices enough to compensate for the oil spike this summer, and they say the high prices are still causing problems.
"We get excited when prices break below $100 a barrel, but we are still in a high feedstock and hydrocarbon environment," said Rich Wells, the vice president for energy at Dow Chemical.
Automakers have appealed for government aid as consumers shun gas-guzzling vehicles, a problem lately worsened by a credit squeeze for potential car buyers. Ford Motor said this week that its U.S. sales had dropped 34 percent in September. Other automakers, like General Motors and Toyota, also reported sharp declines.
Rising oil costs have been a big reason the global airline industry has lost money in all but one year since 2000. Jet fuel is up nearly 50 percent from last year. Fuel costs amounted to 14 percent of airlines' expenses in 2000. They are forecast to reach 40 percent next year, according to the International Air Transport Association.
"Our industry is like Sisyphus," Giovanni Bisignani, director general of the association, said at an industry conference in Istanbul this summer. "After a long uphill journey a giant boulder of bad news is driving us back down."
A sustained drop in oil prices may also lead to a new wave of mergers in the energy industry. Given the sharp increase in prices in recent years for everything from drill rigs to steel pipes, costs in the industry have risen sharply. The cost of adding production is now $70 to $90 a barrel, according to analysts at JPMorgan and elsewhere. Any drop below that range may curb investment in new oil supplies.
Already, some producers are feeling the pinch. Petro-Canada, for example, signaled recently that the cost of developing oil sands in Canada would not be economical below $100 a barrel. The cost of other challenging resources, for example deep-water oil, has also swelled.
The last time they met, many ministers from OPEC said they wanted to cut production to stem the price decline. Defying other producers, the Saudis signaled that they wanted to see oil fall below $100 to give the world economy a boost. Just how low they will let prices fall before tightening the spigot is unclear.
"Prices are still searching for true value and no one is quite sure what that is," said Tom Bentz, an energy analyst at BNP Paribas in New York. "A lot will depend on how the global economic picture will shape up. We still have a world that is a scary place to live in."

http://www.iht.com/articles/2008/10/02/business/oil.php

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U.S. Senate approves Indian nuclear deal
WASHINGTON: The United States opened a new chapter of cooperation with India as Congress gave final approval to an agreement that permits civilian nuclear trade between the two countries for the first time in three decades.
The Senate ratified the deal by a vote of 86 to 13 a week after the House passed it, handing a rare foreign policy victory to President George W. Bush in the twilight of his administration and culminating a three-year debate that raised alarms about a new arms race and that nearly toppled the government of India.
The agreement, in the view of its authors, will redefine relations between two countries, which were often at odds during the Cold War, and build up India as a friendly counterweight to a rising China. Secretary of State Condoleezza Rice will travel to India on Friday to commemorate approval of the accord, The Associated Press reported.
India's national security adviser, M.K. Narayanan, praised the deal Thursday and said the world has now recognized India as a nuclear power, The AP said.
"The world needs India as India needs the world," he said. "It's something that we have understood but the world at large has now recognized."
But critics complain that the deal effectively scraps longstanding policies designed to curb the spread of nuclear weapons and that it could encourage nations like Pakistan, Iran and North Korea to accelerate their own programs outside international legal structures.
Under the terms of the deal, which now goes to Bush for his signature, the United States will be able to sell nuclear fuel, technology and reactors to India for peaceful energy use - despite the fact that New Delhi tested bombs in 1974 and 1998 and has never signed the Nuclear Nonproliferation Treaty. India has faced a nuclear trade ban since that first test.
Under the accord, India agreed to open 14 civilian nuclear facilities to international inspection, but it would continue to shield eight military reactors from outside scrutiny.
"The national security and economic future of the United States will be enhanced by a strong and enduring partnership with India," Senator Richard Lugar of Indiana, the ranking Republican on the Foreign Relations Committee, said in Senate debate on Wednesday.
But Senator Byron Dorgan, Democrat of North Dakota, called the deal a "grievous mistake" that would reward rogue behavior. Dorgan and another Democrat, Senator Jeff Bingaman of New Mexico, tried to amend the agreement to explicitly require the United States to cut off nuclear trade if India conducted a new nuclear test.
Bush has been pursuing the agreement since 2005, and his advisers have called closer relations between the United States and India a key part of his foreign policy legacy.
Prime Minister Manmohan Singh of India, at the White House last week, endorsed that view. "When history is written," he said, "I think it will be recorded that President George W. Bush made a historic goal in bringing our two democracies closer to each other."
But the agreement has proved even more controversial in India. Opposition parties have tried to bring down Singh's government and the Communist Party dropped out of his governing coalition to protest the deal.
For India, the pact signals the end of 34 years of isolation among nuclear powers - what the New Delhi government calls "nuclear apartheid."
The United States-India Business Council, which promoted the deal, estimates that India may spend as much as $175 billion over the next quarter century expanding its nuclear industry to cope with rising energy demands.
"This is one of those historic, important, tectonic shifts in relations with another country," said Ron Somers, the council's president.
Michael Krepon, co-founder of the Henry L. Stimson Center, a research organization in Washington, called the promise of big dollars and U.S. jobs "pure fantasy" and predicted that the United States would regret further opening the nuclear door. "There will be a reckoning for this agreement," he said. "You can argue till you're blue in the face that India is a special case. But what happens in one country affects what happens in others."
Representative Edward Markey, Democrat of Massachusetts, called the legislation "a terrible bill."
"Now that the nuclear rules have been broken for India's sake," he was quoted as saying Thursday by The AP, "Iran, Pakistan and North Korea will be looking for a way to similarly game the system."Pakistan wants its own deal
After the Senate approved the agreement with India, Pakistan demanded Thursday that the United States give it civilian nuclear technology as well, The Associated Press reported from Islamabad.
Pakistan, which like India has a nuclear arsenal, has long opposed efforts by the Bush administration to push through the India deal.
"Now Pakistan also has the right to demand a civilian nuclear agreement with America," said Prime Minister Yousaf Raza Gilani. "We want there to be no discrimination. Pakistan will also strive for a nuclear deal and we think they will have to accommodate us."
The United States is unlikely to agree to the demand from Pakistan, whose nuclear architect, Abdul Qadeer Khan, sold atomic secrets to Iran and Libya.

http://www.iht.com/articles/2008/10/02/asia/nuke.php

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E.ON Ruhrgas gets stake in Russian field
BERLIN: After years of negotiations, E.ON Ruhrgas and Gazprom signed a major deal Thursday giving the German utility a stake in the vast Yuzhno-Russkoye natural gas field in Siberia.
In return, E.ON Ruhrgas will reduce its minority stake in the Russian gas monopoly by nearly half.
The asset swap was announced in St. Petersburg in the presence of Chancellor Angela Merkel of Germany and President Dmitri Medvedev of Russia, who were holding a day of political and economic consultations. This was Merkel's second visit to the country since the outbreak of the war between Russia and Georgia two months ago.
The agreement announced Thursday confirmed the strength of the German-Russian trade relationship. Commercial ties between the two countries have flourished over the past few years, even as companies from other European countries and the United States stumble in their dealings with Russia.
Germany is Russia's most important trading partner, with Russia supplying more than 35 percent of Germany's natural gas needs and Russia becoming a bigger market for German manufactured goods. Total trade last year amounted to €57 billion, or $80 billion.
"Russia is a very interesting market for us," Merkel said at a news conference after discussing with Medvedev how German companies could assist the Russian economy, particularly in energy efficiency and renewable resources.
Medvedev, who in June made Germany his first official visit to a European country as president, said he was "convinced" that Germany and Russia could become much closer.
"Our consultations demonstrated the maturity of the Russian-German partnership, an ability to listen to a partner, to take into account each other's interests despite differences," he said.
Under the terms of the accord, E.ON will obtain a 25 percent stake in the Yuzhno-Russkoye field, which, according to Gazprom, has recoverable reserves of about 600 billion cubic meters of natural gas.
In return, Gazprom will receive 49 percent of E.ON's stake in the Russian energy trading company Gerosgas.
Gerosgas has a stake in Gazprom, of which nearly 3 percent is held by E.ON. The asset swap means that E.ON will relinquish that stake, thus reducing its total stake in Gazprom to 3.5 percent.
Production in Yuzhno-Russkoye began last year and will reach about 25 billion cubic meters by next year, according to Wintershall, the energy division of the chemical company BASF.
More than two years ago, Wintershall clinched a deal with Gazprom to develop the Yuzhno-Russkoye field, obtaining a 35 percent share in return for Gazprom's taking a half-interest in Wingas, Wintershall's European gas distribution subsidiary. With the E.ON accord announced Thursday, Wintershall's stake will be reduced to 25 percent.
"These assets swaps are now common between European energy companies and Gazprom," said Coby van der Linde, director of the Clingendael International Energy Program of the Netherlands Institute of International Relations.
"E.ON Ruhrgas wants to develop its upstream activities because it needs a security of supply, while Gazprom, at least in the case of deals it has concluded with other energy companies in Europe, wants to develop downstream in order to sell its gas," Van der Linde said. "They need each other to realize their respective goals."
The gas from Yuzhno-Russkoye will reach Europe through NordStream, the Russian-German pipeline that will be built under the Baltic Sea - bringing gas for the first time directly from Russia to its markets in Europe.

http://www.iht.com/articles/2008/10/02/business/gazprom.php

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OPINION

RUSSIA, EUROPE AND ENERGY I

The vicious circle
By Tatiana Mitrova
Thursday, October 2, 2008
At the time of the First World War, Winston Churchill formulated the fundamental principle of energy security as follows: "Safety and certainty in oil lie in variety and variety alone."
While the actual concept of "energy security" appeared only much later - during the oil crises of the 1970s - the wisdom of his words is widely regarded to this day as immutable. But in recent years, the tendency to put all one's eggs in one basket has increasingly undermined the long-term security of natural-gas supplies. Producers and consumers have been recklessly playing at "lose-lose."
The issue has become one of the most heatedly discussed items on the international agenda, even though the proportion of gas crossing international borders is far lower than that of oil (28 percent and 58 percent respectively).
There are objective reasons for this: As gas markets integrate and develop, an ever more important role in the security of deliveries is assumed not only by technological factors, but by institutional factors: the differences in regulation of gas markets in different countries; conflicts of national interests; the problems of making investments at the inter-governmental level. The development of transcontinental markets and the need to transport gas through several countries makes the question of secure transit ever more acute.
The relations between the European Union and Russia offer a clear illustration of this issue. The trade that began in the late 1960s with the sale of Soviet gas to Austria and developed dynamically despite the Iron Curtain, the Cold War and fundamentally different political and economic systems, is today undergoing difficult times.
In the past, the Soviet state guaranteed all necessary investments in the production and transport of gas. The transit problem was effectively nonexistent and consumer demand was fixed in long-term bilateral contracts. Trade grew rapidly in the 1970s and 1980s. After the collapse of the Soviet Union, and with the liberalization of the European gas market, these arrangements effectively ceased to function. No new institutions or balance of interests were there to take their place, and these have been taking shape most painfully.
The process is complicated by a vicious circle created by anxieties among producers and consumers over "the reliability of demand" and "the reliability of supply." Producers, uncertain about future demand for their energy resources, postpone investments and look for new markets; that in turn increases the anxiety of consumers and leads them to look for alternative suppliers. Thus diversification - one of the fundamental principles of energy security - ends up undermining relations between Russia and the European Union.
For now, both sides have limited themselves to declarations.
Europe wants Russia to increase investment and to radically increase the participation of Western companies in energy production. Russia is irritated by Europe's backing for "select projects" (above all the Nabucco and Trans-Caspian pipelines); by the demand that Russia ratify the Energy Charter Treaty; by the unclear position of the European Commission on long-term contracts; by statements from EU representatives to the effect that some export pipelines under construction by Gazprom fall under the unbundling; by the many obstacles to the participation of Gazprom downstream; and, most important, by Europe's efforts to diversify gas supplies, 26 percent of which currently come from Russia.
The European Commission has called for an active search for alternative supplies of gas as well as increased use of liquefied natural gas. It is obvious that the alternatives to Russia - Iran, Central Asia, North Africa, Nigeria, etc. - carry high political risks and have unstable economic systems, like many of the countries through which Europe would have to lay new transit routes. In addition, the distance of new suppliers from Europe would require huge capital investment in new infrastructure. Nonetheless, these notions generate considerable concern in Russia.
Russia's symmetrical response - a categorical rejection of the Energy Charter; the concept of strategic reserves; restrictions on foreign participation in production and Gazprom's monopoly on transport and export; increased cooperation with other gas producers from Central Asia to Iran, Algeria and Venezuela; declarations about a diversification of markets (northeast Asia, LNG) - in turn generates alarm among European consumers.
Paradoxically, the efforts by Russian companies to participate in the European market also provokes negative responses. Amazingly, these critics do not understand that a producer who invests considerable resources in acquiring assets downstream would do everything to assure them a reliable supply. Besides that, these same assets are the best guarantee of good behavior, since violations in consuming countries can lead to stiff fines.
The situation is like the arms race, where each effort by one side to ensure its security provokes the other to build up its arsenal, and so on. In the energy field, this means investments in ever less efficient projects in order to achieve "independence." Of course it's possible to find comfort in the fact that this can create an excess of capacity, which then becomes a guarantee of energy security. But at what price! - the destruction of the most precious asset in the energy business: mutual trust.
For all the mutual suspicions, it is worth noting that neither side is actually capable of destroying the symbiosis that has developed between Russia and Europe. Russia and the EU complement each other in energy by virtue of geographical proximity, transport infrastructure and traditional ties. In the past year alone, many European companies have concluded new long-term contracts with Gazprom.
It is also worth noting that in all the talk of diversification, it is only additional deliveries that are at issue. The basic volumes of gas are set by contracts with terms of 20 to 25 years. Such long-term contracts play a key stabilizing role and enable the partners to weather mutual distrust.
European experts, for example, often say they are uncertain about Russia's ability to increase supplies. But it is important to separate two issues - there is no question that Russia cannot (and does not intend to) meet the entire increase in European demand. At the same time, the EU is not clear about the volume it would like to receive. That can only be established through a long-term contract. Violating a contract is subject to steep fines - which is why Russia has always fulfilled its obligations.
A contract also attracts financing, which, given the prospects of the Yamal and Shtokman fields, should become ever larger. So there is no point in doubting Russia's ability to supply what has not been negotiated - or to expect that Russia would invest huge resources without long-term contracts. If they are concluded, any "diversification" would be possible only over and above what has been contracted.
Thus the mechanisms for lowering risks that have been developed by the market over many years - long-term contracts - should be seen not as "market failures" but as a critical component of energy security. Shared participation both upstream and downstream would be another way to increase the reliability of the system.
Energy differs from other forms of business primarily in its long-term character. The mutual dependence and shared risk on both sides of the energy trade are so great that they cannot be fully hedged by any market mechanisms. There is always the threat of opportunistic behavior by counterpart. On the other hand, the efficiency of the international division of labor is so mutually beneficial that it is worth the effort to understand the anxieties of the other side and to find compromises.
Whether this effort succeeds or not will determine whether gas remains "the fuel of the future." Not only that: The future development of the economies of Russia and Europe depend on it.

Tatiana Mitrova is the head of the Center for International Energy Markets Studies of the Russian Academy of Sciences.

http://www.iht.com/articles/2008/10/02/opinion/edmitrova.php

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Russia spares Ukraine from gas shock despite row

Russia agreed on Thursday to spare Ukraine from a shock rise in its gas export prices despite a row over Ukrainian arms sales to Georgia with which Moscow fought a brief war in August.
Russian Prime Minister Vladimir Putin and his Ukrainian counterpart Yulia Tymoshenko met outside Moscow to try to hammer out an agreement over the price Ukraine will pay next year for the Russian gas on which its economy depends.
Apart from the row over Ukraine's weapons supplies to Georgia and the support of Ukraine's West-leaning leadership for Tbilisi, Russia is also angry over its moves to join the NATO military alliance.
"We have just signed a memorandum," Putin told a news conference after signing a broad energy cooperation memorandum with Tymoshenko.
"During today's negotiations we talked about such serious issues as further cooperation in the energy sector, including Russian gas supplies and uninterrupted transits of energy supplies to consumers in Europe."
Tymoshenko, sitting next to Putin, said: "The parties confirmed their willingness to establish a gradual transition to market prices within three years. We have come to a conclusion that our countries do not need shock therapy."
The energy memorandum made no mention of new gas prices but it will serve as a basis for signing long-term gas deals in the future, Tymoshenko said, adding the two sides had agreed there would be no middlemen in their gas trade.
With Russian gas prices for Europe at record highs of over $500 (283 pounds) per 1,000 cubic metres, Russian gas giant Gazprom made clear on Wednesday Tymoshenko would get no easy ride in her bid to shield Ukraine's economy from a sharp price rise.
Gazprom has long said it wants to switch to market prices with ex-Soviet states and has indicated it could increase significantly the price for Ukraine, which at the moment pays $179.50 per 1,000 cubic metres.

http://www.iht.com/articles/reuters/2008/10/02/europe/OUKWD-UK-RUSSIA-UKRAINE.php

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RUSSIA, EUROPE AND ENERGY II

