0400
Thoreau is rediscovered as a climatologist
By Cornelia Dean
Tuesday, October 28, 2008
CONCORD, Massachusetts: Henry David Thoreau endorsed civil disobedience, opposed slavery and lived for two years in a hut in the woods here, an experience he described in "Walden." Now he turns out to have another line in his résumé: climate researcher.
He did not realize it, of course. Thoreau died in 1862, when the industrial revolution was just beginning to pump climate-changing greenhouse gases into the atmosphere. In 1851, when he started recording when and where plants flowered in Concord, he was making notes for a book on the seasons.
Now, though, researchers at Boston University and Harvard are using those notes to discern patterns of plant abundance and decline in Concord — and by extension, New England — and to link those patterns to changing climate.
Their conclusions are clear. On average, common species are flowering seven days earlier than they did in Thoreau's day, Dr. Richard Primack, a conservation biologist at Boston University, and Dr. Abraham Miller-Rushing, then his graduate student, reported this year in the journal Ecology. Working with Dr. Charles Davis, an evolutionary biologist at Harvard and two of his graduate students, they determined that 27 percent of the species documented by Thoreau have vanished from Concord and 36 percent are present in such small numbers that they probably will not survive for long. Those findings appear in the current issue of the Proceedings of the National Academy of Sciences.
"It's targeting certain branches in the tree of life," Davis said. "They happen to be our most charismatic species — orchids, mints, gentians, lilies, iris."
Of the 21 species of orchids Thoreau observed in Concord, "we could only find 7," Primack said.
From 1851 through 1858, Thoreau tracked the first flowerings of perhaps 500 species, Primack said. "He knew what he was doing, and he did it really systematically."
Primack and Miller-Rushing did their own surveys in 2004, 2005 and 2006. They also consulted notes from Pennie Logemann, a landscape designer who tracked flowering times from 1963 to 1993 as an aid to planning Concord gardens. And they looked at contributions by members of area plant, insect and bird clubs and the work of additional participants in Concord's long line of passionate amateur naturalists, some of whose records are preserved in the Free Public Library here.
One of them, Richard Eaton, is best known to botanists for his 1974 book, "A Flora of Concord." Primack recalled that as a graduate student at Harvard, he had worked alongside Eaton in the university's natural history collection — curators relegated the two of them to the same obscure table. "He was just this very elderly man," Primack recalled. "Not a professor, an enthusiast. But he was a very, very good botanist. He used very good methods."
Another contributor, Alfred Hosmer, is more obscure, but his contribution is enormous: detailed notes he made in Concord from 1888 through 1902.
"He was a storekeeper," Primack told a small group of graduate students as he gathered them around a table in a special collections room in the Concord library one recent morning. He opened a gray cardboard box, sifted through photocopies of Thoreau's notoriously hard-to-read notes and pulled out what looked like an ancient composition book. He turned to a page where an inventory of orchid species ended and one of irises began. The entries move across the page in tiny but precise script.
"You can imagine this as a storekeeper's ledger," Primack said. But Hosmer's plant nomenclature was more accurate than Thoreau's, he said. "Plus we can read his writing."
According to Primack, Hosmer spent "15 years walking around Concord for several hours a day several times a week" making notes about plants. "He never wrote about why he was doing this," Primack said, "but he had known Thoreau when he was a boy. Hosmer was one of the first people who said Thoreau was a genius and not just a nut."
Primack said he had never heard of Hosmer until his interest in Thoreau led him to search for old journals, diaries and other records. "I started going to all these funny scientific societies we have," he said. "I was getting up in the 'new business' and telling people what I was looking for. I got a lot of leads, but most were not very useful. Then Ray Angelo told me about Hosmer."
Angelo, who stepped down recently as curator of vascular plants at the New England Botanical Club, is the author of a monograph, "Concord Area Trees and Shrubs." The eminent biologist Ernst Mayr once called him "the most knowledgeable student of the Concord flora" and today, when Primack and the other researchers are looking for this species or that in Concord, Angelo tells them where to find it.
The most daunting challenge, though, was making sense of this kind of data.
"There were a couple of big problems," Miller-Rushing, now at the University of Maryland, said in a telephone interview from Colorado, where he was studying mountain plants. "Thoreau had incredibly messy handwriting. That was a big difficulty." Also, he said, "in some cases he and Hosmer called the same species by different names. We had to figure all that out."
Their work with Davis and his students began then, after they heard the two give talks at Harvard on their efforts and convinced them additional analysis was necessary.
"We just treated each individual species as a data point," Primack said. "That was not the way to do it." Davis and two of his graduate students, Charles Willis and Brad Ruhfel, began looking at the species data from an evolutionary perspective including, for example, the relationship between species traits and abundance. "Those species that are falling out are more closely related than you would expect," Willis said.
As Davis put it, "certain branches of the tree of life are being lopped off."
But when Davis and his colleagues began analyzing the data, things got off to a rough start. "It's actually a very specialized kind of analysis," Primack said. Willis "kept explaining what the analysis was showing, and I kept saying, 'I don't understand.' "
Once he did understand, he added, it became apparent that "a couple of times they had not done the analysis correctly because they did not understand the field data."
Now, though, they have figured out how to communicate. "Climate change, ecology and evolutionary biology have been going their own separate ways," Ruhfel said. "We see now we have information we can share and really further the field."
Now the professors and their graduate students are on the trail of more data. For example, there is growing evidence that as birds change their migration patterns in response to climate change, they may no longer be in sync with the insect species they feed on. Elizabeth Bacon, another of Primack's graduate students, is combing Thoreau's notes on birds and the records of the Nuttall Ornithological Club, a local organization, to see what they can contribute.
Miller-Rushing worked this summer in the Rockies on whether plants that begin to flower earlier have more problems with late-season frost.
Willis and Ruhfel are looking at which species are moving in to Concord to occupy niches vacated by vanished plants, and whether they come from "adjacent species pools," as Willis puts it.
The scientists say their research demonstrates the importance of simply watching the landscape and recording what occurs in it. And it demonstrates the importance of old records and natural history collections, Davis said. But in general, he said, there is little interest in devoting money, time and space to their preservation.
"It's hard to defend the space on major campuses," Davis said. "Eaton could not have prepared his 'Flora' unless Harvard University had maintained herbarium specimens. Hosmer's book was here in Concord for 100 years before anyone used it."
By Cornelia Dean
Tuesday, October 28, 2008
CONCORD, Massachusetts: Henry David Thoreau endorsed civil disobedience, opposed slavery and lived for two years in a hut in the woods here, an experience he described in "Walden." Now he turns out to have another line in his résumé: climate researcher.
He did not realize it, of course. Thoreau died in 1862, when the industrial revolution was just beginning to pump climate-changing greenhouse gases into the atmosphere. In 1851, when he started recording when and where plants flowered in Concord, he was making notes for a book on the seasons.
Now, though, researchers at Boston University and Harvard are using those notes to discern patterns of plant abundance and decline in Concord — and by extension, New England — and to link those patterns to changing climate.
Their conclusions are clear. On average, common species are flowering seven days earlier than they did in Thoreau's day, Dr. Richard Primack, a conservation biologist at Boston University, and Dr. Abraham Miller-Rushing, then his graduate student, reported this year in the journal Ecology. Working with Dr. Charles Davis, an evolutionary biologist at Harvard and two of his graduate students, they determined that 27 percent of the species documented by Thoreau have vanished from Concord and 36 percent are present in such small numbers that they probably will not survive for long. Those findings appear in the current issue of the Proceedings of the National Academy of Sciences.
"It's targeting certain branches in the tree of life," Davis said. "They happen to be our most charismatic species — orchids, mints, gentians, lilies, iris."
Of the 21 species of orchids Thoreau observed in Concord, "we could only find 7," Primack said.
From 1851 through 1858, Thoreau tracked the first flowerings of perhaps 500 species, Primack said. "He knew what he was doing, and he did it really systematically."
Primack and Miller-Rushing did their own surveys in 2004, 2005 and 2006. They also consulted notes from Pennie Logemann, a landscape designer who tracked flowering times from 1963 to 1993 as an aid to planning Concord gardens. And they looked at contributions by members of area plant, insect and bird clubs and the work of additional participants in Concord's long line of passionate amateur naturalists, some of whose records are preserved in the Free Public Library here.
One of them, Richard Eaton, is best known to botanists for his 1974 book, "A Flora of Concord." Primack recalled that as a graduate student at Harvard, he had worked alongside Eaton in the university's natural history collection — curators relegated the two of them to the same obscure table. "He was just this very elderly man," Primack recalled. "Not a professor, an enthusiast. But he was a very, very good botanist. He used very good methods."
Another contributor, Alfred Hosmer, is more obscure, but his contribution is enormous: detailed notes he made in Concord from 1888 through 1902.
"He was a storekeeper," Primack told a small group of graduate students as he gathered them around a table in a special collections room in the Concord library one recent morning. He opened a gray cardboard box, sifted through photocopies of Thoreau's notoriously hard-to-read notes and pulled out what looked like an ancient composition book. He turned to a page where an inventory of orchid species ended and one of irises began. The entries move across the page in tiny but precise script.
"You can imagine this as a storekeeper's ledger," Primack said. But Hosmer's plant nomenclature was more accurate than Thoreau's, he said. "Plus we can read his writing."
According to Primack, Hosmer spent "15 years walking around Concord for several hours a day several times a week" making notes about plants. "He never wrote about why he was doing this," Primack said, "but he had known Thoreau when he was a boy. Hosmer was one of the first people who said Thoreau was a genius and not just a nut."
Primack said he had never heard of Hosmer until his interest in Thoreau led him to search for old journals, diaries and other records. "I started going to all these funny scientific societies we have," he said. "I was getting up in the 'new business' and telling people what I was looking for. I got a lot of leads, but most were not very useful. Then Ray Angelo told me about Hosmer."
Angelo, who stepped down recently as curator of vascular plants at the New England Botanical Club, is the author of a monograph, "Concord Area Trees and Shrubs." The eminent biologist Ernst Mayr once called him "the most knowledgeable student of the Concord flora" and today, when Primack and the other researchers are looking for this species or that in Concord, Angelo tells them where to find it.
The most daunting challenge, though, was making sense of this kind of data.
"There were a couple of big problems," Miller-Rushing, now at the University of Maryland, said in a telephone interview from Colorado, where he was studying mountain plants. "Thoreau had incredibly messy handwriting. That was a big difficulty." Also, he said, "in some cases he and Hosmer called the same species by different names. We had to figure all that out."
Their work with Davis and his students began then, after they heard the two give talks at Harvard on their efforts and convinced them additional analysis was necessary.
"We just treated each individual species as a data point," Primack said. "That was not the way to do it." Davis and two of his graduate students, Charles Willis and Brad Ruhfel, began looking at the species data from an evolutionary perspective including, for example, the relationship between species traits and abundance. "Those species that are falling out are more closely related than you would expect," Willis said.
As Davis put it, "certain branches of the tree of life are being lopped off."
But when Davis and his colleagues began analyzing the data, things got off to a rough start. "It's actually a very specialized kind of analysis," Primack said. Willis "kept explaining what the analysis was showing, and I kept saying, 'I don't understand.' "
Once he did understand, he added, it became apparent that "a couple of times they had not done the analysis correctly because they did not understand the field data."
Now, though, they have figured out how to communicate. "Climate change, ecology and evolutionary biology have been going their own separate ways," Ruhfel said. "We see now we have information we can share and really further the field."
Now the professors and their graduate students are on the trail of more data. For example, there is growing evidence that as birds change their migration patterns in response to climate change, they may no longer be in sync with the insect species they feed on. Elizabeth Bacon, another of Primack's graduate students, is combing Thoreau's notes on birds and the records of the Nuttall Ornithological Club, a local organization, to see what they can contribute.
Miller-Rushing worked this summer in the Rockies on whether plants that begin to flower earlier have more problems with late-season frost.
Willis and Ruhfel are looking at which species are moving in to Concord to occupy niches vacated by vanished plants, and whether they come from "adjacent species pools," as Willis puts it.
The scientists say their research demonstrates the importance of simply watching the landscape and recording what occurs in it. And it demonstrates the importance of old records and natural history collections, Davis said. But in general, he said, there is little interest in devoting money, time and space to their preservation.
"It's hard to defend the space on major campuses," Davis said. "Eaton could not have prepared his 'Flora' unless Harvard University had maintained herbarium specimens. Hosmer's book was here in Concord for 100 years before anyone used it."
***************
China wants more help from West on curbing emissions
Reuters
Tuesday, October 28, 2008
BEIJING: China wants rich countries to commit 1 percent of their economic worth to help poor nations fight global warming and will press for a new international mechanism to spread "green" technology worldwide.
Unveiling the proposals on Tuesday, a senior Chinese official for climate change policy, Gao Guangsheng, said the global financial turmoil should not deter developed countries from increasing their contributions of funds and technology to poor nations.
"Developing countries should take action, but a prerequisite for this action is that developed countries provide funds and transfer technology," Gao said at a news conference.
Gao said current funds to help fight climate change are "virtually nothing." He said China would detail its proposal at a conference next week that will assemble representatives from the United States, Europe and many rich and poor countries.
Gao is the chief of the climate change office in the National Development and Reform Commission, a super-ministry steering Chinese economic policy. His call may signal that Beijing wants to take a more active role in climate change talks.
Carbon dioxide and other greenhouse gases from burning fossil fuels, felling forests and farming are trapping growing levels of solar radiation in the atmosphere, which may result in dangerous rises in average global temperatures.
China, with 1.3 billion people, a fast-growing economy and bulging exports, has pushed its emissions of greenhouse gases above those of the United States, which had long been the world's biggest emitter, according to many experts.
But under the Kyoto Protocol, China and other Third World economies have no required goals to contain emissions.
Washington has refused to ratify the Kyoto pact, saying that the lack of caps on China and other big developing emitters make it ineffective. Many foreign officials and experts say that in a new pact, which is the subject of ongoing talks sponsored by the United Nations, China should accept some binding goals.
These pressures put China at the heart of the accelerating negotiations for a treaty to replace the current Kyoto pact, which expires in 2012. Those negotiations culminate in Copenhagen late next year.
Gao indicated that in those talks China would not only resist calls for it to accept emissions targets, but would also press its demand for a huge increase in the flow of technology and funds to China and other developing nations.
Current climate change agreements provide for funds for technology and adaptation steps. But Chinese officials have long said that their country's ability to cut carbon dioxide, the main greenhouse gas from power plants, factories and vehicles, is hampered by a lack of promised technology from wealthy Western nations.
"The present mechanism is unsuited to the needs of addressing climate change," Gao said. "Developed countries have not carried out their relevant commitments."
Western officials and experts have attributed the delays to worries about patent theft and sacrificed competitiveness. Some have also said China's demands for technology transfers have been too vague to negotiate.
Gao said China's proposal would address those worries and offer stronger protection for intellectual property.
At the two-day conference starting Friday, Prime Minister Wen Jiabao will give a keynote speech, underscoring the seriousness of the government's technology demands, Gao said.
On Wednesday, China is to issue a report detailing its policies and concerns on climate change.
http://www.iht.com/articles/2008/10/28/business/green.php
Reuters
Tuesday, October 28, 2008
BEIJING: China wants rich countries to commit 1 percent of their economic worth to help poor nations fight global warming and will press for a new international mechanism to spread "green" technology worldwide.
Unveiling the proposals on Tuesday, a senior Chinese official for climate change policy, Gao Guangsheng, said the global financial turmoil should not deter developed countries from increasing their contributions of funds and technology to poor nations.
"Developing countries should take action, but a prerequisite for this action is that developed countries provide funds and transfer technology," Gao said at a news conference.
Gao said current funds to help fight climate change are "virtually nothing." He said China would detail its proposal at a conference next week that will assemble representatives from the United States, Europe and many rich and poor countries.
Gao is the chief of the climate change office in the National Development and Reform Commission, a super-ministry steering Chinese economic policy. His call may signal that Beijing wants to take a more active role in climate change talks.
Carbon dioxide and other greenhouse gases from burning fossil fuels, felling forests and farming are trapping growing levels of solar radiation in the atmosphere, which may result in dangerous rises in average global temperatures.
China, with 1.3 billion people, a fast-growing economy and bulging exports, has pushed its emissions of greenhouse gases above those of the United States, which had long been the world's biggest emitter, according to many experts.
But under the Kyoto Protocol, China and other Third World economies have no required goals to contain emissions.
Washington has refused to ratify the Kyoto pact, saying that the lack of caps on China and other big developing emitters make it ineffective. Many foreign officials and experts say that in a new pact, which is the subject of ongoing talks sponsored by the United Nations, China should accept some binding goals.
These pressures put China at the heart of the accelerating negotiations for a treaty to replace the current Kyoto pact, which expires in 2012. Those negotiations culminate in Copenhagen late next year.
Gao indicated that in those talks China would not only resist calls for it to accept emissions targets, but would also press its demand for a huge increase in the flow of technology and funds to China and other developing nations.
Current climate change agreements provide for funds for technology and adaptation steps. But Chinese officials have long said that their country's ability to cut carbon dioxide, the main greenhouse gas from power plants, factories and vehicles, is hampered by a lack of promised technology from wealthy Western nations.
"The present mechanism is unsuited to the needs of addressing climate change," Gao said. "Developed countries have not carried out their relevant commitments."
Western officials and experts have attributed the delays to worries about patent theft and sacrificed competitiveness. Some have also said China's demands for technology transfers have been too vague to negotiate.
Gao said China's proposal would address those worries and offer stronger protection for intellectual property.
At the two-day conference starting Friday, Prime Minister Wen Jiabao will give a keynote speech, underscoring the seriousness of the government's technology demands, Gao said.
On Wednesday, China is to issue a report detailing its policies and concerns on climate change.
http://www.iht.com/articles/2008/10/28/business/green.php
****************
Reducing carbon emissions no easy task for Europe
By Matthew Saltmarsh
Tuesday, October 28, 2008
PARIS: Weakening growth, huge investment needs and a highly contentious policy framework are just a few of the reasons why European Union member states may not get close to their goals for reducing carbon emissions in the next decade or so.
As industrialization worsens pollution across the planet - the International Energy Agency, in Paris, forecasts a 50 percent rise in emissions by 2030 - Europe has laudably tried to take a lead in finding a solution.
In March 2007, months before the first cracks in the financial system appeared, EU members pledged themselves to a set of ambitious targets to be reached by 2020: to cut their greenhouse gas emissions 20 percent from 1990 levels; to obtain 20 percent of their primary energy from renewable sources, up from 6 percent in 2005; and to cut energy consumption 20 percent. The hope is to draw the United States and others into a broad international program at UN climate change talks in Copenhagen next year to agree on a successor to the Kyoto Protocol, which expires in 2012.
But Dieter Helm, a professor at Oxford University, described the 2020 targets as "political rhetoric" to give the union a veneer of leadership before the Copenhagen meeting. Europe's partners will not be naïve enough to believe the commitments, making it "a very odd way to begin negotiations," he said.
Naïveté aside, the 2020 targets, which incorporate commitments by individual countries, face a mounting list of problems. One immediate issue is cost.
"The public is convinced the plan is needed, and it will proceed in one way or another," said Colette Lewiner, head of the energy practice at the French consulting firm Capgemini. "But the goals are unrealistic because of the investments needed and the lack of real support from some governments."
The price tag is hard to estimate because of subsidies and the fact that some private investment will eventually be clawed back. As a starting point, the IEA said over the summer that $45 trillion might be needed globally over the next half-century to prevent energy shortages and greenhouse gas emissions from undermining growth. A report sponsored by the European Commission in March forecast that reaching the 2020 goal would require €672 billion, or $853 billion.
"For many of the countries the costs will be enormous," Helm said. Latvia, Sweden, Finland and Austria were already meeting 20 percent of their energy requirements from renewable sources in 2005, the latest year for which the commission has published data, but in Britain, the Netherlands and Belgium, the figure was less than 3 percent; in Germany, it was 4.8 percent; Italy, Spain and France were around 6 percent.
"Britain is further behind than most, and it will be very expensive for them to support renewables on the scale envisaged," said Helm, who is advising the British government on the matter. In June, Ernst & Young, the consulting firm, said that to meet the commitments, British customer bills would rise 20 percent, excluding inflation, by 2020 "and probably much more," as utilities pass on the additional costs to clients. Such a rise would swell the numbers of people unable to afford adequate heating, a state known as "fuel poverty."
