Bumper barley crop helps brewers, but not drinkers
Thursday, October 30, 2008
HAMBURG: A bumper barley crop has caused a sharp fall in prices for brewing malt and, while breweries are benefiting, beer drinkers will have little to cheer, analysts said Wednesday.
The European Union harvest of spring barley, which is used to make malt, rose by two million tons this summer after poor weather cut the 2007 crop.
As a result, malting barley prices have tumbled, cutting costs for beer makers. In Germany, malting barley is quoted around Euros 160, or $207, a ton, compared with about €300 a ton before the harvest this summer.
"This price reduction provides a certain amount of relief on brewers' costs and could be positive for earnings," said Reiner Klinz at the consultancy KPMG, said. "But a beer retail price cut is not to be expected." He said brewers already had swallowed higher prices for raw materials, energy, glass and logistics, which had not been passed to consumers, and the commodity price reduction would help to reduce pressure on the sector.
The brewing giant SABMiller this month warned of an uncertain year ahead, despite the group's decision to raise prices to offset higher commodity costs and other input costs. Although prices for barley, aluminum and glass had fallen, the company said it would not see a big effect in the current year ending in March 2009 because of the company's forward hedging policy.
9 families sue Chinese milk company
By Edward Wong
Thursday, October 30, 2008
BEIJING: Nine families with babies suffering kidney problems, allegedly because of contaminated milk, have filed separate lawsuits against one of China's largest milk companies, according to lawyers representing the families. They are the latest lawsuits to be filed in China's worst food safety scandal in years.
The lawsuits were filed on Wednesday in the northern city of Shijiazhuang, the location of the headquarters of Sanlu Group, a company at the center of the milk scandal. The lawsuits demand compensation from Sanlu.
The milk scandal and the lawsuits have become politically sensitive matters, and so far no judge has agreed to hear a case in court. At least three other lawsuits had already been filed before Wednesday.
Both product liability lawsuits and class-action lawsuits are rare in China. This means that Chinese consumers have one less layer of protection against defective practices by big companies if governmental regulatory processes fail, as they have in many recent food and product safety cases, some legal scholars say.
The milk scandal first emerged in September, when it was revealed that babies drinking milk formula tainted with a toxic chemical called melamine had developed kidney stones. Melamine had been illegally added to dairy products to artificially boost protein counts to meet nutrition standards.
At least four babies have died and at least 53,000 other children have fallen ill, according to reports from official news agencies.
Since September, a wide range of food products from China have been discovered to have melamine, from yogurt and eggs to biscuits. Countries around the world have ordered recalls of Chinese-made food products suspected of being tainted with melamine.
Senior government officials and company executives have been fired as the scandal has widened, and dozens of people suspected of being involved have been arrested.
Given the Communist Party's sensitivities over the scandal, many lawyers in China do not have high hopes that the lawsuits will get a fair hearing in the courts, if they are heard at all.
The families, which are from several provinces, hope that the central government will eventually provide some sort of compensation for the ill children, said Ji Cheng, a lawyer with the Deheng Law Office, a large firm based in Beijing that is representing the nine families.
Each family had an infant that had to go to the hospital because of kidney stones, and six are still in the hospital, Ji said. The families have kept hospital records and complete records of their purchases of Sanlu baby formula, he added. The families are asking for at least 14,000 yuan, or about $2,000, per child in compensation payments from Sanlu.
Ji said the lawyers did not file a class-action lawsuit on behalf of all the parents because each case had different details.
Class-action lawsuits are highly discouraged in the Chinese legal system. Technically they can be filed, but onerous rules put in place in recent years by official legal bodies have made it difficult for lawyers to file such lawsuits. Some Chinese legal scholars say the government views class-action lawsuits as a threat to social stability.
Over the course of the milk scandal, some lawyers have been discouraged from representing families seeking damages from dairy companies or from the government.
In the first weeks of the scandal, more than 100 lawyers put themselves on a list of lawyers volunteering to dispense legal advice to the families. But at least two dozen have since dropped their names from the list; most of them are from Henan Province, where lawyers have complained of subtle pressure put on them by local officials.
Huang Yuanxi contributed research.
Still time for some environmental mischief
Thursday, October 30, 2008
All presidents indulge in end-of-the-term environmental rule-making, partly to tie up bureaucratic loose ends but mainly to lock in policies that their successor will find hard to reverse.
President Bill Clinton's midnight regulations were mostly good, including a rule protecting 60 million acres of national forests from most commercial development. Not surprisingly, most of President Bush's proposals are bad.
Exhibit A is a set of six resource management plans covering 11 million acres of federal land in Utah. They would open millions of acres to oil and gas drilling and off-road vehicles, risking priceless cultural artifacts and some of the most breathtaking open spaces in America. The plans, each more than 1,000 pages, were dumped on an unsuspecting public in the last few weeks by the Bureau of Land Management.
The bureau claims that drafts were available months ago. But the final documents are what count. The public now has only a few short weeks to register objections before the secretary of the interior makes them final.
What we are seeing is the last gasp of the Dick Cheney drill-now, drill-everywhere energy strategy; one last favor to the oil and gas drillers and the off-road vehicle enthusiasts before a more conservation-minded president (both Barack Obama and John McCain have far better records than Bush) comes to town.
Environmentalists are also suspicious of the Interior Department's recent proposal to revoke a longstanding if rarely used regulation that gives Congress and the interior secretary emergency powers to protect public lands when commercial development seems to pose immediate environmental dangers.
Dirk Kempthorne, the interior secretary, decided that the rule was unnecessary after about 20 members of the House Natural Resources Committee ordered him to withdraw about 1 million acres near the Grand Canyon from new uranium mining claims to give officials time to assess potential damage to the air and water.
Arguing that the committee did not have a quorum and that he had other means of guarding against damage, Kempthorne not only refused to obey the committee's order but proposed to rescind the departmental rule requiring him to obey it.
Kempthorne is also pressing ahead with plans to scale back important protections required by the Endangered Species Act by eliminating some mandatory scientific reviews by the Fish and Wildlife Service of federal projects that could threaten imperiled animals and plants. The new rule - which could be made final at any moment - would allow projects likes roads, bridges and dams to proceed without review if the agency in charge decides they will cause no environmental harm. The National Audubon Society and other groups have compiled an extensive list of cases in which the agencies misjudged the threat.
And there are still three nerve-racking months to go before Bush leaves office.
A splash of autumn
By Elliot Silberberg
Thursday, October 30, 2008
MILAN: Friends in the Colorado Rockies e-mail me rhapsodizing about a wonderfully colorful autumn. Lately, I hear the leaves have thinned and the taste of snow is in the air. No one wrote which color stood out.
Perhaps it was that stunning blend of red, yellow, green and brown. Such a blast of the spectrum is so gorgeous I wouldn't want to see photos, unless they were in black and white. That way my mind could feel the colors in a way that a color print never could match.
Here in Italy, it's warmer, winter comes later, and the colors are more subdued. South of Milan, rice is grown on the Padana plain. My wife and I recently took a drive through the fields, late on a sunny afternoon. A golden-brown sea of rice swayed on both sides of the road. Under cloud cover, the tones became more delicate, a creamy chocolate or deep-walnut tone. Rice fields are quiet and minimalist compared to the blazing show in the mountains, but impeccable in their dignity. Knowing they are a product of hard work and that they nourish us adds to their beauty.
In Colorado, mountain pine beetle kill is giving brown and reddish-brown a bad name. But should it? Beetle kill is simply nature's way of cleaning old trees to make room for the saplings. As far as I know, short of a deep freeze that would kill the larvae, or an invasion of hungry woodpeckers, the brown plight is here to stay. It is a reminder that some things need way more time than many of us have at our disposal. So think brown. It's nature's way of saying the meek shall inherit the earth.
As for seasons, some people couldn't care less about their colors. They live for days, or nights, or simply in the present. I love days, particularly mornings, but I feel comforted to know night is always on the way. Darkness is nature's relief for the fact that there's basically nothing new under the sun.
The dramatic transitions that dawn and sunset represent are also great. As one example, the Italian Tyrrhenian seacoast's prelude to dark is lovely. Nature gets antsy. A breeze ripples over the sea, which turns grayish blue, then bluish grey then dark gray. Even the breeze feels gray. Then, far away, a final orange-red cloud puff accompanies the tomato sun - plink - into the sea.
Once, during a sunset, I saw a school of dolphins arc by close to the shore, like they were doing laps. In the after-glow, the sparrows and swallows chirp like whistles at a parade, then swoop and dip in swarms before settling in, silent, to sleep in the trees.
A friend in Colorado, a seasonal guy, loves winter, not for its short days and long nights, but because snow covers things up. If that's cynical, it's also wise. Too much nature, too many people, constant distraction - there's nothing wrong with tucking it under a white blanket for a spell. Besides, with the crisp blue sky, the green pines, the dead, brown ones and the gray days, winter is a vivid palette.
Incredibly, spring, warmth and muddy brown always return, and are especially welcome. Absence makes the heart grow fonder, in nature too. Color inexorably pushes up out of the mush: green shoots, robin's eggs, ladybugs, my blue wheelbarrow I thought somebody had stolen.
First thing's first, though. Honor to autumn, whose browns will soon be toast. Advance honor to winter, the next big thing. Make plans to hunker down and enjoy, for all that it hides and whatever you seek.
Elliot Silberberg is a teacher and writer who lives in Milan.
Pakistan quake kills at least 215
By Salman Masood
Thursday, October 30, 2008
ISLAMABAD, Pakistan: A powerful earthquake jolted parts of southwestern Pakistan on Wednesday, causing widespread destruction in one of the poorest areas of the country, officials said.
The Associated Press put the death toll at 215 early Thursday. Hundreds more were injured as hundreds of mud houses in desolate villages and hamlets in several districts of Baluchistan Province were leveled by the magnitude 6.5 quake, which struck at 5:10 a.m. Army and paramilitary troops and aid workers scrambled to help the survivors and pull bodies and the injured out of the rubble, but they were hampered by significant damage to roads and the telecommunications network.
The death toll is expected to rise as reports from remote areas funnel in. Meanwhile, an estimated 15,000 people left homeless are trying to withstand the cold and serious aftershocks. Local television showed residents sitting in the open, shivering in the cold. Women huddled in groups with their panicked children. Debris of mud houses with caved roofs presented a bleak sight.
People were shown searching through the rubble for survivors and belongings. There were reports of mass burials.
"It was a shallow earthquake, which is very destructive," said Qamar Zaman Chaudhry, the director general of the Pakistan Meteorological Department. "The aftershocks will be felt for a week with more or less the same intensity." Indeed, one on Wednesday evening had a magnitude of 6.2.
The quake struck along a 44-mile stretch including Quetta, the provincial capital, which lies on a fault line and was leveled in 1935 by a quake that killed 35,000 people.
"It was scary," Malik Siraj Akbar, a resident of Quetta and a journalist for The Daily Times, an English-language daily, said by telephone. "The walls of the apartment complex where I live shook so hard that I just closed my eyes and waited for the roof to collapse. I feel so lucky to be alive."
Aid workers said that 2,000 to 3,000 homes were damaged and that 500 had collapsed.
The International Committee of the Red Cross said it had sent two teams of aid workers to the area, a total of 28 staff members and volunteers, and two mobile health teams.
"Shelter is the most critical need now," said Hasan Muzamdar, the country director of the relief agency CARE, noting that nighttime temperatures fall to 40 degrees. "Winter has already started here."
The earthquake on Wednesday brought back bitter memories of the magnitude 7.6 earthquake that struck in October 2005 and left more than 75,000 people dead and hundreds of thousands homeless in the northern parts of Pakistan and parts of the Himalayan region of Kashmir, which is divided between Pakistan and India. In that disaster, frustration with the slow pace of government assistance tended to run high.
A poor government response in Baluchistan, where bitterness against the federal government in Islamabad has simmered for years, could be very damaging. One of Pakistan's four provinces, Baluchistan is rich with natural resources and sparsely populated, and armed Baluch nationalists have been demanding greater autonomy and a larger share of the national wealth. However, the affected area is inhabited by Pashtuns, a strongly tribal ethnic group that constitutes the majority of the population of Afghanistan.
But officials in Islamabad said the government was taking necessary measures. "It is a localized affair," said Farooq Ahmed Khan, head of the National Disaster Management Authority, at a news conference in Islamabad.
He said that 2,000 tents, 5,000 blankets and 4,000 plastic mats had been sent to Baluchistan and that 12 helicopters were taking part in the rescue operation. "There were no major buildings in the area," he said. "So, there was no need for a technical search-and-rescue operation."
In the hilly tourist resort of Ziarat, a tent village has been established for women and children, as well as a field hospital in the worst-affected district. Eight villages were completely flattened there, officials said.
Khan said there was no immediate need to appeal for international assistance but also welcomed "any outside help."
Exxon Mobil quarterly income hits $14.8 billion
By Jad Mouawad and Julia Werdigier
Thursday, October 30, 2008
NEW YORK: In what might be the high watermark for corporate profits, the world's biggest publicly traded oil company, Exxon Mobil, reported another blowout quarter Thursday, after oil prices hit a record this summer.
Royal Dutch Shell, the biggest oil company in Europe, also reported higher-than-expected earnings for the third quarter, as record oil prices helped mask a decline in oil and gas production.
Exxon said its quarterly income rose by 58 percent to $14.8 billion, well above what analysts had expected.
The quarter includes an after-tax gain of $1.6 billion for the sale of a natural gas transportation business in Germany. Excluding one-time items, Exxon's profit was $13.4 billion, still a record quarter for an American corporation.
Shell said its profit rose 22 percent to $8.45 billion from $6.9 billion in the same period last year.
But while oil companies have seen their profits soar thanks to rising oil prices, the last quarter may signal the end of the boom years. Oil prices have plummeted in recent months, falling 53 percent from their peak of $147.27 on July 11, because of slowing economies and lower oil demand.
This week BP, ConocoPhillips and Occidental Petroleum all reported big third quarter earnings jumps. Chevron reports its earnings on Friday.
The turnaround in oil prices has been surprisingly swift. It could have a long-lasting effect on the world's energy supplies as some companies cut their spending and slash costs.
In recent weeks, energy executives have become increasingly concerned that companies would be forced to lower their investments in production and exploration.
Shell said its crude oil and natural gas output declined 6.6 percent, which sparked concerns among investors about future earnings growth.
"This is a good outcome, but some investors will be disappointed by the sluggish production volumes," said Tony Shepard, an analyst at the broker Charles Stanley in London. "Given the fall in the oil price, an issue for all oil and gas companies is current levels of capital expenditure."
Shares in Shell fell 70 pence, or 4 percent, to £16.35 in London trading on Thursday after rising 12 percent on Wednesday in anticipation of higher earnings. Exxon shares fell 99 cents, or 1.3 percent, to $73.68 in afternoon trading in New York.
Jeroen van der Veer, who will retire as chief executive of Shell next year, said the company plans to make "significant investments" to guarantee profitability despite recent declines in oil prices. "We are watching the world economic situation closely," van der Veer said in a statement. "Shell is robust across a wide range of energy prices."
Van der Veer said that Shell delayed a decision to invest in the second expansion phase of its Athabasca oil sands project in Canada to wait for labor and raw material prices to fall. Shell needs projects like Canada's oil sands to make up for lost production at aging fields.
"With production declines remaining a concern at Shell at a time when BP's operational performance is finally turning, we suggest that there is not enough in these numbers to reverse recent performance," a Citi analyst, Mark Bloomfield, wrote in a research note.
Shell said Wednesday that the chief financial officer, Peter Voser, will take over from van der Veer, who stayed on beyond the Netherlands' traditional retirement age to help the company through a reserves scandal.
Julia Werdigier reported from London.