Europe and Russia both have options
By Robert Johnston and Clifford Kupchan

Common wisdom says that Europe and Russia are bound by an umbilical cord - energy. EU members are dependent on Russia's oil and gas, while Russia depends on the enormous export revenues that the European market generates.
But over the next decade, both sides have more options than commonly assumed. And as the Georgia conflict vividly demonstrates, for geopolitical reasons each might exercise those options.
The current bond is tight. According to EU statistics, Russia in 2006 supplied 33 percent of EU oil imports and 28 percent of consumption. On the gas side, Russia supplied 42 percent of imports and 27 percent of consumption.
The gas numbers have already risen, and EU dependence on imported gas is set to grow to 68 percent by 2030. But the dependence is mutual, as Russian energy exports account for over 60 percent of Moscow's export revenues.
Most observers argue that neither side has viable alternatives. That's true for the next few years. But if Russian-EU relations decay and the Europeans develop more political will, both sides have alternatives over the medium term - 5 to 10 years - that could limit their energy relationship.
Europe could take a number of steps, in many cases by accelerating programs that are already well underway. In isolation, each step would make a marginal difference, but in the aggregate and in the medium-term the EU could reduce its hydrocarbon dependence on Moscow.
On the gas side, the EU already has increased supply from Norway at the expense of Russia. In 2000, Russia supplied 49 percent of EU imports, while Norway stood at 21 percent. By 2006, Russia dropped to 42 percent while Norway grew to 24 percent. And Norway has the reserves to provide increasing volumes to the EU.
Europe is also turning to North Africa for gas. Two pipelines from Algeria and one from Libya provide supply, with plans for another line (Algeria-Italy) moving forward. Libya is the wild card here, as the size of its reserves is uncertain.
Liquified Natural Gas is a significant but expensive alternative for the EU. Europe would have to build significantly more regasification terminals, and then would have to outbid Northeast Asian customers for supply.
It's also a risky option, as many LNG suppliers carry their own political risk - Egypt, Nigeria and Yemen are good examples. Yet the EU countries already had 14 operational LNG regasification terminals at the end of 2007, with 14 more under construction.
The electricity sector is a key area for EU diversification because natural gas consumption for producing electricity offers a wide range of substitutes. This sector accounts for 31 percent of EU natural gas consumption and natural gas-fired power plants produced 20 percent of EU electricity in 2006.
Increased energy efficiency, wind and solar power, and biomass energy could all displace gas power plants. Nuclear power and clean coal (which remains prospective technology) will also play a role in displacing natural gas, especially in markets such as Britain, Eastern Europe and Italy. A significant EU-wide shift would require a change in some nations on the acceptability of nuclear plants, particularly Germany and Spain, and those facilities have a 5-to-7 year lead time.
On the oil side, the EU could more easily diversify, given the global and highly fungible nature of the oil market. Russian pipelines and ports were built to efficiently serve Europe; disruption of Moscow's oil exports would cause short-term dislocations that could last weeks and cause global market upheaval as EU importers scramble for seaborne alternatives from other suppliers. But the EU would obtain alternative volumes of oil, if at much higher price.
Russia too has other options for diversifying its export markets - if geopolitical developments drives Moscow to exercise them.
A promising diversification strategy would involve Beijing, should Russia finally elect to implement its much-discussed plans and build large new gas pipelines to China with perhaps a 5-year lead time. Using the new China routes, Russia could divert volumes from Europe and supply China without much additional production.
This scenario would likely be expensive for Russia, given the massive costs of infrastructure development. On the positive side, China is showing greater willingness to pay higher prices for LNG, which indicates increasing demand for imported gas and could lead to an agreement with Moscow on price for Russian pipeline gas.
On oil, the new East Siberia Pacific Ocean pipeline will likely help bring 600,000 barrels per day to Asian markets by 2010, and by late in the next decade Phase II of the project could bring an additional 1 million barrels per day to Asian consumers.
Moscow hopes to find most of this volume in the forbidding climate of East Siberia, and not serve Asia at the expense of Europe. But Russia is politically committed to this line, and if tensions increase it could be an attractive outlet for existing volumes. These oil and gas options are not yet as economically attractive for Russia as European markets, but they are options.
What then could motivate the Russians and Europeans to seek an expensive divorce? Several political flash points could drive the EU and Russia apart.
First, Russia will need to convince Europe that Georgia was a one-time event, and that Ukraine is not next in line for a Russia on the march. Moscow will also need to stabilize relations with Poland and the Baltic states to show the EU that its eastern members are not threatened.
Second, Russia must refrain from using energy as an instrument of politics. Much of the international community believes Moscow used the energy card on Jan. 1, 2006, when it reduced supplies through Ukraine to Europe. Russia could reduce oil flows through the Druzhba line to Poland in response to Poland's decision to host U.S. missile defense installations. That would set off alarm bells.
Third, Russia defines energy security as security of demand for its producers - meaning acquisition of downstream assets in the European Union.
The strategy has worked well with Germany and Italy; for example, BASF and ENI have received access to the Russian upstream in return for Gazprom obtaining access in Europe's downstream.
But this model has worked less well with Britain and other countries. In the aftermath of Georgia, stiffer governmental reviews of prospective Russian investment are more likely in the United States - and possibly the European Union.
That could well trigger a backlash from Moscow and impair its energy relations with Europe. Finally, the U.S. retains significant influence with the EU. If U.S.-Russian relations decay even further and Washington turns the screws on Europe, that will have an effect.
Both the EU and Russia have what now look like challenging but doable options. If geopolitical relations decay further, the now sacred EU-Russia energy marriage could be in trouble.

Robert Johnston is director for energy and natural resources at Eurasia Group. Clifford Kupchan is a director at Eurasia Group and a former State Department official.

http://www.iht.com/articles/2008/10/02/opinion/edkupchan.php

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Crisis puts renewable energy incentives into play

WASHINGTON: A long-stalled tax bill offering incentives for the use of renewable energy and providing tax breaks to millions of families and businesses gained momentum on Wednesday, when it was strapped onto emergency legislation to shore up the nation's financial system.
By a vote of 74 to 25, the Senate passed the legislation, including the tax breaks, on Wednesday night. The tax provisions may make the bill more attractive to some Republicans in the House, which rejected a bailout bill in a stunning vote on Monday.
The Senate version of the bailout package was amended, at the last minute, to include a wide range of tax breaks, as well as financial aid for certain rural schools and a measure requiring health insurance companies to provide more generous coverage to many people with mental illnesses.
With the new provisions, the legislation has become more palatable to many lawmakers.
Lawmakers of both parties said the changes would help win support for the package in the House, which rejected the bailout plan in a stunning vote on Monday.
The latest version of the tax legislation, virtually identical to that passed overwhelmingly by the Senate on Sept. 23, would extend the business tax credit for research and development, expand the child tax credit and protect millions of middle-income families from the alternative minimum tax, originally aimed at high-income families.
It would also provide tax relief to victims of recent natural disasters, including floods, tornadoes and severe storms.
The tax credits for investing in solar energy and producing wind energy are scheduled to expire at the end of this year.
Gregory Wetstone, director of government affairs at the American Wind Energy Association, hailed the efforts in Congress.
"The renewable energy tax credits are critically important to the future of wind and solar energy in America," Wetstone said. "In 2000, 2002 and 2004, the industry suffered a drop of 70 percent to 90 percent in the level of annual new wind power as a result of Congress's failure to extend the tax credit, which is currently the only major federal program to support renewable energy."
Many House Democrats, led by the fiscally conservative Blue Dog Coalition, had insisted that the cost of tax breaks be fully offset by revenue increases or spending cuts. But it appeared that they were going to lose their yearlong fight with the Senate over this question.
Taken as a whole, the Senate tax package would cost $150.5 billion over 10 years. Of that amount, about $43.5 billion would be offset.
The Senate bill includes several revenue-raising provisions. It would, for example, keep hedge fund managers from using offshore corporations to defer taxes on compensation for their investment services. It would also freeze a tax deduction that oil and gas companies get for certain domestic production activities. The deduction, now 6 percent, is scheduled to rise to 9 percent in 2010.
"With oil and gas prices on the rise, the oil and gas industry does not need tax incentives that it may have needed in the past," said Senator Max Baucus, Democrat of Montana and the chairman of the Finance Committee.
Charles Rangel, Democrat of New York and the chairman of the Ways and Means Committee, said the Senate was setting a bad precedent by trying to impose its tax legislation on the House, rather than negotiating a compromise.
"The Senate leadership took an unprecedented gamble when they attached a package of tax extenders to the emergency financial rescue legislation," Rangel said. He complained that Senate Democrats "repeatedly capitulate to demands" by Republican senators, many of whom contend that Congress should not have to pay for the extension of expiring tax breaks.
To increase tax compliance, the bill would require brokerage firms to track and report the cost basis of stocks, bonds and other securities sold during the year. The cost basis is used in computing the capital gains on which investors must pay taxes. When people overstate the original value or purchase price of stock, they may pay less tax than they should.
Congress estimates that the proposed reporting requirement would raise $6.7 billion in additional revenue over 10 years.
The House jealously guards its power to originate tax bills. The Constitution says, "All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other bills."
The Senate version of the bailout package is technically an amendment to a House bill that would require group health insurance plans to provide equivalence, or parity, in the coverage of mental and physical illnesses.
Insurers often charge higher co-payments and set stricter limits for mental health care than for the treatment of physical illnesses. The bill would outlaw such discrimination, and the government could impose an excise tax on health plans that violated the new requirement.
On the tax legislation, as on other issues in the last two years, the Senate appears likely to get its way because major bills typically need 60 votes to clear procedural hurdles in the Senate. In practice, this means that the majority Democrats cannot pass contentious bills without help from some Republicans.
Another sweetener added to the bailout bill would extend the "secure rural schools" program, which compensates counties for the loss of revenues they had been receiving from the sale of timber on federal lands. Counties in Oregon and several other states have laid off police officers and cut back public services since authority for the program, which provides money for schools and roads, expired this year.

http://www.iht.com/articles/2008/10/02/business/02tax.php

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Honda takes on Toyota with its own hybrids
PARIS: Honda's Insight hybrid, introduced Thursday at the Paris Motor Show, is designed to take on the Toyota Prius.
"Honda is committed to taking a leadership role in hybrid technology," Sage Marie, an American Honda spokesman here. "The Insight is the first of three dedicated hybrid models the company will be introducing in the next four years."
In addition to the Insight, which will go on sale in Europe, Japan and the United States next spring, the company plans a hybrid sports car derived from the CR-Z concept also shown here, and a unique hybrid version of the Fit and Jazz compacts.
The Insight name was previously used by Honda for a 66 miles per gallon gasoline-hybrid electric vehicle introduced in 1999, but discontinued two years ago due to slow sales. The Insight, besides having polarizing styling, had only seating for two people, and no trunk. The new Insight comes in a five-door hatchback configuration with seating for five.
Honda executives said privately that the company had reevaluated its strategy of producing hybrid versions of its existing models, such as Civic and Accord, and decided "dedicated" models, like the Prius, were more likely to be successful in the marketplace.
Hence, the one-of-a-kind Insight, one of the most highly anticipated introductions at this year's Paris show.
Fuel mileage figures were not announced, because, Marie said fuel economy testing in the United States was not yet complete. But he said Insight, powered by the same 1.3 gasoline engine with an electric motor assist that is currently in the Civic Hybrid, should have comparable fuel economy. Honda claims on its website that the Civic gets 42 miles per gallon.
Where Insight is expected to clearly outperform Prius is on price, although no price was announced here either.
Takeo Fukui, Honda Motor Company's chief executive, said the Insight will be priced attractively enough to bring its ambitious annual worldwide sales goal of 200,000 units within reach.
"This new Insight will break new ground," Fukui said, "by providing an affordable hybrid to an expanded number of customers craving great fuel economy and great value."
The Insight, while Prius-sized and shaped, borrows many styling cues from Honda's FCX Clarity hydrogen fuel cell vehicle, which is already being leased to a select number of U.S. customers. Honda's only other current hybrid vehicle, the Civic Hybrid, will receive a facelift next year, to help differentiate it from the Insight.

http://www.iht.com/articles/2008/10/02/business/02honda.php

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Ryanair files EU complaint over Alitalia deal

DUBLIN/MILAN: Irish low-cost carrier Ryanair Holdings asked the European Commission to block changes to Italian bankruptcy law designed to facilitate the rescue of Alitalia, saying they ran foul of rules on state aid.
"The Italian government is writing off up to 2 billion euros (1.56 billion pounds) in Alitalia debts and is guaranteeing the investments by the members of the consortium and underwriting huge concessions to the unions in exchange for their agreement to these ludicrous plans," said Jim Callaghan, Ryanair's director of legal and regulatory affairs in a statement on Thursday.
The European Commission, which said it had not been notified of any aid package to Alitalia, can hold up Italian group CAI's planned takeover of Alitalia if it determines the deal restricts competition or benefits from unfair government aid.
Italian Prime Minister Silvio Berlusconi pushed through changes to bankruptcy law last month to allow Alitalia to be split up and pave the way for its bailout by the CAI group.
The CAI consortium on Thursday formally reinstated its offer to buy Alitalia's profitable assets in a bid to relaunch the airline by early November after briefly withdrawing it last month over union opposition.

http://www.iht.com/articles/reuters/2008/10/02/business/OUKBS-UK-RYANAIR-ALITALIA.php

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Google uses brand power to lobby for changes in energy policy
SAN FRANCISCO: Google hopes to do for the power grid what it did for the Web.
Having conquered the market for Web search by first simplifying how it is done and then making sales of related advertising more efficient, Google is now funding green technology and using its brand power to lobby for policy change.
Google introduced a plan Wednesday to wean the United States off the burning of coal and oil for power by 2030 and to cut oil use for cars by 40 percent. Such initiatives could cost trillions of dollars, but Google believes they should ultimately save money.
Chief Executive Eric Schmidt said the annual cost of the Google energy plan would still be less than the $700 billion being considered to bail out the financial industry. He also cited parallels between the energy challenge and the credit crisis.
"That is an unconscionable failure of system design," he said, referring to the credit crisis. "It is inconceivable to me that the sum of the financial industry would have created that as a possible outcome."
He said Google had not yet felt the economic impact of the financial turmoil, but he added that it was hard to say what would happen next.
"There is an equivalent-scale problem in energy," he said after delivering a speech to the Commonwealth Club of California in San Francisco. His talk was titled "Where Would Google Drill?"
"I'm a computer scientist and computer scientists love scale problems," Schmidt said. "We like scale and replication and leverage in a technical way."
Through its philanthropic arm, Google.org, the company is backing start-ups designing wind, solar and geothermal technologies, which it hopes will eventually be cheaper than coal. Google invested $45 million in such companies this year.
"But that is a drop when we need a flood," Google says on its official blog.
Calls for energy efficiency and the development of alternative sources of fuel, once heard chiefly from environmentalists, are now more mainstream after oil reached record levels well above $100 a barrel.
Google itself is making improvements on its servers and at its buildings, identifying $5 million in building-efficiency investments that will pay for themselves in two and a half years. New efficiency standards for computers could cut power consumption by the equivalent of 10 to 20 coal-fired plants by 2010, Google said.
Google's energy plan calls for stricter building codes, a commitment to wind and solar tax credits that have lapsed and a price to be placed on carbon emissions through a cap-and-trade plan or a tax.
Google recently joined with General Electric to speed up development of new power grid technology. Echoing calls from the presidential candidates of both major U.S. political parties, Google wants to see more smart meters and real-time pricing to let people see how much energy they use and what it costs.
Schmidt, a business adviser to Barack Obama's campaign, was discouraged by talk of "clean coal" among Republicans, but he added that he expected changes on energy policy no matter who won the election in November.
At the time of Google's initial public offering in 2004, the founders Larry Page and Sergey Brin pledged employee time and about 1 percent of Google's equity - three million shares - plus 1 percent of profits to philanthropy. In 2006, Google converted 300,000 shares into about $90 million to set up Google.org.
Schmidt said there was a branding benefit from the effort, but it was ultimately driven by what the two founders wanted, and he doubted investors worried too much about the cost.

http://www.iht.com/articles/2008/10/02/business/google.php

France to host economic summit
PARIS: France will host a European financial summit Saturday in Paris, bringing together leaders of four countries to deal with the international financial crisis.
The leaders of Germany, Britain and Italy are to attend, a statement from President Nicolas Sarkozy's office said. Others invited are Luxembourg Prime Minister Jean-Claude Juncker, a top European financial official; European Central Bank chief Jean-Claude Trichet; and the president of the European Commission, Jose Manuel Barroso.
The aim is to prepare the EU members of the Group of Eight for broader talks on the financial crisis with the club of leading industrialized nations, the statement said. No meeting of the full G-8 has been announced, and Sarkozy's office did not further elaborate.
Sarkozy has pushed for a global summit on the crisis, saying capitalism must be restructured to better adapt to a new era.
The official announcement of the summit came as France poured cold water on reports it backed the creation of a special €300 billion, or $422 billion, fund to rescue any crisis-hit European banks.
The idea for a fund was floated by French Finance Minister Christine Lagarde. She was quoted in an interview with German newspaper Handelsblatt as suggesting the creation of an emergency EU fund that would be available if a bank were on the brink of going under, though she did not name a price tag for it. The suggestion was swiftly rejected by Germany.
Several reports suggested the fund would amount to €300 billion but Lagarde said that figure was "made up."
On Thursday, a top French presidential adviser, Henri Guaino, took a further step backward, denying that France has studied the creation of any special €300 billion fund.
"There is no rescue plan under study by France that foresees creation of a European fund of €300 billion," he said. "Such a fund would be extremely difficult to quickly put together, very difficult to govern on the European level."
However, it remained unclear whether he disputed the price or the very idea for a fund.

http://www.iht.com/articles/2008/10/02/business/02summit.php

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The Paris-New York rivalry
NEW YORK: For years, the Big Apple and the City of Light have competed for recognition as the world's fashion capital. The emergence of this ongoing debate and the artistic relationship between the two cities in the first half of the 20th century is the subject of a new exhibit at the Museum of the City of New York.
"Paris/New York: Design/Fashion/Culture/1925-1940" opens Friday at this Uptown museum, examining New York's inferiority complex about its role in the arts, the influence Paris had on the city's design leaders, and its eventual emergence as a creative powerhouse. Fashion is just one subject the exhibit explores, alongside architecture, the decorative arts, industrial design, art, music, the performing arts and even cuisine.
"Everyone is talking about globalization," says Donald Albrecht, the museum's curator of architecture and design, who also curated the show. "This show is an example of early globalization, how New York came into its own but with a trans-Atlantic influence."
As the museum is dedicated to exploring New York's history, the fashion on display is what prominent residents of the time, like Mona Williams, wore and what the city's companies, stores and designers produced or sold, explains Phyllis Magidson, the museum's curator of costumes and textiles, who worked on the show's fashion components.
The exhibit includes a dress and jacket in silk and silver lamé from Mainbocher, the first American to have an atelier in Paris, which was made there and sold at Salon Moderne, Saks Fifth Avenue's custom-dress shop. There also is a mid-1930s burgundy and navy polka-dot bias silk-satin evening ensemble from Sophie Gimbel, a one-time head of Salon Moderne and wife of the Saks president Adam Gimbel.
There are a few pieces, notably a linen dress, from Valentina, the wife of George Schlee, whom Magidson considers a true couturière and she is organizing a show of her work at the museum next year.
What Magidson calls a "blockbuster" piece, on loan from the Metropolitan Museum of Art, is the "Tricolore" gown in embroidered silk organdy designed by Coco Chanel for Mona Williams in 1939, one of the last dresses Chanel did before closing her couture house before World War II. A year later, Mainbocher packed up his Paris ateliers and set up shop on 57th Street in New York.
In fashion, "America was fighting an uphill battle against Paris" until the 1930s, Magidson says. After the Depression, many people could not afford imported fashion and by the mid-1930s, a true Garment District began to emerge on New York's Seventh Avenue. That, and the shuttering of many of Paris's largest fashion houses in anticipation of war, helped put New York on the map as a fashion capital.
Hattie Carnegie, who started as an importer and designer, debuted a ready-to-wear line in 1933. While she never acknowledged the designers who worked for her, even though the ranks included talents like Norman Norell and Claire McCardell, her company was a springboard for them to introduce their own lines as Paris faded into the background during the war years. The exhibit includes a gold and bronze silk and lamé cloqué evening dress that Carnegie designed for the Broadway star Gertrude Lawrence.
After the Depression, Dorothy Shaver, vice president and director of Lord & Taylor, began promoting American designers, including Clare Potter and Muriel King, an initiative that led to the store's adoption of its enduring label: "The Signature of American Style." A photo of one of Shaver's windows promoting American fashion is part of the museum exhibit.
The "Paris/New York" show, which runs through Feb. 22, marks the debut of the museum's James G. Dinan and Elizabeth R. Miller Gallery, a climate-controlled space that improves the museum's ability to borrow fragile items from other sources as well as display items from its own 27,000-piece apparel and accessories and permanent collection.