Lewiner forecast that French electricity bills would rise 10 percent by 2020 if the country achieved compliance.
A long, deep recession might help fulfill part of the commitment - cutting emissions in the West amid declining output and weak consumption - but the credit crisis and its industrial consequences could actually work against the goals.
The economic squeeze will make it more difficult to finance large projects, like new wind farms, in the next few years, a crucial period if projects are to become operational before 2020. And more worrying, economic trends could also mean heavier reliance on coal.
"A credit-crunch-induced recession implies lower emissions over 2008 to 2010 but also higher coal-fired electricity output over the entire 2008 to 2020 period as planned investments in new capacity are put on hold," Mark Lewis, an analyst at Deutsche Bank, said in a recent report.
The share of highly polluting coal as a global energy source is already increasing. High oil and natural gas prices, though down since the summer, have encouraged a switch to less costly and plentiful coal in India and China.
The U.S. Energy Information Administration forecasts that coal's share of world energy production will climb to 29 percent in 2030 from 27 percent in 2005, with 80 percent of the expected increase coming from India and China.
Coal is "the fuel of choice around the world," Helm said. "You either solve the coal pollution problem or force China to close down its plants."
Alternative energy technologies are nowhere near reaching the scale required to become real substitutes: "Wind farms on the Outer Hebrides aren't going to scratch the surface," Helm said, referring to the island chain off the west coast of Scotland. Moreover, wind power, which is the renewable energy source of choice for some European countries, must be backed by coal and natural gas because it is unreliable.
Many, including the IEA, now see a solution in equipping coal power plants with technology to capture and sequester carbon dioxide. The technology, known as CCS, captures emissions, compresses them and pipes them into underground storage, probably in a depleted oil or natural gas field. Hope is being placed on a pilot project by Vattenfall of Sweden at a coal plant in Lausitz, Germany. And yet CCS plays no real part in the EU's 2020 goals.
Another problem for the EU is that the oil majors are proving reluctant partners. Royal Dutch Shell recently said that it was reviewing participation in the Cirrus Shell Flat Array in England, the world's largest proposed offshore wind farm. "The real profits are years into the future, and they have to pay dividends next year," Helm said. That runs counter to government's need for heavy investment now.
Utilities like RWE, E.ON, Dong, EDF and Iberdrola, with a direct stake in electricity provision, have shown more interest and made significant investments. Still, Helm said, they need "a regulatory regime that will ensure that they get their costs back - and that's not necessarily there."
Meanwhile, political squabbling has begun. At a meeting in October, some leaders, notably from Italy and Poland, threatened to scupper the EU targets unless their industries were given more favorable treatment.
France, a nuclear leader, has lobbied for targets to be "noncarbon" rather than renewable, which would allow the inclusion of atomic energy. That effort was blocked by Germany in 2007 in a move that now looks outdated.
"What we need is a low-carbon option, not just renewables, and that means you have to bring nuclear power into the equation," Helm said.
Similar political divisions have obliged the EU planners to skirt the issue of whether to apply carbon taxes on products derived from polluting industries.
A carbon tax might at least reinforce the EU's existing emissions trading program, introduced in 2005 and now in its second phase of development, which enables companies with high abatement costs to trade allowances with businesses where those costs are lower. Experience with the system has raised questions about permit allocation and possible price manipulation. Still, it has had the merit of creating a price for the credits and should eventually increase the cost of fossil fuel power, encouraging fuel efficiency. Trade in carbon credits reached €45 billion last year, three times more than in 2006, according to Capgemini, and the system is due to be extended to include a broader ranger of polluting industries in a third stage from 2013 to 2020.
"Governments need money, and many tax ideas will be well received, but the real question is what to do with the money from a tax," Lewiner said. "Are you developing cleantech in Europe or paying down government deficits? Or both?"
Whatever the outcome of the argument over taxes, all the renewable technologies being pursued present huge challenges.
In Britain, for example, wind is seen as an important part of the solution: To reach the target of generating 20 percent of energy from renewable sources, 25 percent to 40 percent of the country's electricity would have to come from wind by 2020, Helm estimates. That would require an increase of 30 percent to 35 percent from current levels, delivered in just 11 years.
Aside from the financial challenge, there are turbine supply constraints, tussles over the siting of wind farms and grid integration concerns. Some companies in Scotland have been told to join a 13-year waiting list and to deposit millions of pounds while waiting to be connected, according to local news reports.
Solar electric power, meanwhile, is still at an early stage of development. Using photovoltaic cells to convert solar energy into electricity has merits, particularly for rooftop water heating. But recently, share prices for solar companies tumbled on fears that demand would shrink and that panel prices would slip after Spain and Germany, the largest markets, scaled back government subsidies. Madrid in particular cut the preferential tariff rate paid to solar energy generators, saying the sector had already surpassed capacity targets set for 2010.
Conventional hydroelectric power is a mature technology, although wave and tidal technologies are still nascent. Norway, France, Sweden and Italy have the largest total installed capacity and could expand. But growth will be limited by environmental opposition to using the few remaining untouched rivers and by falling water tables in many regions.
Likewise, the expansion of biofuels has run into hurdles, with ethanol production in particular linked to rising food prices and environmental damage.
Regardless of what Europe does, the real issue to be debated at the Copenhagen meeting and beyond is whether China and India can agree on binding caps, and whether Washington can be tempted to participate in a significant deal. Without that broad buy-in, European leaders may face heavy pressure from consumers and taxpayers to rethink their goals.
By Matthew Saltmarsh
Tuesday, October 28, 2008
PARIS: Weakening growth, huge investment needs and a highly contentious policy framework are just a few of the reasons why European Union member states may not get close to their goals for reducing carbon emissions in the next decade or so.
As industrialization worsens pollution across the planet - the International Energy Agency, in Paris, forecasts a 50 percent rise in emissions by 2030 - Europe has laudably tried to take a lead in finding a solution.
In March 2007, months before the first cracks in the financial system appeared, EU members pledged themselves to a set of ambitious targets to be reached by 2020: to cut their greenhouse gas emissions 20 percent from 1990 levels; to obtain 20 percent of their primary energy from renewable sources, up from 6 percent in 2005; and to cut energy consumption 20 percent. The hope is to draw the United States and others into a broad international program at UN climate change talks in Copenhagen next year to agree on a successor to the Kyoto Protocol, which expires in 2012.
But Dieter Helm, a professor at Oxford University, described the 2020 targets as "political rhetoric" to give the union a veneer of leadership before the Copenhagen meeting. Europe's partners will not be naïve enough to believe the commitments, making it "a very odd way to begin negotiations," he said.
Naïveté aside, the 2020 targets, which incorporate commitments by individual countries, face a mounting list of problems. One immediate issue is cost.
"The public is convinced the plan is needed, and it will proceed in one way or another," said Colette Lewiner, head of the energy practice at the French consulting firm Capgemini. "But the goals are unrealistic because of the investments needed and the lack of real support from some governments."
The price tag is hard to estimate because of subsidies and the fact that some private investment will eventually be clawed back. As a starting point, the IEA said over the summer that $45 trillion might be needed globally over the next half-century to prevent energy shortages and greenhouse gas emissions from undermining growth. A report sponsored by the European Commission in March forecast that reaching the 2020 goal would require €672 billion, or $853 billion.
"For many of the countries the costs will be enormous," Helm said. Latvia, Sweden, Finland and Austria were already meeting 20 percent of their energy requirements from renewable sources in 2005, the latest year for which the commission has published data, but in Britain, the Netherlands and Belgium, the figure was less than 3 percent; in Germany, it was 4.8 percent; Italy, Spain and France were around 6 percent.
"Britain is further behind than most, and it will be very expensive for them to support renewables on the scale envisaged," said Helm, who is advising the British government on the matter. In June, Ernst & Young, the consulting firm, said that to meet the commitments, British customer bills would rise 20 percent, excluding inflation, by 2020 "and probably much more," as utilities pass on the additional costs to clients. Such a rise would swell the numbers of people unable to afford adequate heating, a state known as "fuel poverty."
Lewiner forecast that French electricity bills would rise 10 percent by 2020 if the country achieved compliance.
A long, deep recession might help fulfill part of the commitment - cutting emissions in the West amid declining output and weak consumption - but the credit crisis and its industrial consequences could actually work against the goals.
The economic squeeze will make it more difficult to finance large projects, like new wind farms, in the next few years, a crucial period if projects are to become operational before 2020. And more worrying, economic trends could also mean heavier reliance on coal.
"A credit-crunch-induced recession implies lower emissions over 2008 to 2010 but also higher coal-fired electricity output over the entire 2008 to 2020 period as planned investments in new capacity are put on hold," Mark Lewis, an analyst at Deutsche Bank, said in a recent report.
The share of highly polluting coal as a global energy source is already increasing. High oil and natural gas prices, though down since the summer, have encouraged a switch to less costly and plentiful coal in India and China.
The U.S. Energy Information Administration forecasts that coal's share of world energy production will climb to 29 percent in 2030 from 27 percent in 2005, with 80 percent of the expected increase coming from India and China.
Coal is "the fuel of choice around the world," Helm said. "You either solve the coal pollution problem or force China to close down its plants."
Alternative energy technologies are nowhere near reaching the scale required to become real substitutes: "Wind farms on the Outer Hebrides aren't going to scratch the surface," Helm said, referring to the island chain off the west coast of Scotland. Moreover, wind power, which is the renewable energy source of choice for some European countries, must be backed by coal and natural gas because it is unreliable.
Many, including the IEA, now see a solution in equipping coal power plants with technology to capture and sequester carbon dioxide. The technology, known as CCS, captures emissions, compresses them and pipes them into underground storage, probably in a depleted oil or natural gas field. Hope is being placed on a pilot project by Vattenfall of Sweden at a coal plant in Lausitz, Germany. And yet CCS plays no real part in the EU's 2020 goals.
Another problem for the EU is that the oil majors are proving reluctant partners. Royal Dutch Shell recently said that it was reviewing participation in the Cirrus Shell Flat Array in England, the world's largest proposed offshore wind farm. "The real profits are years into the future, and they have to pay dividends next year," Helm said. That runs counter to government's need for heavy investment now.
Utilities like RWE, E.ON, Dong, EDF and Iberdrola, with a direct stake in electricity provision, have shown more interest and made significant investments. Still, Helm said, they need "a regulatory regime that will ensure that they get their costs back - and that's not necessarily there."
Meanwhile, political squabbling has begun. At a meeting in October, some leaders, notably from Italy and Poland, threatened to scupper the EU targets unless their industries were given more favorable treatment.
France, a nuclear leader, has lobbied for targets to be "noncarbon" rather than renewable, which would allow the inclusion of atomic energy. That effort was blocked by Germany in 2007 in a move that now looks outdated.
"What we need is a low-carbon option, not just renewables, and that means you have to bring nuclear power into the equation," Helm said.
Similar political divisions have obliged the EU planners to skirt the issue of whether to apply carbon taxes on products derived from polluting industries.
A carbon tax might at least reinforce the EU's existing emissions trading program, introduced in 2005 and now in its second phase of development, which enables companies with high abatement costs to trade allowances with businesses where those costs are lower. Experience with the system has raised questions about permit allocation and possible price manipulation. Still, it has had the merit of creating a price for the credits and should eventually increase the cost of fossil fuel power, encouraging fuel efficiency. Trade in carbon credits reached €45 billion last year, three times more than in 2006, according to Capgemini, and the system is due to be extended to include a broader ranger of polluting industries in a third stage from 2013 to 2020.
"Governments need money, and many tax ideas will be well received, but the real question is what to do with the money from a tax," Lewiner said. "Are you developing cleantech in Europe or paying down government deficits? Or both?"
Whatever the outcome of the argument over taxes, all the renewable technologies being pursued present huge challenges.
In Britain, for example, wind is seen as an important part of the solution: To reach the target of generating 20 percent of energy from renewable sources, 25 percent to 40 percent of the country's electricity would have to come from wind by 2020, Helm estimates. That would require an increase of 30 percent to 35 percent from current levels, delivered in just 11 years.
Aside from the financial challenge, there are turbine supply constraints, tussles over the siting of wind farms and grid integration concerns. Some companies in Scotland have been told to join a 13-year waiting list and to deposit millions of pounds while waiting to be connected, according to local news reports.
Solar electric power, meanwhile, is still at an early stage of development. Using photovoltaic cells to convert solar energy into electricity has merits, particularly for rooftop water heating. But recently, share prices for solar companies tumbled on fears that demand would shrink and that panel prices would slip after Spain and Germany, the largest markets, scaled back government subsidies. Madrid in particular cut the preferential tariff rate paid to solar energy generators, saying the sector had already surpassed capacity targets set for 2010.
Conventional hydroelectric power is a mature technology, although wave and tidal technologies are still nascent. Norway, France, Sweden and Italy have the largest total installed capacity and could expand. But growth will be limited by environmental opposition to using the few remaining untouched rivers and by falling water tables in many regions.
Likewise, the expansion of biofuels has run into hurdles, with ethanol production in particular linked to rising food prices and environmental damage.
Regardless of what Europe does, the real issue to be debated at the Copenhagen meeting and beyond is whether China and India can agree on binding caps, and whether Washington can be tempted to participate in a significant deal. Without that broad buy-in, European leaders may face heavy pressure from consumers and taxpayers to rethink their goals.
***************
WWF says reckless consumption threatens the planet
Reuters
Wednesday, October 29, 2008
By Laura MacInnis
The Earth's natural resources are being depleted so quickly that "two planets" would be required to sustain current lifestyles within a generation, the conservation group WWF said on Wednesday.
The Swiss-based WWF, also known as the World Wildlife Fund, said in its latest Living Planet Report that more than three quarters of the world's population lives in countries whose consumption levels are outstripping environmental renewal.
Its Living Planet Report concluded that reckless consumption of "natural capital" was endangering the world's future prosperity, with clear economic impacts including high costs for food, water and energy.
"If our demands on the planet continue to increase at the same rate, by the mid-2030s we would need the equivalent of two planets to maintain our lifestyles," said WWF International Director-General James Leape.
Jonathan Loh of the Zoological Society of London said the dramatic ecological losses from pollution, deforestation, over-fishing and land conversion were having serious impacts.
"We are acting ecologically in the same way as financial institutions have been behaving economically -- seeking immediate gratification without due regard for the consequences," Loh said in a statement accompanying the report.
"The consequences of a global ecological crisis are even graver than the current economic meltdown," he said.
The report said the world's global environmental "footprint" or depletion rate now exceeds the planet's capacity to regenerate by 30 percent. On a per-country basis, the United States and China have the largest footprints, the WWF said.
The United States and Australia rank among the five countries with the largest footprints per person, along with the United Arab Emirates, Kuwait and Denmark.
The lowest five are Bangladesh, Congo, Haiti, Afghanistan and Malawi, WWF said. Regionally, only non-EU Europe, Africa, Latin America and the Caribbean remain within their "biocapacity."
Emissions from fossil fuels -- which would be targeted under a successor to the Kyoto climate change accord -- were among the top culprits cited by WWF for the big demands on the planet.
The WWF's Leape said world leaders needed to put ecological concerns at the top of their agenda and ensure the environment is factored into all decisions about consumption, development, trade, agriculture and fisheries management.
"If humanity has the will, it has the ways to live within the means of the planet, but we must recognise that the ecological credit crunch will require even bolder action than that now being mustered for the financial crisis," Leape said.
(Editing by Jon Boyle)
Reuters
Wednesday, October 29, 2008
By Laura MacInnis
The Earth's natural resources are being depleted so quickly that "two planets" would be required to sustain current lifestyles within a generation, the conservation group WWF said on Wednesday.
The Swiss-based WWF, also known as the World Wildlife Fund, said in its latest Living Planet Report that more than three quarters of the world's population lives in countries whose consumption levels are outstripping environmental renewal.
Its Living Planet Report concluded that reckless consumption of "natural capital" was endangering the world's future prosperity, with clear economic impacts including high costs for food, water and energy.
"If our demands on the planet continue to increase at the same rate, by the mid-2030s we would need the equivalent of two planets to maintain our lifestyles," said WWF International Director-General James Leape.
Jonathan Loh of the Zoological Society of London said the dramatic ecological losses from pollution, deforestation, over-fishing and land conversion were having serious impacts.
"We are acting ecologically in the same way as financial institutions have been behaving economically -- seeking immediate gratification without due regard for the consequences," Loh said in a statement accompanying the report.
"The consequences of a global ecological crisis are even graver than the current economic meltdown," he said.
The report said the world's global environmental "footprint" or depletion rate now exceeds the planet's capacity to regenerate by 30 percent. On a per-country basis, the United States and China have the largest footprints, the WWF said.
The United States and Australia rank among the five countries with the largest footprints per person, along with the United Arab Emirates, Kuwait and Denmark.
The lowest five are Bangladesh, Congo, Haiti, Afghanistan and Malawi, WWF said. Regionally, only non-EU Europe, Africa, Latin America and the Caribbean remain within their "biocapacity."
Emissions from fossil fuels -- which would be targeted under a successor to the Kyoto climate change accord -- were among the top culprits cited by WWF for the big demands on the planet.
The WWF's Leape said world leaders needed to put ecological concerns at the top of their agenda and ensure the environment is factored into all decisions about consumption, development, trade, agriculture and fisheries management.
"If humanity has the will, it has the ways to live within the means of the planet, but we must recognise that the ecological credit crunch will require even bolder action than that now being mustered for the financial crisis," Leape said.
(Editing by Jon Boyle)
How U.S. candidates differ on energy policy
By Erica Gies
Tuesday, October 28, 2008
SAN FRANCISCO: High energy prices and growing awareness of climate change have made energy policy a major issue in the U.S. presidential election, closely tied to voters' main concern: the staggering economy.
The platform of the Republican nominee, Senator John McCain, leans toward traditional energy supplies and market-based solutions, while the plan of the Democratic nominee, Senator Barack Obama, would change course on energy sourcing and require greater government participation.
The League of Conservation Voters, an environmental advocacy group that rates politicians based on their votes, is backing Obama because he has voted in line with its interests 86 percent of the time, versus 24 percent for McCain.
"Barack Obama has put out a plan that is visionary," said Tim Greeff, the league's deputy legislative director, referring to Obama's energy proposals.
Obama's proposed overhaul of the energy sector would generate economic growth and new jobs, he said, a particularly potent message to voters reeling from rising unemployment, record home foreclosures and banking failures. Part of Obama's $150 billion, 10-year plan would support modernizing manufacturing centers and retraining the manufacturing workforce to do five million greener jobs, from building and installing new energy technology to weatherizing existing buildings.
Obama would finance these programs by auctioning off 100 percent of pollution credits under a new a cap and trade program. McCain also favors such a program but would give away credits at first. Critics of McCain's proposal say that it would reward polluters and delay greenhouse gas reductions, while supporters say his approach is economically realistic.
The McCain plan offers deferments for economic efficiency and duress. David Owens, executive vice president of the Edison Electric Institute, an international trade association for privately owned electric utility companies, calls the approach pragmatic.
"You're not really weakening your ultimate goal because what you're trying to do is balance the impact on the economy as well as the goal of reducing greenhouse gases," Owens said.
Environmentalists say that the effect of the deferments would be to slow the reduction of greenhouse gases, undercutting any reduction target. But their far deeper concern is focused on a mechanism that has been called a safety valve, escape hatch, or price cap. It would allow polluters to buy potentially unlimited allowances if the price of carbon credits rose to a pre-determined level.
The idea of a safety valve mechanism is politically popular in Washington and could be added into either of the candidates' plans, although neither mentions it, said Severin Borenstein, director of the University of California Energy Institute.
Legislation saddled with a low-priced safety valve would not reduce emissions much, he said. Industry lobbyists, however, argue that a cap-and-trade program will not work without it.
Greeff, the conservationist, said that in general, McCain would reduce greenhouse gases while defending the economics of existing industry, while "Obama views this as an opportunity."
By amassing capital from the permit auction, Obama can "drive money into innovation and renewable technology and domestic energy production very quickly," Greeff said. "What would be a bigger economic stimulus for this country than fundamentally recreating and redesigning the way we produce energy?" he added.