As U.S. gasoline prices go down, driving goes up
By Clifford Krauss
Thursday, October 30, 2008
VINTON, Louisiana: Doug Guidry gave up drag racing and boating last summer when gasoline prices shot up. Billy Castaneda put off trips to Houston to see his grandchildren. Randal Shul stopped playing paintball with his buddies to save gasoline.
Now, with U.S. gasoline prices dropping, all three men are hitting the road again. "Gas going down means freedom, even when everyone is worried about the economy," Castaneda said as he filled his 1995 Oldsmobile 88 to drive 125 miles to Houston the other day.
The sharp decline in gasoline use earlier this year — with volume down nearly 10 percent in some weeks — suggested to many people, including the automobile companies, that a permanent change in American habits might be at hand. But with gasoline prices falling drastically in recent weeks, some American drivers are returning to their old ways.
What is happening in this blue-collar bedroom community of refinery, food processing and casino workers reminds energy analysts of what happened the last time the oil price collapsed. The frugality of the 1970s, when oil was high, eventually gave way to an era when people drove longer distances, lived farther from work and traded in their cars for minivans and then sport utility vehicles.
"Driving habits die hard, and they can reincarnate quickly," said Christopher Knittel, an economist at the University of California, Davis, who studies gasoline demand. In the late 1980s, he added: "As soon as gas prices fell, there was no real incentive to drive less anymore. If oil prices continue to fall and the economy recovers, I would expect consumers to return to wanting larger and less fuel-efficient cars."
With auto companies closing factories that produce sport utility vehicles in favor of smaller, gas-efficient cars, it may be hard to veer back to the gas-guzzling days very quickly. But Dan Lopez, business manager at the Ford dealership in the Louisiana town of Sulphur, near here, says he has already noticed a shift. Truck sales froze over the summer, he said, but now "some people are gradually getting back into the truck market. We're used to the comforts, frills and whistles, and so if gasoline goes down to a reasonable level, people will not stay in a little boxy fuel-efficient car."
Gasoline demand is still down from last year, in part a reflection not just of high prices but also of the economic slowdown. As unemployment goes up, fewer people are driving to work and going out to dinner and shopping. Vacation trips are being put off. Trucking companies are consolidating routes as factory and retail orders slide.
Oil prices are sinking as the global economy weakens, and gasoline is following oil downward. The national average price for a gallon of unleaded gasoline on Wednesday was $2.59, or 89.6 euro cents per liter, which is $1.05 lower than a month ago and more than $1.50 below the record of $4.11 in July. Gas prices have not been this low since March 2007.
The latest statistics released by the Department of Transportation for August show that when gasoline prices rose, Americans responded by driving less. In that month Americans drove 15 billion fewer miles, or 5.6 percent less, than in August 2007. It was the 10th consecutive month of a decline in miles driven and the most sustained reduction since the 1970s.
It will be a while before the government releases official traffic data covering the last few weeks, when gasoline prices were falling steeply, so it is too soon to say for certain that people are driving more. But along with anecdotal evidence, some early statistical indicators suggest some increase in gasoline demand in recent weeks.
Data compiled by MasterCard Advisors, covering both credit and cash sales of gasoline, had been showing a strong decline of gasoline consumption in early October, when prices were still high. For the weeks ending Oct. 3 and Oct. 10, for example, gasoline sales were down 9.5 percent and 9.7 percent, respectively, compared with the same weeks in 2007.
But a MasterCard Advisors report released Tuesday showed that in the last two weeks, with pump prices falling, consumption of gasoline was down only 6.4 percent in each week compared with the same weeks of 2007.
Michael McNamara, vice president of MasterCard's SpendingPulse data service, said gasoline consumption declined in recent months because of a combination of the slowing economy and high prices at the pump. "You are starting to get some easing from one of the two pressure points," he added.
Tom Kloza, chief oil analyst at the Oil Price Information Service, said: "Demand is trickling back among everyday people." He added that gasoline retailers around the country were telling him "they are probably past the bottom of demand destruction for 2008, meaning they see subtle signs that gasoline demand is increasing."
Kloza and other analysts, however, note that the severity and longevity of the recession will largely determine how much people drive in the coming year. The apparent increase in discretionary driving has by no means translated into improved fortunes for the Detroit automobile companies, whose sales remain deeply depressed, partly because the credit crisis is preventing people from getting car loans.
The big uncertainty in the minds of analysts is whether the summer's run of high gasoline prices wrought any lasting change in the nation's consumer psychology.
Lawrence Goldstein, a director of the Energy Policy Research Foundation, said that what happened over the summer "was not demand destruction but demand reduction, which is largely reversible." He added, "The sharp price increases did not happen long enough to permanently affect behavioral decisions."
Goldstein's view, however, is not shared by all energy analysts.
"Four-dollar gasoline might have accelerated behavioral changes, but the behavioral changes began at $2.50 or $3 a gallon," said Aaron Brady, an analyst at Cambridge Energy Research Associates.
A report Brady co-wrote in June noted that more Americans bought the Toyota Prius hybrid than the Ford Explorer sport utility vehicle in 2007 and that the growth in total vehicle miles traveled in the United States slowed significantly in 2005 and 2006, before declining slightly in 2007. The report noted that it was the first time that total vehicle miles had declined since the late 1970s.
The Arab oil embargo and Iranian revolution led to oil supply shocks at that time, creating a prolonged period of high gasoline prices that lasted through the mid-1980s. People cut down on their driving and drove smaller cars, and government standards forced a big improvement in the fuel efficiency of the American car fleet.
But in the late 1980s, as prices eased, people switched back to larger cars. With prices low through the 1990s and early 2000s, sport utility vehicles became the vehicle of choice for many Americans. Those vehicles, because they were technically light trucks, were subject to lower efficiency requirements.
Conservationists hope there will be no similar loopholes in recently adopted efficiency standards that dictate that automakers build vehicles averaging 35.7 miles a gallon for passenger cars and 28.6 miles a gallon for light trucks in model years 2011 through 2015, with better mileage for the trucks after that. Other analysts, however, warn that improved fuel efficiency over the years has simply encouraged people to live farther from work and otherwise drive more miles on the same budget.
In Vinton, as in so many American towns, what drivers seem to care about most is the price at the pump, and they said in recent interviews that cheaper gas was helping them live better.
Willy Lewis, a nurse's aide, said he just started mowing his lawn every week again after mowing it every third week this summer to save gasoline. Katina Sneed, a housewife who would like to work as a secretary, complained that higher gasoline prices had impeded her ability to find employment.
"I didn't have enough money to put in the car to look for a job" until the last few weeks, she said. "I can do a little more searching now."
By Katrin Bennhold
Thursday, October 30, 2008
PARIS: The French are literally poking fun at President Nicolas Sarkozy, but he is not amused.
After appealing a court decision to allow a voodoo doll made in his image to remain on sale, Sarkozy drew a flurry of ridicule from his critics Thursday. It is his sixth lawsuit this year.
The Nicolas Sarkozy doll, which went on sale Oct. 9 and became a best-selling cult item as soon as the president tried to have it banned, comes with a set of 12 pins and a manual explaining how to put a curse on him.
Its light-blue body features some of his best-known quotes and most notorious gaffes, ready to be poked: "Work more to earn more" reads one, a famous campaign slogan. "Get lost, you poor jerk," reads another, a swipe that Sarkozy took at a bystander who refused to shake his hand at a farm fair.
"You detest Nicolas Sarkozy because he is too far to the right? You dislike him because he is not far enough on the right?" the cover asks the prospective buyer, before claiming that, for only €12.95, or about $17, "you can ward off the evil eye and stop Nicolas Sarkozy from doing more damage."
Sarkozy's lawyer, Thierry Herzog, has demanded a ban, arguing that the president owns the right to his image and had never authorized the doll.
But a Paris court threw out the request, ruling that the doll was protected by what it called the "right to humor."
"Caricature and satire, even deliberately provocative and crude, falls under freedom of expression," three judges wrote in their ruling published Wednesday.
At a time when gloom and doom about the economy have been dominating front pages, the media seized on the news as a welcome distraction.
"Why this fury?" said an editorial in the Latest Alsace News, a local daily in eastern France. "Is the president of the republic superstitious?"
The newspaper Le Monde featured a caricature of a judge with needles sticking out of him and a speech bubble exclaiming: "The president is not happy."
But behind the mocking tone of many editorials was a more serious concern about a president who has been more litigious than any of his predecessors.
In February, for example, Sarkozy sued a journalist for publishing the content of a text message he said he never sent to his former wife, just days before his wedding to his third wife, Carla Bruni.
In May he went after two T-shirt producers who had made fun of his last name.
If the latest case has made more waves than others, it is also because, as interior minister in 2006, Sarkozy was one of the staunchest defenders of the right of newspapers to publish cartoons of the Prophet Mohammed that offended many Muslims.
One of the swiftest criticisms came from Ségolène Royal, Sarkozy's Socialist rival in the election last year. Royal, who is herself the subject of a voodoo doll by the same company and did not sue, said she was "astonished" that Sarkozy had "time to waste on the issue of dolls."
"It's important to keep one's sense of humor," Royal said. "This is the protection of the freedom to caricature the powerful in the world."
It was the first time that a French president had lost a court case dealing with the country's strict privacy laws.
Georges Pompidou successfully sued a company using his face in a boat engine commercial in 1970. Valéry Giscard d'Estaing obtained a ban on a board game named after him six years later.
François Mitterrand and Jacques Chirac, Sarkozy's immediate predecessors, committed themselves to never taking legal action.
The Associated Press
Thursday, October 30, 2008
PARIS: A Paris judge on Thursday filed preliminary charges against a trader suspected of losing more than €600 million in complex derivative trades at French mutual bank Caisse d'Épargne, a judicial official said.
The trader, Boris Picano-Nacci, was placed under judicial supervision by the investigating magistrate Xaviere Simeoni after spending 36 hours being questioned by the financial police, the official said.
The move gives the judge time to investigate before ordering a trial or dropping "breach of trust" charges. The official was speaking on condition of anonymity, in accordance with judicial policy.
Picano-Nacci and his lawyer left the court by a side entrance, avoiding reporters. The terms of the judicial supervision order ban the trader from leaving France or having any contact with employees of Caisse d'Épargne.
The bank's top three executives quit after the losses became known on Oct. 17.
Jean Reinhart, the lawyer for Caisse d'Épargne, said in a statement that Caisse Nationale des Caisses d'Épargne - the holding company of the Caisse d'Épargne group - had acknowledged the charge against its former trader and confirmed its intention of becoming a civil party in the case "shortly."
A Caisse d'Épargne spokesman has said the bank now calculates the loss was larger than the €600 million, or $751.5 million, it initially announced.
The spokesman declined to provide a new estimate, although the prosecutor's office has mentioned the loss would amount to €751 million.
Paris prosecutors are investigating whether there are grounds for a possible legal case of breach of trust. The Police searched Picano-Nacci's residence on the outskirts of Paris on Wednesday for possible evidence.
Finance Minister Christine Lagarde said last week that an initial investigation discovered "serious holes" in the bank's system of controls. Citing a preliminary report by the French banking commission, she said the losses came in complex trades far removed from the bank's core business.
The bank's own internal investigation found a large number of breakdowns in internal controls and said alerts had been disregarded, French news magazine Nouvel Observateur reported on its Web site Wednesday, citing a copy of the investigator's report that the magazine said it had obtained.
The losses drew comparisons with the much larger trading scandal suffered by another French bank, Société Générale, earlier this year. Société Générale took a €4.9 billion hit closing what it says were unauthorized positions by former trader Jérôme Kerviel.
But n a source close to the inquiry said Thursday that there was no evidence at this stage that the trader used the same techniques as Kerviel to disguise his losses.
Bomb attacks in India kill at least 67
By Hari Kumar and Alan Cowell
Thursday, October 30, 2008
NEW DELHI: A series of apparently synchronized explosions tore through four towns in the troubled state of Assam in northeastern India on Thursday, killing at least 67 people and leaving more than 210 wounded, according to witnesses and police.
The bombs targeted crowded markets and government buildings such as courts and police stations, witnesses said. The attacks, among the bloodiest in recent months, left streets littered with bodies and the wreckage of cars and motorcycles, according to witnesses and photographers at the scene.
There were no immediate reports that any group had taken responsibility for the bombings.
For many years, Assam state has been riven by a separatist insurgency led by the United Liberation Front of Assam, which demands independence for the region of some 26 million people and is often blamed by the authorities for bombings. Last month, ethnic clashes left 57 people dead in the area when indigenous Bodos fought with Bengali-speaking Muslims.
According to witnesses and police, at least nine blasts rocked the four towns attacked on Thursday, including three in the state capital Guwahati. One of the bombs there had been left in the parking lot of the district court.
"I saw six or seven people fully burned lying on the ground," said Jeet Hazarika, a 32-year-old lawyer in Guwahati, who spoke in a telephone interview. "It is a very black day for us."
Witnesses said local people, angered by the late arrival of the police and fire brigade, pelted government vehicles with stones until the authorities declared a curfew to clear the streets.
Inspector Mumtaj Ahamed, a police officer in Guwahati, said the toll of 67 dead included 32 in Guwahati alone. The total number of injured was 216, he said.
In one of the explosions, in the refinery town of Bongaigaon, police were tipped off about a suspicious-looking motorcycle, and moved it away from crowded areas. But it exploded, injuring two police officers, the police said.
Khagen Sharma, the inspector general of police in Assam State, said the authorities suspected the attacks may have been orchestrated by the United Liberation Front of Asom working with militant jihadist groups. He said police had been on high alert after tips that an attack might be imminent.
In New Delhi, Shakeel Ahmad, the minister of state for home affairs, told reporters that the situation in Assam had been "very volatile, the government was on high alert and, even then, this has happened."
The blasts in Assam were the latest in a series of bombings in several parts of India as national elections approach. Before Thursday's explosions, around 150 people had died in seven recent attacks around the country. India's Muslims have grown resentful at being blamed by the authorities for many of the attacks. Last Friday, though, the police said that they had arrested three people suspected of involvement in bombings last month in Malegaon, a small city in western Maharashtra State that has long simmered with religious tension. At least one of the suspects belonged to the youth wing of a Hindu nationalist political party, police officials said, and several Indian news organizations have described the case as the first glimpse into radical Hindu groups that plot terrorist attacks. The bomb in Malegaon exploded in a predominantly Muslim neighborhood, killing four people.
In other violence, clashes between Hindus and Christians have swept through eastern Orissa State. Other flashpoints include insurgents in Kashmir and Maoist guerrillas across central India.
Thursday, October 30, 2008
By Jane Sutton
Al Qaeda recruits in Afghanistan wept and shouted praise as they watched a propaganda video made by a Guantanamo defendant, a training camp dropout told the U.S. war crimes court on Thursday.
Three imprisoned men from Lackawanna, New York, were brought to the courtroom at the U.S. naval base in Guantanamo Bay, Cuba, to testify in the trial of accused al Qaeda media director Ali Hamza al Bahlul.
The witnesses are part of the "Lackawanna Six," a group of young American men of Yemeni descent who pleaded guilty to providing material support for terrorism by attending al Qaeda's al Farouk training camp in Afghanistan in early 2001.
The curriculum included multiple viewings of a two-hour video that FBI agents said Bahlul has proudly admitted making.
The video is a melange of bloody images of Muslims under attack in Bosnia, Chechnya, Lebanon and the Palestinian territories.
It is spliced with speeches by al Qaeda leader Osama bin Laden portraying America as the No. 1 enemy of Islam and praising the suicide bombers who attacked U.S. embassies in Africa and the warship USS Cole in Yemen.
Lackawanna witness Yassein Taher said he saw the video at al Farouk with the entire camp population of 60 or 70 men.
"There were shouts of Allahu Akbar, God is Great, and there was some crying," Taher testified.
The shouts of praise came as the men viewed footage of the damaged USS Cole and the tears came as they saw images of Muslim women being beaten with batons, he said.