http://www.iht.com/articles/2008/10/02/style/rmus.php

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The real Paris? Check the dépôts-ventes
PARIS: When the fall season begins, count on seeing certain Parisians sneaking into their local dépôt-ventes, boutiques where high-end brands can be bought at seriously slashed prices. Last season's Chanel, Chloé, Marni and Christian Louboutin? Yours, for a mere third of the original price.
"Dépôt-ventes are a sensible way of getting rid of clothes," says Susanna Hunnewell, the Paris editor of the Paris Review quarterly literary magazine. Dépôt-ventes also relieve the guilt of impulse shopping; women who snap up every label on the Avenue Montaigne and, the following season, take most of their purchases to the dépôt-ventes (or rather their chauffeurs do).
Every arrondissement has one or more dépôt-ventes and, in many ways, their characteristics match their neighborhoods.
Strolling into a dépôt-vente in the 16th, camel, navy and black pieces from Hermès and Chanel decorate the vitrines. Inside, all the immaculate Chanel jackets are hung together like soldiers on parade. The message is conservative: you're smart if your label is smart.
There's also the saleswoman's way of sizing up a visitor from head to toe. Anyone experiencing an haute bourgeois cocktail party for the first time can relate to the encounter.
A dépôt-vente in the First Arrondissement is more welcoming - their livelihood depends on an international clientele - and fashion forward in flavor. The colorful shop windows also show Hermès and Chanel but mixed in with Prada, Lanvin and other top labels to capture their clients' eclectic interest. A shopper may appear in the latest Balenciaga skinny gray pants, and be quite "pointu," or specific, in her tastes, but she may opt for an unusual piece because she is keen to be different.
Dépôt-ventes in the Second Arrondissement tend to be more rough and ready, with Bohemian clients who are more conscious of their personal styles than following trends. They remain loyal to Sonia Rykiel, Armani and all the Japanese designers. A Celine handbag will do; no need for Prada.
On the other hand, clients using the dépôt-ventes in the Sixth Arrondissement follow a trend in their own discreet way. Quality is key but logos or any type of flashiness is a no-no. And in the Seventh Arrondissement, between the Invalides and the 15th, is BCBG conventional - bon chic, bon genre, something of a preppy or Sloane Ranger style. Not a fashion follower, she regards the dépôt-ventes as a "formidable" way to buy logos for less.
Whatever the arrondissement, the best dépôt-ventes operate with certain rules. Accepted items have to be in tip-top shape. "Those ladies running the places are quite exigeant," or forceful, says Hunnewell. "They will not take any old rubbish."
Dominique Balloffet owns WK Accessoires in the First Arrondissement, a few minutes from the renowned boutique Colette.
Generally speaking, those who consign their clothes are "Parisian or from the provinces" whereas those buying consist of Parisians, visiting Europeans and Americans, Balloffet said, adding, "What's fun is the variation of people and mix of milieu."
In recent years, "the sales of accessories have taken over from clothes," she said - evidenced by the tank-sized, boot-black Birkin bag in her shop window. "Chanel accessories and clothes by Yves Saint Laurent, Marni, Chloé, Balenciaga and Alexander McQueen rarely linger."
WK Accessoires, 5 Rue Marché Saint-Honoré; Tel: 33-01-40-20-99-76
La Marelle, in the Second Arrondissement, was opened 35 years ago by Eliane Tesseraud. She primarily stocks clothes from recent seasons but makes an exception for accessories.
In her estimation, consignees fall into three categories: those "needing a change but not affording today's prices"; those no longer fitting into their clothes ("three kilos will do it," she says); and those regretting an expensive "error of judgment."
Her clients range from Banque de France employees, tourists and fashion folk. "We do well with all the Japanese designers: Yamamoto, Miyake and Comme des Garçons," she said.
La Marelle, 21/25 Galerie Vivienne; Tel : 33-01-42-60-08-19
Laurence Carlier, who owns Le Dépôt-Vente de Buci in the Sixth Arrondissement, belongs to a mother and sister act.
"I mix vintage with recent seasons by Missoni and Fendi," she says. "If the client is classic, she goes next door to my mother, Celina Hauser, who sells Alaïa, Marni and Miu Miu."
Carlier's best clients are branché Parisians, American clients who "like crocodile bags" and English stylists "hunting down 1980s." A few of her prized 1980s pieces include a Gianni Versace Western-style shirt with gold rivets, a long cashmere double-breasted Chanel coat and a Karl Lagerfeld "firework" velvet dress.
Le Dépôt-Vente de Buci, 4 rue de Bourbon-le-Château; Tel: 33-01-46-34-28-28
Nora Andizian at Amelie par Luxury describes her clients as "classical" but says that, in the last three years, they have become increasingly casual at night. "Before we had a serious business in long evening gowns, but that's over now that people attend the opera in trainers," she said.
Students from the neighboring American University are new clients. "They may wear H&M and Zara, but they're demanding good accessories: shoes by Jimmy Choo, bags by Dior and Vuitton."
Amelie Par Luxury, 17 rue Amélie; www.luxury-shops.com; Tel.: 33-01-47-05-90-11
Nathalie Denet, in charge of Dépot-Vente de Passy, notes that clients "whatever their age" are "dressing young, young, young."
Along with bags by Hermès, favorite brands include Valentino, Roberto Cavalli, Dolce & Gabbana - and Chanel is the "designer du jour" with 18-year-olds.
"We avoid the too-classical," she says. "And only accept unknown labels if they're really pretty."
In general, she says, the turnaround is quick because many clothes arrive with their original price labels attached. "Certain 'richissimes' women buy so much, change their entire wardrobe every six months," she says. "And we profit from that."
Le Dépôt-Vente de Passy, 14 Rue de la Tour; Tel.: 33-01-45-20-95-21

http://www.iht.com/articles/2008/10/02/style/rresale.php

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Handbag heaven
ANTIBES, France: As dawn breaks a golden brown over the French Riveria, Caroline Calabria, owner of the Vintage Art Gallery, is often one of the first arrivals at a local market.
She combs the jumbled stalls for vintage handbags because, she says, "People in this area are renowned travelers, so I can find bags from Argentina to Africa and anything in between."
Calabria's shop, just a year old, is sandwiched between a hairdresser and a little French restaurant on the cobbled pedestrian street of Rue Thuret. But during the summer high season, it displays 600 or more bags - this season mostly clutches, but it all depends on what she finds.
Calabria says she always has loved handbags. At first, "I brought vintage handbags for myself and then after years of collecting and lots of bags, I had this idea to open my own store." She moved from Paris to Antibes five years ago - "to increase the collection, so I could be closer to the markets."
There is a small collection of vintage clothing at the store entrance. Miranda Richardson, a Londoner, bought a parrot-colored 1960s frock this summer and says she "loves it so much and wore it all the time on holidays in Ibiza."
But the rest of the three-room shop is just handbags. There is every color of the rainbow and all the dark hues of the ocean, as well as the smell of old leather.
"Crocodile bags have been really popular this summer," says Calabria - they range from €150 to €500, or $210 to $705.
As for designers, it has been "Chanel and Louis Vuitton," she said. "I sold a '70s vintage sports bag by Louis Vuitton this morning for €1,200."
Richardson's mother, Madeline Richardson of Grasse, France, bought a handbag at the shop earlier this year. "I really love my crocodile clutch bag," she said. "It's elegant and classic and it was good value for money, too."
With no Web site, no telephone number and just a brown paper bag with the word "vintage" hanging on the front of the store, Calabria says that kind of word-of-mouth has been her most powerful marketing tool.

http://www.iht.com/articles/2008/10/02/style/rantibes.php

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Suspected Islamists tried in France over bomb plot
PARIS: Nine suspected Islamist militants went on trial Thursday accused of plotting bomb attacks in France in a case that has underscored prosecutors' fears that prisons have become a recruiting ground for extremists.
Safe Bourada, 38, the suspected leader of the group, has already served a 10-year sentence for his role in Islamist attacks in France in 1995.
Prosecutors believe he recruited most of the other defendants while in prison.
Bourada has admitted setting up in 2003 an activist group called Ansar al Fath, or Partisans of Victory. He told prosecutors the organisation was created to help finance the Iraqi insurgency and has denied planning attacks in France.
The prosecution say the group was in contact with al Qaeda's leadership in Iraq. Police say an informer told them the group was plotting to target Paris's Orly Airport and the metro network in the French capital.
No arms or explosives were found.
The group was uncovered following an assualt in July 2005 on a transsexual prostitute identified as Abderrahim M. Police say the prostitute was robbed by group members looking to finance their extremist activities.
"These are autonomous groups, dealing in small sums of money, minor crimes with a controller," an anti-terrorist magistrate, who spoke on condition of anonymity, said ahead of the trail.
Interior Minister Michele Alliot-Marie said last month French prisons had become a favourite recruitment centre for Islamist militants.

http://www.iht.com/articles/reuters/2008/10/02/europe/OUKWD-UK-FRANCE-ISLAMIST-TRIAL.php

Putin accuses Ukraine of assisting Georgia during war
NOVO-OGARYOVO, Russia: Prime Minister Vladimir Putin of Russia on Thursday accused Ukraine of having sent weapons and military personnel to assist Georgia during its war with Russia.
The accusation came as Russia announced a memorandum of understanding for handling natural gas sales to Ukraine after Putin met with the Ukrainian prime minister, Yulia Tymoshenko.
The timing of the Russian prime minister's statements underscores a drive in Moscow to increase its leverage in Ukraine, a former Soviet republic.
Without referring to the Ukrainian president by name, Putin suggested that President Viktor Yushchenko had authorized weapons supplies to Georgia before and during Russia's war there in August. He also said that Ukrainian military personnel had fought on Georgia's side during the conflict.
"When people and military systems are used to kill Russian soldiers, it's a crime," Putin told reporters after meeting with Tymoshenko at his residence outside Moscow.
"Only a few years ago, it could not even come to mind, even in a nightmare, that Russians and Ukrainians would be fighting each other. But that happened, and it is a crime."
Russian officials and some Ukrainian lawmakers have said that Ukraine helped arm the pro-Western Georgia before the war. The Russian military has said that antiaircraft missiles supplied by Ukraine shot down four Russian warplanes during the conflict.
Putin said that arms sales may have continued even after the war began, and that some of the weapons had been operated by Ukrainians during the fighting. "The weapons could have been supplied during the military action, and it was operated by Ukrainian specialists," he said.
"That is a crime. That's an attempt to set Russian and Ukrainian people against each other."
Tymoshenko, who is vying for power with Yushchenko, said that a parliamentary panel in Ukraine would investigate the allegations of the arms sales. She said that under Ukrainian law, the president and his Security Council were in charge of arms sales abroad and that her Cabinet had no say.
Russia's use of force in Georgia has deepened nervousness among many Ukrainians about their larger neighbor, whose leaders are vehemently opposing efforts by Yushchenko to bring Ukraine into the North Atlantic Treaty Organization. The Kremlin has warned NATO against granting membership to Ukraine or Georgia.
Moscow could use natural gas as a bargaining chip in its effort to stem Ukraine's strengthening of ties with the West. The natural gas cooperation memorandum signed Thursday leaves ample room for wrangling over prices in actual contracts. But Tymoshenko said she won a Russian commitment that prices would rise only gradually.
"The parties confirmed their desire to gradually move to free-market prices over the next three years," Tymoshenko said. "We have reached an agreement that our countries don't need shock therapy."
The dealings with Putin are something of a turnaround for Tymoshenko, who has strongly criticized Russia in the past.
Tymoshenko was an ally of Yushchenko during the Orange Revolution that brought him to the presidency in 2004 over a pro-Russia candidate, and she said last year that the West should thwart Moscow's ambition to regain influence over countries that were once part of its empire.
But Yushchenko and Tymoshenko have been feuding bitterly recently- the governing coalition of their political parties collapsed last month, raising the prospect of new elections - and she has increasingly talked about the need to improve ties with Russia.
"For Ukraine, Russia is an absolute strategic partner," Tymoshenko said as she sat down with Putin. "We are very much interested in our relations being friendly and mutually beneficial."
http://www.iht.com/articles/2008/10/02/europe/ukraine.php

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Russia sees in credit crisis end of U.S. domination
MOSCOW: The Russian president said in a speech Thursday that the financial crisis in the United States should be taken as a sign that America's global economic leadership is drawing to a close, reiterating an argument that leaders here have been making for some time, though investors in recent weeks have been fleeing Russia and depositing money in U.S. Treasury bills.
Perhaps inevitably for a country long lectured to by the United States, Russia is using the occasion of the U.S. financial crisis to do some lecturing of its own.
President Dmitri Medvedev said Thursday that the U.S. crisis showed that "the times when one economy and one country dominated are gone for good." Speaking of the United States, Medvedev said the world no longer needed a "megaregulator."
Russia has argued that the freewheeling Anglo-American style of capitalism is to blame for the crisis, a position echoed by Germany and other Continental European nations. Medvedev even called it financial "egoism."
A drumbeat of similar pronouncements has been heard in Russia in recent days. Prime Minister Vladimir Putin made a major speech Wednesday on U.S. financial "irresponsibility," blaming the plunge of more than 50 percent in the Russian stock market on the global economic slowdown and U.S. financial turmoil, rather than on any troubles endemic to Russia.
"The saddest thing is that we can see an inability to take appropriate decisions," Putin said in his speech after the U.S. House of Representatives rejected the Bush administration's bailout plan. In contrast, the Russian bailout was decided by decree.
"This is not the irresponsibility of some people but the irresponsibility of the system, which, as it is known, claimed to be the leader," Putin said.
Medvedev spoke Thursday at St. Petersburg State University during the eighth annual Petersburger Dialog, a forum devoted to developing relations with Germany and where he met with Chancellor Angela Merkel. Members of Merkel's government have also been critical of U.S. regulators.
Germany will "always support a multilateral approach" to market regulation, Merkel said, adding that officials from the European members of the Group of 8 industrialized nations would meet to discuss new market regulations, Bloomberg News reported.
But in contrast with other European countries Russia's own financial system has been in steep decline over the past weeks, and regulators suspended stock trading three times. As in other emerging markets during periods of turmoil, investors have had a tendency to pull money out of Russia and to deposit it in U.S. Treasury bills.
Since the second week in August, when the war in Georgia and political tension with the West heightened concerns about stability in Russia, $52 billion in net private capital has left Russia, according to an investor note from Goldman Sachs.
Russia has promised a total of about $150 billion for loans to banks, tax cuts and other measures. The moves seek to stimulate the economy, restore liquidity to the banking sector and return confidence in the stock market.
Still, the global credit crisis could trim about 1 percent from Russian growth next year, according to Finance Minister Alexei Kudrin.
http://www.iht.com/articles/2008/10/02/europe/russia.php

Suicide bombers kill at least 20 in Baghdad
BAGHDAD: As Muslims celebrated the close of the fasting month of Ramadan, suicide bombers killed at least 20 people in attacks on two Shiite mosques during early morning prayers in different areas of Baghdad early Thursday, the Interior Ministry said.
The attacks were the second wave this week during a lengthy public holiday covering observances of the Id al-Fitr feast, which is celebrated at different times by Sunnis and Shiites at the end of Ramadan.
In the middle-class Zafraniya District, an area of southeast Baghdad with a population of mixed faiths, a car bomber rammed a taxi into an armored vehicle guarding the entrance to a compound, killing eight people, including two Iraqi soldiers, the Interior Ministry said. The attack took place in a neighborhood with a mostly Shiite population.
In the second attack, a bomber wearing an explosive vest tried to enter a prayer hall in the predominantly Shiite New Baghdad area nearby, killing 12 people and wounding at least 25.
In Zafraniya, Iraqi troops had mounted a checkpoint just in front a small, blue-domed Shiite mosque, using a Humvee armored vehicle that was destroyed but which prevented the bomber's car from reaching the mosque itself, witnesses and others said.
Outside the mosque, on a dusty street, the blast shattered car windows and damaged the facades of buildings.
Jamal Tawfiq, 28, with a black plastic bag covering his right hand, collected body parts and placed them in a separate yellow bag. "They were targeting the prayers in the mosque," he said. "Nobody expects anything like this on Id al-Fitr."
As American soldiers inspected the aftermath of the attack, using Humvees and other vehicles to set up a cordon, a predominantly Shiite crowd gathered around the area.
Some people in the crowd said they believed Sunni extremists were responsible for the attack, but others said they suspected American involvement. They offered no evidence to support the assertions, but their sentiments reflected deep antagonism toward American forces in an area where the anti-American cleric Moktada al-Sadr holds sway.
Major Jade Hinman, an American adviser to the Iraqi Army, said that, while it was regrettable that the army had sustained losses, the checkpoint outside the mosque had done its job.
"The Iraqi Army had instructions to provide security for Shiite mosques. They believed that the mosque itself was a target," he said, adding that the outcome had been "good for the people in the mosque, bad for the Iraqi Army."
There was no indication who was responsible, he said, but he pointed out that Sunni insurgents had attacked Shiite mosques on other religious holidays.
Last Sunday, five bomb attacks struck Baghdad, three of them aimed at civilians who were out holiday shopping and strolling. Security sources said at least 27 people had been killed and 84 wounded.
The bombings reinforced fears that the security situation in the city was deteriorating, even though it remained at the most stable level since the American-led invasion in 2003, according to data measured by the U.S. military command.
The worst of the bombings Sunday, in a bustling market in the central Karada District, seemed intended to inflict casualties on people preparing to celebrate the holiday marking the end of Ramadan. Sunnis began celebrating earlier this week, while Shiites marked the occasion later.
"This year, Iraq has had three Id al-Fitrs. One for the Sunnis, one for the Shiites, and one for the Sistanist Shiites," Anwar Ali reported on The New York Times Baghdad Bureau blog. The last group is made up of followers of Grand Ayatollah Ali al-Sistani, the most senior Shiite cleric, who lives in Najaf, 160 kilometers, or about 100 miles, south of Baghdad.
Alan Cowell contributed reporting from Paris and Riyadh Mohammed contributed from Baghdad.

http://www.iht.com/articles/2008/10/02/mideast/iraq.php

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Soldier sentenced in killings

Vilseck, Germany: A U.S. soldier pleaded guilty Thursday to charges of accessory to murder and was sentenced to eight months in prison for his role in the killing of four Iraqi prisoners who were bound, blindfolded, shot and dumped in a canal, The Associated Press reported from Vilseck, Germany.
Specialist Steven Ribordy, 25, of Salina, Kansas, also will receive a bad conduct discharge from the Army as part of a plea deal. He also agreed to testify against other members of his unit.
The prosecutor, Captain John Merriam, had pressed for the maximum five years in prison. "The execution of prisoners is arguably the greatest crime," Merriam said at the court martial. "It betrays everything soldiers stand for."
Ribordy testified he had helped stand guard as prisoners were killed by other members of his patrol in early 2007. Initially charged with conspiracy to commit murder, which carries a possible life sentence, the charges were reduced Thursday to the lesser accessory to murder as part of Ribordy's plea agreement.

http://www.iht.com/articles/2008/10/02/mideast/iraq.php

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Wave of abandoned youths sparks outcry in U.S.