Energy efficiency has long been recognized as the least costly and cleanest fastest way to reduce energy costs. Obama's plan would seek a 15 percent reduction in energy demand by 2020. New buildings would be carbon neutral by 2030, and existing buildings' efficiency would improve by 25 percent over the next decade.
Federal buildings would have more aggressive targets; and one million low-income homes would be weatherized annually. The income structure for utilities would be decoupled from volume sales to encourage efficiency rather than increase supply. An Obama administration would also invest in the electricity grid and in more sustainable communities and would require 10 percent of electricity to come from renewable sources by 2012.
McCain, too, would apply a higher efficiency standard to new federal buildings and to retrofitting existing federal buildings; but he has not set a target. He also wants to improve the grid and deploy "smart meters" to customers to help them to better understand and reduce their energy consumption.
McCain's platform proposes the introduction of a permanent tax credit for companies investing in research and development, equal to 10 percent of their wage costs; and his plan would encourage the market for wind, hydro, and solar power by offering "even-handed" tax credits until renewable energy becomes competitive.
In practice, however, his voting record does not demonstrate support for renewable energy or energy efficiency, Greeff said. "It's not enough anymore to just say you support renewable energy," he added. McCain has not taken his "thumb off the scale for coal, gas and oil, and nuclear," Greeff said.
PolitiFact.org, a nonpartisan fact-checking Web site, confirms McCain's voting record against renewable energy.
While McCain has often said that he does not believe in subsidies, he does support "incentives" for nuclear energy: he would build 45 new plants by 2030 and as many as 100 ultimately. While some climate scientists and environmentalists support nuclear power because it has no operating emissions, it is heavily subsidized and expensive.
"The reason no nuclear plants have been built in the last 30 years in this country isn't because of Three Mile Island," Greeff said, referring to the U.S. nuclear accident in 1979. "It's largely because no one can do it economically."
Obama says that nuclear power will probably be necessary to meet aggressive emissions reduction goals; but before expanding the sector, he says, waste storage, security of materials, and proliferation must be addressed.
Amory Lovins, chairman and chief scientist of Rocky Mountain Institute, an organization that researches and promotes market-based energy solutions, said nuclear investment was not necessary to combat climate change.
"Just the opposite is true," Lovins said. "Nuclear investment reduces and retards climate protection." Supporting nuclear would reduce greenhouse gases "roughly 20 to 40 times slower than if you spent the same dollar buying efficiency and micropower," he said
In addition, building a 1,000 megawatt nuclear plant is energy intensive. It takes 10 to 15 years of operation just to recover the energy expended in construction, said Matt Simmons, chairman of Simmons and Company, an energy investment banking firm.
Simmons supports the U.S. pursuit of nuclear power, but he said 45 to 100 new plants was not a realistic target. Aside from the high economic and energy investment, other issues would slow progress, he said. Most U.S. nuclear engineers have retired since the industry's stagnation began. And yellowcake uranium is also in short supply, so existing U.S. plants reprocess mine tailings and weapons-grade materials.
"If we tried to build 45 more plants, we'd have a tremendously tough time figuring out how to fuel them," Simmons said.
Both candidates support "clean coal," a term derided by environmentalists, and by Simmons, as an oxymoron. To further confuse the issue, clean coal can mean reducing emissions on existing plants or carbon capture and storage, known as CCS, a technology that separates carbon dioxide from the coal and injects it underground for long-term storage, but it is not yet commercially available.
Obama has been criticized by some in his own party who have suggested that his position may reflect the influence of the strong coal lobby in Illinois, his home state.
McCain and Obama, however, say that continuing use of coal is an unavoidable reality, particularly in the United States and China, both of which have vast reserves. Therefore, cleaning up coal should be a priority.
Owens, the utility association executive, agrees. "I cannot envision a scenario over the next 20 to 30 years where there will not be increased reliance on coal," he said.
McCain wants to give $2 billion a year to research and development of carbon capture and storage. Obama wants the Energy Department to develop five commercial-scale CCS plants through public-private partnerships.
A recent report from management consulting firm McKinsey suggests that commercial CCS technology is more than 20 years away. Simmons said it could be done more rapidly, particularly if plenty of money is poured into research and development. But he called McCain's proposal "a drop in the bucket."
Both candidates support expanded oil drilling, although Obama couches it as a political compromise. Specifically, Obama would prioritize drilling in existing oil leases rather than new areas on the Outer Continental Shelf. PolitiFact, though, says there may not be as many unused leases available as Obama asserts.
In recent months, McCain has come out strongly in support of drilling on the shelf. His campaign has also espoused a general enthusiasm for drilling that has led to false claims, according to economic and energy experts, who dispute the assertion that drilling would quickly reduce gasoline prices and lead to American energy independence.
Proven oil reserves in the United States are just 1.8 percent of the world's total, while Americans used 24 percent of world production in 2007, according to the Energy Information Administration.
Oil extracted by multinational companies in the United States, moreover, does not go to American consumers but rather into the world oil market.
"The idea that it's our oil if we drill for it shows a complete misunderstanding of world oil markets," said Borenstein, the energy institute director. The world market context also prompts him to dispute Obama's position that speculation has driven up the price of oil.
Simmons is a longtime supporter of increased drilling; but he said searching for oil and dealing with likely lawsuits about specific drilling locations would be lengthy pursuits. Also, an acute shortage of offshore drilling rigs worldwide would retard progress. Bringing oil from new sources to market would very likely take 20 to 25 years, he said.
Recent Republican administrations have already demonstrated the fallacy of the drilling philosophy, said Greeff, the environmental advocate.
"Under the Bush administration, the amount of leases for new land to drill on has increased 361 percent," he said. "The amount of drilling has doubled. And yet prices have gone up over 300 percent during his eight years in office."
By Erica Gies
Tuesday, October 28, 2008
SAN FRANCISCO: High energy prices and growing awareness of climate change have made energy policy a major issue in the U.S. presidential election, closely tied to voters' main concern: the staggering economy.
The platform of the Republican nominee, Senator John McCain, leans toward traditional energy supplies and market-based solutions, while the plan of the Democratic nominee, Senator Barack Obama, would change course on energy sourcing and require greater government participation.
The League of Conservation Voters, an environmental advocacy group that rates politicians based on their votes, is backing Obama because he has voted in line with its interests 86 percent of the time, versus 24 percent for McCain.
"Barack Obama has put out a plan that is visionary," said Tim Greeff, the league's deputy legislative director, referring to Obama's energy proposals.
Obama's proposed overhaul of the energy sector would generate economic growth and new jobs, he said, a particularly potent message to voters reeling from rising unemployment, record home foreclosures and banking failures. Part of Obama's $150 billion, 10-year plan would support modernizing manufacturing centers and retraining the manufacturing workforce to do five million greener jobs, from building and installing new energy technology to weatherizing existing buildings.
Obama would finance these programs by auctioning off 100 percent of pollution credits under a new a cap and trade program. McCain also favors such a program but would give away credits at first. Critics of McCain's proposal say that it would reward polluters and delay greenhouse gas reductions, while supporters say his approach is economically realistic.
The McCain plan offers deferments for economic efficiency and duress. David Owens, executive vice president of the Edison Electric Institute, an international trade association for privately owned electric utility companies, calls the approach pragmatic.
"You're not really weakening your ultimate goal because what you're trying to do is balance the impact on the economy as well as the goal of reducing greenhouse gases," Owens said.
Environmentalists say that the effect of the deferments would be to slow the reduction of greenhouse gases, undercutting any reduction target. But their far deeper concern is focused on a mechanism that has been called a safety valve, escape hatch, or price cap. It would allow polluters to buy potentially unlimited allowances if the price of carbon credits rose to a pre-determined level.
The idea of a safety valve mechanism is politically popular in Washington and could be added into either of the candidates' plans, although neither mentions it, said Severin Borenstein, director of the University of California Energy Institute.
Legislation saddled with a low-priced safety valve would not reduce emissions much, he said. Industry lobbyists, however, argue that a cap-and-trade program will not work without it.
Greeff, the conservationist, said that in general, McCain would reduce greenhouse gases while defending the economics of existing industry, while "Obama views this as an opportunity."
By amassing capital from the permit auction, Obama can "drive money into innovation and renewable technology and domestic energy production very quickly," Greeff said. "What would be a bigger economic stimulus for this country than fundamentally recreating and redesigning the way we produce energy?" he added.
Energy efficiency has long been recognized as the least costly and cleanest fastest way to reduce energy costs. Obama's plan would seek a 15 percent reduction in energy demand by 2020. New buildings would be carbon neutral by 2030, and existing buildings' efficiency would improve by 25 percent over the next decade.
Federal buildings would have more aggressive targets; and one million low-income homes would be weatherized annually. The income structure for utilities would be decoupled from volume sales to encourage efficiency rather than increase supply. An Obama administration would also invest in the electricity grid and in more sustainable communities and would require 10 percent of electricity to come from renewable sources by 2012.
McCain, too, would apply a higher efficiency standard to new federal buildings and to retrofitting existing federal buildings; but he has not set a target. He also wants to improve the grid and deploy "smart meters" to customers to help them to better understand and reduce their energy consumption.
McCain's platform proposes the introduction of a permanent tax credit for companies investing in research and development, equal to 10 percent of their wage costs; and his plan would encourage the market for wind, hydro, and solar power by offering "even-handed" tax credits until renewable energy becomes competitive.
In practice, however, his voting record does not demonstrate support for renewable energy or energy efficiency, Greeff said. "It's not enough anymore to just say you support renewable energy," he added. McCain has not taken his "thumb off the scale for coal, gas and oil, and nuclear," Greeff said.
PolitiFact.org, a nonpartisan fact-checking Web site, confirms McCain's voting record against renewable energy.
While McCain has often said that he does not believe in subsidies, he does support "incentives" for nuclear energy: he would build 45 new plants by 2030 and as many as 100 ultimately. While some climate scientists and environmentalists support nuclear power because it has no operating emissions, it is heavily subsidized and expensive.
"The reason no nuclear plants have been built in the last 30 years in this country isn't because of Three Mile Island," Greeff said, referring to the U.S. nuclear accident in 1979. "It's largely because no one can do it economically."
Obama says that nuclear power will probably be necessary to meet aggressive emissions reduction goals; but before expanding the sector, he says, waste storage, security of materials, and proliferation must be addressed.
Amory Lovins, chairman and chief scientist of Rocky Mountain Institute, an organization that researches and promotes market-based energy solutions, said nuclear investment was not necessary to combat climate change.
"Just the opposite is true," Lovins said. "Nuclear investment reduces and retards climate protection." Supporting nuclear would reduce greenhouse gases "roughly 20 to 40 times slower than if you spent the same dollar buying efficiency and micropower," he said
In addition, building a 1,000 megawatt nuclear plant is energy intensive. It takes 10 to 15 years of operation just to recover the energy expended in construction, said Matt Simmons, chairman of Simmons and Company, an energy investment banking firm.
Simmons supports the U.S. pursuit of nuclear power, but he said 45 to 100 new plants was not a realistic target. Aside from the high economic and energy investment, other issues would slow progress, he said. Most U.S. nuclear engineers have retired since the industry's stagnation began. And yellowcake uranium is also in short supply, so existing U.S. plants reprocess mine tailings and weapons-grade materials.
"If we tried to build 45 more plants, we'd have a tremendously tough time figuring out how to fuel them," Simmons said.
Both candidates support "clean coal," a term derided by environmentalists, and by Simmons, as an oxymoron. To further confuse the issue, clean coal can mean reducing emissions on existing plants or carbon capture and storage, known as CCS, a technology that separates carbon dioxide from the coal and injects it underground for long-term storage, but it is not yet commercially available.
Obama has been criticized by some in his own party who have suggested that his position may reflect the influence of the strong coal lobby in Illinois, his home state.
McCain and Obama, however, say that continuing use of coal is an unavoidable reality, particularly in the United States and China, both of which have vast reserves. Therefore, cleaning up coal should be a priority.
Owens, the utility association executive, agrees. "I cannot envision a scenario over the next 20 to 30 years where there will not be increased reliance on coal," he said.
McCain wants to give $2 billion a year to research and development of carbon capture and storage. Obama wants the Energy Department to develop five commercial-scale CCS plants through public-private partnerships.
A recent report from management consulting firm McKinsey suggests that commercial CCS technology is more than 20 years away. Simmons said it could be done more rapidly, particularly if plenty of money is poured into research and development. But he called McCain's proposal "a drop in the bucket."
Both candidates support expanded oil drilling, although Obama couches it as a political compromise. Specifically, Obama would prioritize drilling in existing oil leases rather than new areas on the Outer Continental Shelf. PolitiFact, though, says there may not be as many unused leases available as Obama asserts.
In recent months, McCain has come out strongly in support of drilling on the shelf. His campaign has also espoused a general enthusiasm for drilling that has led to false claims, according to economic and energy experts, who dispute the assertion that drilling would quickly reduce gasoline prices and lead to American energy independence.
Proven oil reserves in the United States are just 1.8 percent of the world's total, while Americans used 24 percent of world production in 2007, according to the Energy Information Administration.
Oil extracted by multinational companies in the United States, moreover, does not go to American consumers but rather into the world oil market.
"The idea that it's our oil if we drill for it shows a complete misunderstanding of world oil markets," said Borenstein, the energy institute director. The world market context also prompts him to dispute Obama's position that speculation has driven up the price of oil.
Simmons is a longtime supporter of increased drilling; but he said searching for oil and dealing with likely lawsuits about specific drilling locations would be lengthy pursuits. Also, an acute shortage of offshore drilling rigs worldwide would retard progress. Bringing oil from new sources to market would very likely take 20 to 25 years, he said.
Recent Republican administrations have already demonstrated the fallacy of the drilling philosophy, said Greeff, the environmental advocate.
"Under the Bush administration, the amount of leases for new land to drill on has increased 361 percent," he said. "The amount of drilling has doubled. And yet prices have gone up over 300 percent during his eight years in office."
**************
White House explores aid for merger between GM and Chrysler
By Edmund L. Andrews and Bill Vlasic
Tuesday, October 28, 2008
WASHINGTON: The Bush administration is examining a range of options for providing emergency financial help to spur a merger between General Motors and Chrysler, according to government officials.
People familiar with the discussions said the administration wanted to provide financial assistance to the deeply troubled Big Three Detroit automakers, possibly by using the Treasury Department's wide-ranging authority under the $700 billion bailout program that Congress approved this month.
Another option under consideration is to tap a $25 billion loan program that Congress just created to help the auto companies modernize their plants. A third option would involve going back to Congress, immediately after the Nov. 4 election, for authority to spend funds aimed specifically at the auto industry. But officials have not yet decided how much assistance to provide or how to structure any aid program.
GM and the parent of Chrysler, Cerberus Capital Management, are in talks to possibly merge the two companies, which are losing sales and hemorrhaging cash. People close to the talks said GM needs between $5 billion and $10 billion in assistance, mainly to cover GM's own needs between now and the time of the merger.
Any financial help from the government could help provide a level of confidence to investors in such a deal, and possibly cover some of the revamping costs of a merger, which would be substantial.
The government's bailout program was originally created to rescue banks and other financial institutions, but the Treasury Department decided last week to allow some insurance companies to participate as well.
A bailout for carmakers would be the latest in a series of government-financed rescue efforts for banks, Wall Street firms and an insurance conglomerate. While few experts dispute the car industry's troubles, rescuing them would also increase political pressure to help ailing industries like airlines and steel producers.
The automobile industry and lawmakers from Michigan are now arguing that the car companies should be included, because their financing subsidiaries, which have been starved for credit, represent an important channel for consumers to obtain loans to buy cars.
Any U.S. government help for the financing units could be used to provide car loans, which is seen as crucial to increasing car sales. Many dealers have had trouble closing sales with car buyers because of tighter lending standards.
On Monday, White House officials said the car companies might well be eligible for some sort of help under the broader financial rescue program, known as the Troubled Assets Relief Program, or TARP.
"It's clear that the automakers are dealing with a very serious situation, they have for some time," Dana Perino, the White House press secretary, told reporters on Monday.
"Automakers do have financing arms — many of them do — and it's possible that some of those financing arms could be a part of the rescue package," she continued. "We're trying to work with them as much as we can. There are some things we may or may not be able to do."
A spokesman for GM, Greg Martin, said Monday that the company had been asking the Treasury Department to extend aid to automakers as it had to other troubled industries.
"We believe the federal government should consider using all the tools available to it, including some recently enacted, to support industries that are in distress and that are essential to the U.S. economy," Martin said.
A spokeswoman for GMAC Financial Services, Gina Proia, said the auto finance operation was also seeking assistance from Treasury.
"At this point we are working with the government officials to understand the application process of TARP and other programs to determine any potential participation by GMAC," she said.
All three of the major American car companies were already struggling with slumping car sales, soaring gasoline prices and huge losses. But their financial conditions became much worse in the last two months as the credit markets became frozen, unemployment jumped sharply and the economy reached the brink of a recession.
With only a week left before the presidential election, the political and economic stakes have increased. The Republican nominee, Senator John McCain, several weeks ago abandoned hope of winning in Michigan, which has the highest unemployment rate in the country. But the collapse of a major car manufacturer would send shock waves through Indiana, Ohio and potentially other crucial states with large auto plants or suppliers.
The Treasury Department, which oversees the rescue program, warned on Monday that the car companies would not be eligible for the capital injections that the government was offering to banks and some insurance companies. Under that program, the government hopes to invest $250 billion in banks and would receive nonvoting preferred shares in exchange.
"The capital purchase program is available only to federally regulated banks and savings institutions," said Michele Davis, a spokesperson for the Treasury.
But Treasury officials did not rule out other forms of assistance. Under the law that Congress passed in early October, the Treasury Department has almost unlimited discretion to buy up any kind of assets from any kind of financial institution.
Ford and Chrysler both have financing units, mainly for the purpose of providing car loans, and those subsidiaries might qualify as financial institutions.
General Motors is in a more complicated situation, however, because it spun off 51 percent of its financing unit, the General Motors Acceptance Corp., to Cerberus, the same private-equity firm that acquired Chrysler after the breakup of DaimlerChrysler last year.
Both GM and Chrysler are in desperate need of cash to stave off possible bankruptcy filings. GM, the nation's largest automaker, lost $18.8 billion in the first six months of the year, and is burning through more than $1 billion in cash each month.
The company had $21 billion in cash as of June, but is rapidly depleting its reserves to offset declining revenues. Analysts said that at its current cash-burn rate, GM would fall below its minimum operating requirements by sometime next year.
A merger with Chrysler would give GM access to about $11.7 billion in cash that was on Chrysler's books as of June.
Talks between GM and Cerberus are continuing, and the sides are said to be committed to reaching a deal soon, according to people close to the discussions.
The failure of General Motors, the Ford Motor Company or Chrysler would have broad consequences for the economy. The companies combined employ more than 200,000 people in the United States, and indirectly support jobs for millions more Americans through their suppliers and dealerships.
If any of the three companies were to go bankrupt, it would probably leave behind huge liabilities for federal and state governments. Shortfalls in their pension plans would become the responsibility of the Pension Benefit Guaranty Corp., and its reserves are already stretched.
GM has been in merger talks since September with Chrysler's majority owner, the private equity firm Cerberus Capital Management. But the two sides have been unable so far to secure new financing from banks and other lenders, according to people with knowledge of the talks.
By Edmund L. Andrews and Bill Vlasic
Tuesday, October 28, 2008
WASHINGTON: The Bush administration is examining a range of options for providing emergency financial help to spur a merger between General Motors and Chrysler, according to government officials.
People familiar with the discussions said the administration wanted to provide financial assistance to the deeply troubled Big Three Detroit automakers, possibly by using the Treasury Department's wide-ranging authority under the $700 billion bailout program that Congress approved this month.
Another option under consideration is to tap a $25 billion loan program that Congress just created to help the auto companies modernize their plants. A third option would involve going back to Congress, immediately after the Nov. 4 election, for authority to spend funds aimed specifically at the auto industry. But officials have not yet decided how much assistance to provide or how to structure any aid program.
GM and the parent of Chrysler, Cerberus Capital Management, are in talks to possibly merge the two companies, which are losing sales and hemorrhaging cash. People close to the talks said GM needs between $5 billion and $10 billion in assistance, mainly to cover GM's own needs between now and the time of the merger.