Prosecutors charged that Bahlul's media services were war crimes -- conspiracy to attack civilians, soliciting to commit murder and providing material support for terrorism.
Bahlul, a Yemeni, faces life in prison if convicted.
Two other Lackawanna witnesses, Yahya Goba and Sahim Alwan, said they were shown Bahlul's video at guesthouses in Pakistan and Afghanistan during the trip.
Alwan said he realized when he saw it that al Qaeda was behind the embassy bombings, something bin Laden had denied.
"I realized myself that I was in way over my head," Alwan said. "I wanted to get out of there."
PATH TO HEAVEN
The witnesses said they were sent to Afghanistan by a fellow worshiper at a Lackawanna mosque. They said he told them they were lax in their religion and could cleanse their sins and clear a straight path to heaven by training for "jihad."
Al Qaeda frequently uses the term "jihad" to mean a holy war against the West but, for most Muslims, it signifies a spiritual struggle. The New York-born witnesses said they were stunned to realise they were being encouraged to become suicide bombers and that America was a target.
"I was surprised, shocked and I was afraid," said Taher, adding that the al Farouk camp had a martyrdom sign-up sheet.
Taher and Alwan feigned family emergencies and fled the camp. Goba completed the training that he said ended with a lesson on "how to connect a charge to an alarm clock" but refused to sign an oath to bin Laden that would bind him to al Qaeda.
The three are cooperating with the U.S. government as part of their plea agreements and have asked to be assigned new identities under the witness protection program when they finish their seven-to-10 year prison terms.
Bahlul's trial is the second full test of the widely criticized Guantanamo tribunals created by the Bush administration to try non-U.S. captives on terrorism charges outside the regular civilian and military courts.
Human rights observers monitoring the trial said the New York men's case demonstrates that the United States can prosecute terrorism charges in regular federal courts under time-tested rules.
"The American people, the victims of September 11, the victims of the Cole deserve to have a verdict they can trust," said Carol Chodroff of Human Rights Watch.
(Editing by Tom Brown and John O'Callaghan)
By Carlotta Gall
Thursday, October 30, 2008
KABUL, Afghanistan: The Afghan government and its allies in the region have begun approaching the Taliban and other insurgent groups with new intensity to test the possibilities for eventual peace talks, Western diplomats and Afghan officials here say.
The diplomatic approaches have been stepped up over the last several months by the Afghan government, as well as by Pakistan and Saudi Arabia, the officials said. They are part of a broad political effort to stem the downward spiral of violence in Afghanistan and the steep decline of public support for the government during a year that has proved to be the bloodiest of the past seven.
Security has deteriorated to the point that a growing chorus of Western diplomats, NATO commanders and Afghans has begun to argue that the insurgency cannot be defeated solely by military means. Some officials in Kabul contend that the war against the insurgents cannot be won and are calling for negotiations.
The readiness of Saudi Arabia to sponsor talks between the Taliban and the Afghan government was especially important, Western diplomats said. "It is part of a political effort that needs to be made inside and outside the country to ensure that the military effort is complemented in the right ways," one diplomat said.
Important parts of the strategy would be to exploit what diplomats here say are fissures in the Taliban, to separate what amounts to day-wage fighters from the movement's hard-core elements, whom many officials consider to be "irreconcilable," and to divide the Taliban from Al Qaeda.
But some officials fear that without a turnaround in the security situation, the Afghan government and the international forces here will not be in a strong bargaining position. The next six to seven months, when fighting traditionally slows in the winter, will be critical, they said.
Many of the diplomats, military officials and Afghan officials interviewed spoke on the condition of anonymity because of the delicacy of the matter.
The United States military is preparing to take the fight to the insurgents throughout the winter, and it has requested an extra 20,000 American troops in addition to the extra American brigade arriving in January, a senior military commander said. The hope is to break the stalemate that has been building with the insurgents in the south.
At the same time, the Afghan government must improve its policing and its performance in outlying districts and provinces in order to build trust in those communities before the next fighting season starts, another senior Western diplomat said.
One of the important lessons of fighting a counterinsurgency in Iraq "is that you need a comprehensive approach," said General David Petraeus in an interview in September in London.
The general, who formerly led American forces in Iraq, takes over command of all United States forces in Iraq and Afghanistan at Central Command on Friday. He has already been outspoken about the need for a regional approach to resolving the Afghan conflict.
"Where Central Command can help is in looking at this overall challenge as a region, and helping regionally by looking not just at Afghanistan, but also of course Pakistan, at the Stans, Iran and even some of the other countries in the greater region that have been long involved, such as the Kingdom of Saudi Arabia and some of the gulf States, and even leaders in Lebanon," he said.
Diplomacy and regional cooperation in the Afghan conflict have been at best faltering in recent years. But some of that is now changing.
On Tuesday, for instance, Afghan and Pakistani officials completed a two-day jirga, or leadership gathering, of 50 officials and elders from both countries to work on developing peace and security in the region.
The jirga, an initiative of the Afghan president, Hamid Karzai, was largely ignored by the former Pakistani president, Pervez Musharraf, and its convening in Islamabad, Pakistan, was seen as an indication that cooperation between the countries had improved since the election of the Asif Ali Zardari as Pakistan's president in September.
One of the main decisions of the jirga was for a smaller committee to open a dialogue with the Taliban and other opposition groups on both sides of the border, Abdullah, the former Afghan foreign minister who uses one name, said Wednesday on his return here from the gathering.
But he stressed that talking to insurgent groups was only one element of a much wider effort to bring security to the region, including closing off sanctuaries for terrorists and prosecuting those who have committed crimes against humanity.
Behind the scenes, there has also been quiet work by people like Abdullah Anas, an Algerian who fought in Afghanistan with the mujahedeen during the Soviet occupation in the 1980s.
For the last two years, in an effort supported by Karzai, Anas has been lobbying influential Muslim clerics and international leaders of jihads in an attempt to draw the Taliban away from Al Qaeda and to bring peace to Afghanistan, according to an Afghan military attaché working on the plan.
"The problem is not going to be solved by war," Anas said in a telephone interview from London. Neither NATO nor the insurgents could win the war outright, he said, and he predicted that fighting could continue for 10 more years at the cost of some 100,000 casualties.
He said that two main issues stand between the sides: the presence of foreign forces and the system of government. Afghans from all sides, all ethnicities, including all the mujahedeen groups, should come together to work it out, he said.
Neighboring countries must be persuaded that peace will not hurt them, and that they can be winners, too, he said. "This initiative will succeed if the neighbors see it as an initiative not against them, but for them," he said.
The involvement of King Abdullah of Saudi Arabia was of symbolic importance because of his standing in the Muslim world, diplomats and Afghan government officials said. The king hosted some 50 Afghan representatives in Mecca at an iftar dinner, where Muslims break their daily fast during the holy month of Ramadan, which ended this year in early October.
Although the peace effort was kept quiet, the Saudi foreign minister, Saud al-Faisal, later acknowledged that at the request of Karzai the country was leading "an attempt with the Afghan parties to put an end to the fighting in Afghanistan and restore security and stability."
Among those who attended were Karzai's brother, Qayum Karzai, and the head of the Council of Clerics of Afghanistan, Maulvi Fazl Hadi Shinwari. Also present were two former Taliban officials who have remained under government protection in Kabul since their release from United States custody: Mullah Wakil Ahmed Muttawakil, a former Taliban foreign minister, and Mullah Abdul Salaam Zaeef, who served as the Taliban's ambassador to Pakistan.
Active representatives of the Taliban were also said to be present, although two Taliban spokesmen, Zabiullah Mujahed and Qari Yousuf Ahmadi, contacted by telephone denied it and said that the Taliban was not ready to negotiate.
Yet the two spokesmen indicated in previous interviews that the movement had broken from Al Qaeda and its leader, Osama bin Laden, a stance that was seen as opening the way for negotiations.
"Al Qaeda has an international agenda, and Taliban have their own agenda, which is Afghanistan," said Muttawakil, who was seen as a moderate member of the Taliban government and now supports peace talks.
NATO diplomats say there has also been a steady shift in the United States' position over how to deal with the Taliban, much of it thanks to the American ambassador in Kabul, William Wood, who has argued the case back in Washington for more flexibility.
At the same time, government and Western officials in Afghanistan say they have had increasing contact from members of the Taliban who want to give up the fight.
"I'm not saying the Taliban is on the brink of fragmenting, I'm just saying that we are seeing fissures, fracture lines, questionings," one Western diplomat said earlier this year.
Even as Afghans grow increasingly weary of the fighting, some Taliban, like the prominent commander Jalaluddin Haqqani, are likely to remain out of the reach of any negotiation, military officials say. Haqqani maintains close links with Al Qaeda and has been behind some of the worst attacks in Afghanistan this year.
"There are some that will never be reconciled," Lieutenant Colonel Rumi Nielson-Green, the United States military spokeswoman at Bagram Air Base, said last week.
Thursday, October 30, 2008
By Jon Hemming
Polish troops took command of security in the Afghan province of Ghazni on Thursday, a volatile area just two hour's drive southwest of Kabul where Taliban militants are gaining influence.
About 1,600 Polish troops have now taken control of Ghazni, freeing up U.S. forces to take on Taliban militants elsewhere in the eastern sector which includes the porous Pakistani border from where insurgents infiltrate into Afghanistan.
"Poland is taking over responsibility for security and development as well as future prosperity of Ghazni province. We are ready to do it and we are dedicated to do it well for the benefit of out hosts," Polish Defence Minister Bogdan Klich told troops at the change of command ceremony.
The United States has made repeated appeals for its NATO allies to send more troops to Afghanistan and allow those there to engage in combat missions without restrictions that some European nations place on their soldiers.
Poland and France have made the most significant response, with Polish troops agreeing to take responsibility for Ghazni and Paris sending 700 extra French troops to a valley in the east which is a stronghold of Taliban allies. Both France and Poland place no restrictions on their troops in the east.
Some 1,200 troops moved into Ghazni four months ago under U.S. command and have repeatedly come under fire since then.
In the last six months of their tour, which began in another eastern province, Polish troops have been in combat 600 times and have been hit by more than 100 improvised explosive devices. Six Polish soldiers have been killed and 20 wounded, their outgoing commander said.
The Polish troops have brought in a number of helicopter gunships as well as their own transport aircraft, but they have a tough task ahead of them.
Ghazni, the former capital of the 11th century Ghaznavid Empire which stretched from the Caspian Sea to India, is a strategic city astride the main road from the capital, Kabul, to the southern city of Kandahar, and also routes towards Pakistan.
Two years ago, Ghazni was seen as largely secure but since 2006 Taliban militants have moved into the region from the south and east, attacking traffic on the highway, burning schools and kidnapping foreign civilians.
Afghans from Ghazni say it is no longer safe for them to visit villages even close to the provincial capital and local journalists say Taliban fighters can now be seen on the streets of the city after dark.
In a demonstration of their growing influence, the Taliban ordered mobile phone operators to shut their networks during the day in Ghazni last week, extending a night-time ban the insurgents already impose in most of the south and east.
The growth of mobile phone usage is one few business success stories in Afghanistan since U.S.-led and Afghan forces toppled the Taliban after the September 11, 2001 attacks on the United States. There is now no mobile phone coverage in Ghazni, even inside the Polish base.
(Editing by Angus MacSwan)
Thursday, October 30, 2008
By Sayed Salahuddin
A suicide bomber killed five people in a daring attack, claimed by the Taliban, inside the information ministry in the heart of the Afghan capital on Thursday, the government said.
The Taliban said foreign advisers in the ministry were the targets of the attack, which the al Qaeda-backed Islamist militant group said also involved an exchange of gunfire with ministry guards.
Afghan President Hamid Karzai, who has made repeated peace overtures to the Taliban, said the attack was committed by the "enemies" of Afghans, the presidential palace said.
Karzai, on his way to Turkey, said the attacks showed those responsible wanted to block peace efforts.
Ali Shah Amadzai, deputy police chief for Kabul, said a woman was among those killed.
A doctor at a hospital near the blast site said at least one person was killed and 18 were wounded by the blast, the latest episode in escalating violence in Afghanistan this year which has marked the bloodiest period since the Taliban's ouster in 2001.
The blast damaged part of the first floor of the ministry, which lies several hundred metres away from the presidential palace in central Kabul and forced authorities to evacuate ministry officials.
A police source described the blast as a suicide attack, a rare security breach inside the heavily secured Kabul ministry.
"Yes, it was a suicide attack," the source said, adding two more Taliban attackers escaped from the scene.
The Taliban, overthrown in a U.S.-led invasion in 2001, have stepped up their insurgency despite an increase in the number of foreign troops and have carried out a series of high-profile attacks in Kabul.
The bloodiest suicide attack so far in Kabul came in July, when almost 60 people were killed outside the Indian embassy, including two Indian embassy staff.
Other attacks in Kabul this year included an assassination attempt against President Hamid Karzai in April and the killing of several foreigners in the past two weeks.
Officials say some of the attacks were carried out with the help of members of Afghanistan's security forces.
Thursday's attack comes despite recent proposals for talks with the Taliban.
It echoed growing frustration among many Afghans about insecurity, rampant corruption, lack of the rule of law and civilian casualties caused by foreign troops in strikes against the militants.
The Taliban have ruled out talks until foreign troops, led by the U.S. military and NATO, leave Afghanistan.
(Additional Reporting by Jonathan Burch; Editing by Paul Tait)
By Lizette Alvarez
Published: October 30, 2008
Conceding it needed outside help in figuring out why the suicide rate among service members is rising, the U.S. Army has announced plans to collaborate with the National Institute of Mental Health in an ambitious five-year project to identify the causes and risk factors of suicide.
The army said Wednesday that it would make thousands of soldiers available to researchers for interviews and will provide access to its many databases, including those with medical, personnel, criminal and deployment histories. Researchers will draw from a cross section of the army and will include soldiers who have just joined the service or are training for war and those who have returned from war.
Rather than wait until the study is completed, the National Institute of Mental Health will provide the army with new information as researchers find it in the hopes of preventing soldier suicides.
Peter Geren, the secretary of the army, described the five-year, $50 million study as a "landmark undertaking" modeled after the Framingham Heart Study. That influential study looked at heart health over a long period of time among a large group of participants who had not yet developed symptoms or suffered a heart attack.
"The goal is to build resiliency and to prevent suicide," said Geren, who approached the National Institute of Mental Health with the idea to partner on the project.
Today in Americas
Stark economic signs, days before U.S. election
Growing doubts on Palin take a toll, poll finds
Ohio provisional ballots may prove pivotal
Suicides in the army have been climbing since the 2003 invasion of Iraq. In 2007, 115 soldiers killed themselves, a rate of 18.1 per 100,000 people, or 1 percent lower than the civilian rate.
Of the 115, 36 soldiers killed themselves while deployed overseas, 50 had deployed at some point before the act and returned and 29 had never deployed. Only a fraction had a prior diagnosis of post-traumatic stress disorder.
Soldier suicides in 2008 could eclipse the pace of last year. As of August, the number stood at 62 confirmed cases in the army. Another 31 deaths appear to be suicides and are under investigation.
Dr. S. Ward Cassells, assistant secretary of defense for health affairs, said the army was familiar with the most common triggers: marital or relationship problems, poor job performance, feelings of failure on the battlefield and alcohol or drug abuse. Yet, in half the cases, Cassells said, the army cannot figure out why the suicide occurred.
"We've reached a point where we do need some outside help," Cassells said. "We've learned a lot. We've also learned we don't understand it all."
Thursday, October 30, 2008
TEHRAN: Iran has begun building a line of naval bases along its southern coast and up to the Strait of Hormuz at the entrance to the strategic Gulf oil waterway, the Tehran Times quoted an Iranian commander as saying.