OMAHA, Nebraska: The abandonments began Sept. 1, when a mother left her 14-year-old son in a police station here.
By Sept. 23, two more boys and one girl, aged 11 to 14, had been abandoned in hospitals in Omaha and Lincoln. Then a 15-year-old boy and an 11-year-old girl were left.
The biggest shock to public officials came last week, when a single father walked into an Omaha hospital and surrendered 9 of his 10 children, aged 1 to 17, saying that his wife had died and he could no longer cope with the burden of raising them.
In total last month, 15 older children in Nebraska were dropped off by a beleaguered parent or custodial aunt or grandmother who said the children were unmanageable.
Officials have called the abandonments a misuse of a new law that was mainly intended to prevent so-called Dumpster babies - the abandonment of newborns by young, terrified mothers - but instead has been used to hand off out-of-control teenagers or, in the case of the father of 10, to escape financial and personal despair.
The spate of abandonments has prompted an outcry about parental irresponsibility and pledges to change the state law. But it has also cast a spotlight on the hidden extent of family turmoil around the country and what many experts say is a shortage of respite care, counseling and, especially, psychiatric services to help parents in dire need.
Some who work with troubled children add that economic conditions, like stagnant low-end wages and the epidemic of foreclosures, may make the situation worse, adding layers of worry and conflict.
"I have no doubt that there are additional stresses today on families who were already on the margin," said Gary Stangler, director of the Jim Casey Youth Opportunities Initiative in St. Louis, Missouri, which aids foster children entering adulthood.
Mark Courtney, an expert on child welfare at the University of Washington, said that what happened in Nebraska "would happen in any state."
"These days there's a huge void in services for helping distressed families," Courtney said.
When children are abused or neglected, they can be taken by the child-welfare system, and possibly enter foster care. When they commit crimes, they enter the juvenile justice system. In both cases, children and parents are supposed to receive counseling and other aid.
But when troubled children do not fit those categories, they often fall through the cracks, Courtney said. In many states, for example, families lacking health insurance cannot find affordable psychiatric services. And some parents are slow to seek whatever help does exist.
Jim Jenkins, a computer network manager in Lincoln, Nebraska, suffered through years with his teenage son, whom he described as "out of control."
"I can see some parents getting overwhelmed and deciding that giving up the child is the best thing," Jenkins said.
The boy's mother died when he was 8, and at age 13 he seemed to become a different person, Jenkins said, constantly in trouble at school, making threats that led to visits by the police.
"It was just a living hell for years," Jenkins said. "I didn't know where to turn, and I took it on myself that it was my fault."
Finally, the police made him put his son in a hospital for troubled youth for several days, then told him about a respite program at Cedars Home for Children, which took the boy for a week, giving Jenkins, his daughter and his new wife a break and starting therapy for the boy.
"After a while, you realize this is not going to end today, there is no 30-minute solution," Jenkins said.
But after years of therapy, his son turned a corner, has a diploma and plans to go to college.
"I was lucky," Jenkins said, adding that a parent with more children, a less-flexible employer and little money may just throw his hands up.
In July, Nebraska became the last of the states to enact a so-called safe-haven law. Such laws permit mothers to leave an infant at a facility with no fear of prosecution. Nationwide, more than 2,000 babies have been turned over since Texas enacted the first such law in 1999, according to the National Safe Haven Alliance in Virginia.
But Nebraska's version was far broader than all others, protecting not just infants but also children up to age 19.
State Senator Arnie Stuthman, sponsor of the Nebraska bill, said some legislators had said they wanted to protect all children from harm.
"The law, in my opinion, is being abused now," said Stuthman, who said he would push for a revision. "There are family services out there, but some people may lack the resources to take advantage of them, and we've got to take a hard look at what more we can provide."
Todd Landry, the state director of children and family services, denied that the involved families had not had access to aid - most of the children, for example, were in the state Medicaid program and some had received psychiatric care - and he noted that well-publicized hot lines could direct families to help.
"Some parents had accessed our services but weren't getting the results they wanted," Landry said.
"The appropriate response is to reach out to family, friends and community resources," he said. "What is not appropriate is just to say I'm tired of dealing with this and drop the child off at a hospital."
Landry said parents and guardians were mistaken if they thought they could walk away from their responsibilities. For now, such children will be placed in foster care or with relatives, but the courts could require parents to attend counseling and might even order them to pay child support.
He said economic distress was a major issue in only one case, that of Gary Staton, 34, the father of 10 whose wife had died.
Staton, who gave up all but his oldest child, an 18-year-old girl, remains something of a mystery. His wife died in February 2007 after giving birth to the 10th child. Both parents had sporadic employment.
For nine months, in 2004, the children were taken by child welfare officials because their home was filthy and disordered, and the gas and water had been turned off. The family has since received public aid with rent and utility bills while Staton, for unclear reasons, recently quit a factory job.
Their rented yellow wooden house in a low-income area of north Omaha was vacant last weekend and showed signs of disrepair, with part of the roof crumbling and a broken window covered with a blanket.
In a telephone interview, with KETV in Omaha, Staton mentioned the loss of his wife of 17 years.
"We raised them together," he said. "I didn't think I could do it alone. I fell apart. I couldn't take care of them.
"I was able to get the kids to a safe place before they were homeless. I hope they know I love them. I hope their future is better without me around them."
Stunned relatives offered last week to take in the children, and officials said they would probably go to two family homes as soon as background checks were complete.
Joanne Manzner, the stepmother of the deceased wife, said relatives had frequent contact with Staton's family, sometimes taking children for a weekend to give him a rest, and were puzzled that he had not asked for help before taking such drastic action.
Officials and some private agencies differed this week about the adequacy of the state's family programs.
"In Nebraska, as in a lot of states, we don't have sufficient funding to provide a really strong mental health system for kids," said Judy Kay, chief operating officer for the Child Saving Institute in Omaha, which helps families in crisis. "But we do have resources that many parents are not aware of or are not using," including psychiatric counseling with fees tied to family income.
Some who abandoned children last month were aunts, uncles or grandmothers who had taken custody when the parents were incapable of providing care. Several families had prior contact with social workers and psychologists, but the children remained violent and unmanageable.
Judy Lopez, 48, and her husband took charge of her grandsons here more than three years ago. Both boys had been neglected and physically abused; now, aged 7 and 9, they have severe behavioral problems involving fighting, stealing and lying.
"Some days I just want to pull my hair out," Lopez said, adding that like many other families, they were slow to seek aid.
The school suggested a free program managed by the schools and the Child Saving Institute, a local nonprofit organization, that combined counseling for parents and for the children. The boys see a therapist, Lopez said, and the problems have eased somewhat.
"Help is out there," she said, "but people have to know how to find it."

http://www.iht.com/articles/2008/10/02/america/omaha.php

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In a fairy-tale village, Russian orphans thrive
KALUGA REGION, Russia: Standing in a row, sweating in the bright sun, a group of boys hammered on the outer wall of a partially built log cabin. Nearby, two others painted a picnic table while another pack of children scurried by dressed in green tunics, wooden swords drawn for a play battle.
Work and play often commingle in Kitezh, an experimental orphan community about 190 miles southwest of Moscow that combines features of an orphanage with those of foster care. With its colorful wooden cottages, Kitezh appears as distant from the cruelty of the children's frequently alcoholic and abusive parents as it is from the stale, often crowded government institutions where many Russian orphans still live.
"If we can, we try to create the atmosphere of a fairy tale," said Mikhail Shchurav, who has lived at Kitezh for three years and has an adopted son. "Fairy tales help these kids forget what they've been through."
The founders of Kitezh hope that their village can be a model of reform for Russia's decrepit child welfare system, little changed since Soviet days. Though perhaps hard to replicate on a large scale, Kitezh still stands as one of the few largely successful alternatives here to institutional care for orphans.
Russia's orphan problem stretches back for most of the last century: wars, revolution, Stalin's purges, famine and disease all thinned the adult population. Even now, as Russian wealth accumulates, alcoholism and social decay prompted by the Soviet collapse continue to plague the countryside, destroying families.
Russia's Education Ministry has classified about 750,000 children today as orphans. Most have been abandoned or taken from their parents because of neglect or abuse. Thousands more are homeless, living in the dank, freezing train stations and fetid stairwells of Russia's cities.
Foster care, widespread in the United States and Europe, has been slow in coming to Russia. About 510,000 children cycled through foster care in the United States in 2006, and it took an average of 28 months for them to be adopted, according to the Department of Health and Human Services. While increasing numbers of orphaned Russian children are entering foster care, 200,000 are still housed in orphanages — often living there until age 18 — and thousands more enter the institutions each year.
Kitezh was named for a mythical Russian city that escaped decimation by an invading army by disappearing, leaving only the peal of church bells behind.
Dmitri Morozov, a former radio talk-show host, founded Kitezh in 1992 as a kind of orphan collective, building it with the help of volunteers and adoptive parents on a rural plot donated by the Kaluga Region government. Today, there are about half a dozen houses built in Russian-folk style, a school, a communal dining hall and a small Orthodox church.
The 30 or so children who live there study, work and eat together, and live in private homes with their adoptive parents, who are also trained teachers, psychologists and medical personnel.
"We are trying out the latest methods in psychological therapies: play therapy, art therapy, drama therapy," Shchurav said. "We even play economic games. No one in Russia has tried what we are doing with these children."
The experiment has yielded notable results. Of the 40 or so children who have graduated from Kitezh, about 60 percent have gone on to higher education and all have found good jobs, parents in the village said.
Vasily Burdin spent four years in an orphanage after his parents died from complications related to alcohol abuse when he was 4. He said he was treated fairly well there, but gained "an understanding of the world" only when he moved to Kitezh.
With almost fluent English picked up from British students who at times volunteer in the village, Burdin, now 18 and enrolled in a Moscow law university, described his struggle to overcome his past, and — something few Russian orphans have — his hopes for the future.
"I will proceed with law for my business, for my career," he said. "But after I have stability, I will do something with music — maybe open my studio. It's a dream."
Maxim Tarasenko, 7, the village's youngest resident, described his life before Kitezh as "very bad."
"My parents were very drunk, and didn't understand anything," he said. "They didn't understand that you're not allowed to drink only vodka and that you're not allowed to smoke."
At first he was antisocial and picked fights, said Tamara Pichugina, his adoptive mother. But after a year in Kitezh, he has become something of a social butterfly, fluttering about and chatting with whoever will listen.
Despite the successes, few have been able or willing to follow Kitezh's example.
"Our experience is not being put to use because it requires that adults receive a significant amount of training," said Morozov, the founder. It also requires a strict allegiance to the collective that can be at odds with Russia's new materialistic and individualistic ethos.
But the government has begun to revamp child welfare services, promoting adoption to ease the strain on orphanages.
Government funds allotted to adoptive families, including the parents at Kitezh, increased by 28.2 percent in 2007, and about 120,000 orphans left state institutions to join foster families, an increase of 7,000 over 2006, according to the Education Ministry.
Still, those removed from orphanages were replaced by some 120,000 new orphans registered by the ministry last year. Adoptive parents also give back thousands of children each year.
Most of the adults and children at Kitezh said they hoped their project could be replicated throughout the country. Morozov collected enough donations this year to begin building a new orphan village about two hours from the original.
During a lunch break from his internship in Moscow at the American law firm Baker Botts, a large Kitezh sponsor, Burdin said he was considering starting a business with Morozov, his adopted father, to help finance Kitezh's development.
"I think Kitezh is like a fairy tale," he said, adding, "You need to work to hold this beauty."

http://www.iht.com/articles/2008/10/02/europe/02russia.php

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'Body of Lies': Considering Iraq through an 'American archetype'
LOS ANGELES: To paraphrase the old Vietnam-era bumper sticker: What if they gave a war movie and nobody came?
That American moviegoers are allergic to matters revolving around Iraq and the war on terror has become a pillar of wisdom. Films like "Rendition" and "Redacted" have floundered at the U.S. box office. The one bona fide hit with a link to the Mideast has been the stoner comedy "Harold Kumar Escape From Guantanamo Bay."
But what if you gathered two of the world's biggest movie stars, one of its most celebrated directors, an Oscar-winning screenwriter and a novel and threw them all at the seemingly intractable craziness of the Middle East? The results of just such a gamble will be determined beginning Friday, when Warner Brothers releases Ridley Scott's "Body of Lies." (The movie opens almost worldwide between now and December.) With Russell Crowe and Leonardo DiCaprio interpreting a script by William Monahan ("The Departed"), "Body of Lies" puts on prominent display deceptions, betrayals and dispensable attitudes toward humanity that might be essential to U.S. intelligence work overseas, but that seem particularly challenging at a time when studios appear happy to mollify audiences with hormone-based comedies and superhero epics.
It's true that some classics of U.S. cinema, like "Chinatown" and the "Godfather" films, have taken the darkest view of power and human nature. But those films come out of a Hollywood that seems long gone. "Body of Lies" is as nostalgic in its moral ambiguity as it is immediate in its subject matter.
At the center of the film is Roger Ferris (DiCaprio), an up-and-coming CIA operative with the handicap of a conscience and the assignment of tracking down a bin Laden-like terrorist named al-Saleem (Alon Aboutboul). While Ferris dodges bullets, bombs and his own pangs of guilt, his handler, Ed Hoffman (a corpulent Crowe), is seen mostly in the context of American domestic tranquillity. He takes his kid to the bathroom. He walks his lawn in a bathrobe. All the while dictating his agent's next move via cellphone.
"Hoffman is really an American archetype," Monahan said. "He really is: Hoffman, the American bureaucrat who never does anything right and never gets punished for it. You can put him anywhere you like - executive, editor, your boss down at the sewer department. One of those guys who manages to rise and rise while never actually accomplishing anything. He doesn't reflect the CIA. He's not a CIA archetype. I think he's an American archetype. I quite like him."
Whether audiences will be drawn to him is another story. But the subject of "Body of Lies" seems custom-made for Scott, whose films - which include "Blade Runner," "Black Hawk Down" and three movies with Crowe ("Gladiator," "A Good Year" and "American Gangster") - often involve landscapes in which the director's visual virtuosity can be exercised. Occasionally they feature situations in which perception is amorphous and good intentions are thwarted. "Isn't that the world?" Scott said, laughing.
"What attracted us is that it's a taut, provocative spy thriller," said Donald De Line, a producer of the movie. "You're in a world where a character's job is deception, when your life and your job are about deception. What's fascinating is how that bleeds into other areas of your life."
Yet audiences' current aversion to such Iraq-related films still looms over the project. "You can't ignore it, of course," De Line said, even while protesting that the film really isn't about Iraq. And he's right; bouncing from Baghdad to Ankara to Washington to Berlin, the story is set primarily in Amman, Jordan, where the trajectories of Ferris, Hoffman and a Jordanian intelligence chief, Hani Salaam (Mark Strong), intersect.
Still, the perception remains. So one thing a filmmaker can do is ratchet up the action, as Peter Berg did in "The Kingdom" last year; there's far more gunplay in "Body of Lies" the movie than "Body of Lies" the book. And the filmmakers can avoid preachiness, like the kind that sank "Lions for Lambs" despite its casting of Tom Cruise, Meryl Streep and Robert Redford.
DiCaprio said the filmmakers knew that the more they injected politics into the movie, the less effective it would be. "The most fascinating thing about this movie is the fact that it doesn't take a political position either way, I don't think," he said. "It vilifies everybody."
David Ignatius, the book's author and a columnist for The Washington Post with extensive foreign experience, echoed DiCaprio's sentiments about "Body of Lies." "It's not trying to make a political point," said Ignatius. "But if people come out of the movie thinking there are easy answers to these questions, they haven't got it."
The filmmakers are hoping that they're not the ones left out to dry, by a public too angry or exhausted by the Iraq war. The themes of darkness that lie beneath the action, adventure, romance and star power of "Body of Lies" are oddly similar to those animating "The Dark Knight": ruthlessness, political expediency and moral bankruptcy. The major difference, besides a cape and a Batmobile, may only be geography.

http://www.iht.com/articles/2008/10/04/arts/warfilm.php

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OPINION

A failing war

By Rami G. Khouri
CAIRO:
I was not surprised, during a visit to Egypt for a few days, to read the results of the latest BBC World Service global poll showing that in 22 out of 23 countries surveyed most people feel the U.S.-led "global war on terror" has not weakened Al Qaeda. On average, the poll showed, only 22 percent of respondents feel that Al Qaeda has been weakened, while three in five believe that the war on terror has had no effect (29 percent) or made Al Qaeda stronger (30 percent).
The poll surveyed 23,937 adults in 23 countries in July-September, and was conducted by pollsters GlobeScan with the Program on International Policy Attitudes at the University of Maryland.
In most of the countries surveyed, people had a negative view of Al Qaeda, except for two countries that are also very close allies of the United States: Egypt and Pakistan. In these two, those who have mixed or positive feelings toward Al Qaeda (Egypt 40 percent mixed and 20 percent positive; Pakistan 22 percent mixed and 19 percent positive) are nearly double those who view the group negatively (Egypt 35 percent; Pakistan 19 percent).
Two aspects of this are important and should get the attention of whoever becomes the next U.S. president. First, Egypt and Pakistan have been central suppliers of leaders, ideologists, foot soldiers and supporters for Al Qaeda and other terror groups in the past 20 years. Second, public sympathy for Al Qaeda and other movements like it persists in both countries, alongside enormous U.S. financial and military aid to their governments.
Something is very wrong if the U.S. and allies are spending hundreds of billions of dollars on a global war, but the main terror group targeted continues to operate, spawning allies, and in most parts of the world is seen either to be holding its own against the U.S. or is maintaining public support.
The poll has other troubling findings:
On average across all 23 countries, 10 percent think Al Qaeda is winning, 22 percent think the U.S. is winning, and 47 percent think neither side is winning.
In the U.S., just 34 percent believe Al Qaeda has been weakened. Fifty-nine percent believe the "war on terror" has either had no effect or has made Al Qaeda stronger, and 56 percent believe neither side is winning the conflict.
On average 61 percent of respondents had negative feelings about Al Qaeda, with just 8 percent positive and 18 percent mixed views.
Publics in some of the U.S.'s closest allies had the largest numbers perceiving that the war on terror has strengthened Al Qaeda, including France (48 percent), Mexico (48 percent), Italy (43 percent), Australia (41 percent) and the U.K. (40 percent).
What could explain the astounding reality that Al Qaeda (and other extremist movements like the Taliban) seem to be most firmly anchored in countries that are among the world's top recipients of U.S. economic aid?
Several possibilities come to mind:
Chromosomes. Perhaps Egyptians and Pakistanis are genetically predisposed to irrational and violent behavior. A graduate student in Alaska who is not fully occupied with monitoring Russia should probably get on this right away and launch a serious study.
Domestic politics. Perhaps Egyptians and Pakistanis have been so demeaned by their own autocratic political systems that some of them have embraced extremist views as a cathartic antidote to their degradation.
Resentment against the U.S. Perhaps many people think Al Qaeda is a bunch of despicable thugs, but they turn a blind eye to it because their daily lives are impacted more adversely by the destructive consequences of U.S. policies.
Domestic and foreign policy convergence. Perhaps many Egyptians and Pakistanis feel that U.S. support for their governments promotes dehumanizing conditions. When the U.S. is seen as fighting a specific foe, that foe - regardless of its own record - becomes a little less menacing in view of the enormity of people's disdain for the policies of Washington and their own governments.
Pakistan and Egypt are two stressed and distorted societies, with great human suffering, worsening socio-economic disparities, flawed governance systems, enormous U.S. support, and a legacy of spawning, supporting or acquiescing to Qaeda-like extremism. How those elements combine and relate to each other would seem worthy of deeper analysis than they seem to have enjoyed to date - from Alaska and Washington alike.