Any financial help from the government could help provide a level of confidence to investors in such a deal, and possibly cover some of the revamping costs of a merger, which would be substantial.
The government's bailout program was originally created to rescue banks and other financial institutions, but the Treasury Department decided last week to allow some insurance companies to participate as well.
A bailout for carmakers would be the latest in a series of government-financed rescue efforts for banks, Wall Street firms and an insurance conglomerate. While few experts dispute the car industry's troubles, rescuing them would also increase political pressure to help ailing industries like airlines and steel producers.
The automobile industry and lawmakers from Michigan are now arguing that the car companies should be included, because their financing subsidiaries, which have been starved for credit, represent an important channel for consumers to obtain loans to buy cars.
Any U.S. government help for the financing units could be used to provide car loans, which is seen as crucial to increasing car sales. Many dealers have had trouble closing sales with car buyers because of tighter lending standards.
On Monday, White House officials said the car companies might well be eligible for some sort of help under the broader financial rescue program, known as the Troubled Assets Relief Program, or TARP.
"It's clear that the automakers are dealing with a very serious situation, they have for some time," Dana Perino, the White House press secretary, told reporters on Monday.
"Automakers do have financing arms — many of them do — and it's possible that some of those financing arms could be a part of the rescue package," she continued. "We're trying to work with them as much as we can. There are some things we may or may not be able to do."
A spokesman for GM, Greg Martin, said Monday that the company had been asking the Treasury Department to extend aid to automakers as it had to other troubled industries.
"We believe the federal government should consider using all the tools available to it, including some recently enacted, to support industries that are in distress and that are essential to the U.S. economy," Martin said.
A spokeswoman for GMAC Financial Services, Gina Proia, said the auto finance operation was also seeking assistance from Treasury.
"At this point we are working with the government officials to understand the application process of TARP and other programs to determine any potential participation by GMAC," she said.
All three of the major American car companies were already struggling with slumping car sales, soaring gasoline prices and huge losses. But their financial conditions became much worse in the last two months as the credit markets became frozen, unemployment jumped sharply and the economy reached the brink of a recession.
With only a week left before the presidential election, the political and economic stakes have increased. The Republican nominee, Senator John McCain, several weeks ago abandoned hope of winning in Michigan, which has the highest unemployment rate in the country. But the collapse of a major car manufacturer would send shock waves through Indiana, Ohio and potentially other crucial states with large auto plants or suppliers.
The Treasury Department, which oversees the rescue program, warned on Monday that the car companies would not be eligible for the capital injections that the government was offering to banks and some insurance companies. Under that program, the government hopes to invest $250 billion in banks and would receive nonvoting preferred shares in exchange.
"The capital purchase program is available only to federally regulated banks and savings institutions," said Michele Davis, a spokesperson for the Treasury.
But Treasury officials did not rule out other forms of assistance. Under the law that Congress passed in early October, the Treasury Department has almost unlimited discretion to buy up any kind of assets from any kind of financial institution.
Ford and Chrysler both have financing units, mainly for the purpose of providing car loans, and those subsidiaries might qualify as financial institutions.
General Motors is in a more complicated situation, however, because it spun off 51 percent of its financing unit, the General Motors Acceptance Corp., to Cerberus, the same private-equity firm that acquired Chrysler after the breakup of DaimlerChrysler last year.
Both GM and Chrysler are in desperate need of cash to stave off possible bankruptcy filings. GM, the nation's largest automaker, lost $18.8 billion in the first six months of the year, and is burning through more than $1 billion in cash each month.
The company had $21 billion in cash as of June, but is rapidly depleting its reserves to offset declining revenues. Analysts said that at its current cash-burn rate, GM would fall below its minimum operating requirements by sometime next year.
A merger with Chrysler would give GM access to about $11.7 billion in cash that was on Chrysler's books as of June.
Talks between GM and Cerberus are continuing, and the sides are said to be committed to reaching a deal soon, according to people close to the discussions.
The failure of General Motors, the Ford Motor Company or Chrysler would have broad consequences for the economy. The companies combined employ more than 200,000 people in the United States, and indirectly support jobs for millions more Americans through their suppliers and dealerships.
If any of the three companies were to go bankrupt, it would probably leave behind huge liabilities for federal and state governments. Shortfalls in their pension plans would become the responsibility of the Pension Benefit Guaranty Corp., and its reserves are already stretched.
GM has been in merger talks since September with Chrysler's majority owner, the private equity firm Cerberus Capital Management. But the two sides have been unable so far to secure new financing from banks and other lenders, according to people with knowledge of the talks.
**************
Financial aspect to Google's environmental goals grows
By Miguel Helft
Tuesday, October 28, 2008
SAN FRANCISCO: Google, the Internet search and advertising giant, is increasingly looking to the energy sector as a potential business opportunity.
From its beginning, the company has invested millions of dollars in making its own power-hungry data centers more efficient. Its philanthropic arm has made small investments in clean energy technologies.
But in recent weeks, Eric Schmidt, Google's chief executive, has hinted at the company's broad interest in the energy business. He also joined Jeffrey Immelt, General Electric's chief executive, to announce that they would collaborate on policies and technologies aimed at improving the electricity grid. The effort could include offering tools for consumers.
Meanwhile, engineers at Google are hoping to unveil soon tools that could help consumers make better decisions about their energy use.
And while the company's philanthropic unit, Google.org, has invested in clean energy start-ups like one that uses kites to harness wind power, Google is now considering large investments in projects that generate electricity from renewable sources.
"We want to make money, and we want to have impact," said Dan Reicher, director for climate change and energy initiatives at Google.org.
The timing could be off. With a recession looming and oil prices dropping, investors might pressure Google to curtail its clean energy ambitions.
Google's shares have lost more than half their value in the last year, and some analysts complain that the company has a long history of dabbling in new initiatives with mixed results. It still relies on one business — small text ads that appear next to search results and on other sites — for the bulk of its earnings.
And Google's online success does not guarantee success in the energy business.
But none of this has deterred Google from going deeper into the alternative energy business. To support its efforts, it has hired a growing number of engineers who are conducting research in renewable energy, former government energy officials, scientists and even a former NASA astronaut, whose hands-on experience with all sorts of electronic gadgets is being put to use to develop energy tools for consumers.
"They are a high-profile actor in the energy field," said Daniel Kammen, a professor in the energy and resources group at the University of California, Berkeley, and an adviser on energy to the Obama campaign. "Google is in the lead in terms of human resources as well as money."
Last year, Google unveiled an ambitious initiative called RE < href="http://www.iht.com/articles/2008/10/28/technology/28google.php">http://www.iht.com/articles/2008/10/28/technology/28google.php
By Miguel Helft
Tuesday, October 28, 2008
SAN FRANCISCO: Google, the Internet search and advertising giant, is increasingly looking to the energy sector as a potential business opportunity.
From its beginning, the company has invested millions of dollars in making its own power-hungry data centers more efficient. Its philanthropic arm has made small investments in clean energy technologies.
But in recent weeks, Eric Schmidt, Google's chief executive, has hinted at the company's broad interest in the energy business. He also joined Jeffrey Immelt, General Electric's chief executive, to announce that they would collaborate on policies and technologies aimed at improving the electricity grid. The effort could include offering tools for consumers.
Meanwhile, engineers at Google are hoping to unveil soon tools that could help consumers make better decisions about their energy use.
And while the company's philanthropic unit, Google.org, has invested in clean energy start-ups like one that uses kites to harness wind power, Google is now considering large investments in projects that generate electricity from renewable sources.
"We want to make money, and we want to have impact," said Dan Reicher, director for climate change and energy initiatives at Google.org.
The timing could be off. With a recession looming and oil prices dropping, investors might pressure Google to curtail its clean energy ambitions.
Google's shares have lost more than half their value in the last year, and some analysts complain that the company has a long history of dabbling in new initiatives with mixed results. It still relies on one business — small text ads that appear next to search results and on other sites — for the bulk of its earnings.
And Google's online success does not guarantee success in the energy business.
But none of this has deterred Google from going deeper into the alternative energy business. To support its efforts, it has hired a growing number of engineers who are conducting research in renewable energy, former government energy officials, scientists and even a former NASA astronaut, whose hands-on experience with all sorts of electronic gadgets is being put to use to develop energy tools for consumers.
"They are a high-profile actor in the energy field," said Daniel Kammen, a professor in the energy and resources group at the University of California, Berkeley, and an adviser on energy to the Obama campaign. "Google is in the lead in terms of human resources as well as money."
Last year, Google unveiled an ambitious initiative called RE < href="http://www.iht.com/articles/2008/10/28/technology/28google.php">http://www.iht.com/articles/2008/10/28/technology/28google.php
****************
Russia seeks to negotiate loans-for-oil deal with China
By Andrew Kramer
Tuesday, October 28, 2008
MOSCOW: As chances of rolling over loans with troubled Western banks dwindle in the financial crisis, Russian oil companies are negotiating multibillion dollar lines of credit from a more reliable source: the cash-rich Chinese government.
Prime Minister Wen Jiabao of China was in Moscow on Tuesday for talks with his Russian counterpart, Vladimir Putin, about a potential loan-for-oil deal that would be backed by future exports to China, Russian officials said.
If signed, the deal would mark a significant commitment from Russian companies to redirect some of their energy exports to Asia at a time when Russia's relations with the West are strained.
Few details of the proposed deal have been made public. The Russian deputy prime minister for energy, Igor Sechin, said after the talks Tuesday that "considerable" sums of money were being negotiated.
It is unclear how much oil China might receive in exchange for the credit. Plans for a pipeline to China, a spur off a trans-Siberian pipeline that is currently under construction, specify that it could carry about 300,000 barrels of oil per day.
Reuters, which first reported the Russia-China talks on Monday, cited industry sources as saying that Russian oil companies could borrow between $20 billion and $30 billion and pledge to export about two billion barrels of oil to China over the next 20 years. That would cover about 4 percent of China's oil demand.
The two countries agreed Tuesday to build the spur pipeline, which will run from the Russian town of Skovorodino to the Chinese border, at a cost of about $800 million. But in reality, the pipeline project had never been in much doubt. The terms for delivering oil through it, however, have been points of contention for some time.
A crushing need for cash by Russian oil companies that are no longer able to draw credit from Western banks seems to have brought the two countries closer to agreement. The state oil company Rosneft, for example, has about $21 billion in debt and some of its creditors are demanding early repayment.
The Russian government, which has a healthy cash reserve, has pledged $9 billion in loans to oil companies. But that pledge will not suffice to cover the whole of the debt and the financing of expansion into more expensive and remote fields in Siberia.
China, meanwhile, is awash in cash. After years of running a trade surplus with the United States, China has $1.9 trillion in currency reserves, the largest in the world.
On Tuesday, Wen and Putin also discussed reducing their reliance on the dollar, in favor of the ruble and yuan, for bilateral trade.
"At the moment, the world which is based on the dollar is suffering," said Putin, a vocal advocate of reducing the importance of the dollar in trade.
http://www.iht.com/articles/2008/10/28/europe/russia.php
Russia seeks to negotiate loans-for-oil deal with China
By Andrew Kramer
Tuesday, October 28, 2008
MOSCOW: As chances of rolling over loans with troubled Western banks dwindle in the financial crisis, Russian oil companies are negotiating multibillion dollar lines of credit from a more reliable source: the cash-rich Chinese government.
Prime Minister Wen Jiabao of China was in Moscow on Tuesday for talks with his Russian counterpart, Vladimir Putin, about a potential loan-for-oil deal that would be backed by future exports to China, Russian officials said.
If signed, the deal would mark a significant commitment from Russian companies to redirect some of their energy exports to Asia at a time when Russia's relations with the West are strained.
Few details of the proposed deal have been made public. The Russian deputy prime minister for energy, Igor Sechin, said after the talks Tuesday that "considerable" sums of money were being negotiated.
It is unclear how much oil China might receive in exchange for the credit. Plans for a pipeline to China, a spur off a trans-Siberian pipeline that is currently under construction, specify that it could carry about 300,000 barrels of oil per day.
Reuters, which first reported the Russia-China talks on Monday, cited industry sources as saying that Russian oil companies could borrow between $20 billion and $30 billion and pledge to export about two billion barrels of oil to China over the next 20 years. That would cover about 4 percent of China's oil demand.
The two countries agreed Tuesday to build the spur pipeline, which will run from the Russian town of Skovorodino to the Chinese border, at a cost of about $800 million. But in reality, the pipeline project had never been in much doubt. The terms for delivering oil through it, however, have been points of contention for some time.
A crushing need for cash by Russian oil companies that are no longer able to draw credit from Western banks seems to have brought the two countries closer to agreement. The state oil company Rosneft, for example, has about $21 billion in debt and some of its creditors are demanding early repayment.
The Russian government, which has a healthy cash reserve, has pledged $9 billion in loans to oil companies. But that pledge will not suffice to cover the whole of the debt and the financing of expansion into more expensive and remote fields in Siberia.
China, meanwhile, is awash in cash. After years of running a trade surplus with the United States, China has $1.9 trillion in currency reserves, the largest in the world.
On Tuesday, Wen and Putin also discussed reducing their reliance on the dollar, in favor of the ruble and yuan, for bilateral trade.
"At the moment, the world which is based on the dollar is suffering," said Putin, a vocal advocate of reducing the importance of the dollar in trade.
http://www.iht.com/articles/2008/10/28/europe/russia.php
**************
Oil's stunning retreat: How long can it last?
By Jad Mouawad
Tuesday, October 28, 2008
NEW YORK: After surging to record levels this summer, oil prices have suffered a dizzying collapse in recent months, echoing the darkening prospects of the global economy.
Within three months, drastic swings drove oil prices from their peak of $147.27 a barrel to less than $65 a barrel. Oil industry analysts at Goldman Sachs, who had raised the possibility that prices could reach $200 this year, now believe that oil could drop to $50 a barrel in the event of a global recession.
While consumers can cheer the drop, producers have been alarmed at the sudden downturn in their fortunes. Fears of a global slowdown have kicked off a down cycle in the oil sector: It is unclear how long it will last and how low prices will go.
As oil gets caught in the wild gyrations of the financial meltdown, three major questions loom over the oil markets for next year.
What will happen to oil consumption in the United States and in China? How will producers respond to lower prices? Can the oil cartel OPEC stop the slide in prices?
In the past decade, economic growth in emerging countries from Asia to Latin America has propelled a surge in oil demand. Consumption in developing nations jumped by more than 40 percent since 1998 while oil producers struggled to increase their output. That disparity severely tightened oil markets and led to a 14-fold increase in prices from its $10-a-barrel trough to its peak in July.
But high prices and a slowing economy have led to a stark reduction in demand across the industrialized world that probably will outweigh growth in oil consumption from such developing nations as China.
After a quarter century of growth, some analysts say it is quite possible that this year global oil consumption could have its first annual drop since 1983.
In its latest outlook, the International Monetary Fund knocked nearly a percentage point off its forecast for global economic growth for 2009, with developed economies barely able to expand by 0.5 percent.
In turn, that means that global oil demand over the next two years may prove anemic, experts said.
"Oil is integral to the real economy," said Jan Stuart, an energy economist in New York for UBS. "If the real economy goes down, oil goes down. The market right now is trading a long recession and literally no growth in oil demand for years."
Didier Houssin, director of the office of energy markets and security at the International Energy Agency, the world's main forecaster, said there were strong uncertainties about how demand will evolve because of the economic and financial crisis. "That remains a big mystery," he said.
Faced with slowing growth, the International Energy Agency has been paring its forecast for global oil demand since the beginning of the year. But its analysts still see oil demand expanding by 400,000 barrels a day this year, to 86.5 million barrels a day. When the year started, they forecast growth of two million barrels a day for 2008. Some analysts say the energy agency's current forecast is still hopelessly optimistic.
"Despite the IEA's wishful thinking, demand is disappearing very quickly," said Lawrence Goldstein, an economist at the Energy Policy Research Foundation in Washington, who said he expected global oil demand to fall this year. It would be the first drop since the energy shock of the early 1980s.
The double impact of record high prices and slower economic growth has been particularly visible in the United States, which accounts for a quarter of the world's total oil consumption and where demand has slipped to its lowest level since June 1999. Americans have been driving less and flying less this year. Automakers are desperate for a government bailout and airlines are losing billions of dollars.
As a result, U.S. oil demand will probably decline by 5 percent this year, said Stuart, the UBS energy economist.
Similar declines are also taking place in most developed economies, which account for 60 percent of global demand. In Japan, for example, oil consumption in August tumbled 12 percent from a year earlier, while oil use in France has declined 10 percent.
"There is no question the physical oil market has weakened," Stuart said. "The credit crisis has dried up commerce and halted trade, and that has effectively pushed down demand for oil. The trouble is that no one can predict when this is going to end."
Where prices go next year hinges greatly on what happens in developing countries, especially China. Over the past decade, Chinese oil demand has surged by 85 percent, or 3.5 million barrels a day, and has been the main engine that has driven up oil markets. China accounted for a third of the world's extra oil demand last year.
But in recent weeks, there have been concerns that the economy may also be affected.
The chief executive of the global mining giant Rio Tinto warned this month that the Chinese economy was headed for a major slowdown. The World Bank's chief economist said it was unlikely that China would be immune to a global recession. And the chairman of the Industrial & Commercial Bank of China said that demand for Chinese goods was declining.
"As the full effects of the financial meltdown continue to unravel, nudging several OECD countries closer or into recession, there appears to be evidence that key engines of China's growth are already feeling the pinch," PFC Energy, a consulting firm in Washington, said in a research note that referred to the Organization for Economic Cooperation and Development.
China's manufacturing sector, which contributes to 40 percent of the country's economy, has experienced a "marked decline in activity" for several months as its export markets shrink, for example. Still, that is not to say Chinese demand will fall. PFC says it expects consumption to rise by 330,000 barrels a day in 2009, compared with 490,000 barrels this year.
Global oil supplies have also been constrained - and many experts say that they do not expect the picture to brighten much in coming years.
In the past decade, oil companies and producers have been unable to increase their production fast enough to meet demand. For a variety of reasons, including tougher access to resources, political volatility or violence in many oil-producing states, and steadily rising costs throughout the industry, the growth in oil supplies has been disappointing.
Simply, it is getting harder for oil companies and some producing countries to increase production. Over the next two decades, some experts say, oil production will peak at around 95 million barrels a day.
One big problem is that oil fields have a natural rate of decline as oil gets pumped out. The rate varies widely from field to field, but the global average is about 5 percent a year. So, just to maintain output, producers around the world must find and develop about six million barrels of oil a day. To increase global oil production by 1.5 million barrels a day, that figure rises to 7 million or 8 million barrels a day, or at least 2.5 billion barrels a year - a monumental task that gets tougher as production grows.
"The energy crisis is fundamentally a problem of supplies, not of energy demand," said Frédéric Lasserre, the head of commodity research at Société Générale in Paris.
Meanwhile, big producers are struggling. Russian production has been declining in recent months; Mexico's biggest oil field, Cantarell, is in a free fall; Nigerian output has been curbed significantly by rampant violence; and any increases in Iraqi production are contingent on improving the country's security.
"Global oil supply is also falling short of prior expectations," said Arjun Murti, an analyst at Goldman Sachs. "The problem, though, is that investors appear to be placing greater weight on the demand concerns rather than the supply shortfalls; it may require a clear bottoming in global growth sentiment before supply shortfalls are again recognized as a bullish factor."
As prices fall and demand slows, a new concern in the industry is whether oil producers will reduce their investments as prices decline.
Andrew Gould, the chief executive of Schlumberger, the world's largest oil-field services company, has said that producers will probably reduce spending on field development if low prices persist for more than a year.
That view is widely shared in the industry, especially as the credit crunch constrains the ability of many companies to invest.
Meanwhile, the cost of producing extra barrels of oil is rising. As prices fall, this might cause high-cost producers, like those working Canada's vast oil sand deposits, to shut down production or curb their expenses.
"Investments in exploration and production are very much linked to the price of oil," said Houssin of the International Energy Agency. "What we can fear is that the financial crisis leads to delays in many projects. This would create problems for some operators, while the slowdown in demand would not encourage investments in the short term."