Rear Admiral Habibollah Sayyari said the bases were being built on the Sea of Oman coast from Pasa Bandar, near the Pakistan border, to Bandar Abbas, Iran's major port on the Strait of Hormuz, the English-language newspaper reported on Thursday.
He did not say when work would be completed.
Sayyari this week opened a naval port at Jask, which is also along the Sea of Oman, Iranian media reported.
"The new mission of the navy is to build an impenetrable line of defence at the entrance to the Sea of Oman," Sayyari said in Hormuzgan province in south Iran, the Tehran Times reported.
"If the enemy goes insane, we will drown them at the bottom of the Indian Ocean and the Sea of Oman before they reach the Strait of Hormuz and the entrance to the Persian Gulf," he said.
Iran has threatened to close the strait, the sea route through which two-fifths of the world's globally traded oil passes, if the United States attacked. Iranian officials have often said Washington would be foolish to contemplate an attack.
Washington is embroiled in a row over Tehran's nuclear work, which the West says is aimed at making an atomic bomb, a charge Iran denies. The U.S. administration has said it wants diplomacy to resolve the row but has not ruled out military action.
Military experts say Iran's armed forces cannot match U.S. military technology but could still cause havoc on shipping routes, particularly using small craft for hit-and-run attacks.
(Writing by Edmund Blair; Editing by Louise Ireland)
Thursday, October 30, 2008
SYDNEY: In an effort to stem a wave of alcohol-related violence on Sydney's streets, the authorities will no longer issue 24-hour liquor licenses, and 50 pubs and clubs will be forced to lockout patrons and serve drinks in plastic glasses.
Sydney has seen a spate of "glassings" in recent weeks, where drinkers, male and female, have been smashed in the face with a beer glass, and street brawls which have left police officers injured.
The authorities say a culture of binge drinking by young men and women is behind the rise in violence.
Australia's most populous state, New South Wales, which includes Sydney, recorded 21,000 incidents of alcohol-related violence in the past year, with the rate of violent incidents rising 7 percent annually.
In announcing the new alcohol laws Thursday, the state's prime minister, Nathan Rees, said, "The people of New South Wales have had enough of it."
Rees added that the new laws were not aimed at "ending the good times," but "stopping drunken behavior that ends in violence."
"We're serious about tackling alcohol-related violence and will do whatever it takes to make our streets safer. There's nothing more gutless than sticking a glass in someone's face," he said.
New liquor licenses will only allow an upper limit of 18 hours trading. Fifty pubs and clubs in Sydney and around New South Wales will be forced to "lockout" new patrons after 2 a.m., use plastic cups after midnight, restrict drinks bought after midnight and close alcohol service 30 minutes before closing time.
Sixteen pubs in Sydney's central business district and eastern suburbs are affected, including tourist havens like the Orient Hotel in the Rocks, Scruffy Murphy's on George Street and the Coogee Bay and Bondi hotels.
By Elisabetta Povoledo
Thursday, October 30, 2008
ROME: In his first few months back in office, Prime Minister Silvio Berlusconi has focused on cleaning up Italy's streets - of illegal immigrants, crime and, now, spray paint. Graffiti, he says, must be abolished because "in some of our cities, it feels as though we're in Africa rather than Europe."
His government hopes to issue strict measures Friday that would increase punishments for anyone who marks up private walls or public property.
In the face of shrinking economic growth and a growing dependence on tourism, putting Italy's best face forward is becoming a national imperative. This has not been helped by the recent media coverage of a lingering garbage crisis in Naples, with news photographs showing streets piled high with garbage.
"Italy must recover its image," especially abroad, Berlusconi said Wednesday at a meeting of the Federation of Merchants and Shopkeepers, where he said that the anti-graffiti measures would be discussed at a cabinet meeting Friday.
Italy already has a law that punishes those who deface or mark anything that is not personal property, with fines up to €2,580, or $3,300, for buildings of particular or artistic interest, and home detention up to 30 days.
The new measures would raise the fines to as much as €30,000 if historic monuments are defaced and introduce prison sentences of up to 40 days, which could be commuted to community service, said Andrea Amato, secretary of the National Anti-Graffiti Association, which helped draft the measures.
The existing law "doesn't discourage anyone," Amato said. And Italy's already glutted judicial system is ill equipped to take on new cases, so it is very rare that graffiti crimes ever go to court.
Amato said, however, that he doubted the new measures would have much of an effect on graffiti writers "who get an adrenalin boost from breaking the law during the dead of night."
Chiara Canali, one of the curators of an exhibition last year of graffiti art at PAC, Milan's contemporary art museum, concurred. "Their graffiti is part of a larger protest, a social revolt," she said. Tougher laws will only "increase their desire for transgression because the stakes have been raised."
By Peter Gelling
Thursday, October 30, 2008
JAKARTA: Shouts of "Thank you, God!" erupted inside the Indonesian Parliament building Thursday after lawmakers passed anti-pornography legislation, bringing to an end nearly 10 years of debate.
At the same time, at a courthouse across town, Habib Rizieq Shihab, the leader of the Islamic Defenders' Front, a group that acts as a sort of moral militia, was sentenced to 18 months in prison for inciting violence at a religious tolerance rally in June.
Opponents of the anti-pornography legislation said they were concerned that groups like the Islamic Defenders' Front would now be able to point to the new law, which includes an article allowing "civil society" to help prevent pornographic acts, as justification for their often violent actions.
"This law will only empower vigilante groups like the Defenders' Front," said Eva Sundari, a member of the Democratic Party of Struggle, one of the bill's most active opponents.
The new law represents a second major victory in the last year for conservative Muslim groups here. In June, the Indonesian government severely limited the religious freedom of Ahmadiyah, a Muslim sect that does not believe Mohammad is the last prophet, after years of lobbying by organizations like the Islamic Defenders' Front and the prominent Council of Ulemas, which was one of the first organizations to call for the anti-pornography legislation.
Parliament proceeded with the vote despite more than 100 lawmakers, from two major parties, marching out in protest. The remaining factions, or about 400 members, voted in favor of the law.
The bill outlaws pornographic acts and images, broadly defining pornography as "man-made sexual materials in the form of drawings, sketches, illustrations, photographs, text, voice, sound, moving pictures, animation, cartoons, poetry, conversations and gestures." It also makes illegal public performances which could "incite sexual desire."
The bill calls for harsh penalties for those in violation of the laws. Anyone caught "displaying nudity" in public could spend up to 10 years in prison and be fined up to $500,000. Downloading pornography from the Internet could net up to four years in prison.
Strong opposition during the last two years forced lawmakers to soften the legislation somewhat. The current bill has half as many articles as the original and provides exceptions for tourists wearing bikinis and other revealing clothing.
The issue has long pitted a small but vocal conservative Islamic movement against a coalition of moderates, liberals and cultural groups that fear the laws will infringe on the rights of women and threaten Indonesia's cultural diversity.
The bill has particularly enraged populations outside of Java where some cultural traditions could now be considered pornographic. Thousands protested this month on the resort island of Bali, a predominantly Hindu enclave where wood carvings, paintings and other artwork often have sexual overtones.
The bill, originally drafted in 1999, was resurrected in 2006 by a prominent Islamic political party after outrage among religious conservatives that Playboy magazine intended to publish an Indonesian version.
While the wording of the law has been altered, opponents said the definition of what was considered pornographic remained virtually unchanged and questioned the timing of the vote, which comes six months before national elections are to be held.
"Many of the members are preparing for elections and are looking for support among the Islamic community," said Sundari, who was among the lawmakers who stormed out before the vote. "Now they can point to this law as evidence that they are supportive of Islamic values."
By John Markoff
Thursday, October 30, 2008
SAN FRANCISCO: How much money can criminals make scaring naïve computer users? Try $5 million a year.
That is how much a marketing associate of one Russian operation appears to be earning from its sales of fake anti-virus software through an elaborate scheme that relies on e-mail spam and indirect control of thousands of unprotected PCs, according to internal company files posted online by a Russian hacker.
The company is Bakasoftware, a clandestine effort based in Russia that markets what it claims is an anti-virus program strictly to English-speaking computer users.
The program, whose name has recently been updated from Antivirus XP 2008 to Antivirus XP 2009, lodges itself on a victim's computer and then begins generating a series of pop-up messages warning that the user's computer is infected. If the user responds to the warnings, he is urged to buy a $49.95 program for disinfecting the machine.
Although tens of millions of Windows PC users have seen these irritating programs, which purport to warn against malware infections, there are few details about the operators who develop and distribute the software, known as scareware.
Financial details of the operation came to light recently after information posted by a computer hacker identifying himself as NeoN was discovered on a Russian electronic bulletin board by an American computer security researcher.
The researcher, Joe Stewart, who is director of malware research at SecureWorks of Atlanta, has tried to understand the nature of the fake anti-virus software and the way it is sold through a second tier of "bot-herders" - people who redistribute the program through illegal "botnets" or networks of Internet-connected PCs.
The scheme was partly unmasked, Stewart said, after NeoN broke into one of the computers used by Bakasoftware for accounting. Stewart said he believed the hacker posted the results of just one week's operations.
Stewart also discovered that when the Bakasoftware program starts, it checks the language of the computer user, based on information contained in the Windows operating system. If it finds the personal computer of a Russian-language speaker, the program terminates.
Bakasoftware, which may be based in Moscow according to Internet domain name records, did not respond to telephone and e-mail requests for comment.
This type of online scheme had recently become the target of a concerted law enforcement effort by the Washington State attorney general's office with the assistance of Microsoft's computer security investigators. Last month the attorney general, Rob McKenna, said that his office was using recently passed state legislation aimed at companies that use scareware tactics to file seven lawsuits seeking to halt the practice.
The attorney general's office has received complaints about the Antivirus XP program, a spokeswoman said, but she declined to provide information on its investigations.
"The big problem with scareware is that you have voluntarily provided personal information to a Web site that you would not ordinarily want to have your name, address, credit card and date of birth," Richard Boscovich, a Microsoft lawyer who leads a group of security investigators at the company, said.
Stewart said he found that Bakasoftware's program has some limited anti-virus capabilities, but that it was "a far cry from what a real anti-virus program does."
NeoN posted a detailed exposé of Bakasoftware's sales scheme, which relies on a network of affiliates, on Sept. 22. Stewart describes the affiliate program as a sophisticated, automated and highly profitable system intended to efficiently infect millions of computers.
"Affiliates can earn anywhere from 58 percent to 90 percent commission on sales of the software, depending on the volume of sales," Stewart wrote.
By Dale Fuchs
Thursday, October 30, 2008
MADRID: A car bomb injured 17 people Thursday at a university in the northern Spanish city of Pamplona after police searched the wrong campus for explosives following a telephone call purportedly from the Basque separatist group ETA warning of an imminent attack, Spanish authorities said.
The government blamed ETA for the incident.
The bomb exploded in a parking lot at the University of Navarra at 11 a.m., according to the Interior Ministry in Madrid. Few students were in the area where the bomb exploded because of rain.
"We could have had an enormous tragedy at the University of Navarra," Interior Minister Alfredo Perez Rubalcaba told a news conference in Madrid. "The bomb simply went off when nobody was around."
Police received a warning call in the name of ETA an hour before the explosion, Rubalcaba said, but the caller did not specify which university would be attacked.
Police first searched the campus in nearby Vitoria, which meant that officials were not able to evacuate the Pamplona university in time — the usual police procedure following ETAwarning calls. The Pamplona campus was evacuated following the explosion.
The bomb may have contained up to 220 pounds of explosives, according to Spanish press reports. Most of the injuries were caused by flying glass.
The attack was the sixth since 1979 on the university, which is located in the northern region of Navarra, one of several Basque-speaking provinces which ETA would like to turn into an independent state.
Authorities speculate that the attack was a response to the recent arrest of three suspected ETA leaders in Pamplona and another in Valencia.
ETA ended its most recent truce in December 2006 when talks with the Spanish government broke down.
ETA has killed more than 800 people in its nearly four-decade fight for an independent Basque state in parts of southern France and northern Spain. In recent years it has been severely weakened by recruitment problems and hundreds of arrests in both Spain and France.
Thursday, October 30, 2008
By Philip Pullella
Candidates for the Catholic priesthood should undergo psychological tests to screen out heterosexuals unable to control their sexual urges and those with strong homosexual tendencies, the Vatican said Thursday.
A new document was the second in three years to deal with the effects of a sexual abuse scandal that rocked the Church six years ago.
It said the early detection of "sometimes pathological" psychological defects of men before they become priests would help avoid tragic experiences.
Seminary rectors and other officials should use outside experts if they cannot handle the screening themselves, it said.
"The Church...has a duty of discerning a vocation and the suitability of candidates for the priestly ministry," said the document from the Vatican's Congregation for Catholic Education.
"The priestly ministry...requires certain abilities as well as moral and theological virtues, which are supported by a human and psychic -- and particularly affective -- equilibrium, so as to allow the subject to be adequately predisposed for giving of himself in the celibate life," it said.
Vatican officials told a news conference the tests would not be obligatory but decided on a case-by-case basis when seminary rectors wanted to be sure a man was qualified for the priesthood.
The testing by a psychologist or psychotherapist should aim to detect "grave immaturity" and imbalances in the candidates' personality.
"Such areas of immaturity would include strong affective dependencies; notable lack of freedom in relations; excessive rigidity of character; lack of loyalty; uncertain sexual identity; deep-seated homosexual tendencies, etc. If this should be the case, the path of formation will have to be interrupted," it said.
A sexual abuse scandal that was first uncovered in the United States in 2002 and then spread throughout the world involved mostly abuse of teenage boys by priests.
The document said it was "not enough to be sure that (a candidate) is capable of abstaining from sexual activity" but also to "evaluate his sexual orientation."
Gay groups have accused the Church of using homosexuals as scapegoats for the abuse scandals.
The document said men with strong homosexual tendencies should not be admitted to the priesthood but it also made references to control of heterosexual urges.
Men should be barred from entering the priesthood if psychological testing makes it "evident that the candidate has difficulty living chastity in celibacy: that is, if celibacy, for him is lived as a burden so heavy that it compromises his affective and relational equilibrium."
Rectors could not force candidates to undergo psychological testing, but the main purpose of the document seemed to be to encourage its use to avoid future scandals.
Move over, my pretty, ugly is here
By Sarah Kershaw
Thursday, October 30, 2008
It would be close to impossible to tally all the magazine articles, scholarly treatises and philosophical works, reality shows and Internet sites, college courses, lectures and books devoted to the subject of beauty.
But what about ugliness?
It is an awkward topic, a wretched concept, really, and, of course, a terrible insult when flung in your direction.
When a woman once told Winston Churchill he was drunk, he is said to have replied: "And you, madam, are ugly. But I shall be sober tomorrow, whereas you will still be ugly."
Ugliness is associated with evil and fear, with villains and monsters: the Wicked Witch of the West, Freddy Krueger and Harry Potter's arch-meanie, Lord Voldemort, with his veiny skull, creepy slits in his nose for nostrils and rotten teeth.
There are the gentle souls, too, plagued through no fault of their own by their disturbing appearance: Dr. Frankenstein's monster, the Elephant Man and Shrek, who is ugly and green but in a cute way.
Ugliness has recently emerged as a serious subject of study and academic interest unto itself, in some small part because of the success of television's "Ugly Betty," which ABC promoted with a "Be Ugly" campaign stressing self-esteem for girls and young women. Sociologists, writers, lawyers and economists have begun to examine ugliness, suggesting that the subject has been marginalized in history and that discrimination against the unattractive, while difficult to document or prevent, is a quiet but widespread injustice.
Researchers who have tried to measure appearance discrimination, or "uglyism" and "looksism," and the impact of what they call the "beauty premium" and the "plainness penalty" on income, say that the time has come for ugly to peek out from beauty's shadow.