Rami G. Khouri is editor-at-large of The Daily Star and director of the Issam Fares Institute for Public Policy and International Affairs at the American University of Beirut. Distributed by Agence Global.

http://www.iht.com/articles/2008/10/02/opinion/edkhouri.php

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LETTER FROM WASHINGTON
McCain's foreign policy echoes interventionist era
WASHINGTON: Here's John McCain's model for the conduct of U.S. foreign policy, enunciated in a television interview this week: "Teddy Roosevelt - speak softly and carry a big stick."
"I am a Teddy Roosevelt Republican," he said.
As the U.S. presidential election campaign draws into its final stretch, that remark says as much about McCain's world view as do his campaign speeches listing foreign policy credentials, the places he has visited and the many foreign leaders he has met. McCain's assessment of Roosevelt borders on hero worship.
In a 2002 memoir, "Worth the Fighting For," McCain devoted a 22-page chapter to Roosevelt and described him in terms that could also apply to the author: impetuous, intemperate, egotistical, self-confident, impatient, courageous.
Roosevelt, one of the four presidents whose faces are hewn into the rock of Mount Rushmore, is the political patron saint of what McCain has called "national greatness conservatism," a belief that the United States is the greatest force for good in the world.
In history books in the United States, Roosevelt is generally remembered for building the Panama Canal, for giving his name to the teddy bear, for starting the national parks system and for winning a Nobel Peace Prize for negotiating the end of the Russo-Japanese war.
In Latin America and parts of Asia, he tends to be seen as the bellicose American who came up with the Roosevelt Corollary to the Monroe Doctrine, a concept that the United States had the right to exercise "international police powers" to right "chronic wrongdoing" in Latin America. Chronic wrongdoing as defined by the U.S. president, of course.
The interventionist doctrine Roosevelt proclaimed halfway through his two terms (1901 to 1909) was used by him and several of his successors to justify sending U.S. troops to Cuba, the Philippines, Puerto Rico, Nicaragua, Haiti and the Dominican Republic.
"Roosevelt is the antihero in Latin America and a source of inspiration for today's neoconservatives," says Larry Birns, head of the Council on Hemispheric Affairs, a Washington research group.
The first foreign policy debate between McCain and his Democratic rival, Barack Obama, did little to shed light on how McCain would apply, or adapt, the "Speak softly and carry a big stick" doctrine to the 21st century and a world in which the balance of power has been shifting away from the United States, a trend almost certain to accelerate as a result of the worst financial crisis since the Great Depression.
On the day McCain, who was born in 1936, much closer to the 19th century than the 21st, talked about the Big Stick, Chinese astronauts made their first spacewalk, Russian warships were heading toward exercises in the Caribbean for the first time since the Cold War, and the unfettered capitalism the United States had long held up as a model appeared to be on its deathbed.
America's military stick, still by far the world's biggest, is being whittled down by the wars in Afghanistan and Iraq. In his debate with Obama, McCain suggested as one possible way out of the financial crisis a spending freeze on everything but defense, veterans affairs and social security programs. There were no takers for that guns-over-butter idea.
McCain's most extensive foreign policy outline since he won his party's nomination in March would, if carried out, antagonize China, worsen already strained relations with a resurgent (and nuclear-armed) Russia, undermine the United Nations and set the United States against the majority of countries not fully under democratic rule - and that includes a good number of its allies.
"We have to strengthen our global alliances as the core of a new global compact - a League of Democracies - that can harness the vast influence of the more than 100 democratic nations around the world," McCain said. Foreign Policy Magazine, an independent publication, described such a league as one of his 10 worst ideas.
Hyllis Bennis of the Institute for Policy Studies, a Washington research group, said the league was "a polite way of saying 'club of all countries we like, designed to exclude and probably gang up on all the countries we don't like."'
Displaying the impetuousness he admires in Teddy Roosevelt, McCain telephoned the Georgian president, Mikheil Saakashvili, after Russia struck back with overwhelming military force in response to an attempt by Georgia to wrest control of a breakaway province this summer. "I told him that I know I speak for every American when I say to him, 'Today we are all Georgians,"' McCain reported later.
Every American? Did he take a poll? Even before the Russian invasion of Georgia, McCain advocated kicking Russia out of the Group of Eight industrialized nations to punish it for what he called "nuclear blackmail and cyber attacks." India and Brazil would be added to the group, China left outside, at least until it moves to political liberalization.
Some of McCain's opponents call him McSame and say his election would be tantamount to a third term for President George W. Bush. That view seems to be wrong. The line McCain has been taking on Russia, Iran and North Korea echoes the Bush administration's first term, the "if you aren't with us you are against us" phase that was tempered in the more pragmatic second term.
With America's standing in the world at a low ebb, one measure of McCain's relative lack of success in portraying himself as a statesman on the global stage came in a poll the BBC conducted among 22,000 people in 22 countries and published in September. On average, 46 percent thought foreign relations would improve if Obama won the presidency. Just 20 percent thought they would get better with McCain.

http://www.iht.com/articles/2008/10/02/america/letter.php

A rising tide of migrants unsettles Athens
ATHENS: About 80,000 migrants have traveled to Greece this year and decided to stay illegally, according to the authorities, who say the country can no longer handle the task of guarding the European Union's southeast flank.
While initial problems with the flood of migrants from Africa and the Middle East who are desperate to enter Europe centered on the Aegean islands, migrants are now wreaking havoc in the capital.
The historic center of Athens has been riven by several street battles in recent months, involving what the police characterize as rival groups, often involved in dealing drugs, from Afghanistan, Iraq and war-torn African countries wielding swords, axes and machetes.
After 11 people were hurt in one such brawl in late August, the police began 24-hour patrolling of the area. Store owners and residents are leaving the busy central shopping and restaurant district.
According to a residents' group, dozens of people renting in the area have left their homes in the past year, and several stores have closed, chiefly small but long-established neighborhood conveniences like bakeries, hardware stores or delicatessens.
"People are scared and depressed, it's getting worse and worse," said Vassiliki Nikolakopoulou of the group, Panathinaia.
The top policy adviser for immigration issues at the Interior Ministry, which also oversees public order, blames the influx of about 80,000 migrants this year.
"Because of this phenomenon, we see more and more immigrants in central Athens trying to survive, often through illicit activities," the official, Patroklos Georgiadis, said in a telephone interview. "This unpleasant situation - for the migrants and for us as an EU country - has become unbearable."
Georgiadis said that Greece supported the stricter line on immigration being promoted by the bloc's French presidency. "There will not be another wave of legalization of immigrants in Greece in the near future," Georgiadis said, referring to the three programs that have granted work and residence permits to some 500,000 migrants, most of them undocumented foreigners - at least half from Albania - since 1997.
The unrest in Athens has triggered a backlash from the far-right party Laos, whose popularity has jumped to 5.4 percent in opinion polls from 3.5 percent when it entered Parliament a year ago.
"The city center has been taken hostage by gangs of illegal immigrants with knives - isn't it about time we asked ourselves if we have too many of them?" a Laos legislator, Antonis Georgiadis, said during a recent television debate. He is not related to the immigration official.
Although some on the Greek left have warned against demonizing migrants, the Athens prefect, Yiannis Sgouros, who belongs to the main opposition Socialist party, Pasok, refers to an "explosive problem" in the heart of the capital, where thousands of migrants living in cheap hotels and derelict houses struggle to find work.
"Illegal immigrants are becoming pawns to local drug barons and are forming gangs," Sgouros wrote last week in a letter to Prime Minister Kostas Karamanlis. He added: "Something has to change or the area will become an arena for race clashes and gang wars."
Thomas Hammarberg, a Swede who is human rights commissioner at the Council of Europe, has criticized Greece and other EU states for "criminalizing the irregular entry and presence of migrants as part of a policy of so-called migration management."
"Political decision-makers should not lose the human rights perspective in migration," Hammarberg wrote in an e-mail message when asked to comment for this article. "Migrants coming from war-torn states should be given refuge."
The government says that Greece grants protection to all refugees, as long as their status can be proven. But UN refugee agency statistics show that Greece approves less than one percent of asylum applications, compared with a European Union average of 20 percent.
According to minority groups, the treatment of migrants from war-torn states as "illegals" rather than refugees requiring protection forces them to eke out a life on the fringes of society.
"Most don't get asylum or social support and have to find other ways to survive," Adam Ziat, leader of the Union of Sudanese Refugees, said in a dingy café behind central Omonia Square that serves as his office.
According to Ahmed Mowias, coordinator of the Greek Migrants' Forum, newly-arrived refugees from conflict zones are being exploited by rackets run by Nigerians, Moroccans and Algerians established in the area for many years. "Refugees are the smallest links in the dealing chain," Mowias, a longtime resident of Athens who is from Sudan, said.
Police figures show that most immigrants arrested on drug-related charges in central Athens this year were from war-torn states like Sudan, Afghanistan, Iraq and Pakistan.
For most of these migrants, their first stop in Greece was one of the Aegean islands where reception centers are overcrowded and the local authorities are losing their patience.
On Patmos, in the eastern Aegean, the authorities this month blocked their ports to boats carrying passengers from Turkey, saying the number of unwanted visitors on their island had exceeded its 3,000 permanent residents.
The popular islands of Lesbos and Samos, which report getting boatloads of migrants almost daily, are calling on the government to take action.
But, according to Mowias, the government's failure to create a comprehensive immigration and asylum system is the root of the problem. "When a group of people has no social support and cannot solve its problems, this leads to a crisis," he said.

http://www.iht.com/articles/2008/10/02/europe/greece.php

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Australia struggles with needs of its surging population

SYDNEY: The population of Australia is booming, fueled in large part by migration, and the boom may leave policy makers struggling to ensure adequate infrastructure like housing, transport and health care within a few decades.
Demographers say Australian cities must radically change their urban plans, in scale and form, promoting high-density housing. Residents must also abandon the culture of urban sprawl to be more like the citizens of Paris and Los Angeles, who live and work in self-contained communities.
"It's time to drop the pretense that the current strategic plans will manage our cities in the first half of the 21st century and develop new models for housing, infrastructure and funding," said Bernard Salt, a prominent Australian demographer who works for KPMG. "Its already at breaking point. This is a train wreck waiting to happen."
Australia is experiencing the biggest migration boom in history, with 200,000 migrants arriving in the year to March 2008. The population grew by 1.6 percent over those 12 months to 21.2 million, the fastest rate of expansion in almost 19 years.
It is projected to rise further to between 30 and 42 million by 2056, and up to 62 million by 2101, according to a new Australian Bureau of Statistics report.
But while cities will struggle to cope with the increased population, there will be winners as well as losers.
A report on the impact of changing demographics on business found the health care, housing and personal finance sectors would benefit from an aging population and growing migration.
The PKF Business & Population Monitor report said the changes "will be the largest structural shifts in the Australian economy since World War Two" and will pose risks and opportunities to businesses and governments as spending and tax patterns change.
The biggest Australian private hospital operator, Ramsay Health Care, which owns more than 60 hospitals, says that an aging population, increased life expectancy and demand for higher-quality care will underpin growth in 2009.
Property firms like Lend Lease and Stockland are positioning themselves for growth in retirement villages. Building materials groups like Boral and CSR expect a big building boom, particularly in the most populous state, New South Wales, which has a major housing shortage, and developers and contractors like Leighton see no end to infrastructure demand.
In the next 30 years, however, the working population will dramatically fall due to retirements, leaving a smaller tax base from which to fund infrastructure.
By 2047, a quarter of the population is projected to be aged 65 or older, slowing economic growth, particularly in the 2020s when the bulk of baby boomers retire, according to a government report.
There will be only three people of working age for every one aged 65 or older, compared with the current ratio of five to one. The report said that the current budget surplus of 19.7 billion Australian dollars, or $15.5 billion - amounting to 2 percent of GDP - could swing to a deficit of 3.5 percent of GDP by 2046-47, and government debt could rise to 30 percent of GDP by 2046-47 due to the rising cost of an aging population, it said.
Major cities - and especially the largest, Sydney, which has four million residents - are already struggling with growing populations.
A housing shortage in Sydney has created a rental crisis and seen home ownership affordability plummet due to the boom in house prices of recent years. Overcrowded trains and buses groan with commuters and traffic gridlock is a daily occurrence.
City hospitals routinely close wards because of a lack of funds. The Australian Medical Association, which represents doctors, wants an immediate injection of 3 billion dollars into hospitals across the country and says this should be indexed annually to meet rising costs in coming years.
"Emergency departments around Australia are struggling to care for patients who need to be admitted to hospital," said Rosanna Capolingua, president of the association.
The urban plan of Sydney envisaged a city capable of accommodating an extra 980,000 residents between 2006 and 2031, but the latest projections mean an extra 1.4 million people will call it home by then, and by 2056 it could have 7 million residents.
"We now need to rethink the structure, form and operation of our cities," said Salt.
Salt believes a national plan like that taken against climate change is needed to tackle the population crisis, warning that without action cities would "grind to halt."

http://www.iht.com/articles/2008/10/01/business/col02.php

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Fewer reported entering U.S. illegally
The latest arrest figures from the Border Patrol and a report released on Thursday by the Pew Hispanic Center indicate that fewer people are trying to enter the United States illegally and that the number living here without documents has declined.
Border Patrol spokesman Jason Cilberti said there were significant decreases in the numbers of arrests along the southwest U.S. border, with apprehensions falling by 78 percent around Yuma, Arizona, and more than 60 percent around El Paso, Texas. The Pew center's report shows that for the first time in nearly a decade, the number of migrants entering the country illegally was lower than the number arriving through legal channels.
Experts said the loss of low-wage jobs in the American economy, combined with intensified enforcement at the border and at worksites across the country, had caused immigrants to think twice before risking the increasingly dangerous journey to cross the southwest border illegally, bringing a significant reversal to a decade of rapid growth in immigration flows. As a result of those trends, central banks from Mexico to Brazil projected the biggest declines in remittances from the United States in more than a decade.
The report by the Pew center, based on an analysis of census data, found that illegal immigration to the United States dropped to some 500,000 annually from 2005 to the present, from an average yearly rate of 800,000 between 2000 and 2004. Since 2000, the average number of legal immigrants entering the United States each year has remained steady at between 600,000 and 700,000.
Border Patrol officials and groups advocating tougher immigration controls attributed the trend to crackdowns against illegal immigration, including record numbers of work place raids and deportations across the United States.
The center's Jeffrey Passel said the Pew study was not designed to explain why the inflows of illegal immigrants had declined. He speculated, however, that it was the result of a combination of factors, led primarily by the weakening economy and rising rates of unemployment in the construction and service industries, which rely heavily on immigrant labor.
An income report by the center found that the median annual income of noncitizen households — more than half of which are led by illegal immigrants — fell 7.3 percent from 2006 to 2007, while the annual income for all households rose by 1.3 percent.
"If there are jobs in the United States, people will find a way to come fill them," said Jeffrey Davidow, president of the San Diego-based Institute of the Americas. "If the jobs are not there, then coming to the United States might be too big a risk."
But both Davidow and Passel agreed that a harsher political climate also played a role in making the United States less attractive to illegal immigrants.
A Pew survey of some 2,015 Latinos released earlier this month showed that half reported their lives had worsened over the last year, and one in 10 said the police or other authorities had stopped and questioned them about their immigration status. One in seven of those surveyed said they had trouble finding or keeping a job because they were Latino. And one in 10 reported similar troubles finding housing.
"The anti-immigrant sentiment in towns and cities across the country seems to have contributed to flows back across the border," Davidow said. "Those flows include people who are here legally and illegally, and who just don't feel comfortable here anymore."
Central bank reports from Mexico to Brazil suggested that the effects of those trends were being felt beyond America's border. A report released Wednesday by the Inter-American Development Bank projected that the value of remittances from the United States to Latin America and the Caribbean would decrease this year for the first time since the bank began tracking the figures in 2000.
In Mexico, where remittances are the second-largest source of foreign income after oil, officials projected a 12 percent drop in remittances this year, the biggest decline on record. Other significant declines were projected by officials in El Salvador and Guatemala, which both rely on money from immigrants in the United States for more than 10 percent of their gross domestic products.
Augusto de la Torre, a chief economist at the World Bank, said slight improvements in several Latin American economies, including those of Panama, Peru, Colombia, Brazil and Chile, might have compelled some people in the region to stay closer to home.
"For the first time in a decade, there are economies in Latin America that are doing better than in rich countries," De la Torre said, "So people who were thinking of going to the United States, might now be migrating to other countries in the region."