The wild card in the oil deck next year will hinge on what actions OPEC takes. As oil fell below $80 a barrel the cartel called an emergency meeting, agreeing Friday to cut output by 1.5 million barrels a day. Just a few years ago, $80 oil would have seemed improbably high. But many producers are now used to high prices - and larger government revenues - and have been spending accordingly. This makes them acutely sensitive to falling prices.
Yet OPEC, which controls 40 percent of the world's oil exports, is quite likely to find it hard to cut output fast enough to halt the slide, analysts said. After the cut announced Friday the price dropped again, ending the week near $60 a barrel. In fact, the Organization of Petroleum Exporting Countries could face a very tough year ahead if demand remains sluggish.
"The irony is that for OPEC $80 a barrel is a crisis," said Goldstein, the economist. "OPEC members have put on their crisis management hat because they realize that demand is slipping quickly from them."
In the longer term, however, many analysts point out that the world is likely to see prices jumping back above $100 a barrel. Population growth and economic activity are both rising, and with it the demand for oil, for which there is no easy or ready substitute, particularly in the transportation sector.
Given the constraints on supplies in coming years, this means tight markets are here to stay. In fact, some analysts warn, the lower oil prices fall in the next years, the sharper the rebound will be when the economy - and oil demand - finally picks up.
By Jad Mouawad
Tuesday, October 28, 2008
NEW YORK: After surging to record levels this summer, oil prices have suffered a dizzying collapse in recent months, echoing the darkening prospects of the global economy.
Within three months, drastic swings drove oil prices from their peak of $147.27 a barrel to less than $65 a barrel. Oil industry analysts at Goldman Sachs, who had raised the possibility that prices could reach $200 this year, now believe that oil could drop to $50 a barrel in the event of a global recession.
While consumers can cheer the drop, producers have been alarmed at the sudden downturn in their fortunes. Fears of a global slowdown have kicked off a down cycle in the oil sector: It is unclear how long it will last and how low prices will go.
As oil gets caught in the wild gyrations of the financial meltdown, three major questions loom over the oil markets for next year.
What will happen to oil consumption in the United States and in China? How will producers respond to lower prices? Can the oil cartel OPEC stop the slide in prices?
In the past decade, economic growth in emerging countries from Asia to Latin America has propelled a surge in oil demand. Consumption in developing nations jumped by more than 40 percent since 1998 while oil producers struggled to increase their output. That disparity severely tightened oil markets and led to a 14-fold increase in prices from its $10-a-barrel trough to its peak in July.
But high prices and a slowing economy have led to a stark reduction in demand across the industrialized world that probably will outweigh growth in oil consumption from such developing nations as China.
After a quarter century of growth, some analysts say it is quite possible that this year global oil consumption could have its first annual drop since 1983.
In its latest outlook, the International Monetary Fund knocked nearly a percentage point off its forecast for global economic growth for 2009, with developed economies barely able to expand by 0.5 percent.
In turn, that means that global oil demand over the next two years may prove anemic, experts said.
"Oil is integral to the real economy," said Jan Stuart, an energy economist in New York for UBS. "If the real economy goes down, oil goes down. The market right now is trading a long recession and literally no growth in oil demand for years."
Didier Houssin, director of the office of energy markets and security at the International Energy Agency, the world's main forecaster, said there were strong uncertainties about how demand will evolve because of the economic and financial crisis. "That remains a big mystery," he said.
Faced with slowing growth, the International Energy Agency has been paring its forecast for global oil demand since the beginning of the year. But its analysts still see oil demand expanding by 400,000 barrels a day this year, to 86.5 million barrels a day. When the year started, they forecast growth of two million barrels a day for 2008. Some analysts say the energy agency's current forecast is still hopelessly optimistic.
"Despite the IEA's wishful thinking, demand is disappearing very quickly," said Lawrence Goldstein, an economist at the Energy Policy Research Foundation in Washington, who said he expected global oil demand to fall this year. It would be the first drop since the energy shock of the early 1980s.
The double impact of record high prices and slower economic growth has been particularly visible in the United States, which accounts for a quarter of the world's total oil consumption and where demand has slipped to its lowest level since June 1999. Americans have been driving less and flying less this year. Automakers are desperate for a government bailout and airlines are losing billions of dollars.
As a result, U.S. oil demand will probably decline by 5 percent this year, said Stuart, the UBS energy economist.
Similar declines are also taking place in most developed economies, which account for 60 percent of global demand. In Japan, for example, oil consumption in August tumbled 12 percent from a year earlier, while oil use in France has declined 10 percent.
"There is no question the physical oil market has weakened," Stuart said. "The credit crisis has dried up commerce and halted trade, and that has effectively pushed down demand for oil. The trouble is that no one can predict when this is going to end."
Where prices go next year hinges greatly on what happens in developing countries, especially China. Over the past decade, Chinese oil demand has surged by 85 percent, or 3.5 million barrels a day, and has been the main engine that has driven up oil markets. China accounted for a third of the world's extra oil demand last year.
But in recent weeks, there have been concerns that the economy may also be affected.
The chief executive of the global mining giant Rio Tinto warned this month that the Chinese economy was headed for a major slowdown. The World Bank's chief economist said it was unlikely that China would be immune to a global recession. And the chairman of the Industrial & Commercial Bank of China said that demand for Chinese goods was declining.
"As the full effects of the financial meltdown continue to unravel, nudging several OECD countries closer or into recession, there appears to be evidence that key engines of China's growth are already feeling the pinch," PFC Energy, a consulting firm in Washington, said in a research note that referred to the Organization for Economic Cooperation and Development.
China's manufacturing sector, which contributes to 40 percent of the country's economy, has experienced a "marked decline in activity" for several months as its export markets shrink, for example. Still, that is not to say Chinese demand will fall. PFC says it expects consumption to rise by 330,000 barrels a day in 2009, compared with 490,000 barrels this year.
Global oil supplies have also been constrained - and many experts say that they do not expect the picture to brighten much in coming years.
In the past decade, oil companies and producers have been unable to increase their production fast enough to meet demand. For a variety of reasons, including tougher access to resources, political volatility or violence in many oil-producing states, and steadily rising costs throughout the industry, the growth in oil supplies has been disappointing.
Simply, it is getting harder for oil companies and some producing countries to increase production. Over the next two decades, some experts say, oil production will peak at around 95 million barrels a day.
One big problem is that oil fields have a natural rate of decline as oil gets pumped out. The rate varies widely from field to field, but the global average is about 5 percent a year. So, just to maintain output, producers around the world must find and develop about six million barrels of oil a day. To increase global oil production by 1.5 million barrels a day, that figure rises to 7 million or 8 million barrels a day, or at least 2.5 billion barrels a year - a monumental task that gets tougher as production grows.
"The energy crisis is fundamentally a problem of supplies, not of energy demand," said Frédéric Lasserre, the head of commodity research at Société Générale in Paris.
Meanwhile, big producers are struggling. Russian production has been declining in recent months; Mexico's biggest oil field, Cantarell, is in a free fall; Nigerian output has been curbed significantly by rampant violence; and any increases in Iraqi production are contingent on improving the country's security.
"Global oil supply is also falling short of prior expectations," said Arjun Murti, an analyst at Goldman Sachs. "The problem, though, is that investors appear to be placing greater weight on the demand concerns rather than the supply shortfalls; it may require a clear bottoming in global growth sentiment before supply shortfalls are again recognized as a bullish factor."
As prices fall and demand slows, a new concern in the industry is whether oil producers will reduce their investments as prices decline.
Andrew Gould, the chief executive of Schlumberger, the world's largest oil-field services company, has said that producers will probably reduce spending on field development if low prices persist for more than a year.
That view is widely shared in the industry, especially as the credit crunch constrains the ability of many companies to invest.
Meanwhile, the cost of producing extra barrels of oil is rising. As prices fall, this might cause high-cost producers, like those working Canada's vast oil sand deposits, to shut down production or curb their expenses.
"Investments in exploration and production are very much linked to the price of oil," said Houssin of the International Energy Agency. "What we can fear is that the financial crisis leads to delays in many projects. This would create problems for some operators, while the slowdown in demand would not encourage investments in the short term."
The wild card in the oil deck next year will hinge on what actions OPEC takes. As oil fell below $80 a barrel the cartel called an emergency meeting, agreeing Friday to cut output by 1.5 million barrels a day. Just a few years ago, $80 oil would have seemed improbably high. But many producers are now used to high prices - and larger government revenues - and have been spending accordingly. This makes them acutely sensitive to falling prices.
Yet OPEC, which controls 40 percent of the world's oil exports, is quite likely to find it hard to cut output fast enough to halt the slide, analysts said. After the cut announced Friday the price dropped again, ending the week near $60 a barrel. In fact, the Organization of Petroleum Exporting Countries could face a very tough year ahead if demand remains sluggish.
"The irony is that for OPEC $80 a barrel is a crisis," said Goldstein, the economist. "OPEC members have put on their crisis management hat because they realize that demand is slipping quickly from them."
In the longer term, however, many analysts point out that the world is likely to see prices jumping back above $100 a barrel. Population growth and economic activity are both rising, and with it the demand for oil, for which there is no easy or ready substitute, particularly in the transportation sector.
Given the constraints on supplies in coming years, this means tight markets are here to stay. In fact, some analysts warn, the lower oil prices fall in the next years, the sharper the rebound will be when the economy - and oil demand - finally picks up.
*****************
BG announces friendly takeover bid for Queensland Gas
By Fayen Wong and Denny ThomasReuters
Wednesday, October 29, 2008
PERTH, Australia: The British gas producer BG Group has announced a 5.6 billion Australian dollar friendly takeover bid for Queensland Gas in Australia, its latest effort to increase its position in the country's fast-growing natural gas market.
"It's a good deal and a fair price for QGC," said Ivor Ries, senior analyst at EL & C Baillieu Stockbroking. "It is definitely hard to see anyone coming over the top for QGC."
BG, which acquired a near-10 percent stake in Queensland Gas in February, offered to pay 5.75 Australian dollars, or $3.55, each for the shares it did not already own, an 80 percent premium to the Australian company's last traded price, the two companies said in a joint statement Tuesday.
BG will also buy a 22 percent stake in Queensland Gas held by the top Australian energy retailer, AGL Energy, with AGL set to receive 1.18 billion Australian dollars.
Queensland Gas shares jumped 80 percent on resuming trade to match the offer price, having been placed on a trading halt Friday pending the announcement.
Queensland Gas said its voting directors had unanimously recommended BG's bid and that total acceptances, as well as declared acceptance intentions, from directors and institutional investors, would give BG a 46.2 percent stake in the company.
The deal came less than two months after BG abandoned its 13.8 billion Australian dollar hostile bid for the second-largest Australian energy retailer, Origin Energy, which holds the largest amount of coal seam gas reserves in the country.
"Some shareholders may have preferred to see the fruition of the proposed LNG project, but that's a long wait and the current financial crisis is giving too much uncertainty," Ries added, referring to liquefied natural gas.
BG said its offer for Queensland Gas was final in the absence of a higher competing bid.
AGL Energy jumped 7.3 percent to 14.38 Australian dollars on Tuesday. BG fell 7.4 percent in London trading on Monday.
BG already has a partnership with Queensland Gas to build a $8 billion liquefied natural gas plant in the northeastern Australian state of Queensland using QGC's coal seam gas as a feedstock. The plant will have a capacity of 7.5 million tons per annum.
BG's acquisition of Queensland Gas, if successful, would mark a big change in BG's liquefied natural gas business in the Asia-Pacific, where demand for liquefied natural gas has been forecast to rise 20 percent to 126 million tons a year by 2010, and to just above 200 million tons a year in 2020.
"The acquisition will enhance BG's global LNG position and establish a material business in Australia, with undeveloped resource potential located close to valuable domestic and regional markets," said Ashley Almanza, BG's chief financial officer.
BG said it would fund the acquisition from internal cash reserves or from existing debt facilities if required.
A raft of deals in the Australian gas sector this year has established coal seam gas as a credible energy source, with global energy majors, including Petronas, Royal Dutch Shell and ConocoPhillips paying billions for stakes in various proposed LNG projects on the east coast that plan to tap coal seam gas.
Denny Thomas reported from Sydney.
By Fayen Wong and Denny ThomasReuters
Wednesday, October 29, 2008
PERTH, Australia: The British gas producer BG Group has announced a 5.6 billion Australian dollar friendly takeover bid for Queensland Gas in Australia, its latest effort to increase its position in the country's fast-growing natural gas market.
"It's a good deal and a fair price for QGC," said Ivor Ries, senior analyst at EL & C Baillieu Stockbroking. "It is definitely hard to see anyone coming over the top for QGC."
BG, which acquired a near-10 percent stake in Queensland Gas in February, offered to pay 5.75 Australian dollars, or $3.55, each for the shares it did not already own, an 80 percent premium to the Australian company's last traded price, the two companies said in a joint statement Tuesday.
BG will also buy a 22 percent stake in Queensland Gas held by the top Australian energy retailer, AGL Energy, with AGL set to receive 1.18 billion Australian dollars.
Queensland Gas shares jumped 80 percent on resuming trade to match the offer price, having been placed on a trading halt Friday pending the announcement.
Queensland Gas said its voting directors had unanimously recommended BG's bid and that total acceptances, as well as declared acceptance intentions, from directors and institutional investors, would give BG a 46.2 percent stake in the company.
The deal came less than two months after BG abandoned its 13.8 billion Australian dollar hostile bid for the second-largest Australian energy retailer, Origin Energy, which holds the largest amount of coal seam gas reserves in the country.
"Some shareholders may have preferred to see the fruition of the proposed LNG project, but that's a long wait and the current financial crisis is giving too much uncertainty," Ries added, referring to liquefied natural gas.
BG said its offer for Queensland Gas was final in the absence of a higher competing bid.
AGL Energy jumped 7.3 percent to 14.38 Australian dollars on Tuesday. BG fell 7.4 percent in London trading on Monday.
BG already has a partnership with Queensland Gas to build a $8 billion liquefied natural gas plant in the northeastern Australian state of Queensland using QGC's coal seam gas as a feedstock. The plant will have a capacity of 7.5 million tons per annum.
BG's acquisition of Queensland Gas, if successful, would mark a big change in BG's liquefied natural gas business in the Asia-Pacific, where demand for liquefied natural gas has been forecast to rise 20 percent to 126 million tons a year by 2010, and to just above 200 million tons a year in 2020.
"The acquisition will enhance BG's global LNG position and establish a material business in Australia, with undeveloped resource potential located close to valuable domestic and regional markets," said Ashley Almanza, BG's chief financial officer.
BG said it would fund the acquisition from internal cash reserves or from existing debt facilities if required.
A raft of deals in the Australian gas sector this year has established coal seam gas as a credible energy source, with global energy majors, including Petronas, Royal Dutch Shell and ConocoPhillips paying billions for stakes in various proposed LNG projects on the east coast that plan to tap coal seam gas.
Denny Thomas reported from Sydney.
*****************
Oil exec warns on North Sea oil rig safety
Reuters
Tuesday, October 28, 2008
By Tom Bergin
Some oil platforms in the North Sea are "falling apart" and a potential drop in investment as a result of the collapse in crude prices could lead to serious accidents, a senior oil industry executive said on Tuesday.
Ayman Asfari, Chief Executive of Petrofac , which owns North Sea fields and operates fields on behalf of other oil companies, said his company had seen facilities which were in bad need of repair.
"The state of some of these assets that were built in the 1970s is really, they are falling apart," Asfari told the Oil and Money Conference in London. "We've seen incidents happen where people have fallen through gratings."
Asfari said the safety regulator had already told the industry it needed to do more on facilities integrity.
However, the falling oil price could deter companies from spending more on improvements.
"What worries me is that we end up in a situation where these budgets get curtailed and that means one thing, that there will be serious accidents around the corner," Asfari said.
(Editing by Erica Billingham)
Reuters
Tuesday, October 28, 2008
By Tom Bergin
Some oil platforms in the North Sea are "falling apart" and a potential drop in investment as a result of the collapse in crude prices could lead to serious accidents, a senior oil industry executive said on Tuesday.
Ayman Asfari, Chief Executive of Petrofac , which owns North Sea fields and operates fields on behalf of other oil companies, said his company had seen facilities which were in bad need of repair.
"The state of some of these assets that were built in the 1970s is really, they are falling apart," Asfari told the Oil and Money Conference in London. "We've seen incidents happen where people have fallen through gratings."
Asfari said the safety regulator had already told the industry it needed to do more on facilities integrity.
However, the falling oil price could deter companies from spending more on improvements.
"What worries me is that we end up in a situation where these budgets get curtailed and that means one thing, that there will be serious accidents around the corner," Asfari said.
(Editing by Erica Billingham)
******************
Global consensus on energy solutions remains elusive
By Christopher Knight
Tuesday, October 28, 2008
PARIS: When Ralph Sims gives talks on energy use, like one he offered at a seminar in September in Paris, he ends the address by getting personal.
"When I give presentations on future energy demands and climate change, I often show a picture of my 1-year-old granddaughter and ask - what will their world be like when she is my age? People take notice," Sims said.
As a senior analyst at the International Energy Agency, he finds himself trying to stay hopeful but sometimes growing despondent.
"There's no doubt that we have procrastinated too long to make decisions," Sims said.
Although oil prices are now sliding fast from record levels near $150 a barrel this year, other parts of the picture are bleak. Demand from rapidly expanding economies in China and India seems likely to keep rising; exporting countries from Russia to South America and the Middle East have nationalized energy production; and the search for "cheap" oil is getting ever harder.
Some analysts have suggested that the global supply of oil could start dropping in the not-too-distant future; meanwhile, progress on developing substitute fuels and alternative energies is frustratingly slow, and some, like grain-based biofuels, are facing fierce economic and environmental challenges.
Consumers often want quick answers to energy problems like rising gasoline prices, but with issues like oil or biofuel, it is often impossible to make rapid changes. In the United States, oil prices have led to heated discussions in the presidential election campaign, with consumers calling for lower prices, now.
The market may be delivering that wish, but the earlier price surge cruelly exposed the lack of any clear policy response, with the Republican ticket calling for more nuclear reactors and increased U.S. oil production, with chants like "drill, baby, drill," and the Democratic nominee, Barack Obama, dismissing those solutions as under-researched and utterly ineffective within a 10-year time frame.
Andrew Busch, a professor of government at Claremont McKenna College, in Claremont, California, who follows U.S. energy issues and the U.S. presidential election, said it was hard to find a consensus on long-term energy priorities in the United States or internationally.
"There is not even a consensus among experts on whether to have a long-term plan, if by a plan you mean a top-down, five-year plan," Busch said. "Part of the problem is that energy issues are so closely intertwined with environmental issues. If one were to judge the issue purely on the criteria of what improves America's energy position, the issue would be much easier politically - we would drill for as much oil as we could and we would rely more on coal, of which we have abundant supplies, and nuclear."
Environmental groups, however, strongly oppose all those options, he noted. "So John McCain favors what is sometimes called the 'all of the above' approach, while Obama's options are more limited," Busch said.
Since the United States consumes about a quarter of the world's energy production, this policy uncertainty has global repercussions.
Arriving at a long-term global solution for energy use and conservation is fraught with confusion, too, because globalization has its limits, and different parts of the world have different needs. In Europe and the United States, supply and security are the top energy issues; but in much of Africa and Asia, just sustaining a living is the priority: providing access to fuel for cooking, heating and essential transportation.
In the industrialized world, "People want to drive into a service station any time of the day or night and fill up with petrol or diesel," said Sims, the analyst.
"But of course in Indonesia, Afghanistan and Kenya, they have different expectations altogether," he said. "They are pleased when the lights come on and when they can get petrol, if they even have a car."
In Europe, the energy debate often focuses on price and security; and while the price issue may lose its edge as the recession bites into demand, security concerns seem increasingly acute as a resurgent Russia increasingly uses its energy supply position for geopolitical advantage.
Still, Ferran Tarradellas, the European Commission's energy spokesman in Brussels, said ensuring a steady flow of gas or oil from Russia should not be a top energy concern for the European Union. Russia needs Europe just as much as Europe needs Russia, he said, and behind the Kremlin's occasional bluster that reality is recognized, at least for now.
"They are our main supplier and we are their main market," Tarradellas said. "It's important for both of us to have good relations."