"It hasn't been politically correct to talk about uglyism," said Anthony Synnott, a professor of sociology at Concordia University in Montreal, who is publishing a paper next month on ugliness. "But there's no reason for us to think that beautiful people are actually good and ugly people evil, yet we do."
One pioneering study, "Beauty and the Labor Market,"; published in the American Economic Review in 1994, estimated that unattractive men and women earn five to 10 percent less than those considered attractive or beautiful, and that less attractive women marry men with less money.
Another study, in 2005, determined that the discrimination was consistent across occupations, so that even a computer programmer buried behind a desk could suffer from the plainness penalty.
"People who are physically attractive might develop better communication skills because the tendency is that from an early age they get more attention from all their caregivers, including their own mothers onward," said Tanya Rosenblat, an associate professor of economics at Iowa State University, and an author of the 2005 study, "Why Beauty Matters," published in the American Economic Review. The study tested how volunteers, in the role of employers, rated the ability of "employees" to complete computer mazes. The volunteers predicted that the more attractive employees could complete more of the mazes.
The study authors concluded that because attractiveness has no bearing on the ability to complete computer mazes — unlike a job in which beauty may be an occupational asset like retail sales — discrimination based on looks occurs across occupations.
Few laws prohibit employment discrimination based on lack of attractiveness, although some plaintiffs have pursued cases under broader statutes: a Vermont chambermaid who was missing her front teeth and was fired won a case against her employer when in 1992 the State Supreme Court upheld her suit, ruling that she was protected by the state's Fair Employment Practices Act.
Some cities, including Washington, San Francisco and Santa Cruz, California, have passed ordinances banning discrimination based on looks. But legal action on behalf of the unattractive can be complicated.
"One pitfall is the distinction between people's identities as members of a race or a religious group or gender versus as a member of a group of ugly people," said Sherry Colb, a law professor at Cornell. "Because of successful identity politics, people have come to identify profoundly with other kinds of groups — 'I am a Jew,' or 'a French person.' But it's not likely with 'I am an ugly person and let's have a meeting of all ugly people.' Most people in general would want to disclaim membership. It's like declaring yourself a member of the clueless."
Defining ugliness is difficult. Beyond a predictable visceral response to cartoon ogres or Halloween witches, is there any agreement on what makes someone or something ugly? Warts and scars? Hook noses and beady eyes? Social scientists investigating beauty have found that people across age groups, races and cultures tend to agree on what constitutes facial attraction; but there is no corresponding body of study that measures homeliness. Synnott of Concordia University, who has written and taught courses on beauty for more than a decade, was recently contacted by an online journal to contribute another article on the topic. But he suggested instead that he write about the neglected topic of ugliness.
In his article, "Ugliness, Visibility and the Invisible Prejudice," to appear next month in the first issue Glimpses Journal, Synnott notes that judgments about appearance imply values about good and evil — the "halo-horns effect." These conclusions are "false, unfair, dangerous and silly; yet it is perpetuated by our language, literature, media, many philosophers and our simple binary perspectives," Synnott writes in his paper. Many colloquialisms, like "beauty is only skin deep," suggest that there is collective acknowledgment that the fixation on physical beauty is superficial," Synnott writes.
By contrast, the phrase "ugliness is only skin deep," is rarely heard, Synnott said, adding that the booming cosmetic surgery industry underscores the plainness prejudice.
"Beautiful people are considered to be more intelligent, sexier, more trustworthy and they have more partners," Synnott said. "And this implies that ugly people are assumed to be less trustworthy and less intelligent."
Last year, the Italian novelist and critic Umberto Eco published "On Ugliness," a 450-page book largely devoted to ugliness in art.
"In every century, philosophers and artists have supplied definitions of beauty, and thanks to their works it is possible to reconstruct a history of aesthetic ideas over time," the author writes in his introduction. "But this did not happen with ugliness. Most of the time it was defined as the opposite of beauty but almost no one ever devoted a treatise of any length to ugliness, which was relegated to passing mentions in marginal works."
In "On Ugliness," Eco addresses the fascination in painting, sculpture, poetry and literature with the grotesque and disgusting, chronicling formulations of ugliness from Plato to punk rock. His subjects include witches and monsters, as well as "the Avant-Garde and the triumph of ugliness," in which he points out that the general public was once scandalized by the deformed images of women in Picasso's paintings and other art works, but eventually they gained universal acceptance.
"What will be appreciated tomorrow as great art could seem distasteful today," Eco writes.
The popularity of "Ugly Betty," which made its debut in 2006, has spawned a wide conversation about whether the show portends a greater tolerance in society for the unattractive. ABC's "Be Ugly" campaign last year, urged women and girls to "Be real, be smart, be passionate, be true to yourself and be ugly."
More recently, the producers of "Shrek the Musical," which is coming to Broadway, adopted another up-with-homely tagline, "Bringing Ugly Back."
Researching the phenomenon of "Ugly Betty," Madeleine Shufeldt Esch, an adjunct assistant professor in communications at Tulane, contributed a paper, "Ugly Is the New Beautiful," to a meeting of the Association for Education in Journalism and Mass Media.
"The show's willingness to challenge conventional notions of beauty has been championed by audiences and television critics," Esch wrote. "It has been pegged as part of a larger shift away from the unreal perfection of stick-thin and airbrushed models and the fashion fetishism of the 'Sex and the City' set."
"Anytime that there are images that show diversity of acceptable appearances, that's a positive thing," Esch said. "Even if Betty isn't what we could call ugly, by any objective standard."
Indeed, the show's star, America Ferrara, is universally considered attractive. She makes a Cinderella transformation from a frizzy-haired character with braces and too-tight clothing into a conventional Hollywood beauty whenever she appears on a red carpet or magazine cover.
For this reason, some critics have labeled the "Be Ugly" campaign as a marketing ploy, and they argue that the show has done little to increase acceptance of the homely. On the contrary, American society continues to move aggressively in the opposite direction, critics say, placing an ever-higher importance on beauty.
Synnott, among others, attributed the growth of the $13 billion cosmetic-surgery industry, in part, to a deep and widely held fear of ugliness. The distaste is reinforced by the increasing possibility of altering the appearance of one's face and body through medicine, hygiene and nutrition. A ceaseless stream of mass media imagery extols physical perfection, they say.
Synnott, Esch and others said that despite growing attention to discrimination based on appearances, the majority of messages in society continue to shout, in essence, "Don't be ugly."
"I think there was a brief ugly moment," Esch said. "But it may have been a passing fancy."
Thursday, October 30, 2008
For the last year and a half, a team of psychology professors has been conducting remarkable experiments on how Americans view Barack Obama through the prism of race.
The scholars used a common research technique, the implicit association test, to measure whether people regarded Obama and other candidates as more foreign or more American. They found that research subjects - particularly when primed to think of Obama as a black candidate - subconsciously considered him less American than either Hillary Clinton or John McCain.
Indeed, the study found that the research subjects - Californian college students, many of them Democrats supportive of Obama - unconsciously perceived him as less American even than the former Prime Minister Tony Blair of Britain.
It's not that any of them actually believed Obama to be foreign. But the implicit association test measured the way the unconscious mind works, and in following instructions to sort images rapidly, the mind balked at accepting a black candidate as fully American. This result mattered: The more difficulty a person had in classifying Obama as American, the less likely that person was to support Obama.
It's easy to be skeptical of such research, so test for your own unconscious biases at https://implicit.harvard.edu/implicit/demo/ or at http://backhand.uchicago.edu/Center/ShooterEffect/.
Race is a controversial, emotional subject in America, particularly in the context of this campaign. Many Obama supporters believe that their candidate would be further ahead if it were not for racism, while many McCain supporters resent the insinuations and believe that if Obama were white, he wouldn't even be considered for the presidency.
Yet with race an undercurrent in the national debate, that also makes this a teachable moment. Partly that's because of new findings both in neurology, using brain scans to understand how we respond to people of different races, and social psychology, examining the gulf between our conscious ideals of equality and our unconscious proclivity to discriminate.
Incidentally, such discrimination is not only racial. We also have unconscious biases against the elderly and against women seeking powerful positions - biases that affect the Republican ticket.
Some scholars link racial attitudes to a benefit in evolutionary times from an ability to form snap judgments about who is a likely friend and foe.
There may have been an evolutionary advantage in recognizing instantaneously whether a stranger was from one's own tribe or from an enemy tribe.
There's some evidence that the amygdala, a center in the brain for emotions, flashes a threat warning when it perceives people who look "different."
Yet our biases are probably largely cultural. One reason to think that is that many African-Americans themselves have an unconscious pro-white bias.
All told, considerable evidence suggests that while the vast majority of Americans truly believe in equality and aspire to equal opportunity for all, our minds aren't as egalitarian as we think they are.
"To me, this study really reveals this gap between our minds and our ideals," said Thierry Devos, a professor at San Diego State University who conducted the research on Obama, along with Debbie Ma of the University of Chicago.
"Equality is very much linked to ideas of American identity, but it's hard to live up to these ideas. Even somebody like Barack Obama, who may be about to become president - we have a hard time seeing him as American."
A flood of recent research has shown that most Americans, including Latinos and Asian-Americans, associate the idea of "American" with white skin.
One study found that although people realize that Lucy Liu is American and that Kate Winslet is British, their minds automatically process an Asian face as foreign and a white face as American - hence this title in an academic journal: "Is Kate Winslet More American Than Lucy Liu?"
One might argue that Obama registers as foreign in Americans' minds because he does have overseas family connections, such as his father's Kenyan ancestry. But similar experiments have found the same outcome with famous African-American sports figures.
Moreover, Devos found that when participants in the latest study were told to focus on the age of each candidate, or on the political party of each candidate, then Obama and McCain were perceived as equally American. It was only when people were prompted to focus on skin color and to see Obama as black that he was perceived as foreign.
This 2008 election is a milestone and may put a black man in the White House. That creates an opportunity for an adult conversation about the murky complexities of race, in part because there's evidence that when people become aware of their unconscious biases, they can overcome them.
By Carl Hulse
Thursday, October 30, 2008
LITHONIA, Georgia: Just a few blocks off Max Cleland Boulevard, named for the Democrat defeated by Senator Saxby Chambliss in a bitter congressional race six years ago, a line has formed that could be problematic for Chambliss's own re-election this year.
Hundreds of voters, most of them black residents of bedroom communities east of Atlanta, are waiting to cast early ballots, motivated by the candidacy of Senator Barack Obama but many also taking the opportunity to vote for Jim Martin, Chambliss's Democratic opponent.
"I voted for Jim because I like what he is saying, not just because he is Democratic," Iris Epps said as she exited Lithonia Middle School after waiting about 90 minutes on Tuesday evening to cast her ballot. She said the wait would have been even longer earlier in the day.
Like several other Senate and House candidates in North Carolina, Ohio and Connecticut, Chambliss finds himself in a tight race even though only months ago he was considered a cinch for re-election. A significant part of his problem is the surging participation by African-American voters, their ranks bolstered by the newly registered, a group expected to vote overwhelmingly for Democrats this year.
In Georgia, where Obama's organization worked hard to register new voters but did not mount a full-blown campaign because the state seems beyond his reach, black voters in Atlanta and the surrounding areas have been standing in line for hours. Many are among the tens of thousands of newly registered voters.
New registrations of black voters ran more than 25 percent higher this year than four years ago, with especially high registration among black women.
Nearly 1.4 million Georgians have voted, according to the Georgia Secretary of State's Office, and more than a third were black. (Blacks make up just over 29 percent of registered voters in the state, which keeps track of racial data under civil rights laws.) Early voting began Sept. 22, and this week the state opened extra polling stations and extended their hours.
The development is not lost on Chambliss. "There has always been a rush to the polls by African-Americans early," he said at the square in Covington, a quick stop on a bus tour as the campaign entered its final week. He predicted the crowds of early voters would motivate Republicans to turn out. "It has also got our side energized, they see what is happening," he said.
Martin, who stood in a daunting line on Tuesday to cast his own early ballot at the Fulton County government center in Atlanta, said the greater the turnout, the better his chances.
"I am honored to have a lot of African-American support," said Martin, a former director of the state Human Services Department and a longtime state legislator who was greeted with handshakes and encouragement by waiting voters as he worked his way to the end of the queue snaking through the building. "But I have broad-based support across the state people who want change."
The Georgia race was initially considered out of reach for Democrats. But Chambliss has been hurt by his vote for the $700 billion Wall Street bailout which was widely unpopular, both among conservatives and African-Americans and by a flood of tough attack advertisements from the Democratic Senatorial Campaign Committee. The contest is one of the longshots Democrats would need to win to reach a 60-vote majority in the Senate that would let them thwart filibusters.
"A month ago this would have been a cakewalk," said Merle Black, an expert on Southern politics at Emory University. "This is not the election that they thought they were running."
The Georgia race has another twist. To be declared the winner, a candidate needs to receive more than 50 percent of the vote an absolute majority. Both the tight race reflected in the polls and the presence of a third-party Libertarian candidate, Allen Buckley, raise the possibility that neither Chambliss nor Martin will break 50 percent, forcing a runoff on Dec. 2. If a 60-vote Senate hangs in the balance, the runoff could take on outsized importance.
Chambliss and his allies acknowledge a rough patch after his bailout vote, which was uniformly opposed by Republican House members from the state, a glaring divide the senator quickly sought to bridge through a stepped-up schedule of appearances.
As he spoke to small but politically active crowds of conservatives in Covington and Conyers this week, Chambliss assured his audiences that survey trends were in his favor. But he urged them to beat the bushes for every available Republican vote.
"It is important that you talk to everybody you are friends with, you work with, you go to church with, you drink coffee with, whatever it may be, and make sure that on Nov. 4 they turn out to vote," Chambliss exhorted a flag-waving group gathered in Covington's town square, warning against a liberal takeover of Washington.
Martin has, with the help of national Democrats, hammered Chambliss for his support of Bush administration economic policies, most recently with highly visible television commercials attributing Georgia job losses and economic pain to "Saxby economics."
Democrats would revel in defeating Chambliss. In 2002, they accused him of libeling Cleland, a badly wounded and decorated Vietnam veteran, with an advertisement that questioned his commitment to fighting terrorism. They now view Martin as the potential key to a 60-vote Senate, a distinction with which Martin seems slightly uncomfortable.
"I think that is overstated," said Martin, who said he does not see himself as a filibuster warrior but as someone with a bipartisan history and a lawmaker who would "go up to the United States Senate and stick up for the middle-class Georgian."
As in Senate races in North Carolina and Mississippi and a handful of House races, Democrats are closely monitoring African-American participation, calculating that a significantly increased turnout could tip the balance for their candidates.
Black, the political scientist, said that if strongly Democratic African-American voters make up more than a third of the electorate, Martin needs to secure about a quarter or slightly more of the white vote to assemble a majority. "It is certainly doable," Black said.
The black voters who waited patiently at the Lithonia Middle School seemed aware of the difference their votes could make.
"This is the most important election," said Cathy Blakeney of Stone Mountain, who not only voted herself but made sure her 22-year-old son showed up as well. "Based on the economic conditions and people losing their jobs and people losing their homes and the economy not growing and banks going under, I was going to make sure that I came out and voted and that he came out and voted, too."
More Articles in US » A version of this article appeared in print on October 30, 2008, on page A18 of the New York edition.
The Associated Press
Thursday, October 30, 2008
PITTSBURGH: A volunteer for John McCain's presidential campaign agreed Thursday to enter a probation program for first-time offenders for falsely reporting that a Barack Obama supporter robbed and assaulted her and scratched a "B" on her cheek.
Ashley Todd, 20, of College Station, Texas, claimed the attack happened when a robber saw her McCain bumper sticker. Todd appeared before a city judge and waived her right to a hearing and was to be released from jail later Thursday.