http://www.iht.com/articles/2008/10/02/america/03immig.php

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Some migrants in Spain default and decamp
Rodolfo Jaramillo looks around his Madrid apartment at the stacked stereo system and a picture of parakeets on the wall, and shrugs. It's been three months since he paid a mortgage instalment and he plans to return to Ecuador.
Jaramillo, 40, has lived in Spain for nine years. Over the last six months, he has lost his job in construction, his wife is stuck in Quito after her return visa was revoked and his two children, both Spanish citizens, have joined her.
Alone and jobless in Spain, he sees no choice but to leave his debts and go home.
"The bank has offered different mortgage terms, but I don't have the money. The moment I get rid of this flat, if I have to give it up or they take it, I'm going back to Ecuador," he said.
During Spain's boom years, banks energetically courted immigrants: now numbering around 5 million, some like Jaramillo are heading home. Those who stay have dwindling earnings to repatriate as competition for jobs rises and wages slip.
Similar situations are emerging elsewhere in Europe as an immigrant tide turns back from potential recession: there is anecdotal evidence some of the Polish workers who restored many British homes are returning, and Britain's Border Agency has said fewer eastern Europeans sought work in the second quarter.
"Last year, I was working on a housing construction site in Madrid for 1,800 euros a month. No one's building houses anymore and the few jobs left, if you can find them, pay 1,300 euros maximum," said Franklin Vallejas, 42, also from Ecuador.
Spain's economy is forecast to enter recession this year and construction, until recently a major source of employment for immigrants, has stagnated as the housing market imploded.
So far between one and two percent have returned to their home countries, according to a study by Luis Miguel Doncel, professor of economics at the Rey Juan Carlos University.
Money sent home by foreign nationals living in Spain fell 5 percent to 3.6 billion euros in the first half of 2008 from 3.8 billion a year earlier, according to the Bank of Spain.
International money transfers are one of the largest sources of foreign currency for Latin American countries such as Mexico and Ecuador: for both, income from citizens living abroad fell in the second quarter.
TARGET MARKETS
Loan defaults among Spain's immigrant community are also set to rise. According to a study by Javier Morillas, a professor of applied economics at Madrid's San Pablo-CEU university, over 90 percent of non-performing mortgages are held by immigrants.
Banks themselves provide no such breakdown of loans, but since immigration boosted Spain's population by more than 10 percent in a decade they must have taken many home loans.
The banks won the business through aggressive marketing campaigns, opening specialised branches in neighbourhoods with growing immigrant populations and pitching fiercely for slices of the lucrative money-transfer business.
Most active were the dozens of small, unlisted savings banks, or cajas -- rather than Santander or BBVA -- which registered steep growth over the last decade by targeting new markets among young people and immigrants.
Now many of their customers are struggling.
Total defaults by all mortgage holders in Spain in the second quarter leapt to 8.0 billion euros (6.32 billion pounds) from 2.8 billion a year earlier, with the cajas holding the lion's share.
The Bank of Spain, which strongly denies the existence of a Spanish subprime sector, points out July's non-performing loan ratios of 2.14 percent are far short of levels around 17 percent faced by many U.S. banks.
"Immigrants in Spain are especially vulnerable to defaults in these times of crisis," said Maisa Urmeneta, head of studies at the immigrant research group, ECV Investigacion.
"They are the first to be affected by a slowdown. Many hold unstable employment -- in this case in construction -- and they don't have the social buffer the Spanish have. When things go wrong, immigrants don't have the family to fall back on."
Joblessness among legal migrants hit 16 percent in the second quarter, against 10.4 percent for the workforce as a whole.
GUARANTORS NOW JOBLESS
In their eagerness to lend to immigrants, banks often allowed foreigners to use their relatives as guarantors, even if their own economic position was precarious.
"Banks were offering immigrants completely different mortgages to those offered to the Spanish, with unheard-of and totally abusive conditions," said the head of Bank and Insurance Users Association, Manuel Pardos.
"Banks have often used family members as guarantors and demanded much higher interest rates," he said.
San Pablo-CEU's Morillas agreed collateral conditions applied to immigrants often differed greatly from those expected from the native population, but argued that the terms came more from necessity than abuse.
"Young Spaniards are often asked to use their parents' homes as guarantee against a mortgage loan. Loans to immigrants have not been offered with the same criteria, and that is why defaults are so high," Morillas said.
Jaramillo said he had no problem securing a joint mortgage with his wife and the backing of three guarantors -- his brother-in-law, who sold him the flat, an aunt and a friend.
Monthly payments on the flat began at 900 euros (712 pounds) a month, which seemed reasonable when the bank handed over the flat's papers almost two years ago.
Then Jaramillo was earning 1,900 euros a month and his wife, Ana Maria, 39, another 800 euros on a production line.
Almost two years later the monthly mortgage stands at 1,300 euros. Jaramillo receives less than 1,000 a month in unemployment benefit after he lost his job when a traffic accident forced him to take some weeks off.
Two of Jaramillo's three guarantors are also unemployed.
"I've offered the bank 300 a month, but they won't accept that," he said.
His compatriot Valleja's former employer had an alternative approach to his debts.
"He had three builders' trucks and he couldn't pay what he owed on them," he said.
"So he drove them into an empty lot, gave the keys to a caretaker and told him to give them to the bank if they came calling. Then he left the country."

http://www.iht.com/articles/reuters/2008/10/01/america/OUKWD-UK-SPAIN-IMMIGRANTS-DEBT.php

COLUMNIST

Nicholas D. Kristof: Save the fat cats
In the early 1990s, when I was a foreign correspondent looking for my next overseas posting with The New York Times, I sought Japan. At the time, Tokyo was an awe-inspiring economic titan, arguably the most important capital outside the United States.
Then Japanese politicians, acting with the same sublime ineptitude that America's House of Representatives displayed this week, ignored a growing banking crisis and dithered on a bailout. And so I watched from Tokyo as a mighty economy melted like an iceberg in the Caribbean.
Japan's failure to respond urgently and decisively to its banking mess caused the country to endure a "lost decade" of economic stagnation. If America wants to avoid Japan's decline, the House should approve a bailout, immediately.
Just as in the U.S. today, most Japanese did not initially appreciate how devastating a banking crisis could be to the real economy. Banks and real estate tycoons in Japan were corrupt, profligate and unsympathetic figures, and no one wanted to help them. On corporate expense accounts, they sipped coffee with gold leaf and patronized "no-panties shabu-shabu" restaurants, which had mirrored floors and miniskirted waitresses.
In short, the businessmen involved were jerks. And, whether in Japan or the U.S., it's challenging for politicians to frame a bailout with the slogan: Save the jerks!
Japanese politicians didn't want to rescue such unpopular fat cats and didn't see any emergency. So Japan's economy slowly lost air, and the biggest losers were the small futon makers who couldn't get credit and the farmers on remote islands who lost ferry service when the government eventually had to cut back on spending.
For those of you accustomed to bull markets, who think we're sure to come out of this quickly, remember this: Japan's stock index is still less than one-third of its level of 19 years ago.
In 1993, after Japanese stocks had already tumbled for several years, an American friend told me that he was going to invest in Japanese stocks. "I don't know what they're going to do for the next couple of years," he said, "but we all know that over five years they'll recover and do better than American stocks." Since then, Japanese stocks have lost another 40 percent of their value.
The Federal Reserve chairman, Ben Bernanke, is an expert on Japan's Lost Decade, and the president of the New York Fed, Timothy Geithner, lived in Tokyo during that debacle, and their experience no doubt is one reason for the urgency of Washington's response. The lesson from Japan is pretty clear: Hold your nose and support a bailout, in particular to clean up banking assets.
All this said, critics of the bailout have reason to be furious. It is profoundly unfair that working-class American families lose their homes, their jobs, their savings, while it's plutocrats who caused the problem who get rescued.
If the congressional critics of the bailout want to do some lasting good, they should come back in January - after approving the bailout now - with a series of tough measures to improve governance and inject more fairness in the economy.
A starting point would be to remove tax subsidies on executive pay and allow courts to restructure mortgages as they do other kinds of debt. The Institute for Policy Studies in Washington estimates that U.S. taxpayers every year provide more than $20 billion in tax subsidies for executive pay.
Among the strongest critics of inflated executive pay have been Warren Buffett and the late management guru, Peter Drucker, who argued that CEO salaries should peak at no more than 20 or 25 times those of the average worker. (Last year, CEOs got an average of 344 times the wages of the typical worker.)
The truth is that with the complicity of boards of directors, CEOs hijack shareholder wealth in ways that are unconscionable. As The Wall Street Journal reported in June, if Eugene Isenberg, the 78-year-old CEO of Nabors Industries were to drop dead one of these days, his estate would be entitled to a "severance payment" of at least $263 million - more than the firm's first-quarter earnings.
With such greed oozing out of the corporate suite, and with financial companies enjoying the confidence of only 10 percent of Americans today (down from 36 percent in 2000), it's no wonder that voters are repulsed by the idea of helping banks. Wall Street urgently needs to undertake its own housecleaning, for the public revulsion toward it undermines its own long-term interests.
But, for now, the priority is to get credit flowing again in the arteries of commerce, even if that means saving the jerks. Otherwise, America risks becoming Japan.

http://www.iht.com/articles/2008/10/02/opinion/edkristof.php

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Merrill Lynch chief to remain at Bank of America

NEW YORK: Merrill Lynch's chairman and chief executive, John Thain, will remain at Bank of America after the merger of the two financial giants, Charlotte-based Bank of America said Thursday.
The announcement settles a big question circulating around Wall Street: What was next for Thain, a veteran of Goldman Sachs who led the New York Stock Exchange before joining Merrill Lynch last fall?
According to Bank of America, Thain will become president of global banking, securities and wealth management in the combined company, essentially retaining control of the businesses run by Merrill. Similar units currently run by Bank of America will be merged into Merrill's far larger and more established operations.
"I am delighted that John has agreed to join Bank of America," Kenneth Lewis, Bank of America's chairman and chief executive, said in a statement. "His experience and expertise will be invaluable as we put our two companies together and move forward as the premier financial services company in the world."
Thain engineered Merrill's sale to Bank of America nearly three weeks ago, in an emergency deal struck amid the collapse of Lehman Brothers. That agreement will create one of the world's largest financial firms, with a strong presence in investment and retail banking and wealth management, combining Bank of America's retail banking network and Merrill's corps of 16,000 financial advisers.
"This is an opportunity to create what will be the leading financial institution in the world," Thain said in a statement. "Combining these two companies will create great value for our shareholders and clients around the world."
Separately, Bank of America said that Brian Moynihan, the firm's current president of global corporate and investment banking, would remain in that post during the merger transition period. After that, he will take a new enterprise-wide role.

http://www.iht.com/articles/2008/10/02/business/02BofA.php

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Life in Zimbabwe: Wait for useless money

HARARE, Zimbabwe: Long before the rooster in their dirt yard crowed, Rose Moyo and her husband rolled out of bed. "It is time to get up," intoned the robotic voice of her cellphone. Its glowing face displayed the time: 2:20 a.m.
They crept past their children sleeping on the floor of the one-room house — Cinderella, 9, and Chrissie, 10 — and took their daily moonlit stroll to the bank. The guard on the graveyard shift gave them a number. They were the 29th to arrive, all hoping for a chance to withdraw the maximum amount of Zimbabwean currency the government allowed last month — the equivalent of just a dollar or two.
Zimbabwe is in the grip of one of the great hyperinflations in world history. The people of this once proud capital have been plunged into a Darwinian struggle to get by. Many have been reduced to peddlers and paupers, hawkers and black-market hustlers, eating just a meal or two a day, their hollowed cheeks a testament to their hunger.
Like countless Zimbabweans, Moyo has calculated the price of goods by the number of days she had to spend in line at the bank to withdraw cash to buy them: a day for a bar of soap; another for a bag of salt; and four for a sack of cornmeal.
The withdrawal limit rose on Monday, but with inflation surpassing what independent economists say is an almost unimaginable 40 million percent, she said the value of the new amount would quickly be a pittance, too.
"It's survival of the fittest," said Moyo, 29, a hair braider who sells the greens she grows in her yard for a dime a bunch. "If you're not fit, you will starve."
Economists here and abroad say Zimbabwe's economic collapse is gaining velocity, radiating instability into the heart of southern Africa. As the bankrupt government prints ever more money, inflation has gone wild, rising from 1,000 percent in 2006 to 12,000 percent in 2007 to a figure so high the government had to lop 10 zeros off the currency in August to keep the nation's calculators from being overwhelmed. (Had it left the currency alone, $1 would now be worth about 10 trillion Zimbabwean dollars.)
In fact, Zimbabwe's hyperinflation is probably among the five worst of all time, said Jeffrey Sachs, a Columbia University economics professor, along with Germany in the 1920s, Greece and Hungary in the 1940s and Yugoslavia in 1993.
Making matters worse, cash itself has become scarce. Business executives and diplomats say Zimbabwe's central bank governor, Gideon Gono, desperate for foreign currency to stoke the governing party's patronage machine, sends runners into the streets with suitcases of the nation's currency to buy up American dollars and South African rand on the black market — drying up Zimbabwean dollars that would otherwise go to the banks.
Because of the cash shortage, the government strictly limits the amount people can withdraw. Even so, Zimbabweans say they often wait in vain for hours at banks that send their customers away empty-handed.
Gono, who blames Western sanctions for the nation's troubles, did not respond to requests for an interview, but he has shown few signs of doing anything differently.
"I am going to print and print and sign the money until sanctions are removed," he told state media this week.
Political Solution Needed
Economists say that the only thing that can halt Zimbabwe's inflationary spiral is a political solution that takes control over the country's economy out of the hands of Robert Mugabe, the 84-year-old president who still maintains a viselike hold on power after 28 years in office.
"This is the end of the endgame," Professor Sachs said.
Mugabe, who lives in splendor here in a mansion hidden behind high walls, returned to Harare on Monday from the United Nations General Assembly meeting in New York. He and the opposition leader, Morgan Tsvangirai, signed a power-sharing agreement, but they are still deadlocked over the division of the ministries. So far, Mugabe has refused to give up control of the crucial Finance and Home Ministries.
Basic public services, already devastated by an exodus of professionals in recent years, are breaking down on an ever larger scale as tens of thousands of teachers, nurses, garbage collectors and janitors have simply stopped reporting to their jobs because their salaries, more worthless literally by the hour, no longer cover the cost of taking the bus to work.
"It's scary and it's pathetic," said Tendai Chikowore, president of the Zimbabwe Teachers Association, the largest and least radical of the teacher unions. She said a teacher's monthly pay was not even enough to buy two bottles of cooking oil. "This is a collapse of the system, and it's not only for teachers," she said. "At the hospitals, there are no nurses, no drugs."
Those who continue to show up often make a little extra on the job. Teachers sell their students candy and cookies, for example, or accept payment from parents in cornmeal or cooking oil, said Raymond Majongwe, secretary general of the Progressive Teachers Union.
Zimbabweans have a legendary ability to make do despite extraordinary hardship, and the money sent home by millions of their compatriots who have fled abroad to escape political repression and economic deprivation continues to sustain many of them. But the deteriorating conditions are creating pressures for a renewed exodus, even as people employ all their entrepreneurial creativity to stay alive.
Among those thinking of leaving is Fortunate Nyabinde, whose salary of $3,600 Zimbabwean dollars a month (or $36 trillion before the government rejiggered the currency in August) does not even pay for four days of bus fare to her job at Parirenyatwa Hospital, one of Zimbabwe's leading public institutions.
Yet, for now, she keeps going to work, wheeling a trolley of cornmeal porridge from ward to ward, mostly because she can eke out an extra 20 cents a day by selling basic necessities to patients that the hospital usually does not have in stock: toilet paper, toothpaste, soap.
"If they come to the hospital without anything, they will have to buy from us," Nyabinde said.
Signs of a Calamity
Clues to the calamitous state of the country can be found even in recent articles tucked into Mugabe's mouthpiece, The Herald, the only daily newspaper he has allowed to keep publishing.
The bodies of paupers in advanced states of decay were stacking up in the mortuary at Beitbridge District Hospital because not even government authorities were seeing to their burial.
Harare Central Hospital slashed admissions by almost half because so much of its cleaning staff could no longer afford to get to work.
Most of the capital, though lovely beneath its springtime canopy of lavender jacaranda blooms, was without water because the authorities had stopped paying the bills to transport the treatment chemicals. Garbage is piling up uncollected. Sixteen people have died in an outbreak of cholera in nearby Chitungwiza, spread by contaminated water and sewage.
Vigilantes in Kwekwe killed a man suspected of stealing two chickens, eggs and a bucket of corn.
And traditional chiefs complained about corrupt politicians and army officers who sold grain needed for the hungry to the politically connected instead.
Zimbabweans standing in bank lines across the capital offer their own stratagems for survival. At the Avondale shopping center, a strip mall with a café serving cappuccinos and a multiplex showing "Sex and the City," more than 200 sweaty, grumpy people lined up one recent morning to withdraw whatever they could from the bank.
Moyo, the early riser, had her usual sought-after, low number — 26 — while Nyabinde, the hospital worker on the overnight shift, was far back at No. 148 because she had arrived late — about 5:15 a.m.
No. 132 was Stanford Mafumera, 35, a security guard who spends most of his time at his job or in line at the bank; he is so poor that he sleeps beneath the overhang at the mall rather than pay for bus fare home to his family. His clothes hung loose on his gaunt body, and his dusty shoes were coming apart.
"Since Monday, Tuesday, Wednesday, there was no cash here," he said. "We started getting cash only yesterday."
Most days, he said, he eats only a bag of corn nuts to conserve his monthly pay — worth $10 a week and a half ago, but only $5 now because of inflation.
Each day, he buys a pack of cigarettes and sells them one by one, making an extra 20 to 30 cents. But he was unable to afford the cost of taking his 5-year-old daughter to the doctor recently when she got diarrhea after drinking dirty water from an unprotected well.
Mafumera blamed the government's land reform program for Zimbabwe's woes. It chased away the white commercial farmers who had made the country a breadbasket, he said, as well as donors from Britain and other European countries and the United States who sustained Zimbabwe's starving millions for years.
"A lot of people got farms, but they can't produce anything and this is what is causing the poverty and hunger," he said. "There's no food."
Chaotic Land Reform
Zimbabwe's economic unraveling has, indeed, accelerated since the chaotic, often violent invasions of thousands of white-owned farms by Mugabe's supporters began in 2000. The big farms now produce less than a tenth the corn — the main staple food crop here — of what they did in the 1990s, the United Nations Food and Agriculture Organization reported in June.
In the years since, the country has suffered extreme food scarcity, rampant inflation, a shrinking economy and collapsing public services. In Nyabinde's neighborhood, every spare spot of ground sprouts the greens people eat with cornmeal porridge, evidence of the scramble for food.
And in a country that used to have an education system that was the pride of the continent, the schools that Nyabinde's children — Chenai, 10, and Darlington, 6 — attend are now empty of teachers. So she sends them to Stella Muponda, a teacher who quit her public school job last year, for a couple of hours of instruction a day. The money Nyabinde pays Muponda for the children's lessons is now worth only about 40 cents, enough for a single bread roll.
Muponda, a widow with twin, 14-year-old boys, said she and her sons grew thinner, weaker and more sickly last year, unable to eat enough on her meager pay. When she no longer had the strength for the five-mile walk to and from school, she quit.
Gaunt and exhausted, she kept saying, "I only wish I could get a decent job."

http://www.iht.com/articles/2008/10/02/africa/02zimbabwe.php

Film review: 'Blindness'