Europe's main long-term concerns, Tarradellas said, should be conservation and the production of renewable energy, especially for transportation.
With countries like China and India increasingly competing for oil and natural gas, Europe must concentrate on producing its own energy, he said, while fostering a global dialogue with consumers and producers to facilitate a free and diversified flow of supplies.
"Oil is not something that is going to last forever, and the transport sector is so dependent on oil," Terradellas said.
European Union leaders have set a goal that at least 10 percent of transportation fuel should come from biofuels by 2020.
Though some organizations have expressed concerns that this effort could contribute to a further rise in food prices, the EU has stuck by its goal, saying that promoting the right biofuels should ultimately cut the energy cost of producing food and bringing it to market.
At the energy agency, Sims takes a more cautiously nuanced view of biofuels; in the long term, with more research and investment, fuels based on nonfood biomass could - and the emphasis is on could, rather than should - become effective substitutes for traditional oil and gas, he said.
"There certainly has been a lot of improvement, and the cost has come down," Sims said, referring to first-generation biofuels made from corn and other food crops, "but I don't think some are going to be viable without subsidies, even at high oil prices."
For biofuels to play a significant, cost-effective role, technology must improve and investment must rise to develop second- or even third-generation biofuels, made from nonfood sources like grasses or wood chips. Even then, there "is no guarantee if and when" biofuels will be commercially viable, he said.
Yet on oil itself, Sims strikes a more optimistic note. No one, he said, can predict when the world will reach "peak oil" production, the point at which a global decline in output begins. "We still have more oil underground that has not been tapped," Sims said.
"There are major oil reserves off the coast of Brazil, for example, and technology is changing, allowing us to drill in deeper and deeper water. We're looking in places that couldn't have been contemplated a few years ago. People tend to forget that technology changes. There is always new extraction technology."
If consumers are willing to pay the rising economic and environmental costs, "there is a whole slate of liquid fuels to keep the world going," he said.
David Hobbs, managing director of global research at Cambridge Energy Research Associates, said the surge in the price of oil this year had made him optimistic about the future because it should have pushed politicians and the private sector to work harder on alternatives.
"I think what is much more interesting for the long run is whether politicians are going to waste the energy price crisis or not," Hobbs said, referring to the high price of oil. "Will they allow the price of gasoline to fall so that people are no longer willing to spend extra money on hybrid cars? Will they allow the price of gas and coal to fall and undermine the move to build wind and solar power or undermine the economics of biofuel?"
Certainly, if policy is driven by short-term price, it is unlikely to show much long-term coherence. Over the past 10 years, oil prices have dropped to $10 a barrel in the late 1990s and hit nearly $150 a barrel this year. But, a Cambridge Energy report this year concluded, multiple factors, including concern about global warming as a threat to political and environmental security, will continue to push governments toward alternative energy development, if necessary by means of subsidies, even if oil drops durably below $100 a barrel.
Both Sims and Tarradellas said conservation should be a top focus over the long term, rather than focusing on more drilling or hoping for a big, quick switch to alternative fuels.
Sims, perhaps surprisingly for an analyst at an agency focused on strategic energy security, also urged attention to be directed at reducing greenhouse gases and fighting global warming. With mean atmospheric temperature predicted to keep rising well into this century, even if greenhouse gas emissions are stabilized, he said, the world must face up to a long-term reality of rising sea levels and increasingly vicious weather.
"There is still a lot of negotiating" over policy on global warming, Sims said.
But, he added, "the IEA's message is very clear: We can't keep doing what we're doing. What we need to do now is start to change, to move forward to new energy sources and increase the uptake of energy efficiency. We should err on the cautious side. It's stupid to ignore what the vast majority of science is saying, just in case science is right."
Sims said every consumer should do more to save energy, money and the environment.
"The key message out of all of this is pretty simple: not to waste the stuff," he said. "Use energy wisely, don't use a car when you don't need to, insulate the buildings, use more public transport, hop on a bicycle."
By Christopher Knight
Tuesday, October 28, 2008
PARIS: When Ralph Sims gives talks on energy use, like one he offered at a seminar in September in Paris, he ends the address by getting personal.
"When I give presentations on future energy demands and climate change, I often show a picture of my 1-year-old granddaughter and ask - what will their world be like when she is my age? People take notice," Sims said.
As a senior analyst at the International Energy Agency, he finds himself trying to stay hopeful but sometimes growing despondent.
"There's no doubt that we have procrastinated too long to make decisions," Sims said.
Although oil prices are now sliding fast from record levels near $150 a barrel this year, other parts of the picture are bleak. Demand from rapidly expanding economies in China and India seems likely to keep rising; exporting countries from Russia to South America and the Middle East have nationalized energy production; and the search for "cheap" oil is getting ever harder.
Some analysts have suggested that the global supply of oil could start dropping in the not-too-distant future; meanwhile, progress on developing substitute fuels and alternative energies is frustratingly slow, and some, like grain-based biofuels, are facing fierce economic and environmental challenges.
Consumers often want quick answers to energy problems like rising gasoline prices, but with issues like oil or biofuel, it is often impossible to make rapid changes. In the United States, oil prices have led to heated discussions in the presidential election campaign, with consumers calling for lower prices, now.
The market may be delivering that wish, but the earlier price surge cruelly exposed the lack of any clear policy response, with the Republican ticket calling for more nuclear reactors and increased U.S. oil production, with chants like "drill, baby, drill," and the Democratic nominee, Barack Obama, dismissing those solutions as under-researched and utterly ineffective within a 10-year time frame.
Andrew Busch, a professor of government at Claremont McKenna College, in Claremont, California, who follows U.S. energy issues and the U.S. presidential election, said it was hard to find a consensus on long-term energy priorities in the United States or internationally.
"There is not even a consensus among experts on whether to have a long-term plan, if by a plan you mean a top-down, five-year plan," Busch said. "Part of the problem is that energy issues are so closely intertwined with environmental issues. If one were to judge the issue purely on the criteria of what improves America's energy position, the issue would be much easier politically - we would drill for as much oil as we could and we would rely more on coal, of which we have abundant supplies, and nuclear."
Environmental groups, however, strongly oppose all those options, he noted. "So John McCain favors what is sometimes called the 'all of the above' approach, while Obama's options are more limited," Busch said.
Since the United States consumes about a quarter of the world's energy production, this policy uncertainty has global repercussions.
Arriving at a long-term global solution for energy use and conservation is fraught with confusion, too, because globalization has its limits, and different parts of the world have different needs. In Europe and the United States, supply and security are the top energy issues; but in much of Africa and Asia, just sustaining a living is the priority: providing access to fuel for cooking, heating and essential transportation.
In the industrialized world, "People want to drive into a service station any time of the day or night and fill up with petrol or diesel," said Sims, the analyst.
"But of course in Indonesia, Afghanistan and Kenya, they have different expectations altogether," he said. "They are pleased when the lights come on and when they can get petrol, if they even have a car."
In Europe, the energy debate often focuses on price and security; and while the price issue may lose its edge as the recession bites into demand, security concerns seem increasingly acute as a resurgent Russia increasingly uses its energy supply position for geopolitical advantage.
Still, Ferran Tarradellas, the European Commission's energy spokesman in Brussels, said ensuring a steady flow of gas or oil from Russia should not be a top energy concern for the European Union. Russia needs Europe just as much as Europe needs Russia, he said, and behind the Kremlin's occasional bluster that reality is recognized, at least for now.
"They are our main supplier and we are their main market," Tarradellas said. "It's important for both of us to have good relations."
Europe's main long-term concerns, Tarradellas said, should be conservation and the production of renewable energy, especially for transportation.
With countries like China and India increasingly competing for oil and natural gas, Europe must concentrate on producing its own energy, he said, while fostering a global dialogue with consumers and producers to facilitate a free and diversified flow of supplies.
"Oil is not something that is going to last forever, and the transport sector is so dependent on oil," Terradellas said.
European Union leaders have set a goal that at least 10 percent of transportation fuel should come from biofuels by 2020.
Though some organizations have expressed concerns that this effort could contribute to a further rise in food prices, the EU has stuck by its goal, saying that promoting the right biofuels should ultimately cut the energy cost of producing food and bringing it to market.
At the energy agency, Sims takes a more cautiously nuanced view of biofuels; in the long term, with more research and investment, fuels based on nonfood biomass could - and the emphasis is on could, rather than should - become effective substitutes for traditional oil and gas, he said.
"There certainly has been a lot of improvement, and the cost has come down," Sims said, referring to first-generation biofuels made from corn and other food crops, "but I don't think some are going to be viable without subsidies, even at high oil prices."
For biofuels to play a significant, cost-effective role, technology must improve and investment must rise to develop second- or even third-generation biofuels, made from nonfood sources like grasses or wood chips. Even then, there "is no guarantee if and when" biofuels will be commercially viable, he said.
Yet on oil itself, Sims strikes a more optimistic note. No one, he said, can predict when the world will reach "peak oil" production, the point at which a global decline in output begins. "We still have more oil underground that has not been tapped," Sims said.
"There are major oil reserves off the coast of Brazil, for example, and technology is changing, allowing us to drill in deeper and deeper water. We're looking in places that couldn't have been contemplated a few years ago. People tend to forget that technology changes. There is always new extraction technology."
If consumers are willing to pay the rising economic and environmental costs, "there is a whole slate of liquid fuels to keep the world going," he said.
David Hobbs, managing director of global research at Cambridge Energy Research Associates, said the surge in the price of oil this year had made him optimistic about the future because it should have pushed politicians and the private sector to work harder on alternatives.
"I think what is much more interesting for the long run is whether politicians are going to waste the energy price crisis or not," Hobbs said, referring to the high price of oil. "Will they allow the price of gasoline to fall so that people are no longer willing to spend extra money on hybrid cars? Will they allow the price of gas and coal to fall and undermine the move to build wind and solar power or undermine the economics of biofuel?"
Certainly, if policy is driven by short-term price, it is unlikely to show much long-term coherence. Over the past 10 years, oil prices have dropped to $10 a barrel in the late 1990s and hit nearly $150 a barrel this year. But, a Cambridge Energy report this year concluded, multiple factors, including concern about global warming as a threat to political and environmental security, will continue to push governments toward alternative energy development, if necessary by means of subsidies, even if oil drops durably below $100 a barrel.
Both Sims and Tarradellas said conservation should be a top focus over the long term, rather than focusing on more drilling or hoping for a big, quick switch to alternative fuels.
Sims, perhaps surprisingly for an analyst at an agency focused on strategic energy security, also urged attention to be directed at reducing greenhouse gases and fighting global warming. With mean atmospheric temperature predicted to keep rising well into this century, even if greenhouse gas emissions are stabilized, he said, the world must face up to a long-term reality of rising sea levels and increasingly vicious weather.
"There is still a lot of negotiating" over policy on global warming, Sims said.
But, he added, "the IEA's message is very clear: We can't keep doing what we're doing. What we need to do now is start to change, to move forward to new energy sources and increase the uptake of energy efficiency. We should err on the cautious side. It's stupid to ignore what the vast majority of science is saying, just in case science is right."
Sims said every consumer should do more to save energy, money and the environment.
"The key message out of all of this is pretty simple: not to waste the stuff," he said. "Use energy wisely, don't use a car when you don't need to, insulate the buildings, use more public transport, hop on a bicycle."
France weighs big changes in drinking laws
By Eric Pfanner
Tuesday, October 28, 2008
NUITS-SAINT-GEORGES, France: Sampling recent vintages in a 17th-century cellar here in the heart of Burgundy, Pascale Chicotot has no complaints about the weather or the wine critics. Both have been kind to her family's vineyards of late.
Just don't get her started on the French government.
"They treat us as if we were making a dangerous product," said Chicotot, who owns a small winery with her husband, Georges. "We are not terrorists. Wine is not a dangerous product. Wine is a noble thing."
The Chicotots are not alone. Winemakers are complaining that the government, egged on by anti-alcoholism campaigners, wants to make it harder to sell and drink wine in France, even as demand for the country's finest wines soars elsewhere. After having banned smoking in public places, they add, killjoys are taking aim at another pleasure, one that is even more emblematic of French joie de vivre.
"Why this national masochism?" asks Denis Saverot, editor of the leading French wine magazine, "La Revue du Vin de France," in a new book, "In Vino Satanas." "Has wine become politically incorrect?"
In an effort to crack down on binge drinking among French teenagers, the government last week proposed raising the legal age for buying alcohol to 18 from 16. It also wants to ban sales of alcohol at highway filling stations and to ban all-you-can-drink "open bar" evenings at French high schools.
Binge drinking in France? Don't French children grow up sipping wine alongside their parents, learning the virtues of moderation?
France's laissez-faire approach has been tested by what the Health Ministry says is a 50 percent increase, over the last four years, in hospitalizations of children under 15 for drunkenness.
"Binge drinking is not just an Anglo-Saxon problem anymore," said Alain Rigaud, president of the ANPAA, an anti-alcoholism group.
But wine industry groups say the proposed measures would do little to solve the problem and would further undermine an industry that is already struggling. French teenagers consider wine their parents' drink, so when they want to get drunk they often turn to hard liquor or beer.
While consumption of beer and hard liquor in France has risen slightly in recent years, wine drinking has fallen to an average of 56 liters a year per person from 100 liters in 1960, according to the national statistics bureau. In total wine consumption, France is about to be surpassed by the United States, according to a study conducted for Vinexpo, a wine fair in Bordeaux, though France remains ahead on a per capita level.
French wine production has fallen, too, and it would decline further under European Union plans to scale back billions of euros worth of subsidies. Adding to winemakers' fears that they have few friends in government, President Nicolas Sarkozy is a teetotaler.
In addition to the measures proposed by the Health Ministry, groups like the ANPAA have been pushing for a ban on Internet advertising of alcoholic drinks.
France already has some of the world's toughest restrictions on the marketing of alcohol; ads are banned entirely on television and print ads are not allowed to show people drinking wine, beer or liquor.
Those rules were written in 1991, before the Internet was a mainstream medium. Marketers of alcoholic drinks who have used the Web in France have been operating in a legal limbo, and some have fallen afoul of the courts.
Under a draft of proposed legislation that was leaked during the summer, winemakers might even have had to shut down online wine retailers or informational sites.
Roselyne Bachelot, the health minister, backed away from the toughest restrictions on Internet promotions This week. In an interview in Le Figaro, Bachelot said she favored allowing Web ads for drinks containing alcohol, but not on sites aimed at children or devoted to sports.
Many people in the wine industry breathed a sigh of relief, including Angélique de Lencquesaing, a founder and associate of iDealwine, an online wine auction site. Still, she said she was worried that the idea of a ban might be revived when Parliament debates the issue in coming months.
"We are going to keep on explaining that our aim is not to sell wine to people in order for them to get drunk as fast as possible," de Lencquesaing said.
To try to get across their message, winemakers plan to gather Thursday in regional wine capitals like Bordeaux, Épernay in Champagne and Angers in the Loire Valley for protests against the government's anti-binge-drinking proposals.
"We are very angry," said Marie-Christine Tarby, president of Vin & Société, a lobbying group for the wine industry, which employs about 250,000 people in France and accounts for about 17 percent of agricultural output. "It's such a big part of the economy, and yet we always have to fight."
Tarby said the proposal to end open-bar nights at high schools, which provide unlimited drinks with a single ticket, was written so broadly that it might also outlaw wine tastings, as well as the practice of including a glass of wine in restaurants' lunch specials.
Perhaps the biggest societal change could come from the change in the drinking age. Under current rules, 16- and 17-year-olds are allowed to buy alcohol of any kind in retail stores and they are allowed to order beer or wine, but nothing stronger, in bars and restaurants.
While the rules are displayed in French bistros and bars, they are rarely enforced. Rigaud, at the ANPAA, blames the complexity of the system. By streamlining the drinking age, he said, the government would make it easier to enforce the rules. Also, the fines against vendors who violated the law would be doubled.
Could the sight of waiters asking customers for proof of age - a feature of watering holes in the United States- soon become commonplace in Parisian brasseries?
"French people are used to showing a piece of identification when they write a check," Rigaud said. "There is no reason why they couldn't do it when buying a drink."
http://www.iht.com/articles/2008/10/28/asia/wine.php
Aid disrupted in eastern Congo as rebels advance and populace flees
By Jeffrey Gettleman
Tuesday, October 28, 2008
NAIROBI: Aid workers began evacuating battle zones in eastern Congo on Tuesday and some UN operations ground to a halt because of the escalating insecurity in the region.
Rebel forces seemed to be continuing their rout of government troops, and fears were spreading that the provincial capital of Goma, which recently had been thought to be a refuge for hundreds of thousands of displaced people and UN operations, was now in danger of falling.
Eastern Congo has been plagued by violence and insecurity for years. But UN officials said the current situation was especially worrisome because there were tens of thousands of people trying to escape the fighting and it was very difficult to help them.
"We have about 15 trucks loaded with food and they can't move," said Marcus Prior, a spokesman in Nairobi for the UN World Food Program.
Prior said that the fighting outside of Goma had made it too dangerous to distribute much-needed food in the rural areas. Inside Goma, he said, operations had been halted because of the level of hostility toward the United Nations. On Monday, hundreds of furious Congolese hurled stones at a UN compound in Goma, venting their rage that the United Nations had not done a better job of protecting them.
Congo is home to the largest UN peacekeeping mission in the world, with 17,000 troops. But the blue-helmeted soldiers and their attack helicopters have been unable to stop Laurent Nkunda, a renegade Congolese general who is leading the rebel charge on Goma.
Nkunda says he is fighting to protect ethnic Tutsis living in eastern Congo, and he sees himself as a Tutsi messiah. He commands a formidable force of several thousand battle-tested soldiers who are widely suspected of being supported by the small but tough Rwandan Army.
For the past several weeks, Nkunda's troops have been gobbling up territory and forcing the government to retreat.
By Tuesday they were within 16 kilometers, or 10 miles, of Goma, and they are employing new hit-and-run tactics that seem to be frustrating the UN peacekeepers, who have been working with the Congolese military against the rebels.
On Tuesday, the rebels were closing in on Rutshuru, a village north of Goma that has been the scene of vicious fighting before. Aid workers reported heavy artillery shelling in the village and terrified people fleeing in several directions.
Médecins Sans Frontières was pulling some staff out of Rutshuru, and there were plans to send peacekeepers to the village to evacuate United Nations aid workers.
Some UN officials said there was even talk of evacuating Goma, though no decision had been reached Tuesday night.
http://www.iht.com/articles/2008/10/28/africa/congo.php
****************
From America's homeless, varied views on the campaign
By Brian Knowlton
Tuesday, October 28, 2008
WASHINGTON: She has a veneer of skeptical toughness that slowly melts as she talks of being part of a "sorority" of homeless women. A husky-voiced, blue-eyed woman, she peers over purple, half-lens glasses that lend a certain distinction.
"You know, the longer you're homeless, the harder it is to get out," she said. "And the easier it is to develop mental problems."
Whoever becomes president - John McCain or Barack Obama - Brenda Lee-Wilson will be a neighbor. Washington has about 6,000 to 7,000 homeless people, the government estimates, many living on downtown streets or park benches within blocks of the White House.
A president's nearest neighbors, it turns out, are the homeless residents of Lafayette Square.
People like Lee-Wilson and Reggie Black, Roger Boursma and Jeffery McNeil, and many others who fade away rather than talk to a stranger, are part of a national army of homeless people whose numbers - the Department of Housing and Urban Development puts them between 700,000 and 750,000 at any given time - could exceed the population of Governor Sarah Palin's Alaska.
At times of crisis the homeless can be experts in economic malfunction. Some have strong views. An unscientific survey of several revealed Obama supporters, McCain supporters and others hard to define.
Michael Stoops, an advocate for the homeless for more than three decades, has never seen them more engaged. If there is one thing the homeless have plenty of, after all, it is time, he said. Time to read - "some of them read The New York Times cover to cover." Time to think. Time to argue politics.
The homeless can vote. A 1984 lawsuit in Washington helped establish that their residence can be as insubstantial as "Steam Grate, corner of 13th and L streets," though they have to be able to pick up mail somewhere. Last month, more than 300 homeless were registered in Washington in a single week.