Under the agreement, her criminal record will be expunged after if she stays out of trouble and gets mental treatment on probation. Most people spend a year on probation in the program, which is for first-time, nonviolent offenders.
"Our focus was really, 'This is somebody who appeared to have some mental issues,'" said prosecutor Chris Avetta. "And we wanted to make sure she doesn't hurt herself or anybody else."
Todd's public defender, Emily McNally, declined to comment.
Todd initially told investigators she was attempting to use a bank ATM on Oct. 22 when a 6-foot-4 black man approached her from behind, put a knife to her throat and demanded money. She told police she handed the assailant $60 and walked away.
Todd, who is white, told investigators she suspected the man then noticed a McCain sticker on her car. She said the man punched her in the back of the head, knocked her to the ground and scratched a backward letter "B" into her face with a dull knife.
After admitting she made up the story, the woman told investigators she believed she cut the "B" onto her own cheek but didn't remember doing so, police said last week.
She was charged with a misdemeanor count of making a false police report and had been jailed since Oct. 24. She underwent a court-ordered psychiatric examination and was deemed to be competent to stand trial but in need of further counseling.
The charge Todd faced carries a maximum two-year jail sentence. Assistant Police Chief Maurita Bryant said Todd must abide by the conditions of her release or risk being prosecuted on the charge.
"I think what she needed mostly was counseling," Bryant said. "The only one she actually hurt was herself, although there could have been so many other ramifications based on her actions."
The case generated national media attention when a picture showing Todd with a black eye and the red "B" on her cheek was posted online.
Initial reports of the mugging prompted calls of support from McCain, the Republican presidential nominee, and his running mate, Sarah Palin. The College Republican National Committee at first criticized the attack, then fired and disowned Todd once the hoax was exposed.
By Shaila Dewan and Robbie Brown
Thursday, October 30, 2008
ATLANTA: Democrats up and down the ballot have been trying to reverse the Republican rhetorical dominance that made "liberal" an unsavory label, and many have found help in a slender document percolating through their party's hierarchy.
It is called the "Message Handbook for Progressives From Left to Center," and, along with a companion piece on health care, it was created by Drew Westen, a psychology professor at Emory University here who was virtually unknown in political circles before this election cycle. Several Democratic consultants say it is the first systematic, data-driven effort to mold the language of the left to fit the sensibilities of the center.
Dr. Westen's advice can be heard when Alisha Thomas Morgan, running for re-election to the Georgia House in a conservative suburb of Atlanta, uses the word "leadership" in place of "government" and speaks about the middle class instead of the poor.
Or when Andrew Gillum, a city commissioner in Tallahassee, Florida, who is fighting a ballot initiative against same-sex marriage, tells members of his predominantly black church of the human desire for dignity and respect instead of lecturing them on the evils of discrimination.
Democrats of higher office who have heard Dr. Westen have also shifted their rhetoric, as when Senator Mary Landrieu of Louisiana, fending off a Republican challenger, not only says that "health care is a right for every citizen" but pointedly adds, "Particularly citizens who are working hard every day."
Dr. Westen advises jettisoning wonkish 12-point plans in favor of direct emotional appeals that can compete with those evoked by Republicans using terms like "family values" and "the war on terror."
"We are a centrist nation," he said in an interview, "but people prefer center-left to center-right, even in conservative parts of the country, if they hear equally strong messages on both sides."
Liberal candidates, especially those running in not-so-liberal territory, have latched on to his approach.
"There's almost a rebirth, or a pride, that we can really talk about what we believe and not do so shamefully," Gillum said, adding that Dr. Westen's advice had given him the confidence to speak his mind even on conservative talk radio. "If we communicate it through our stories and our real-life examples, if they don't agree with you then they can at least understand where you come from."
Dr. Westen's ideas began to catch on when he was writing "The Political Brain," a scientific explanation of the central role of emotion in politics, published in 2007, that urged Democrats to stop cowering and fight back.
Among those with whom he has had audiences are Howard Dean, the Democratic national chairman, and Young Elected Officials, a national group of left-leaning city council members and state legislators. During the primaries, Senator Joseph Biden Jr., now Senator Barack Obama's running mate, recommended "The Political Brain" to his campaign staff. Bill Clinton is a fan.
Even Frank Luntz, the architect of many Republican rhetorical successes, says Dr. Westen is fostering a sea change.
"It's as though the Republicans have fallen back 15 years in their communication," Luntz said, "at the very moment when Democrats vaulted ahead 15 years."
Luntz said the Obama campaign often mirrored Dr. Westen's approach. Though Dr. Westen has not worked for the campaign in an official capacity, he has offered guidance, both directly and in his Huffington Post columns.
Instead of using euphemisms like "pro-choice" and "reproductive health," his handbook suggests, liberal candidates might insist that it is un-American for the government to tell men and women when to start a family or what religious beliefs to follow, arguments that test well in focus groups with conservatives and independents. On illegal immigration, he recommends, candidates who have said their plan would "allow" immigrants to become citizens should instead say they will "require" it.
"The idea," Dr. Westen said, "is to start to rebrand progressives using language that's as evocative as the language of the other side, and stop using phrases that just turn people off."
The handbook does not offer a script so much as a menu of options, each of which was poll-tested against conservative arguments. On economics, for example, one message begins with "I want to see the words 'Made in America' again." Another reads, "We need leaders who don't just talk about family values but actually value families."
Celinda Lake, a prominent Democratic strategist in Washington, said of the handbook: "I think people have been overjoyed to have it. I don't think we have rooted our message in the kind of systematic understanding of values and networks of values that Drew uses."
Dr. Westen is not the first to try to whip Democratic messaging into shape. But several political consultants said his scientific approach based largely on recent advances in the study of how the brain reacts to political speech and his advocacy of plain talk made him more effective.
Bill Jones, a moderate Democrat in a conservative, wealthy section of suburban Atlanta, said talking to Dr. Westen had helped him make the decision to run for Congress against the Republican incumbent, Representative Tom Price.
Among other recommendations, Dr. Westen encouraged Jones to make his background as an Air Force veteran a prominent part of his biography. "It wasn't a contrived approach like 'how can we create a persona?' " Jones recalled. "It's 'be the person you are.' "
In a candidates' forum at a church on a recent Saturday afternoon, Bobbie Smith, 77, listened while her husband, a veteran, exchanged war stories with Jones. Smith, who identified herself as a conservative-leaning independent, said she had seen Jones's television commercials, co-produced by Dr. Westen. "I liked the down-to-earth talk," she said. "Common words for common people."
Not everyone has jumped wholeheartedly onto the Westen bandwagon. Though praising Dr. Westen's work, Will Marshall, president of the Progressive Policy Institute, the research wing of the Democratic Leadership Council, said he worried that it focused too much on the message rather than substance.
But Paul Begala, a commentator and Democratic strategist who was an adviser to President Bill Clinton, said that with candidates like Jones, Dr. Westen was helping to shape the future of the party.
"The fact that they're doing this in Georgia is really, really, really important," Begala said. "Great politicians often come out of enemy territory. Ronald Reagan came from Hollywood, and it made him tougher and smarter."
By Richard Pérez-Peña
Published: October 30, 2008
Alleging media bias in favor of Democrats, Senator John McCain and Governor Sarah Palin seized Wednesday on The Los Angeles Times's refusal to release a five-year-old videotape of Barack Obama at a dinner honoring a Palestinian rights advocate.
The video shows a gathering in Chicago for Rashid Khalidi, a teacher, writer and Obama friend who is critical of Israel. Obama spoke at the dinner, where other speakers likened Israel and Israelis to terrorists. The McCain campaign said the tape could show how Obama reacted to anti-Israel remarks.
Khalidi, now a professor of Arab studies at Columbia University, opposes Israel's occupation of territory it seized in the 1967 war and has defended Palestinian resistance to the occupation. He advised a Palestinian delegation at a 1991 peace conference and has written several books on the Middle East.
The Los Angeles Times said it had been given the video on the condition that it not be shown to anyone else. In an article published in April, the paper disclosed the tape's existence and described the dinner. The article said that in a speech there, Obama spoke of frequent discussions with Khalidi and dinners at his home, and also called on the people of the Middle East to find common ground.
That article drew little attention for more than six months, until it was raised by conservative bloggers and then by the McCain campaign. On Tuesday, a campaign spokesman accused the newspaper of shielding Obama from potentially damaging disclosures. And on Wednesday, McCain and Palin took up that message.
"I'm not in the business of talking about media bias, but what if there was a tape with John McCain with a neo-Nazi outfit being held by some media outlet?" McCain said in an interview with radio station WAQI in Miami. "I think the treatment of the issue would be slightly different."
Some conservatives question the sincerity of Obama's stated support for Israel, a crucial issue to many Jewish voters in swing states like Florida. Obama's campaign says that his stance on the matter has not changed and that his public and private positions are identical. Khalidi has said much the same of the candidate's stance.
In countering the McCain attacks, the Obama campaign also cited a tangential link between McCain and Khalidi. McCain is chairman of the International Republican Institute, which gave grants in the 1990s to the Center for Palestine Research and Studies, of which Khalidi was a founder, to conduct surveys of Palestinians. The International Republican Institute's 1998 tax filing says it gave $448,000 to the Palestine group, money that originated with government grants to the Republican organization.
The Times article about the dinner said that one speaker had read a poem accusing Israel of terrorism and that another had compared West Bank settlers to Osama bin Laden.
"What we don't know is how Barack Obama responded to these slurs on a country that he professes to support, and the reason we don't know is the newspaper that has this tape, The Los Angeles Times, refuses to release it," Palin said at a rally in Bowling Green, Ohio. "It must be nice for a candidate to have major news organizations looking out for their best interests like that."
Officials of the newspaper said they were inundated with complaining phone calls on Wednesday, after conservative commentators on television, radio and the Internet called for the tape's release. But Doyle McManus, the paper's Washington bureau chief, said it was being unfairly maligned for a rather routine agreement with a source.
"We revealed this event," McManus said. "We didn't suppress it."
"It's not unusual for reporters to be given information in ways that allow them to authenticate it but don't give them complete control of the information," he said. "We are sometimes shown documents that we are allowed to read but not keep."
He would not say whether The Times still had the tape or whether it showed anything of Obama's reactions to anti-Israel statements.
Julie Bosman and Mike McIntire contributed reporting
Thursday, October 30, 2008
BAGHDAD: The Iraqi government and donor countries must do more to support millions of refugees living outside Iraq, rather than seeking to lure them home to a still-violent country, a refugee group said Thursday.
"Two million Iraqi refugees are increasingly desperate and few of them are willing to return home," Refugees International said in a report.
"The government should provide assistance to the displaced in the region while working to establish the right conditions for returning refugees, including security, essential services and effective means to resolve property disputes," it said.
According to the International Organisation for Migration (IOM), some 2.8 million Iraqis have been displaced from their homes within Iraq. Another 2 million are believed to be outside the country, mainly in Syria and Jordan.
The U.S.-backed government of Prime Minister Nuri al-Maliki has been encouraging Iraqis to come home as violence drops sharply across the country, providing free flights for some refugees and offering settlement payments to returnees.
Last month the government warned it would prosecute any squatters who remained in other people's homes in Baghdad, part of an effort to free up homes so that owners can return.
Yet violence continues, and the IOM says the number of families who have heeded those calls has been small, around 17,000 families returning to Baghdad as of September 21.
In its report, Washington-based Refugees International said it worried many refugees will not be resettled properly outside Iraq yet neither will they be able to return, especially religious minorities or those who were closely associated with Saddam Hussein's Baath party.
It also called on the government to help displaced Iraqis continue schooling and for neighbouring countries to help them find work instead of focussing on encouraging returns.
It also encouraged donors to help countries where large numbers of Iraqis have landed, such as Syria and Lebanon. It said Jordan, unlike Syria, had received generous support from the United States.
(Reporting by Missy Ryan; Editing by Louise Ireland)
Thursday, October 30, 2008
By Lisa Baertlein
A memento with Depression-era humour helps Kristin Bertrand keep perspective as her family braces for a Christmas holiday without their home.
The small ceramic dish she keeps from her grandfather reads: "Cheer up, things could be worse." Then, in smaller type: "So I cheered up and sure enough things got worse."
Just a few years ago, Kristin and her husband Mike Bertrand, 36, were confident they owned their own piece of the American dream. They pulled in $140,000 (84,580 pounds) a year, owned a house, two cars, a telescope and other gadgets, and had season tickets to Disneyland for their two kids.
But since they lost their home in May, the Bertrands live in a sparsely furnished rental in Thousand Oaks, California, and have cut expenses to the bone.
They've sold Kristin's set of wedding rings, given up a car and the Disneyland passes to get back on their feet. The dish, taken when Kristin's 90-year-old grandfather moved to a nursing home, sits on the mantel as a reminder.
"It's going to be a lean holiday for us," said Kristin, 36, who said the family has put plans to visit relatives in Idaho on the back burner. "I think this year we need to lay low."
Adding to their worries as the holidays approach, Mike just learned that his consulting contract, the family's main income, will not be renewed at the end of October.
The Bertrands' story will be played out in many versions across the United States this holiday season, where several hundred thousand people who lost their homes to foreclosure try to redefine how they celebrate with their families.
For the Bertrands, and others, past splurges for special occasions have already been cut out of the household budget.
The Bertrands have kept their 13-year-old daughter McKaylee and 10-year-old son Taylor in the loop about their financial troubles all along. The kids have long stopped asking for money for clothes or fund-raisers, they said.
While the family had once taken McKaylee and a friend to Disneyland to celebrate her birthday, her latest party was held at home with a borrowed karaoke machine and a jump rope that guests fashioned from glow-in-the-dark necklaces.
NOT JUST A NUMBER
More than one million U.S. homes were lost in foreclosure from the beginning of 2007 through the end of September this year, according to RealtyTrac. Credit Suisse estimates 6.5 million loans will fall into foreclosure over the next five years, with the peak coming this year.
Families who have already lived through the worst of their financial troubles -- due to inflated monthly mortgage payments, the plunge in U.S. home values, or layoffs -- have prepared for a low-key holiday.
But even people who have not fallen into dire straits expect to tone it down this year, frightened by a plunge in financial markets that has wiped out trillions of dollars of asset values and raised the prospect of a global recession.
Six times as many people say they will cut back on gift-buying as those who plan to spend more, according to a recent Reuters/Zogby poll. U.S. retailers are bracing for their most dismal holiday sales season in nearly two decades.
Virginia Washington, a 64-year-old grandmother to 10, is already planning a more frugal holiday as she struggles to make payments on the $207,000 loan on her dream retirement home in Tolleson, Arizona, which is now worth about $150,000.
"The spirit will be there, though many of the things you've gotten used to over the years may not be," she said.
Counsellors who help people through the foreclosure process say that many families just aren't making holiday plans.
"They're not as concerned about what they're going to do for the holidays, it's more about what they're going to do to keep the home," said MaryEllen De Los Santos, a housing counselling coordinator with the Adams County Housing Authority in Commerce City, Colorado.
One outlier is Ann Neukomm, 57, a receptionist from Cape Coral, Florida, who filed for bankruptcy in May and now faces foreclosure on a mortgage she took out about two years ago.
She's thinking about using a small inheritance from her father to take her 17-year-old son on a holiday cruise.
"I'd like to do something with him because it's probably going to be the last time," Neukomm said, referring to her son's 18th birthday, a time when many American teenagers stop living with their parents.
De Los Santos, the housing counsellor, said that in the past, families in trouble would pour into her office at the beginning of each year. Many of them could not make mortgage payments because they spent too much on the holidays.
Now she expects more people won't even make it to the holidays to overspend, and predicts a flood of cases starting in early December.
One question De Los Santos asks clients is: "Do you want to have this kind of Christmas, or to you want to spend next Christmas in your home?"