Blindness Directed by Fernando Meirelles
In "Blindness," Fernando Meirelles's adaptation of the novel by Nobel laureate José Saramago, human civilization is threatened by a sudden and virulent outbreak of metaphor. As people go about their daily lives in an unidentified city (a brilliantly shot, digitally tweaked composite of Toronto, Tokyo and São Paulo), they begin, one by one, to lose their sight. No organic cause can be found for this condition, which manifests itself not as a descent into darkness but as a whiteout, as if the world had become a blank page, an empty screen or a puddle of milk.
Panic ensues, and the government quarantines the afflicted in an unused sanitarium, where they act out a pageant revealing the deep and ugly truths of human nature for the benefit of an audience encouraged to wonder What It All Means. We notice, first of all, the failures of compassion that greet the initial outbreak, and then, once the blind are sequestered, the decline of their makeshift society into a primordial condition of tribal war. We see decency, reason and fellow-feeling challenged by stronger impulses toward domination and selfishness, and observe how goodness can triumph by means of violence and deceit.
That none of this is meant to be taken literally is signaled by an ambient fuzziness familiar to anyone who has dabbled, as reader or writer, in the cloudy waters of literary allegory. "Blindness," which opened in Brazil in September and on Friday in the United States and will open in many other countries worldwide in October and November, concentrates on a small group of people, each with a thematic identity and a clear narrative function, not one with a name. When they stumble into the quarantine ward, these characters introduce themselves by number, according to order of arrival, and by profession, evidence that they have been stripped of their humanity not by sickness or the state, but rather by Saramago and by Don McKellar, the screenwriter.
The main group, most of whom we have encountered at least briefly before their incarceration, includes an ophthalmologist and his wife (Mark Ruffalo and Julianne Moore), a prostitute (Alice Braga), a thief (McKellar), a mysterious old man (Danny Glover), a child (Mitchell Nye) and a Japanese yuppie couple (Yusuke Iseya and Yoshino Kimura). Their rivals, quartered in another ward, are led by a bartender (Gael García Bernal) who turns himself into a cruel, capricious monarch and whose rise to power is aided by a lieutenant (Maury Chaykin) with the advantage of having been blind all his life.
The ophthalmologist's wife, meanwhile, has retained her sight, which gives her tattered clan a bit of an edge in the struggle for domination and survival that occupies the film's long middle section. Her condition also makes her a surrogate for the audience and the crucial ingredient in the film's murky thematic stew. We wonder why she, apparently alone among the inhabitants of the city, was spared. Is it because she was nice to her husband when he went blind? We also wonder whether, or how, her apparently limitless patience and pity will withstand the challenge of caring for a filthy and terrified accidental family.
In its original incarnation as a novel, "Blindness" belongs with those other important 20th-century allegories that use an imagined communal disaster as the laboratory for a moral thought experiment. Other notable examples, drawn from the charmed circle of Nobel Prize winners, might include "The Plague" by Albert Camus and "Lord of the Flies" by William Golding. Saramago's book, lacking the dark simplicity of Camus's fable, is more likely to join Golding's well-worn novel as term-paper fodder for high school English classes.
An interesting transmutation sometimes occurs when the pedagogical machinery of this kind of book is brought to the screen. The characters in Meirelles's film may be ciphers, as they are in the mechanical universe of Saramago's novel, but they are also Julianne Moore, Mark Ruffalo, Alice Braga and the rest of those names listed in parentheses above. And this simple fact makes a big difference.
Saramago's lofty, ideologically defended humanism has no place for actual human beings, but actors of this caliber don't know how to be anything else. Moore's pale, fine-boned face is too precise and delicate an instrument to obey the rather simplistic directives of the story, and the rest of the cast shares her inability to sacrifice physical or psychological nuance in the service of vague ideas.
Meirelles (a Brazilian filmmaker whose previous features include "City of God" and "The Constant Gardener") sometimes seems overly enamored of arresting images, manipulating light, color and composition at the expense of emotional or narrative clarity.
Here, he revels in the paradox of trying to use a visual medium to convey the experience of sightlessness, and excels at showing what the world of the blind might look like. And he is not above exploiting both the comical and the horrific aspects of their condition, punctuating scenes of cruelty and dread with moments of grimly funny slapstick.
"Blindness" is not a great film, mainly because it can't transcend - and, indeed, lays bare - the intellectual flimsiness of its source. But it is, nonetheless, full of examples of what good filmmaking looks like. For all its chin-rubbing, brow-furrowing attitudes, it does not, in the end, give you much to think about.
But there is, nonetheless, a lot here to see.

http://www.iht.com/articles/2008/10/03/arts/fmreview3.php

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The other end of the line
Last year, I had the extreme displeasure of calling my father to let him know that his son, my brother, had killed himself. Getting in touch with my father was, at first, comical. I called the assisted-living home where he has been ever since he was evicted from his last place. He has always spent money on the horses. He could often be found reading the racing form and betting at Off-Track Betting.
When the receptionist answered the phone and I asked for my father, she put me on hold. I was on hold for a while, and I started replaying my brother's suicide in my head. I imagined him on the floor of his room. I imagined him on his knees. I imagined him crying. Have I mentioned that he did it with a handgun? Someone finally picked up the phone, but it was not my father.
"Hello, who's this?" an old woman's voice said.
"Umm, I'm on hold for my father," I said.
"Get off the line," she said. "I'm waiting for Paul Newman."
"Paul Newman?" I said, smiling in spite of my self.
"Yes," she said. "Now get off the phone."
I did get off the phone and then called back and told the receptionist what happened. She laughed and said she'd try to find my father for me. When I finally reached him, he sounded as if he was ready to cry. Had someone already told him the news? But then I remembered that it had been years since I'd spoken to him, and he just sounded old.
I didn't want to say it, but my sister, who was in the room with me and my mother and my other sister, kept saying, "Ask him if he's sitting down." So I said, "Dad, are you sitting down?" And without waiting to hear his answer, I told him.
"Funny," my father said. "Why do you think he did that?"
My father never did what was expected of him, so no wonder he didn't react with sadness or grief to the news. For years, before he left our family, my mother wanted him to get a regular job. Instead he went into the film business. He would be wonderful at making movies, he told everyone. In the meantime, we were poor. He was hired to go to Monterey. He was one of the cameramen for the rock documentary "Monterey Pop." He was doing it, man, he was living his dream. There was free love. There was pot and grooviness. There were other movies. But there was never money.
Sometimes my brother helped him with the movies. My brother was key grip. My brother was cameraman. My brother had a chipped front tooth, light brown hair, long fingers. He played guitar and mandolin. He left a note on his bedside table. It had all the access codes for his e-mail accounts. At the bottom of the note he had written "goodbye." My brother's 15-year-old son was in the house.
My father didn't wait for me to answer his question. "They treat me like an animal in here," he said. "Killing yourself might not be such a bad idea after all," and then he said how he had written to us, his children, but no one had written him back. "No one sends me Christmas cards or birthday cards anymore," he said. "No one gives a [expletive]." I wanted to tell him that he never sent us those things, either, but I didn't.
I didn't want to listen to my father complain about his life when my brother had just ended his. Before I called, I thought the death of his son might make him stop thinking about himself. It didn't. Then I thought in the moment he shot himself, my brother was being just like our father, thinking of only himself and not his family. I was like them, too: I thought of myself.
My brother's death meant that whatever memories I had of him, from when we were children, were now ruined. I could no longer relive the endless games of hide-and-go-seek we played, or the way I listened to him practicing on his guitar every night while I fell asleep, to the point where there was always music in my dreams. I could never remember those things without also remembering that he killed himself. I realized how self-centered grieving was, and I decided that I would be different, I would not grieve.
"I have to go now," I said, and hung up.
When I got off the phone, I shrugged instead of cried, but then I looked into the eyes of my mother and my sisters, and I could not help crying. I could not help grieving like everyone else. I would leave the task of being different to my father. He could carry that torch much better than I.

Yannick Murphy is the author of several books. Her most recent novel is "Signed, Mata Hari."

http://www.iht.com/articles/2008/10/02/opinion/edmurphy.php

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In a fairy-tale village, Russian orphans thrive
KALUGA REGION, Russia: Standing in a row, sweating in the bright sun, a group of boys hammered on the outer wall of a partially built log cabin. Nearby, two others painted a picnic table while another pack of children scurried by dressed in green tunics, wooden swords drawn for a play battle.
Work and play often commingle in Kitezh, an experimental orphan community about 190 miles southwest of Moscow that combines features of an orphanage with those of foster care. With its colorful wooden cottages, Kitezh appears as distant from the cruelty of the children's frequently alcoholic and abusive parents as it is from the stale, often crowded government institutions where many Russian orphans still live.
"If we can, we try to create the atmosphere of a fairy tale," said Mikhail Shchurav, who has lived at Kitezh for three years and has an adopted son. "Fairy tales help these kids forget what they've been through."
The founders of Kitezh hope that their village can be a model of reform for Russia's decrepit child welfare system, little changed since Soviet days. Though perhaps hard to replicate on a large scale, Kitezh still stands as one of the few largely successful alternatives here to institutional care for orphans.
Russia's orphan problem stretches back for most of the last century: wars, revolution, Stalin's purges, famine and disease all thinned the adult population. Even now, as Russian wealth accumulates, alcoholism and social decay prompted by the Soviet collapse continue to plague the countryside, destroying families.
Russia's Education Ministry has classified about 750,000 children today as orphans. Most have been abandoned or taken from their parents because of neglect or abuse. Thousands more are homeless, living in the dank, freezing train stations and fetid stairwells of Russia's cities.
Foster care, widespread in the United States and Europe, has been slow in coming to Russia. About 510,000 children cycled through foster care in the United States in 2006, and it took an average of 28 months for them to be adopted, according to the Department of Health and Human Services. While increasing numbers of orphaned Russian children are entering foster care, 200,000 are still housed in orphanages — often living there until age 18 — and thousands more enter the institutions each year.
Kitezh was named for a mythical Russian city that escaped decimation by an invading army by disappearing, leaving only the peal of church bells behind.
Dmitri Morozov, a former radio talk-show host, founded Kitezh in 1992 as a kind of orphan collective, building it with the help of volunteers and adoptive parents on a rural plot donated by the Kaluga Region government. Today, there are about half a dozen houses built in Russian-folk style, a school, a communal dining hall and a small Orthodox church.
The 30 or so children who live there study, work and eat together, and live in private homes with their adoptive parents, who are also trained teachers, psychologists and medical personnel.
"We are trying out the latest methods in psychological therapies: play therapy, art therapy, drama therapy," Shchurav said. "We even play economic games. No one in Russia has tried what we are doing with these children."
The experiment has yielded notable results. Of the 40 or so children who have graduated from Kitezh, about 60 percent have gone on to higher education and all have found good jobs, parents in the village said.
Vasily Burdin spent four years in an orphanage after his parents died from complications related to alcohol abuse when he was 4. He said he was treated fairly well there, but gained "an understanding of the world" only when he moved to Kitezh.
With almost fluent English picked up from British students who at times volunteer in the village, Burdin, now 18 and enrolled in a Moscow law university, described his struggle to overcome his past, and — something few Russian orphans have — his hopes for the future.
"I will proceed with law for my business, for my career," he said. "But after I have stability, I will do something with music — maybe open my studio. It's a dream."
Maxim Tarasenko, 7, the village's youngest resident, described his life before Kitezh as "very bad."
"My parents were very drunk, and didn't understand anything," he said. "They didn't understand that you're not allowed to drink only vodka and that you're not allowed to smoke."
At first he was antisocial and picked fights, said Tamara Pichugina, his adoptive mother. But after a year in Kitezh, he has become something of a social butterfly, fluttering about and chatting with whoever will listen.
Despite the successes, few have been able or willing to follow Kitezh's example.
"Our experience is not being put to use because it requires that adults receive a significant amount of training," said Morozov, the founder. It also requires a strict allegiance to the collective that can be at odds with Russia's new materialistic and individualistic ethos.
But the government has begun to revamp child welfare services, promoting adoption to ease the strain on orphanages.
Government funds allotted to adoptive families, including the parents at Kitezh, increased by 28.2 percent in 2007, and about 120,000 orphans left state institutions to join foster families, an increase of 7,000 over 2006, according to the Education Ministry.
Still, those removed from orphanages were replaced by some 120,000 new orphans registered by the ministry last year. Adoptive parents also give back thousands of children each year.
Most of the adults and children at Kitezh said they hoped their project could be replicated throughout the country. Morozov collected enough donations this year to begin building a new orphan village about two hours from the original.
During a lunch break from his internship in Moscow at the American law firm Baker Botts, a large Kitezh sponsor, Burdin said he was considering starting a business with Morozov, his adopted father, to help finance Kitezh's development.
"I think Kitezh is like a fairy tale," he said, adding, "You need to work to hold this beauty."

http://www.iht.com/articles/2008/10/02/europe/02russia.php

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Tormenting online rumors linked to Korean suicide
SEOUL, South Korea: One of South Korea's most famous actresses was found dead in her home on Thursday in what the police called a suicide. They linked her death to malicious online rumors, a growing social problem in South Korea, which has both one of the world's most active online communities and among its highest suicide rates.
The body of the actress, Choi Jin-sil, 39, was found in the bathroom of her apartment with a rope made out of bandages around her neck, Yang Jae-ho, a senior police investigator, said at a news conference.
Already struggling with a messy divorce, she had been deeply troubled by online accusations that she had driven another actor to gas himself in his car a month earlier, Yang said. The actor, Ahn Jae-hwan, was struggling with debt, and the rumors said she had pressed him relentlessly to repay money she had loaned. She complained to the police about the rumors, which she called baseless, and they were investigating when she died.
The night before, Yang said, she came home drunk and broke down before her mother, crying and bitterly protesting the Internet rumors. Then, in a sort of high-tech suicide note, Choi sent cellphone text massages to her makeup assistant, asking her to look after her two children, Yang said.
Almost 80 percent of South Korea's households have broadband access, fostering especially active online interactions. Most Web sites here have bulletin boards where users can post uncensored, anonymous comments, and nearly all young people run their own blogs, updating via cellphone.
Such sites were a major avenue for rumors about the possible dangers of dropping a ban on American beef that fed enormous street protests and political upheaval earlier this year.
Major Web portals have in recent years doubled the number of monitors to screen out online character assassination and respond more quickly to complaints of malicious rumors in cyberspace. But many victims still complained that vicious rumors spread so fast their reputation is ruined virtually overnight.
When two young female celebrities killed themselves last year, at least one of them, the singer Yoo Na, was found to have suffered from malicious online rumors saying she had had plastic surgery.

http://www.iht.com/articles/2008/10/02/asia/03actress.php

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Finnish children's site pulls shooting game

HELSINKI: An Internet game in which players roam a school and kill kindergarten students with a shotgun has been pulled from a Finnish children's gaming site one week after the worst school shooting in Finnish history.
An Internet game in which players roam a school and kill kindergarten students with a shotgun has been pulled from a site for Finnish children site one week after the country's worst school shooting.
"We have removed pages from our site that are not necessarily appropriate for younger family members," the site, lastenpelit.fi, said in a statement.
The game, "Kindergarten Killer," can be found widely on the Web.
Matti Saari, 22, killed 10 people at a vocational school in Kauhajoki, Finland, last week. It was the second school shooting in the country in less than a year. Saari prefaced his rampage with boastful video clips on Web sites including YouTube.

Pekka-Eric Auvinen, another Finnish student, did the same thing before shooting six fellow students, the school nurse and the school principal to death at Jokela high school last November.
Both Saari and Auvinen killed themselves after their rampages.
http://www.iht.com/articles/2008/10/02/europe/kids.php

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Death toll rises to 224 in Indian temple stampede
JODHPUR, India: The death toll in a stampede at a Hindu temple rose Thursday to 224 as the government asked a retired judge to probe the cause of the disaster two days earlier in western India, police said.
Another 57 injured were being treated in various hospitals in the historic city of Jodhpur in Rajasthan state, said senior police official Rajeev Dosat.
Dosat said the death toll went up after police found that several local people had taken their dead relatives home and later cremated them without informing authorities. Police contacted them subsequently.
A retired judge has been asked to head a government-ordered probe into the disaster, he said.
The disaster happened just as the doors of the temple were being opened for worship at dawn Tuesday for more than 12,000 people celebrating a key Hindu festival in the temple in a 15th century fort in Jodhpur.
A group of 200 pilgrims jostled with the crowd and tried to move ahead of others, causing some people to slip down the narrow 1.35-mile (2-kilometer) path leading to the temple, said Mahendra Singh Nagar, who heads a private trust that oversees the temple's operations.
False rumors of a bomb added to the chaos, worshippers said.
Tensions are high because India has been hit by a spate of recent bomb attacks.
Temple floors were also slick with coconut milk as thousands of devotees broke coconuts as religious offerings, causing pilgrims to slip and fall as they scrambled to escape, Nagar said.

http://www.iht.com/articles/ap/2008/10/02/asia/AS-India-Temple-Stampede.php

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Train driver texting just before fatal crash
LOS ANGELES: The train driver blamed for the worst U.S. train crash in 15 years was sending and receiving text messages seconds before his crowded commuter train skipped a red light and collided head-on with a freight train, federal investigators said on Wednesday.
The Metrolink commuter train ploughed into a Union Pacific freight locomotive on September 12 in Chatsworth, California, killing 25 people and injuring 135 in the worst train accident since 1993.
A National Transportation Safety Board probe has focussed on whether the engineer, identified as Robert Martin Sanchez, 46, failed to heed trackside signals. Sanchez was killed in the crash.
Cell phone records show Sanchez was sent a text message at 4:22:01 p.m., and received one at 4:21:03 p.m. The accident occurred at 4:22:23 p.m., according to Union Pacific train's onboard recorders.
He received seven and sent five text messages between 3:00 p.m. and the time of the accident.
Sanchez also received 21 text messages and sent 24 while he ran a train from 6:44 a.m. to 8:53 a.m.
Since the timings were not all recorded on a common platform, the precise correlation between the events is not clear, investigators at the NTSB said.
Local TV station KCBS reported that a teenager claimed to have received a text message from the Metrolink engineer a minute before the collision.
Following the accident, California authorities temporarily banned railroad workers from using cellphones on duty.

http://www.iht.com/articles/reuters/2008/10/02/america/OUKWD-UK-USA-TRAIN-CRASH.php

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Tanzania says 19 children suffocate in disco
DAR ES SALAAM: Nineteen Tanzanian children aged between five and 12 suffocated and died in a disco during a party to mark the Muslim Eid al-Fitr holiday, a government official said on Thursday.
The children died during the daytime festivities on Wednesday in a building in Tabora town, about 760 km (475 miles) northwest of the commercial capital Dar es Salaam.
"There are 19 people dead, 11 girls and eight boys, aged between five and 12. They were in a children's disco, celebrating Eid," Salva Rweyemamu, director of communications at Tanzania's presidential office, told Reuters.
"The president (Jakaya Kikwete) says he is really saddened."
Rweyemamu, citing Tabora police and officials, added that 17 other children were in hospital with injuries.
One organiser of the event, one of many such Eid celebrations across Tanzania, had been arrested, he said.
Tabora officials were unavailable to give more details.
It was not known how many children were in the disco at the time, or what exactly caused the suffocation.

http://www.iht.com/articles/reuters/2008/10/02/africa/OUKWD-UK-TANZANIA-FIRE.php

Suicide bomber kills at least 4 in northwest Pakistan
PESHAWAR, Pakistan: A suicide bomber blew himself up near a leading politician critical of Islamic extremists in northwestern Pakistan on Thursday, killing at least four people but leaving the politician unhurt, police said.
The government vowed to battle militancy following the blast, the latest in a surge in attacks by Taliban and al-Qaida-linked insurgents on government, military and Western targets.
"We have two options: either hand over the country to the Taliban or defeat them," said Interior Ministry chief Rehman Malik. "We will defeat and eliminate them."
The attack occurred as the politician, Asfandyar Wali Khan, was receiving guests to mark the end of the Islamic fasting month at his home in Charsadda, said police officer Akhtar Ali Shah.
"The bomber shouted 'God is great!' and ran toward Asfandyar Wali Khan. I saw a police guard open fire and hit him in the head," said police officer Riaz Khan. "He fell down and blew himself up."
Shah said Khan was unhurt, but at least four people were killed and several others were injured.
Northwestern Pakistan is the front line in the country's battle against the militants, who are also blamed for increasing attacks on NATO and U.S. forces in neighboring Afghanistan.
Khan's Awami National Party competes with pro-Taliban religious parties for the loyalties of the region's ethnic Pashtuns. It has been sharply critical of Islamic extremists.
The grouping also is a key partner in the ruling coalition of pro-Western President Asif Ali Zardari.

http://www.iht.com/articles/ap/2008/10/02/asia/AS-Pakistan-Explosion.php

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U.N. children to leave Pakistan

The United Nations said on Thursday it has ordered children of its international staff to leave Pakistan after raising its security level in the wake of last month's suicide attack on the Marriott Hotel in the capital.
The alert came as a suicide bomber killed himself and three other people on Thursday in northwest Pakistan in an attack aimed at a prominent ethnic Pashtun politician, police said.
The politician, Asfandyar Wali Khan, leader of the liberal-leaning Awami National Party (ANP) that is part of the ruling coalition government, was not hurt in the attack in the northwestern town of Charsadda, police said.
The blast, the latest in a wave of bomb attacks by Islamist militants, came as the United Nations said it was raising its alert level to "security phase III" -- under which children of international staff, and possibly their spouses, would have to leave the country.