Lee-Wilson, 53, was raised a devout Republican, "but I consider myself an environmentalist, or maybe a Democrat. If we destroy the planet, we won't have anything to vote on." She likes McCain, but she is not sure, if elected, whether he would be his own man or someone "bought and paid."
But Lee-Wilson, who left a small town in Texas after a bad experience she said she preferred not to talk about, does know what the next president should do: provide comprehensive health care and a realistic "living wage" based on actual local living costs.
"I need glasses and dental work," she said, plus a "womanly checkup" from time to time. "I've been here in Washington for four years," she added, "and over half the facilities that offer services to the indigent and homeless have closed down." She recently waited half-a-day in a vast, overcrowded waiting room to see a lone optometrist.
Reginald Black, 30 years Lee Wilson's junior, has been on the street since returning home one day to find himself permanently locked out. "I had only a bag of belongings and a big machete."
Friends told him that as a homeless man he could make money any way he liked.
He saw two outcomes: jail or death. He chose instead to work as a vendor for Street Sense, a newspaper produced and sold by the homeless. Now he writes a column about how hard it is for a young homeless man to date or have a social life.
Roger Boursma, 46, was in McPherson Square on a recent afternoon, chatting with a nervous, long-haired young man who melted away as a stranger approached.
Skeletally thin, with a thatch of sandy hair and a smile revealing gaps and erosions, Boursma was lost in a drastically outsized pair of black jogging pants, pulled high above his waist.
He was happy to talk politics. He said he worried most about security. "I kind of think McCain and this governor from Alaska are probably moderate conservatives and are very well-equipped to get the job done," said Boursma, a self-described "homeless photographer."
If not outright suspicious of Obama, he was at least doubtful. "Who were the ones that brung 'im?" he asked with a smile, meaning, who were his backers and, possibly, his string-pullers?
Not far away, Tom Ashley, a lean fellow with unkempt hair, was standing on a street corner with a few plastic bags propping up a hand-lettered cardboard sign pleading for help. The wind kept threatening to carry off the sign.
Behind him loomed the massive Veterans Administration office building, itself with a view of the White House and, across the river, the Pentagon. Ashley is a navy veteran like McCain, a woodworker and homeless, following a painful divorce and custody fight that he said left him with $12 to his name. Being a veteran and homeless is not unusual - 2 in 10 of the homeless are vets - but being a veteran and an Obama supporter is a bit more so.
McCain is "not the man he used to be," he said, adding: "He's business-oriented, he's not people-oriented, and I think that's why Obama has gained so much ground."
Nationwide, perhaps 4 in 10 of the homeless sleep on the street on any given night, according to the Department of Housing and Urban Development. That number has grown in Washington since the mayor closed a popular shelter last month, promising better facilities.
Stoops, acting executive director of the National Coalition for the Homeless, said that the national total was certain to grow. "We think we're on the brink of a tidal wave unless something is done to help people facing home foreclosures," he said.
Jeffery McNeil, 38, is an entertaining, fast-talking political columnist for Street Sense. "I don't like either party," he said in the paper's cramped office in a handsome Episcopal church downtown.
"I don't believe in the liberal philosophy, but the right wing seems like they hate everyone unless they're rich." Democrats' support for the $700 billion bailout disgusted him: "They're voting to bail out all these guys with Maseratis."
McNeil, who is black, is no great fan of Obama, though he ranks George W. Bush as the "worst president ever."
Earl Francis, 50, a soft-spoken man in a neat black pin-striped suit, is a part-time poet and occasional street minister. He cares less about politics than about results.
"It's not a matter of party affiliation," he said, "but of which person can go into the Oval Office and bring the economy around and bring the soldiers home." In the end, on Nov. 4 "people will really vote their conscience, and that's why I think Mr. Obama is going to win."
L. Morrow, 61, a tall, thin black man with a mischievous sense of humor and a neatly knotted tie, does not think it matters who wins. "Who runs the White House? Who runs the country?" he asked. "We all know it's big business."
If things were otherwise, he said, "then Congress would have taken its $700 billion and built affordable housing."
Stoops said the homeless fear the street corners becoming more crowded, the clinics even more overstretched.
Reggie Black thinks every American should understand what it means to live on the street.
He would like to see the next president require every student to experience a program called Urban Plunge: 48 hours on the street, with no money, no cellphone, nothing.
And, added Black, who wore a thick wool sweater and a puffy parka during an interview, indoors, on a mild autumn day, students should have to do this in the dead of winter.
By Brian Knowlton
Tuesday, October 28, 2008
WASHINGTON: She has a veneer of skeptical toughness that slowly melts as she talks of being part of a "sorority" of homeless women. A husky-voiced, blue-eyed woman, she peers over purple, half-lens glasses that lend a certain distinction.
"You know, the longer you're homeless, the harder it is to get out," she said. "And the easier it is to develop mental problems."
Whoever becomes president - John McCain or Barack Obama - Brenda Lee-Wilson will be a neighbor. Washington has about 6,000 to 7,000 homeless people, the government estimates, many living on downtown streets or park benches within blocks of the White House.
A president's nearest neighbors, it turns out, are the homeless residents of Lafayette Square.
People like Lee-Wilson and Reggie Black, Roger Boursma and Jeffery McNeil, and many others who fade away rather than talk to a stranger, are part of a national army of homeless people whose numbers - the Department of Housing and Urban Development puts them between 700,000 and 750,000 at any given time - could exceed the population of Governor Sarah Palin's Alaska.
At times of crisis the homeless can be experts in economic malfunction. Some have strong views. An unscientific survey of several revealed Obama supporters, McCain supporters and others hard to define.
Michael Stoops, an advocate for the homeless for more than three decades, has never seen them more engaged. If there is one thing the homeless have plenty of, after all, it is time, he said. Time to read - "some of them read The New York Times cover to cover." Time to think. Time to argue politics.
The homeless can vote. A 1984 lawsuit in Washington helped establish that their residence can be as insubstantial as "Steam Grate, corner of 13th and L streets," though they have to be able to pick up mail somewhere. Last month, more than 300 homeless were registered in Washington in a single week.
Lee-Wilson, 53, was raised a devout Republican, "but I consider myself an environmentalist, or maybe a Democrat. If we destroy the planet, we won't have anything to vote on." She likes McCain, but she is not sure, if elected, whether he would be his own man or someone "bought and paid."
But Lee-Wilson, who left a small town in Texas after a bad experience she said she preferred not to talk about, does know what the next president should do: provide comprehensive health care and a realistic "living wage" based on actual local living costs.
"I need glasses and dental work," she said, plus a "womanly checkup" from time to time. "I've been here in Washington for four years," she added, "and over half the facilities that offer services to the indigent and homeless have closed down." She recently waited half-a-day in a vast, overcrowded waiting room to see a lone optometrist.
Reginald Black, 30 years Lee Wilson's junior, has been on the street since returning home one day to find himself permanently locked out. "I had only a bag of belongings and a big machete."
Friends told him that as a homeless man he could make money any way he liked.
He saw two outcomes: jail or death. He chose instead to work as a vendor for Street Sense, a newspaper produced and sold by the homeless. Now he writes a column about how hard it is for a young homeless man to date or have a social life.
Roger Boursma, 46, was in McPherson Square on a recent afternoon, chatting with a nervous, long-haired young man who melted away as a stranger approached.
Skeletally thin, with a thatch of sandy hair and a smile revealing gaps and erosions, Boursma was lost in a drastically outsized pair of black jogging pants, pulled high above his waist.
He was happy to talk politics. He said he worried most about security. "I kind of think McCain and this governor from Alaska are probably moderate conservatives and are very well-equipped to get the job done," said Boursma, a self-described "homeless photographer."
If not outright suspicious of Obama, he was at least doubtful. "Who were the ones that brung 'im?" he asked with a smile, meaning, who were his backers and, possibly, his string-pullers?
Not far away, Tom Ashley, a lean fellow with unkempt hair, was standing on a street corner with a few plastic bags propping up a hand-lettered cardboard sign pleading for help. The wind kept threatening to carry off the sign.
Behind him loomed the massive Veterans Administration office building, itself with a view of the White House and, across the river, the Pentagon. Ashley is a navy veteran like McCain, a woodworker and homeless, following a painful divorce and custody fight that he said left him with $12 to his name. Being a veteran and homeless is not unusual - 2 in 10 of the homeless are vets - but being a veteran and an Obama supporter is a bit more so.
McCain is "not the man he used to be," he said, adding: "He's business-oriented, he's not people-oriented, and I think that's why Obama has gained so much ground."
Nationwide, perhaps 4 in 10 of the homeless sleep on the street on any given night, according to the Department of Housing and Urban Development. That number has grown in Washington since the mayor closed a popular shelter last month, promising better facilities.
Stoops, acting executive director of the National Coalition for the Homeless, said that the national total was certain to grow. "We think we're on the brink of a tidal wave unless something is done to help people facing home foreclosures," he said.
Jeffery McNeil, 38, is an entertaining, fast-talking political columnist for Street Sense. "I don't like either party," he said in the paper's cramped office in a handsome Episcopal church downtown.
"I don't believe in the liberal philosophy, but the right wing seems like they hate everyone unless they're rich." Democrats' support for the $700 billion bailout disgusted him: "They're voting to bail out all these guys with Maseratis."
McNeil, who is black, is no great fan of Obama, though he ranks George W. Bush as the "worst president ever."
Earl Francis, 50, a soft-spoken man in a neat black pin-striped suit, is a part-time poet and occasional street minister. He cares less about politics than about results.
"It's not a matter of party affiliation," he said, "but of which person can go into the Oval Office and bring the economy around and bring the soldiers home." In the end, on Nov. 4 "people will really vote their conscience, and that's why I think Mr. Obama is going to win."
L. Morrow, 61, a tall, thin black man with a mischievous sense of humor and a neatly knotted tie, does not think it matters who wins. "Who runs the White House? Who runs the country?" he asked. "We all know it's big business."
If things were otherwise, he said, "then Congress would have taken its $700 billion and built affordable housing."
Stoops said the homeless fear the street corners becoming more crowded, the clinics even more overstretched.
Reggie Black thinks every American should understand what it means to live on the street.
He would like to see the next president require every student to experience a program called Urban Plunge: 48 hours on the street, with no money, no cellphone, nothing.
And, added Black, who wore a thick wool sweater and a puffy parka during an interview, indoors, on a mild autumn day, students should have to do this in the dead of winter.
Brown calls on China and Gulf states to help IMF pay for bailouts
Wall Street soars on bargain hunters and possible Federal Reserve rate cut
Governments on both sides of Atlantic turn to bailing out auto industry
*****************
COLUMNIST
David Brooks: The behavioral revolution
Tuesday, October 28, 2008
Roughly speaking, there are four steps to every decision. First, you perceive a situation. Then you think of possible courses of action. Then you calculate which course is in your best interest. Then you take the action.
Over the past few centuries, public policy analysts have assumed that step three is the most important. Economic models and entire social science disciplines are premised on the assumption that people are mostly engaged in rationally calculating and maximizing their self-interest.
But during this financial crisis, that way of thinking has failed spectacularly. As Alan Greenspan noted in his congressional testimony last week, he was "shocked" that markets did not work as anticipated. "I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms."
So perhaps this will be the moment when we alter our view of decision-making. Perhaps this will be the moment when we shift our focus from step three, rational calculation, to step one, perception.
Perceiving a situation seems, at first glimpse, like a remarkably simple operation. You just look and see what's around. But the operation that seems most simple is actually the most complex, it's just that most of the action takes place below the level of awareness. Looking at and perceiving the world is an active process of meaning-making that shapes and biases the rest of the decision-making chain.
Economists and psychologists have been exploring our perceptual biases for four decades now, with the work of Amos Tversky and Daniel Kahneman, and also with work by people like Richard Thaler, Robert Schiller, John Bargh and Dan Ariely.
My sense is that this financial crisis is going to amount to a coming-out party for behavioral economists and others who are bringing sophisticated psychology to the realm of public policy. At least these folks have plausible explanations for why so many people could have been so gigantically wrong about the risks they were taking.
Nassim Nicholas Taleb has been deeply influenced by this stream of research. Taleb not only has an explanation for what's happening, he saw it coming. His popular books "Fooled by Randomness" and "The Back Swan" were broadsides at the risk-management models used in the financial world and beyond.
In "The Black Swan," Taleb wrote, "The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup." Globalization, he noted, "creates interlocking fragility." He warned that while the growth of giant banks gives the appearance of stability, in reality, it raises the risk of a systemic collapse - "when one fails, they all fail."
Taleb believes that our brains evolved to suit a world much simpler than the one we now face. His writing is idiosyncratic, but he does touch on many of the perceptual biases that distort our thinking: our tendency to see data that confirm our prejudices more vividly than data that contradict them; our tendency to overvalue recent events when anticipating future possibilities; our tendency to spin concurring facts into a single causal narrative; our tendency to applaud our own supposed skill in circumstances when we've actually benefited from dumb luck.
And looking at the financial crisis, it is easy to see dozens of errors of perception. Traders misperceived the possibility of rare events. They got caught in social contagions and reinforced each other's risk assessments. They failed to perceive how tightly linked global networks can transform small events into big disasters.
Taleb is characteristically vituperative about the quantitative risk models, which try to model something that defies modelization. He subscribes to what he calls the tragic vision of humankind, which "believes in the existence of inherent limitations and flaws in the way we think and act and requires an acknowledgment of this fact as a basis for any individual and collective action." If recent events don't underline this worldview, nothing will.
If you start thinking about our faulty perceptions, the first thing you realize is that markets are not perfectly efficient, people are not always good guardians of their own self-interest and there might be limited circumstances when government could usefully slant the decision-making architecture (see "Nudge" by Thaler and Cass Sunstein for proposals). But the second thing you realize is that government officials are probably going to be even worse perceivers of reality than private business types. Their information feedback mechanism is more limited, and, being deeply politicized, they're even more likely to filter inconvenient facts.
This meltdown is not just a financial event, but also a cultural one. It's a big, whopping reminder that the human mind is continually trying to perceive things that aren't true, and not perceiving them takes enormous effort.
Tuesday, October 28, 2008
Roughly speaking, there are four steps to every decision. First, you perceive a situation. Then you think of possible courses of action. Then you calculate which course is in your best interest. Then you take the action.
Over the past few centuries, public policy analysts have assumed that step three is the most important. Economic models and entire social science disciplines are premised on the assumption that people are mostly engaged in rationally calculating and maximizing their self-interest.
But during this financial crisis, that way of thinking has failed spectacularly. As Alan Greenspan noted in his congressional testimony last week, he was "shocked" that markets did not work as anticipated. "I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms."
So perhaps this will be the moment when we alter our view of decision-making. Perhaps this will be the moment when we shift our focus from step three, rational calculation, to step one, perception.
Perceiving a situation seems, at first glimpse, like a remarkably simple operation. You just look and see what's around. But the operation that seems most simple is actually the most complex, it's just that most of the action takes place below the level of awareness. Looking at and perceiving the world is an active process of meaning-making that shapes and biases the rest of the decision-making chain.
Economists and psychologists have been exploring our perceptual biases for four decades now, with the work of Amos Tversky and Daniel Kahneman, and also with work by people like Richard Thaler, Robert Schiller, John Bargh and Dan Ariely.
My sense is that this financial crisis is going to amount to a coming-out party for behavioral economists and others who are bringing sophisticated psychology to the realm of public policy. At least these folks have plausible explanations for why so many people could have been so gigantically wrong about the risks they were taking.
Nassim Nicholas Taleb has been deeply influenced by this stream of research. Taleb not only has an explanation for what's happening, he saw it coming. His popular books "Fooled by Randomness" and "The Back Swan" were broadsides at the risk-management models used in the financial world and beyond.
In "The Black Swan," Taleb wrote, "The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup." Globalization, he noted, "creates interlocking fragility." He warned that while the growth of giant banks gives the appearance of stability, in reality, it raises the risk of a systemic collapse - "when one fails, they all fail."
Taleb believes that our brains evolved to suit a world much simpler than the one we now face. His writing is idiosyncratic, but he does touch on many of the perceptual biases that distort our thinking: our tendency to see data that confirm our prejudices more vividly than data that contradict them; our tendency to overvalue recent events when anticipating future possibilities; our tendency to spin concurring facts into a single causal narrative; our tendency to applaud our own supposed skill in circumstances when we've actually benefited from dumb luck.
And looking at the financial crisis, it is easy to see dozens of errors of perception. Traders misperceived the possibility of rare events. They got caught in social contagions and reinforced each other's risk assessments. They failed to perceive how tightly linked global networks can transform small events into big disasters.
Taleb is characteristically vituperative about the quantitative risk models, which try to model something that defies modelization. He subscribes to what he calls the tragic vision of humankind, which "believes in the existence of inherent limitations and flaws in the way we think and act and requires an acknowledgment of this fact as a basis for any individual and collective action." If recent events don't underline this worldview, nothing will.
If you start thinking about our faulty perceptions, the first thing you realize is that markets are not perfectly efficient, people are not always good guardians of their own self-interest and there might be limited circumstances when government could usefully slant the decision-making architecture (see "Nudge" by Thaler and Cass Sunstein for proposals). But the second thing you realize is that government officials are probably going to be even worse perceivers of reality than private business types. Their information feedback mechanism is more limited, and, being deeply politicized, they're even more likely to filter inconvenient facts.
This meltdown is not just a financial event, but also a cultural one. It's a big, whopping reminder that the human mind is continually trying to perceive things that aren't true, and not perceiving them takes enormous effort.
*******************
Financial crisis heralds era of "new seriousness"
Reuters
Wednesday, October 29, 2008
By Tom Bergin
Power tools roar as an army of workmen rushes to ensure Europe's largest city-centre shopping mall opens on time, but marketing executives say the crisis in global financial markets has accelerated a trend among consumers to reject conspicuous consumption.
The $3 billion (1.87 billion pound) Westfield centre in West London will have a strong focus on luxury when it opens on Thursday. Promotional material cites Louis Vuitton, Prada, Tiffany and Gucci among its stores but Managing Director Michael Gutman downplays these.
"We have a mass-market offer here, even though a couple of the precincts have attracted particular attention," he told Reuters by telephone.
Executives say other retailers are quietly dropping the term "luxury" from their marketing material in favour of phrases depicting shopping as relaxation and time shared with family and friends.
With credit harder to obtain, mortgage costs rising and unemployment growing in the United States, Europe and Japan, clever advertising may not be enough to persuade those who can still afford it to part with their money.
"In grim times it becomes distasteful or simply unfashionable to spend money on bling or what you might call conspicuous consumption," said Rory Sutherland, vice-chairman at advertising agency Ogilvy.
"There will be a trend towards Swedish, Lutheran-style minimalism," Sutherland predicted, referring to the modest, even austere, lifestyles favoured by Lutherans and Swedes by reputation.
Bentley-driving broker Scott David said people in the City of London financial district who could still afford it were hesitating before spending conspicuously.
"You wouldn't turn up to meeting in a brand-new Porsche. It would be seen as bad taste," he said. "You don't want to be seen to be rubbing people's faces in it."
LUXURY GOODS SLUMP
After years of strong growth, luxury goods sales are expected to fall globally by 1 percent in the fourth quarter, and may drop by up to 7 percent next year, according to a study by consulting firm Bain and Co. released this month.
U.S. sales of Porsche cars fell by 58 percent in September compared with September 2007, while overall car sales declined by 22 percent, according to figures from Autodata.
Andy Lear, head of planning at the London office of French advertising agency Publicis said the repercussions of the financial crisis -- front-page news worldwide for weeks -- were simply accelerating a trend that already existed.
"People had already been looking for something more meaningful than just chasing cash and buying things that look flashy," he said.
Certainly, some in the financial services industry who had previously enjoyed a luxury lifestyle say they are starting to question the relentless pursuit of material gain.
Investment banker Patrick, who did not want his surname to be used, said his working patterns had changed in recent months.
"I'm going home earlier and going to work later. I took my son to school last week before coming into work -- something I never did before," he said, adding that some colleagues were doing the same.
It was partly because the tough financial climate meant his employer would not be able to pay large bonuses this year, Patrick said, but it was also because the "buzz" had gone out of working long hours.
"The tone has changed ... I've got different priorities now."
Patrick is looking at ways to "give something back" to society, and is planning to work with a charity that offers debt counselling to the poor.