Archstone Consulting Chief Executive Todd Lavieri said his biggest concern is unemployment and job insecurity. The United States has lost more than 700,000 jobs since January and experts are bracing for massive layoffs ahead.
"Saving your money to save your house will have a direct impact on holiday spending, no question about it," said Lavieri, whose group expects this year's holiday sales to contract when adjusted for inflation.
The Bertrands' plight began when Mike lost his job in 2007. He has worked since, but always for lower pay.
"I was working, but I was making less money. I kept fighting and struggling to catch up," Mike said.
In February, he lost a second job. "That was pretty much the final nail in the coffin," said Mike.
"The fear was overwhelming," Kristin said of the foreclosure saga, which left her feeling guilty and helpless.
While the family was not required to make mortgage payments during the year that the Newbury Park house they bought in 2001 was in foreclosure, Mike and Kristin said nothing felt as good as making their first payment on their rental.
"It was the best therapy," said Mike.
The couple started a support group called Moving Forward (http://wearemovingforward.org/) to help others manage the emotional toll of foreclosure. They worry that the holidays will pile additional stress on families already struggling to keep their heads above water.
"We need to get through it without any casualties," Kristin said.
(Reporting by Lisa Baertlein; Additional reporting by Tim Gaynor in Phoenix and Tom Brown in Cape Coral, Florida; Editing by Michele Gershberg and Eddie Evans)
By Ben White and Jonathan D. Glater
Thursday, October 30, 2008
Wall Street is coming under mounting political pressure to cut bonuses for top executives, traders and bankers in what was already expected to be a down year for pay.
Under pressure from members of Congress to curtail compensation, banks now face a new threat from Andrew Cuomo, the New York attorney general, who sent a letter on Wednesday to nine big financial institutions receiving government aid.
Cuomo gave the companies a week to provide a "detailed accounting regarding your expected payments to top management in the upcoming bonus season."
That could prove difficult for the banks, which typically do not complete bonus pools until later this month at the earliest.
Cuomo's letter also warned that payments worth more than the services provided by executives might violate New York law.
The letter follows one sent earlier this week to the same banks by Henry A. Waxman, the California Democrat who is chairman of the House Committee on Oversight and Government Reform, urging them not to use any government money for bonuses or other payments and asking for data on pay going back to 2006.
The demands from Cuomo and Waxman reflect an increased concern among lawmakers and regulators about payments to executives, which have drawn strong public reactions since the government approved a $700 billion bailout to stabilize the financial system. Other politicians have also held private meetings with bank executives to warn them that big bonus figures this year would create enormous political problems.
Any lawsuit based on the law cited by Cuomo would take some creative legal footwork, said Edward Morrison, a law professor at Columbia University. The law permits creditors to try to recover or block payments. "You have to find a way for the attorney general, for Cuomo, to shoehorn himself into the position of a creditor," Professor Morrison said. "It's not implausible." The attorney general could act under the law, Professor Morrison said, if New York state pension funds hold bonds issued by the nine companies. Cuomo might also claim jurisdiction over any of the companies that might owe taxes to New York.
The attention raised questions on Wall Street, because bonus payments are already expected to be as much as 50 percent smaller than last year and perhaps even far smaller at banks that posted big losses. The New York State comptroller estimated that Wall Street paid $33.2 billion in bonuses for 2007, compared with $33.9 billion the year before.
Even banks like Morgan Stanley and Goldman Sachs, which produced decent profits this year, are expected to award significantly smaller bonuses.
Lloyd Blankfein, the chief executive of Goldman Sachs, received bonus and stock awards worth about $68.5 million last year, while Goldman's co-presidents got just slightly less. Those numbers will not be repeated. John Mack, Morgan Stanley's chief executive, declined to take a bonus last year.
Last week, Cuomo reached an agreement with the American International Group, the insurance conglomerate that has received tens of billions of dollars in loans from the Federal Reserve, to freeze millions in payments to former executives. His latest move appears to expand the inquiry into executive compensation at companies participating in the government's financial bailout program.
"Taxpayers are, in many ways, now like shareholders of your company," Cuomo wrote, "and your firm has a responsibility to them."
In his letter, Cuomo asked specifically for a description of bonus pools for this year, a description of how money in those pools would be allocated, an explanation of how that allocation might have changed since each company received money under the federal Troubled Asset Relief Program and a description of bonuses paid to executives earning more than $250,000 in 2006 and 2007.
Cuomo's letter was sent to Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley, State Street and Wells Fargo, all of which received capital injections from the government as part of a wide-reaching program to stabilize the financial system. Representatives of Morgan Stanley, JPMorgan Chase, Bank of America and Wells Fargo declined to comment on the letter.
Citigroup said it would "cooperate with federal and state inquiries about our global expenditures for wages, health insurance and other benefits, which we believe reflect compensation best practices. In addition, we will of course adhere to applicable legal and regulatory requirements, including those in the federal government investment program, such as restrictions on executive compensation."
In an e-mail message, a spokeswoman for State Street said the bank was "carefully evaluating" Cuomo's request.
Other financial institutions did not return calls.
By Michael J. de la Merced
Thursday, October 30, 2008
For years, it was the ultimate brass ring on Wall Street. But now admission into Goldman Sachs's partnership may have lost its luster — or at least, its lucre.
The firm named 94 new partners on Wednesday, including one of the its top economists and its one of its key executives in India, down from 115 employees promoted two years ago. To be tapped for partnership means access to a special bonus pool that has made its members millionaires several times over.
But in the distressed times that have reshaped Wall Street into a land of leaner profits, it is unlikely that the class of 2008 will see the eye-popping, multimillion-dollar paydays of years past. Goldman's profits through September have fallen 47 percent from last year's record, to $4.4 billion.
The firm's transformation into a bank holding company also brings regulatory constraints that promise to drop the curtain on what were once among the most lucrative returns on Wall Street. Lawmakers and regulators are also keeping a closer eye on executive compensation, in light of the government-financed bailout of the financial sector.
Goldman shares have fallen about 25 percent since last month, when it announced its transformation from an investment bank , closing on Wednesday at $97.66.
Since the advent of the modern investment banks, gaining entrance into these firms' partnerships was the goal of every first-year associate.
For Goldman in particular, it nourished a close-knit group that helped shape its culture and helped mentor future leaders like Lloyd Blankfein, the firm's chairman and chief executive. Other powerhouses to have emerged from the inner circle include Henry Paulson Jr., Jon Corzine and Robert Rubin.
To say that Goldman's partner pool is selective is an understatement: Wednesday's announcement brings that number to 443, while the firm had about 32,500 employees as of Aug. 30.
"It's a lot like a university professor becoming tenured or learning that you're on the varsity team," said Charles Ellis, the author of "The Partnership: The Making of Goldman Sachs." "It's a great lift for people who make it and instills a real sense of discipline for those who come close."
When the firm began admitting outsiders into its top ranks in the mid-1980s, the partnership pool served to lure senior talent from other firms, said Lisa Endlich, a former Goldman trader and the author of "Goldman Sachs: A Culture of Success."
To make partner, however, is not a license to relax, Ellis said. New members are pressured to work even harder, "running wind sprints after wind sprints" to keep ahead of the younger generation.
Goldman is the only bank on Wall Street to have created such an inner sanctum. Even after Goldman went public in 1999, years after its rivals did, the firm sought to maintain the spirit of the partnership by creating the current class of partner-level executives. Announced every two years, the distinction provided the lucky few with access to paychecks that often rivaled those of chief executives at competitors.
Among those admitted to the partner pool this year are Jan Hatzius, Goldman's chief United States economist; L. Brooks Entwistle, who heads the firm's operations in India; and an assortment of deal makers, traders and private equity executives.
Thursday, October 30, 2008
By Louis Charbonneau
Escalating violence in eastern Democratic Republic of Congo is creating a humanitarian catastrophe and could have tragic consequences for the entire region, U.N. Secretary-General Ban Ki-moon said on Wednesday.
Rebels loyal to renegade General Laurent Nkunda advanced on the eastern city of Goma, scattering residents and threatening to overwhelm a 17,000-strong U.N. force, known as MONUC, trying to halt a return to all-out war. Thousands of civilians and hundreds of Congolese government soldiers poured into Goma.
In a statement read by U.N. spokeswoman Marie Okabe, Ban said "the intensification and expansion of the conflict is creating a humanitarian crisis of catastrophic dimensions and threatens dire consequences on a regional scale."
She said Ban urged "all parties to immediately cease hostilities and to respect international humanitarian law."
"He deplores the use of civilians as human shields and their deliberate targeting by belligerents," Okabe said.
Shortly after Ban's statement, a spokesman for Nkunda loyalists said the CNDP rebels had declared a cease-fire.
The U.N. Security Council discussed the issue for the second day in a row and unanimously adopted a non-binding statement that "condemns the recent CNDP offensive ... and demands that it bring its operations to an end."
The Security Council statement also called on the governments of Congo and neighbouring Rwanda "to take concrete steps to defuse tensions and to restore stability in the region." It also welcomed Nkunda's cease-fire and urged him to rejoin the peace process.
Several council diplomats told Reuters that Rwanda was clearly providing support to Nkunda's CNDP but Rwanda's U.N. Ambassador Joseph Nsengimana denied the allegation.
"It is not true," he told Reuters. "There is no proof."
The council took no action on a request from MONUC chief Alan Doss for a temporary increase in his force by roughly 2,000 personnel -- two battalions of soldiers, two companies of special forces and one police unit.
The statement said the council "duly notes" the request.
British Ambassador John Sawers told reporters the request for additional troops would be discussed in the coming weeks, above all by the European Union. In the short term, he said MONUC would be redeploying peacekeepers to reinforce the roughly 800 MONUC troops now in Goma.
In an attempt to mediate the crisis on Congo's border with Rwanda, Okabe said Ban was dispatching two envoys to meet the governments -- deputy U.N. peacekeeping chief Edmond Mulet to Congo and U.N. special envoy to Zimbabwe Haile Menkerios to Rwanda.
Ban's decision to send Menkerios to Kigali reflects a growing concern among U.N. officials that Rwanda may be providing support to Nkunda, as Congo has alleged for weeks.
Okabe said both sides in the fighting were preventing U.N. peacekeepers from evacuating civilians. Among those needing evacuation were "humanitarian workers, including a double amputee nun who has been injured in the fighting," she said.
"I cannot emphasise how desperate the situation on the ground is right now," she said.
The U.N. refugee agency UNHCR said up to 45,000 uprooted people had left camps for the displaced and headed to Goma on Wednesday. The agency also said more than 1,000 villagers fled to neighbouring Uganda, with many more expected to follow.
(Additional reporting by Laura MacInnis in Geneva; editing by John O'Callaghan)
Thursday, October 30, 2008
The economic recovery of 2003-07 was driven by an exceptionally favorable international environment, with abundant liquidity, high commodities prices and robust growth in Argentina's main trading partners. The reversal of this favorable scenario will hit an economy already facing increasing domestic difficulties.
Default fears. The deepening of the global crisis has increased fears of a new sovereign default. Doubts about the government's creditworthiness increased in August, when it had to pay an interest rate of some 15% on a 1 billion dollar bond issued to the Venezuelan government. The high interest rate caused growing worries about the financial outlook for 2009, and concerns about a new default led to a steep decline in bond prices and a rise in country risk. To restore confidence in the government's creditworthiness, Fernandez de Kirchner made a series of announcements:
1. Paris Club. On September 2, she announced that the government would cancel the 6.7 billion dollar debt owed to the Paris Club, in default since 2001, using BCRA reserves. The Paris Club default has been cited as an obstacle to regaining access to voluntary capital markets, and the government hoped that this would open the way to fresh funds. However, the worsening of the global crisis led the government to postpone this payment and give priority to preserving international reserves, given that in the current context access to new funds would nevertheless remain unattainable.
2. Bond swap. On September 22, the president announced that the 2005 sovereign debt swap would be reopened for 'holdout' creditors (those bondholders who did not accept the 2005 debt restructuring, who account for around 30 billion dollars in defaulted debt). Fernandez de Kirchner accepted a proposal by Barclays Capital, Deutsche Bank and Citibank, through which bondholders would be offered a new growth-linked bond but would be required to provide fresh funds of some 2.5 billion dollars. The proposal would require a minimum acceptance of 10 billion dollars and imply a reduction in debt servicing of 65%.
The reopening of the bond swap would have to be approved by Congress, as established in the terms of the 2005 restructuring. However, once again, this was a good decision taken at a bad time: the worsening of the global crisis reduced the attractiveness of the proposal, as the price of public bonds has plunged and the credit crunch has reduced banks' and bondholders' ability to provide fresh funds. Consequently, the government has postponed the initiative.
3. Debt rollover. The government also announced the rollover of guaranteed loans ('prestamos garantizados') borrowed from domestic banks in 2001, of which 4.5 billion dollars fall due next year. In exchange, banks would also provide fresh funds of between 1.2-1.8 billion dollars. However, this rollover is also on stand-by due to the financial crisis.
Pension funds nationalization. In a highly controversial move, on October 21 Fernandez de Kirchner announced a new reform of the social security system, which would imply the end of the private pension system and the nationalization of the funds administered by private pension funds managers. Although Fernandez de Kirchner argued that this decision aims to protect the pensions of future retirees, it is clear that its main goal is to provide fresh funds to the government, at a time when it has no access to new lending.
Argentina's dependence on the global economy will make economic adjustment inevitable. Given the worsening global panorama, the government's attempts to improve access to fresh funds have proved fruitless. The nationalization of pension funds reflects the government's unwillingness to implement fiscal tightening and raises doubts about sustainability and the possibility of a new default.
By James SaftReuters
Thursday, October 30, 2008
NEW YORK: Walk the streets of midtown Manhattan, listen to the jackhammers, look at the cranes on so many blocks and you might conclude: These people are in the midst of a big commercial real estate boom.
You might be right, but not for long.
Nonresidential property investment in the United States, which usually tracks economic growth with a delay, has stayed unusually strong unusually long into what is looking like an increasingly ugly and protracted recession.
And that is pretty bad news, both for the economy and for the banks. The economy is about to suffer the latest dropping of other shoes when nonresidential construction, which includes everything from hotels to manufacturing plants, turns sharply south and removes one of its few supports.
There simply won't be enough demand for all of these new office buildings, malls and hotels, even in places that aren't banking centers. And manufacturing and power construction, which have been very strong, may be hit by dropping demand, both at home and overseas, as a global downturn takes hold.
Development will slow or contract, jobs will be lost and economic activity diminish.
And the banks themselves, which are already such basket cases that they require government support, are about to see the value of the commercial real estate loans that they own get whacked, prompting yet another self-reinforcing cycle of loan write-downs, tightening credit and loss of confidence.
"It takes a lot of time until projects are finished, and there were a lot of things in the pipeline," said Harm Bandholz, an economist at UniCredit in New York. "But developers are probably not very happy about it."
Because it takes time to plan, finance and build a building, it is not unusual for development to carry on after gross domestic product growth begins to weaken, but this time the construction activity has defied gravity. "Usually you have a tight correlation between GDP and construction, with a lag of two quarters," Bandholz said. "This is unprecedented."
Private investment in structures grew by 14.3 percent in the second quarter as compared with the quarter before, and though it is a fairly small sector, this activity actually contributed almost a half a percentage point to GDP growth.
The growth was concentrated in the manufacturing, power, lodging and office sectors, all of which face considerable headwinds now.
Manufacturing is sensitive to domestic and global growth, which is falling. Power plants may be less profitable with the price of a barrel of oil now in double rather than triple digits. Hotels would seem to be a natural to lose out during a recession, and offices need businesses and workers, of which there will be fewer.
The question arises as to how and why the banks were actually lending to finance all of this construction. The Federal Reserve Senior Loan Officer survey shows that banks have sharply tightened up credit terms and availability. Loans for commercial real estate are now as hard to get as they have been since at least the early 1990s.