"(A) number of security incidents in the recent past, including the bombing of the Marriott Hotel, have drawn attention to the prevailing security situation in the country and the potential risks to the international and national communities," the United Nations said in a statement.
The heightened security level applied to Islamabad, Rawalpindi, Quetta and nine districts of Baluchistan, it said.
A U.N. information officer in Islamabad, Ishrat Rizvi, said the world body remained committed to Pakistan. She added that the evacuation of children "doesn't make any difference to the work of the United Nations."
The former head of U.N. security resigned earlier this year after an inquiry faulted his department for ignoring repeated internal requests to raise the security level in Algeria ahead of a December 2007 bomb attack that killed 17 U.N. employees.
A suicide truck bomber attacked the Marriott Hotel in Islamabad on September 20, killing 55 people, among them six foreigners including the Czech ambassador and three Americans.
Britain's Foreign Office said on Wednesday it was withdrawing the children of its diplomats in Pakistan.
Aid groups and some other embassies and foreign companies are expected to follow suit by asking dependents of their international staff to leave.
The Pakistani government had issued assurances about efforts to protect foreigners after the Marriott attack but unease over the security situation has grown.
POLITICIAN TARGETED
Pakistan's security forces are battling al Qaeda and Taliban militants in remote, semi-autonomous regions on the Afghan border. Up to 1,000 militants have been killed since August, the military said.
Hospital officials said more than a dozen people were wounded in Thursday's attack in Charsadda.
"Obviously, Mr Asfandyar Wali was the target as the suicide bomber tried to enter his guest house but was shot by the security people. He then fell to the ground and blew up," provincial police chief Malik Naveed told Reuters.
Wali's ANP is fiercely opposed to militants based in the region waging a bloody campaign against the government.
There have been 89 suicide attacks across Pakistan since July 2007 in which nearly 1,200 people have been killed, according to figures issued by the military.
Worsening security has coincided with serious economic problems -- a widening current account deficit, unsustainable fiscal deficit and inflation running at more than 25 percent.
Pakistan's main stock index has shed 34.8 percent since the beginning of the year and is 41.7 percent lower than a life high set in April, while the rupee has lost 21.3 percent against the dollar this year.

http://www.iht.com/articles/reuters/2008/10/02/asia/OUKWD-UK-PAKISTAN-VIOLENCE.php

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Pakistani leader repeats a long debunked hoax
The president of Pakistan apparently believes an Internet hoax alleging that Oliver North warned of the dangers posed by Osama bin Laden 20 years ago.
President Asif Ali Zardari, in an interview with the Fox News Channel that was televised Tuesday, said that North, the former White House aide at the heart of the Iran-Contra controversy, installed a security system for his home in the late 1980s "because he was scared of Osama bin Laden."
That rumor emerged on the Internet shortly after the terrorist attacks on the United States on Sept. 11, 2001. It has been thoroughly debunked by a number of reliable sources, including the U.S. Senate's Web site and North himself.
Nonetheless, the hoax continues to be perpetuated through a widely e-mailed document that claims to be a transcript of North's testimony during the Iran-Contra hearings in 1987.
In the forgery, North is quoted as saying that bin Laden is a grave threat to the United States. But in his actual testimony, North never mentioned bin Laden and referred only to the terrorist Abu Nidal. In November 2001, after receiving copies of the e-mail hoax, North wrote a response that said the claims were "simply inaccurate."
"Though I would like to claim the gift of prophesy, I don't have it," he wrote.
A reference page on the Senate Web site also explains that the e-mail hoax is not true, stating, "Colonel North testified the security system was installed because threats were made on his life by terrorist Abu Nidal."
Zardari repeated the hoax during a conversation about terrorist threats with the Fox News anchor Greta Van Susteren. In the interview, which was recorded Saturday in New York, Zardari said that his wife, Benazir Bhutto, a former Pakistani prime minister who was assassinated last year, had called President George H.W. Bush to complain about bin Laden, who was reported to have bankrolled a no-confidence vote against Bhutto.
According to Zardari, the phone call was placed on a secure line at the U.S. Embassy. He said Bhutto had "complained that why is an operator who is supposed to be an American destabilizing my government?"
Bush "hadn't even heard of the name Osama bin Laden," Zardari added, before repeating the claim about North's testimony.
In the 1980s, bin Laden, a Saudi, traveled to Pakistan and backed the insurgents who used the country as a base to fight the Soviet occupation of Afghanistan. The governments of Saudi Arabia, the United States and Pakistan supported the insurgents, too.
Farahnaz Ispahani, a spokeswoman for Zardari's Pakistan People's Party, responded to a query from The New York Times, whose global edition is the International Herald Tribune, about Zardari's statements in an e-mail message.
"The point President Zardari sought to make was more about how the U.S. ignored the threat posed by Al Qaeda and Osama bin Laden and less about the Oliver North comment or hoax," it read. "As President Zardari has said elsewhere, bin Laden funded opponents of Prime Minister Benazir Bhutto in 1989. Her complaints about bin Laden to American officials drew the response that they did not know much about him or his movement, which at that time operated under the name of Services Bureau."
Van Susteren did not explain to viewers that Zardari's statement was untrue.
A spokesman for Van Susteren's program said that it was aware of the issue and planned to post a statement from North on her blog.

http://www.iht.com/articles/2008/10/02/asia/zardari.php

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OPINION

There's no time to lose for Pakistan's new spy chief

For too long, Pakistan's military and intelligence service have played a cynical and dangerous double-game: accepting billions of dollars in American aid while also aiding the Taliban and other extremists who threaten the United States, Afghanistan and, increasingly, Pakistan's fragile democracy.
Pakistan's military chief, General Ashfaq Parvez Kayani, has been under strong pressure from Washington and his own government to clean up the intelligence service. We hope his decision to appoint a new spy chief this week means that he has decided to finally put an end to that destructive game.
Kayani took over the army last November after Pervez Musharraf relinquished the role in hopes of holding on to the presidency. When Pakistan's new civilian leaders decided to oust Musharraf, Kayani distinguished himself by remaining on the sideline. The general has also pledged to reform Pakistan's intelligence service, which has long used the Taliban and other extremists to project power in Afghanistan and the Indian Kashmir. On that front, his record is less encouraging.
Kayani blocked an effort two months ago by Pakistan's civilian leaders to wrest control of the intelligence agency from the army.
American officials say members of the spy agency helped militants plan a deadly bombing of India's embassy in Kabul on July 7.
Kayani has now put his own loyalist, Lieutenant General Ahmed Shuja Pasha, at the top of the intelligence service.
The two men must root out tainted officials and make clear that it is no longer Pakistan's policy to promote extremists of any stripe. They must also retrain their agents and military forces in counterinsurgency warfare.
Whether they are up to those tasks is unclear. If there is another incident like the Indian embassy bombing, the buck now clearly stops at Kayani's desk.
President Asif Ali Zardari is speaking out forcefully (in English, at least) about the need for Pakistan, not just America, to defeat the extremists. In August, the Pakistani Army opened a full-scale battle to rout militants in the Bajaur tribal area, a Taliban and Al Qaeda stronghold along the Afghan border.
There's no time to lose. The militants are fiercely holding their ground and using increasingly sophisticated tactics, weapons and communications to attack Afghanistan. The deadly bombing at Islamabad's Marriott Hotel last month is a chilling sign of the extremists' ability to directly threaten Pakistan.

http://www.iht.com/articles/2008/10/02/opinion/edpakistan.php

India bars smoking in public places
NEW DELHI: India barred smoking in public places on Thursday in an attempt to fight tobacco use blamed, directly or indirectly, for a fifth of all deaths here.
The ban, which includes all offices and restaurants, will hit an estimated 240 million tobacco users, who are likely to find their homes and cars among the last few places to light up. The ban includes schools and colleges, pubs and discothèques, hospitals and bus stops. Offenders will be fined 200 rupees, or $4.22.
Attempts to ban spitting and urinating in public in India drew little success, and the impoverished and lawless northern state of Bihar has already expressed reservations about the practicalities of the ban.

http://www.iht.com/articles/2008/10/02/asia/smoke.php

Israeli general says settler violence increasing
JERUSALEM: Hundreds of Jewish settlers are engaged in violence against Palestinians and Israeli soldiers who get in their way, Israel's top general in the occupied West Bank said in remarks published on Thursday.
"In the past, only a few dozen individuals took part in such activity but today that number has grown into the hundreds. That's a very significant change," Major-General Gadi Shamni said in an interview with the Haaretz newspaper.
"These hundreds are engaged in conspiratorial actions against Palestinians and the security forces. It's a very grave phenomenon," he said, accusing settler leaders and rabbis, whom he did not name, of encouraging vigilante violence.
Shamni's comments echoed the findings of a recent U.N. report which recorded 222 incidents of settler violence in the West Bank in the first half of 2008 compared with 291 in all of 2007.
Palestinians have long complained of harassment by settlers, including the burning of their olive trees and rock-throwing against farmers.
In an incident on September 13, scores of settlers armed with guns, slingshots, knives and stun grenades attacked the West Bank village of Asira al-Kibliya, wounding three Palestinians.
Settlers and the Israeli army said the Asira assault was triggered by the wounding of a nine-year-old settler boy by a Palestinian whom he had disturbed in the act of setting fire to a house in the Yitzhar settlement while the family was away.
"POGROMS"
Israeli Prime Minister Ehud Olmert reacted strongly to the settlers' attack, saying he would not tolerate "pogroms" by Jewish extremists who are determined on religious grounds to stop Israel swapping occupied land for peace.
No arrests were made after the attack on Asira.
In the interview, Shamni said Israeli officers and soldiers who have tried to protect Palestinians from attack have been injured by settlers or had their vehicles damaged.
Diverting military resources to keep settlers in line, Shamni said, impairs the army's ability to carry out "security missions" in the West Bank, which include raids against Palestinian militants.
Palestinians say the military often turns a blind eye to settler vigilantism.
Some 500,000 settlers live in the West Bank, including Arab East Jerusalem. The areas are home to some 2.5 million Palestinians.
"The majority of (settlers) here act normally. We're talking about a hard core of a few hundred activists," Shamni said.
Last week, an Israeli academic who has been an outspoken critic of settlement on occupied land Palestinians want for a state, was wounded by a pipe bomb outside his Jerusalem home.
Olmert said the bombing was evidence of "an evil wind of extremism, of hatred, of violence" threatening Israeli democracy.

http://www.iht.com/articles/reuters/2008/10/02/africa/OUKWD-UK-PALESTINIANS-ISRAEL-SETTLERS.php

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Ethnic rivalry flares before Bosnian local election
Ethnic rivalry has flared again in Bosnia ahead of Sunday's local election, fuelling fears its leaders are more intent on splitting the state than healing the scars of its 1992-5 war and joining the European Union.
Bosnians will choose city councils and mayors in the two autonomous regions created under the U.S.-brokered Dayton peace accords that ended the war, and in the northern neutral Brcko district in the Sunday poll.
Analysts say ethnic parties are likely to triumph, with turnout set to be low among a populace tired of rhetoric.
Political hostilities between the Muslim-Croat federation and the Serb Republic, which co-exist in an uneasy alliance under a weak central government, culminated last month in a series of provocative moves by Muslim and Serb leaders.
Haris Silajdzic, who chairs the country's tripartite presidency and heads one of the two ruling Muslim parties, lobbied hard against the Serb Republic, which he says was "founded on genocide." Some 100,000 people were killed in the former Yugoslav republic's war, most of them Muslims.
Serb Republic Prime Minister Milorad Dodik has taken steps to establish his region as a de facto separate state, which has earned him strong warnings from Western peace sponsors.
International peace envoy Miroslav Lajcak told the Dnevni Avaz newspaper last week the animosities were weakening the state and blocking its progress towards eventual European Union membership.
"You can't say that you are for Bosnia-Herzegovina and at the same time treat half of the country as an enemy state... You can't say that you respect Bosnia-Herzegovina while doing everything to weaken state institutions," Lajcak was quoted saying in a criticism of Muslim and Serb leaders in turn.
In June, Bosnia signed a Stabilisation and Association Agreement with the European Union, the first rung on the ladder towards EU membership. But so far, little progress has been made to meet conditions set in the agreement.
"I doubt we shall see significant changes by 2010, when a general election is scheduled, which means that we shall not get into the EU along with other Balkan states," Sanel Huskic, president of the Sarajevo-based ACIPS think-tank, told Reuters.
Activists from a new multi-ethnic party trying to break the stalemate have been beaten up and threatened by political rivals in recent weeks, dampening already dim hopes it would win power.
Bojan Bajic said the party would persist in fighting for "basic freedom, democracy and human rights." "Governments that do not have good opposition have a tendency to turn into dictatorships based on fear and threats," he said.

http://www.iht.com/articles/reuters/2008/10/02/europe/OUKWD-UK-BOSNIA-ELECTION.php

British savers seek refuge in Irish banks
Reuters
By Paul Hoskins and Kevin Smith LONDON/DUBLIN: Ireland's banks are suddenly flavour of the month among nervous British savers after the Irish government stepped out of line with its European neighbours and pledged a blanket guarantee on all deposits.
The Irish parliament on Thursday approved legislation that will guarantee 400 billion euros (315 billion pounds) worth of liabilities at Irish banks which is more than twice the country's annual gross domestic product.
Unnerved by the recent collapses of some of the biggest names in global banking, British depositors, and companies in particular, have begun transferring funds across the Irish Sea.
"The interest from the wholesale market has undoubtedly spiked and I think you could see some strong inflows from that market over the next quarter or two," said one senior industry source in Dublin.
International asset managers in particular are now more inclined to lodge funds with Irish banks for safe keeping.
"There are very strong, high-level inquiries from that market wanting to play again," the source said.
The Irish Times reported on Thursday that one Irish bank had received a single corporate deposit of 500 million euros ($697 million) following announcement of the guarantee.
Two other Irish banking sources said it would be wrong, however, to talk about a flood of transfers into Irish banks.
"Yes, money has come in across the board but I think it's pushing it a bit to talk about torrents of cash from the UK," said one.
While it may be some months before the full extent of the inflows becomes clear, Ireland's financial regulator has already acknowledged that they have "had a positive impact for the funding profiles of Irish banks."
There has also been enough movement of funds to spark complaints that Irish banks have been handed an unfair advantage.
Henri Guaino, one of French President Nicolas Sarkozy's closest advisers, specifically pointed to Ireland's guarantee system as a potential danger for banks in other countries.
"If all English depositors go to the Irish banks, you can imagine that the English will not be happy," he told Canal Plus Television.
Meanwhile the British Bankers' Association said the Irish move had distorted competition.
"While we support proposals aimed at re-reintroducing stability to the financial markets, we need fair play for financial institutions across Europe," it said in a statement.
NORTHERN ROCK BENEFITS
The Irish move has prompted calls for a coordinated European approach to underpinning financial stability in the region.
Ewald Nowotny, governor of the Austrian central bank and member of the European Central Bank's governing council, told Reuters in an interview that he wanted to see harmonisation of deposit guarantees in the European Union.
"Coordination is for me the main priority," he said. "Measures like Ireland's have repercussions in other states."
Dutch Finance Minister Wouter Boss told parliament he too was lobbying for cooperation because varying deposit guarantees across Europe had created an "unequal playing field."
Irish banks are not the only ones to benefit from state backing, however.
Britain's own National Savings and Investments (NS&I), a state agency, said it had seen increased interest in its products.
"In the last few days, and certainly in the last couple of weeks, we have observed an increase in calls to our customer support centre," a spokeswoman for NS&I said.
Meanwhile mortgage lender Northern Rock, which was taken under state control by the British government in February after a run on the bank, said on Thursday that it had withdrawn several savings products because a surge in deposits had brought it close to breaching a cap on its market share.
Those banks who don't enjoy direct state backing but have a more traditional approach to banking than the big victims of the credit crisis may also be benefiting from investor nerves.
"We are seeing a relatively strong inflow of clients," Floris Deckers, Chief Executive of Dutch private bank Van Lanschot, told Reuters in an interview this week.
"At this moment I only hear that people want certainty. The big question is not 'return on your money' but 'return of your money'."

http://www.iht.com/articles/reuters/2008/10/02/business/OUKBS-UK-IRELAND-BANKS-BRITISH.php

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