That, too, indicates a sharp drop-off in new activity and yet another negative for economic growth.
But what will a downturn do to banks? It certainly won't help. While delinquencies in commercial real estate loans are up and banks have moved to write down more of their exposure, levels are still way below those typically seen in a large recession.
Delinquency rates were 4.24 percent on commercial real estate loans in the second quarter, according to Federal Reserve data, up quite a bit but nowhere near the double digit rates of the early 1990s. Charge off rates, the level of loans that banks write down as losses, were a bit less than one percent in the second quarter, less than half the peaks of the early 1990s.
Christopher Whalen, the managing director at Institutional Risk Analytics, a company that specializes in financial and banking analysis, said he foresaw write-downs of commercial real estate loans at double their early 1990s seasonally adjusted peak, or about 4.5 percent.
A quadrupling on write-downs from here would have a big impact on capitalization for an industry that is already bleeding and having grave difficulties attracting new free market investors.
"If the hole we have dug is as big as we think in the United States," Whalen said, "what does that do for loss rates at banks?"
"You will see a situation where you have a lot more developers filing for bankruptcies," Whalen added. He also thinks that this, in conjunction with soaring losses on other loans, could push more large banks into the arms of the U.S. government.
So, timed as it is, the coming U.S. commercial real estate bust will reinforce the credit crunch, put further strains on taxpayers and deepen a recession that already threatens to be one of the worst in decades.
Manhattan, and the United States, will be a lot quieter in six months' time. We may come to miss the sound of hammering.
Thursday, October 30, 2008
By Burton Frierson and Christian Plumb
The U.S. economy contracted in the third quarter as the financial crisis raged, while Japan and Germany said they would spend billions of dollars to provide a cushion against a deep global recession.
The spending measures would complement a series of interest rates cuts, including those from China, Norway and the United States on Wednesday.
Japan may cut rates on Friday and the European Central Bank, Britain and Australia are expected to follow next week, coming on the heels of data that showed a rapid deterioration in major economies.
"A harsh storm seen only once in 100 years is raging," Japanese Prime Minister Taro Aso told a news conference.
The president of the San Francisco Federal Reserve Bank, Janet Yellen, called recent trends in the U.S. economy "deeply worrisome."
The first Fed official to speak after Thursday's news that the U.S. economy contracted in the third quarter, Yellen said the U.S. federal funds rate could potentially go "a little lower" than 1 percent, one day after the Fed cut its benchmark lending rate by a half percentage point.
"The mortgage meltdown is far from over, the economy and financial markets are still reeling from it," she said.
The world's largest economy shrank at a 0.3 percent annual rate in the third quarter, the sharpest contraction in the United States in seven years. U.S. consumers slashed spending at the sharpest rate in 28 years in the third quarter, undermining growth.
CREDIT MARKETS THAW
The economy also suffered in the third quarter as businesses cut investment. More companies announced payroll cuts on Thursday. Credit card issuer American Express Co said it would chop 7,000 jobs, while cellular phone maker Motorola Inc said it would lay off 3,000 workers.
However, the data on the gross domestic product was not as bad as many had feared, which along with the global rate cuts and signs of a thaw in credit markets helped push U.S. stocks .DJI> up about 2 percent.
The gains brought stability to a market that had fallen to 5-1/2-year lows this month, ravaged by the credit turmoil. U.S. stocks are still down about 15 percent just this month.
European shares lost much of their earlier gains but still closed higher.
Japan's benchmark Nikkei average index closed up 10 percent, a third straight day of gains that have lifted the index 26 percent. However, like most markets in the world, the Nikkei remains down more than 40 percent this year.
Even as the markets edged higher, there remained some big pockets of weakness, including insurance, which has been discussed as a possible recipient for U.S. bailout funds.
Hartford Financial Services Group Inc shares lost more than half their value, sinking to an all-time low, a day after the company had what its chief executive described as the worst quarter in its 198-year history, stoking concern it may need to raise even more capital.
"What we see is the world getting much worse," Lazard Ltd Chief Executive Bruce Wasserstein said in an interview with Fortune Magazine that was open to the media. "The financial system has a long way to go" before rebounding, the legendary dealmaker said.
U.S. AUTO BAILOUT URGED
As U.S. banks began announcing the terms under which the government had injected billions of dollars in capital into them, they reiterated pleas to the U.S. Treasury Department to clarify whether participating in the $250 billion program would force them to cut executive pay or bar them from paying dividends.
Still, encouraging news emerged from the banking sector. Closely watched rates on bank-to-bank borrowing fell on Thursday, helped by the U.S. Federal Reserve's rate cut on Wednesday and currency swap lines to ease a scramble for dollars around the world.
Also, the supply of U.S. commercial paper rose on Wednesday, signalling a Federal Reserve program to buy the securities appears to have revived this crucial part of the credit market.
U.S. banks' direct borrowing from the Federal Reserve decreased last week but remained at very high levels, even as the central bank made loans directly to businesses for the first time ever.
There have been fewer positive signs for the auto industry, and a lobby group for top U.S. chief executives said the Treasury should use some of the funds from the bailout legislation to provide direct capital injections to automakers and their finance companies.
But a Bush administration official said the Treasury Department was not negotiating with General Motors Corp and the owners of Chrysler LLC on a request to provide direct government aid to their proposed merger.
The U.S. GDP data came five days before the U.S. presidential election and candidates seized on the report as a chance to take swipes at their rival's plans.
Democratic nominee Barack Obama called the contracting economy "a direct result" of Bush administration policies that he said Republican nominee "John McCain has embraced for the last eight years and plans to continue for the next four."
The McCain camp fired back that "Barack Obama would accelerate this dangerous course. ... John McCain offers a new direction and a real choice."
BRAZIL AIMS TO DODGE DOWNTURN
Japan, the world's second biggest economy, unveiled a 5 trillion yen (31 billion pounds) package of spending measures to support its economy.
"I am certain that what is most important is to remove uncertainties from the lives of people," said Japan's prime minister.
Germany planned to introduce a range of steps worth up to about 30 billion euros (23.8 billion pounds) to boost investment in Europe's biggest economy.
The package will include support for car makers and building renovation as well as tax breaks enabling companies to write off a share of their investments, German newspapers reported.
Governments are desperate to put measures in place to protect their economies against recession, which euro-zone statistics suggested has hit much of Europe.
Economic sentiment in the 15-nation currency bloc plunged to its lowest level since 1993 in October, official data showed.
Brazil's top economic officials said the global financial crisis will not push the country into a recession and that the central bank would unveil a new lending facility for exporters suffering from a credit crunch.
Poor corporate earnings and forecasts for 2009 from companies from Eastman Kodak Co to British advertising firm WPP Group to Japanese automaker Mitsubishi Motors Corp supported the view that the downturn would be long-lasting.
(Reporting by Reuters bureaus worldwide; Editing by Leslie Adler)
Thursday, October 30, 2008
By Yoo Choonsik
As the rest of the world groans under the strain of the spreading financial storm, life in the self-described paradise of North Korea remains blissfully untouched.
"We know many countries are struggling due to the financial crisis ... we have no problem here," said a North Korean guide working with a visiting aid group from the South, whose economy has been among the hardest hit as financial markets tumble around the world.
North Korea's centrally planned economy, built around the state ideology of self-reliance, has little time for capitalism and has only in recent years grudgingly allowed even street markets to emerge.
It has no stock market and visitors pay for everything in foreign currency at an officially set -- and inflated -- exchange rate.
It also has one of the world's poorest economies that has managed to avoid any impact from the surge in economic growth of its East Asian neighbours.
Constantly under threat of famine, its 22 million population has an annual per capita income, by one estimate, of no more than $400 (241 pounds). That's about 2 percent of the level in capitalist South Korea.
"We are hearing that it will take a while until the countries come out of the crisis, but ... we are okay because we have a different system," said the guide, whose duties included blocking his charges from making any contact with ordinary North Koreans.
But the looming global recession has come at an awkward time for Pyongyang's leaders, just as they are gradually mending fences with the outside world over their nuclear weapons ambitions with the hope of tapping into the international economy from which they have largely isolated themselves for the best part of 60 years.
This month, Washington removed North Korea from its list of governments that sponsor terrorism, lifting a major deterrent to doing business with a country still barred under United Nations sanctions from dealing with outside financial firms.
"The removal from the list will help our country improve relations with the United States," the guide said, without going into detail on how it might lift an economy whose industrial base has mostly rusted into decay.
North Korea's economy had flourished in the 1970s but has since been contracting, prompting many analysts to say it has become a failed state. Its current leader Kim Jong-il inherited the position from his father and North Korea's first ruler.
Despite the policy of self-reliance, North Koreans depend heavily on aid, mostly from neighbouring China and South Korea but the government shows no sign that it is ready to open up more than a crack.
Visitors are banned from bringing their mobile phones into the country. The Internet exists, but it can take quite a long time to send a simple email.
"Fill in the application form and give it to me. I will get back to you quickly, in just 30 minutes," a member of staff at one of the two biggest tourist hotels in Pyongyang told a guest who asked to use a computer to send an email.
The hotel staff balked when the guest said he wanted to email his wife in South Korea, with which the North remains technically at war.
"No, you can't. You should not write to an email address in the South," said a hotel worker in charge of international communications.
An hour, rather than the promised 30 minutes later, she allowed the guest to send an email to his daughter in the United States for $3 -- in hard cash.
(Editing by Jonathan Thatcher and Megan Goldin)
By Graham Bowley
Thursday, October 30, 2008
Thousands of people demonstrated in the Syrian capital Damascus on Thursday, in an apparently stage-managed protest of the American military raid across the Iraqi border into Syrian territory on Sunday.
Accounts of the demonstration by SANA, Syria's official news agency, did not convey whether the protest was spontaneous or orchestrated by the government. But judging by other news accounts and images shown on television, it seemed clear that the government had organized the protest, which looked precisely timed and managed.
The BBC showed TV scenes of crowds of protesters massing in central Damascus, carrying Syrian flags and pictures of the Syrian president, Bashar al-Assad. According to The Associated Press, which reported from Damascus, Syrian riot police formed a protective ring around the United States Embassy, a mile away from the demonstrations. The Embassy was closed for the protests and the crowds dispersed peacefully after a couple of hours, The AP said.
Syria said eight civilians were killed in the raid on Sunday, and has described the attack as "terrorist aggression" by the United States. But American officials said the raid, by American helicopter-borne forces, killed an Iraqi militant responsible for running weapons, money and foreign fighters across the border into Iraq. The American officials said that all the people killed in the assault were militants.
Earlier this week, in its first retaliation against the raid, the Syrian cabinet said it had decided to order the closure of the American School and an American cultural center in Damascus.
The strike into Syria was by far the boldest by American commandos in the five years since the United States invaded Iraq and began to condemn Syria's role in stoking the Iraqi insurgency.
But in justifying the attack, American officials said the United States was determined to halt the flow of militants and weapons across the border to the insurgency.
They confirmed the death in the raid of the man suspected of leading an insurgent cell, an Iraqi known as Abu Ghadiya. In the raid on Sunday, about two dozen American commandos in specially equipped Black Hawk helicopters swooped into the village of Sukkariyah, six miles from the Iraqi border, just before 5 p.m., and fought a brief gun battle with Abu Ghadiya and several members of his cell, the officials said.
It was unclear whether Abu Ghadiya died near his tent on the battlefield or after he was taken into American custody, one senior American official said.
Thursday, October 30, 2008
A Syrian court sentenced 12 prominent dissidents to two and a half years each in prison on Wednesday for calling for democratic reforms and an end to the Baath Party's monopoly on power. The dissidents, 11 men and a woman, were arrested last year after holding a large meeting to revive a movement that called for freedom of expression and a democratic constitution in Syria, which has been ruled by the Baath Party for four decades. Their case has drawn international condemnation, with the United States and European nations repeatedly calling for their release. The defendants, who are among Syria's leading intellectuals and opposition figures, have been in jail since their arrest. The charges against them included "weakening national morale."
Thursday, October 30, 2008
BEIRUT: Syria will deploy more troops along its border with Lebanon in an effort to stop smuggling, the Lebanese army said on Thursday.
The deployment along Syria's side of Lebanon's eastern border follows the stationing of hundreds of Syrian troops on Lebanon's borders in the north -- a region where Damascus has warned of a threat from Islamist militancy.
Lebanese army chief Jean Kahwaji and his Syrian counterpart Ali Habib discussed the deployment of Syrian army units "along the length of the eastern border in the coming few days," the Lebanese army said in a statement.
It did not say how many troops would deploy.
The Syrian army had completed its deployment on its own side of Lebanon's northern border, the statement said, adding that the two commanders had discussed the new steps in a phone call.
"This deployment comes in the framework of measures to stop smuggling and prevent the movement of people illegally across the borders," the statement said. Witnesses in Lebanon said Syrian troops had already started to deploy.
Syria's deployment in the north was a cause for concern among anti-Syrian Lebanese politicians, who feared that Damascus might be planning to intervene in its smaller neighbour.
Syria controlled politics and security in Lebanon until 2005 when the assassination of former Prime Minister Rafik al-Hariri triggered international pressure that forced it to end its 29-year military presence in the country.
Northern Lebanon has been the scene of a series of recent attacks on the Lebanese army. The public prosecutor this week accused 34 Islamists, including Lebanese, Saudis, Syrians and Palestinians of carrying out the deadly bombings.
Syria has said a vehicle used in a suicide attack in Damascus last month had crossed into the country from an Arab neighbour. It has not said which country. Syria's Arab neighbours are Jordan, Iraq and Lebanon.
(Writing by Tom Perry; Editing by Giles Elgood)
The Associated Press
Thursday, October 30, 2008
ROME: The Italian government gave Libya early warning of the 1986 U.S. airstrikes launched in response to a deadly attack on a disco in Germany, Libyan and Italian officials said Thursday.
The Libyan foreign minister, Abdel-Rahman Shalgam, was quoted by the ANSA and Apcom news agencies as saying that the Italians had warned him of the raids launched from a NATO base on Italian soil because they were opposed to the action. Shalgam said the Italians informed him personally since, at the time, he was the Libyan ambassador in Rome.
"I don't think I am revealing a secret if I announce that Italy informed us a day before - April 14, 1986 - that there would be an American aggression against Libya," the agencies quoted Shalgam as saying.
Shalgam was quoted as saying that the United States launched a strike from a NATO base on Lampedusa, a tiny Sicilian island, "against the will of the Italian government."
The agencies also quoted a veteran politician, Giulio Andreotti, who in 1986 was the Italian foreign minister, as saying that the attack was "a mistake" and confirming that the Socialist-led government of Bettino Craxi warned Libya.
It was not immediately clear whether Libya acted on the information.
The two politicians were speaking on the sidelines of conference in Rome.
Former President Ronald Reagan ordered airstrikes on Tripoli and Benghazi after the disco attacks that killed three people, including two U.S. servicemen. The Libyans say the retaliatory attacks killed 41 people - including the adopted daughter of the Libyan leader, Muammar el-Qaddafi - and wounded 226 others.
Italy, a NATO member, kept good ties with Tripoli even as the West accused Qaddafi of supporting terrorism and issued sanctions on the country.
U.S.-Libyan relations hit a low point in the 1980s, with Libyan-linked terrorist attacks, most notoriously the 1988 downing of Pan Am 103 over Lockerbie, Scotland.
At one point, Reagan called Qaddafi a "mad dog."
Relations began to improve after Qaddafi renounced weapons of mass destruction and terrorism in 2003. Libya also agreed to pay compensation to the families of victims of the Lockerbie bombing, which killed 270 people and to those of the disco attack in Berlin.
Shalgam was in Rome to attend a conference at the Foreign Ministry on a treaty the two countries signed in August, which includes $5 billion in compensation for Italy's 30-year colonial rule of Libya, from 1911 to 1943.