BOARD GAMES
Henrietta Creighton, managing director at Lifestyle Boutique which provides luxury concierge services, said business had slowed compared with last year, but clients were still spending on family celebrations.
Family board games such as Scrabble, Trivial Pursuit and Monopoly were expected to be Christmas hits as families decided against expensive holidays, Brian Goldner, chief executive of toy maker Hasbro, told Reuters in an interview last week.
The credit crisis could propel some people in firmly secular societies such as Britain towards religion, said Lord Richard Harries, a member of Britain's upper house of parliament and a former Anglican bishop.
"Perhaps after the last decades of conspicuous consumption and hollow celebrity culture we are entering what we might call an era of the new seriousness," he said in a talk on BBC radio.
Greater focus on family and a rise in altruism and spirituality often coincided with downturns, said Nick Wills-Johnson, Research fellow, at Curtain University Business School's centre for applied economics in Sydney.
The avaricious and brash 1980s, a period typified by the film "Wall Street," was followed by a global recession and what trend-watchers called the "Caring '90s," whose tone was set by George Bush Senior's pledge to make the United States "a kinder and gentler nation."
Downturns also boost anti-materialist movements, especially among the young, said David Fowler of Cambridge University, author of the book "Youth Culture in Modern Britain, 1920-1970."
"These do flourish in periods of austerity ... (a recession) exposes the superficiality of consumer-driven culture," he said.
(Additional reporting by Sinead Cruise; editing by Andrew Dobbie)
Reuters
Wednesday, October 29, 2008
By Tom Bergin
Power tools roar as an army of workmen rushes to ensure Europe's largest city-centre shopping mall opens on time, but marketing executives say the crisis in global financial markets has accelerated a trend among consumers to reject conspicuous consumption.
The $3 billion (1.87 billion pound) Westfield centre in West London will have a strong focus on luxury when it opens on Thursday. Promotional material cites Louis Vuitton, Prada, Tiffany and Gucci among its stores but Managing Director Michael Gutman downplays these.
"We have a mass-market offer here, even though a couple of the precincts have attracted particular attention," he told Reuters by telephone.
Executives say other retailers are quietly dropping the term "luxury" from their marketing material in favour of phrases depicting shopping as relaxation and time shared with family and friends.
With credit harder to obtain, mortgage costs rising and unemployment growing in the United States, Europe and Japan, clever advertising may not be enough to persuade those who can still afford it to part with their money.
"In grim times it becomes distasteful or simply unfashionable to spend money on bling or what you might call conspicuous consumption," said Rory Sutherland, vice-chairman at advertising agency Ogilvy.
"There will be a trend towards Swedish, Lutheran-style minimalism," Sutherland predicted, referring to the modest, even austere, lifestyles favoured by Lutherans and Swedes by reputation.
Bentley-driving broker Scott David said people in the City of London financial district who could still afford it were hesitating before spending conspicuously.
"You wouldn't turn up to meeting in a brand-new Porsche. It would be seen as bad taste," he said. "You don't want to be seen to be rubbing people's faces in it."
LUXURY GOODS SLUMP
After years of strong growth, luxury goods sales are expected to fall globally by 1 percent in the fourth quarter, and may drop by up to 7 percent next year, according to a study by consulting firm Bain and Co. released this month.
U.S. sales of Porsche cars fell by 58 percent in September compared with September 2007, while overall car sales declined by 22 percent, according to figures from Autodata.
Andy Lear, head of planning at the London office of French advertising agency Publicis said the repercussions of the financial crisis -- front-page news worldwide for weeks -- were simply accelerating a trend that already existed.
"People had already been looking for something more meaningful than just chasing cash and buying things that look flashy," he said.
Certainly, some in the financial services industry who had previously enjoyed a luxury lifestyle say they are starting to question the relentless pursuit of material gain.
Investment banker Patrick, who did not want his surname to be used, said his working patterns had changed in recent months.
"I'm going home earlier and going to work later. I took my son to school last week before coming into work -- something I never did before," he said, adding that some colleagues were doing the same.
It was partly because the tough financial climate meant his employer would not be able to pay large bonuses this year, Patrick said, but it was also because the "buzz" had gone out of working long hours.
"The tone has changed ... I've got different priorities now."
Patrick is looking at ways to "give something back" to society, and is planning to work with a charity that offers debt counselling to the poor.
BOARD GAMES
Henrietta Creighton, managing director at Lifestyle Boutique which provides luxury concierge services, said business had slowed compared with last year, but clients were still spending on family celebrations.
Family board games such as Scrabble, Trivial Pursuit and Monopoly were expected to be Christmas hits as families decided against expensive holidays, Brian Goldner, chief executive of toy maker Hasbro, told Reuters in an interview last week.
The credit crisis could propel some people in firmly secular societies such as Britain towards religion, said Lord Richard Harries, a member of Britain's upper house of parliament and a former Anglican bishop.
"Perhaps after the last decades of conspicuous consumption and hollow celebrity culture we are entering what we might call an era of the new seriousness," he said in a talk on BBC radio.
Greater focus on family and a rise in altruism and spirituality often coincided with downturns, said Nick Wills-Johnson, Research fellow, at Curtain University Business School's centre for applied economics in Sydney.
The avaricious and brash 1980s, a period typified by the film "Wall Street," was followed by a global recession and what trend-watchers called the "Caring '90s," whose tone was set by George Bush Senior's pledge to make the United States "a kinder and gentler nation."
Downturns also boost anti-materialist movements, especially among the young, said David Fowler of Cambridge University, author of the book "Youth Culture in Modern Britain, 1920-1970."
"These do flourish in periods of austerity ... (a recession) exposes the superficiality of consumer-driven culture," he said.
(Additional reporting by Sinead Cruise; editing by Andrew Dobbie)
*************
MEANWHILE
All's not well for the well-to-do
By Alex Beam
Tuesday, October 28, 2008
What a terrible time to be well off.
Notice I said well off, not rich. It's always a good time to be rich, except perhaps when the tumbrels are rolling toward the guillotine, the mob is calling for your head, and your visa to Switzerland got lost in the mail. But to be merely affluent during this economic crisis - you're doomed.
Who's affluent? Quite possibly, you. I say you are well-to-do if, like 1.6 million Americans, you fall into the IRS's 33 percent marginal tax bracket, meaning that you and your spouse make between $200,000 and $357,000 in annual taxable income. (For perspective, the median American household income level is about $50,000.) Or if you are one of about 4 million Americans who fall between the top 2 percent and the top 4 percent in terms of income. The top 1 percent - the one-plus-million who fall into the highest, 35 percent tax bracket - are really quite rich.
Why does it stink to be well off? Well, on the discretionary spending side, you have to make some adjustments. Things you used to do, such as eating at nice restaurants, paying someone else to mow your lawn, enjoying a theater subscription - those will go. You'll learn that Stop & Shop club soda starts tasting pretty much the same as San Pellegrino. Payments that weren't altogether necessary, like psychological therapy for the "worried well," or orthodontistry for children with perfect teeth - they'll go, too.
I'm just happy I had those enamel implants put in above my gum line before my mutual funds collapsed.
There are other perquisites of being well-to-do that can't be so easily foregone. The people I am writing about tend to live in communities where the public schools are excellent, or they send children to private schools.
And to private colleges. This isn't like the lawn service. Where are they going to come up with $50,000 a year, when all those funds that the grandparents helped out with are suddenly in the tank?
Suppose you want your children to attend an excellent private university like Tufts? "We've heard from people who are concerned," says executive vice president Patricia Campbell. "People across all income strata are reassessing what they are able to do." Like people, there are rich colleges, like Harvard, Yale and Stanford, and there are colleges that are merely well-to-do. "There is stress on every single source of revenue," Campbell says. "That includes endowments, which are down, annual gifts, and grants from the government, which has its own fiscal problems."
Tufts and other schools want to help their existing students first.
Will there be as much aid money for next year's entering freshmen? Campbell says it's too early to tell.
There is more bad news. You are welcome to compare the tax plans of the two presidential candidates, which have some significant differences.
(Obama is overtly soak-the-rich. McCain dreams that he can preserve the 2001 Bush tax cuts.) But one thing is for certain. When the next president and the Democratic Congress try to pay for their wars and their bailouts, they will be coming after the 33 percenters.
"There will probably be a tax hike regardless of who is president," says Tax Foundation economist Gerald Prante. "They have to go where the income is. They could raise taxes on the people at the bottom, but there's not enough money there, plus you would have a political backlash."
The genuinely rich? They couldn't give a fig. For one thing, they aren't exactly hurting in the downturn. Jamie Johnson, an heir to the Johnson & Johnson fortune who writes a blog chronicling "The One Percent," notes that "I cannot say that I have seen the super-rich crumbling under the weight of debilitating financial loses. Their day may come, but it hasn't arrived yet."
The Gotrocks are so flush, they're voting for Obama. A recent survey from Prince Associates, a market research firm specializing in wealth, reports that the merely affluent intend to vote for McCain. But the really rich, families with $30 million of net worth or more, plan to vote for Obama.
Why? Because the super-rich don't care about taxes. They care more about social issues, Supreme Court nominations and healthcare policy.
They don't object to redistributing wealth, because they have so much of it. You, on the other hand: You're doomed.
By Alex Beam
Tuesday, October 28, 2008
What a terrible time to be well off.
Notice I said well off, not rich. It's always a good time to be rich, except perhaps when the tumbrels are rolling toward the guillotine, the mob is calling for your head, and your visa to Switzerland got lost in the mail. But to be merely affluent during this economic crisis - you're doomed.
Who's affluent? Quite possibly, you. I say you are well-to-do if, like 1.6 million Americans, you fall into the IRS's 33 percent marginal tax bracket, meaning that you and your spouse make between $200,000 and $357,000 in annual taxable income. (For perspective, the median American household income level is about $50,000.) Or if you are one of about 4 million Americans who fall between the top 2 percent and the top 4 percent in terms of income. The top 1 percent - the one-plus-million who fall into the highest, 35 percent tax bracket - are really quite rich.
Why does it stink to be well off? Well, on the discretionary spending side, you have to make some adjustments. Things you used to do, such as eating at nice restaurants, paying someone else to mow your lawn, enjoying a theater subscription - those will go. You'll learn that Stop & Shop club soda starts tasting pretty much the same as San Pellegrino. Payments that weren't altogether necessary, like psychological therapy for the "worried well," or orthodontistry for children with perfect teeth - they'll go, too.
I'm just happy I had those enamel implants put in above my gum line before my mutual funds collapsed.
There are other perquisites of being well-to-do that can't be so easily foregone. The people I am writing about tend to live in communities where the public schools are excellent, or they send children to private schools.
And to private colleges. This isn't like the lawn service. Where are they going to come up with $50,000 a year, when all those funds that the grandparents helped out with are suddenly in the tank?
Suppose you want your children to attend an excellent private university like Tufts? "We've heard from people who are concerned," says executive vice president Patricia Campbell. "People across all income strata are reassessing what they are able to do." Like people, there are rich colleges, like Harvard, Yale and Stanford, and there are colleges that are merely well-to-do. "There is stress on every single source of revenue," Campbell says. "That includes endowments, which are down, annual gifts, and grants from the government, which has its own fiscal problems."
Tufts and other schools want to help their existing students first.
Will there be as much aid money for next year's entering freshmen? Campbell says it's too early to tell.
There is more bad news. You are welcome to compare the tax plans of the two presidential candidates, which have some significant differences.
(Obama is overtly soak-the-rich. McCain dreams that he can preserve the 2001 Bush tax cuts.) But one thing is for certain. When the next president and the Democratic Congress try to pay for their wars and their bailouts, they will be coming after the 33 percenters.
"There will probably be a tax hike regardless of who is president," says Tax Foundation economist Gerald Prante. "They have to go where the income is. They could raise taxes on the people at the bottom, but there's not enough money there, plus you would have a political backlash."
The genuinely rich? They couldn't give a fig. For one thing, they aren't exactly hurting in the downturn. Jamie Johnson, an heir to the Johnson & Johnson fortune who writes a blog chronicling "The One Percent," notes that "I cannot say that I have seen the super-rich crumbling under the weight of debilitating financial loses. Their day may come, but it hasn't arrived yet."
The Gotrocks are so flush, they're voting for Obama. A recent survey from Prince Associates, a market research firm specializing in wealth, reports that the merely affluent intend to vote for McCain. But the really rich, families with $30 million of net worth or more, plan to vote for Obama.
Why? Because the super-rich don't care about taxes. They care more about social issues, Supreme Court nominations and healthcare policy.
They don't object to redistributing wealth, because they have so much of it. You, on the other hand: You're doomed.
Immigrant convicted of murder and sexual violence in Italy
The Associated Press
Tuesday, October 28, 2008
PERUGIA, Italy: An American college student and her former boyfriend were ordered Tuesday to stand trial in last year's slaying of her roommate, while the judge also convicted an Ivory Coast man in the killing, lawyers said.
The judge indicted Amanda Knox, 21, of Seattle and Raffaele Sollecito of Italy on charges of murder and sexual violence in the stabbing death of Meredith Kercher of England, said Francesco Maresca, a lawyer for the victim's family. Trial for the two, who deny wrongdoing, will start Dec. 4.
A third suspect, Rudy Hermann Guede of the West African nation of Ivory Coast, was sentenced to 30 years in prison after being convicted on the same charges in a fast-track trial requested by his defense, Maresca said. Prosecutors asked for life in jail.
Knox's attorney, Luciano Ghirga, said his client "was quite disappointed" by the ruling. "She is ready to start again," Ghirga told reporters. "The (first) hearing is very close, we have to reorganize our defense line in time."
Judge Paolo Micheli emerged with a verdict after almost 12 of hours of deliberations. All the proceedings were held behind closed doors and the three suspects awaited the ruling in separate cells at the courthouse.
Lawyers for Knox and Sollecito, who were jailed shortly after the slaying last Nov. 2, had asked that their clients be granted house arrest if indicted. Lawyers leaving the courthouse said Micheli did not rule on the request and a decision was expected in the coming days.
Kercher's family, including her mother, father, two brothers and a sister attended the hearing.
"We are as pleased as we can be with the decision. At the end of the day, we are here because our sister Meredith was murdered," brother Lyle Kercher said at a news conference.
The victim's other brother, John, said he was "overwhelmed" when the judge handed down the guilty verdict for Guede.
Kercher, a 21-year-old student from England, was found dead in the apartment she shared with Knox. She had been stabbed in the neck.
Prosecutors allege Kercher died during what began as a sex game, with Sollecito holding her by the shoulders from behind while Knox touched her with the point of a knife and Guede tried to sexually assault her. Prosecutors say Knox then fatally stabbed Kercher in the throat.
Guede admitted being in the house, but denied any part in the killing. He said that he was in the bathroom when Kercher was attacked and that he rushed into the bedroom to try to rescue her. He said he fled Italy after the slaying because he was frightened.
Sollecito, 24, has said that he was in his own apartment in Perugia at the time of the killing and that he doesn't remember if Knox spent part or all of that night with him.
Knox initially told investigators she was in the apartment when Kercher was killed and covered her ears against the victim's screams. Later, Knox said she wasn't in the house.
Prosecutors say Knox's DNA was found on the handle of a knife that might have been used in the slaying, while Kercher's DNA was found on the blade.
They say they found Sollecito's DNA on the victim's bra, although Sollecito's defense team says the bra bore multiple DNA traces and argue the evidence might have been inadvertently contaminated during the investigation.
http://www.iht.com/articles/ap/2008/10/28/europe/EU-Italy-Student-Slain.php
UN atomic energy chief warns of nuclear theft
By Neil MacFarquhar
Tuesday, October 28, 2008
UNITED NATIONS, New York: Mohamed ElBaradei, chief of the International Atomic Energy Agency, asserts that the number of reports of nuclear or radioactive material stolen around the world last year was "disturbingly high."
ElBaradei, in his annual report to the General Assembly, said Monday that nearly 250 thefts were reported in the year ending in June.
"The possibility of terrorists obtaining nuclear or other radioactive material remains a grave threat," he said. "Equally troubling is the fact that much of this material is not subsequently recovered."
Members of ElBaradei's staff and outside experts said that the amount of missing material remained relatively small. If all the stolen material were lumped together, it would not be enough to build even one nuclear device, they said.
It was unclear if the rising number of reports of stolen material stemmed from a growing market for radioactive goods or more vigilant reporting of thefts by member states.
But the idea that there might be a new market for such material was of concern, the staff members said, especially if some of it were to end up in a dirty bomb. The threat from such a bomb is less a health risk from radiation than from the panic an attack would probably cause, said Cristina Hansell, a professor at the Center for Nonproliferation Studies, in Monterey, California.
Most of the concern about theft centers on the countries of the former Soviet Union, where nuclear programs were widespread, but they occur everywhere. In a typical case, Hansell said, an oil company reported last May that a device containing radioactive material that was used in exploration in Sudan was missing.
It would take long exposure to the device to create any health risk, she said.
Aside from the issue of thefts, ElBaradei said he hoped that North Korea, which left the Nuclear Nonproliferation Treaty in 2003, would return, and he criticized Iran for impeding the agency's attempts to verify whether it was developing nuclear weapons.
Sin Sang Chol, a North Korean representative to the UN, accused the monitoring agency of spying on his country at the behest of Washington and called its position "prejudiced and unfair."
By Neil MacFarquhar
Tuesday, October 28, 2008
UNITED NATIONS, New York: Mohamed ElBaradei, chief of the International Atomic Energy Agency, asserts that the number of reports of nuclear or radioactive material stolen around the world last year was "disturbingly high."
ElBaradei, in his annual report to the General Assembly, said Monday that nearly 250 thefts were reported in the year ending in June.
"The possibility of terrorists obtaining nuclear or other radioactive material remains a grave threat," he said. "Equally troubling is the fact that much of this material is not subsequently recovered."
Members of ElBaradei's staff and outside experts said that the amount of missing material remained relatively small. If all the stolen material were lumped together, it would not be enough to build even one nuclear device, they said.
It was unclear if the rising number of reports of stolen material stemmed from a growing market for radioactive goods or more vigilant reporting of thefts by member states.
But the idea that there might be a new market for such material was of concern, the staff members said, especially if some of it were to end up in a dirty bomb. The threat from such a bomb is less a health risk from radiation than from the panic an attack would probably cause, said Cristina Hansell, a professor at the Center for Nonproliferation Studies, in Monterey, California.
Most of the concern about theft centers on the countries of the former Soviet Union, where nuclear programs were widespread, but they occur everywhere. In a typical case, Hansell said, an oil company reported last May that a device containing radioactive material that was used in exploration in Sudan was missing.
It would take long exposure to the device to create any health risk, she said.
Aside from the issue of thefts, ElBaradei said he hoped that North Korea, which left the Nuclear Nonproliferation Treaty in 2003, would return, and he criticized Iran for impeding the agency's attempts to verify whether it was developing nuclear weapons.
Sin Sang Chol, a North Korean representative to the UN, accused the monitoring agency of spying on his country at the behest of Washington and called its position "prejudiced and unfair."
***********************
Iraqi court convicts U.S. soldiers' killer
By Alissa J. Rubin
Tuesday, October 28, 2008
BAGHDAD: An Iraqi criminal court on Tuesday sentenced to death a man accused in the kidnapping, torture and murder of three young U.S. soldiers on June 14, 2006, but acquitted his two co-defendants.
The man, Ibrahim Karim al-Qaraguli, 29, was part of a gang of militants operating in an area just south of Baghdad known as the Triangle of Death.
He appears to have been the driver of one of the vehicles that was used in the soldiers' abduction and torture.
The kidnapping and killing of the three soldiers, who belonged to the 101st Airborne Division, was one of the more horrific to occur in the course of the war.
Specialist David Babineau, 25, Private First Class Kristian Menchaca, 23, and Private First Class Thomas Tucker, 25, of the 1st Battalion 502nd Regiment of the 2nd Brigade of the 101st Airborne Division were attacked by a group of insurgents as they sat in their Humvee under a bridge near the Euphrates River.
Babineau was killed in the initial gunfight with the militants, but the other two soldiers were captured and tortured; one was beheaded.
The Mujahideen Shura Council, a militant Sunni group affiliated with Al Qaeda in Mesopotamia, claimed responsibility for the attack in a video saying that it was revenge for the rape of a 14-year-old girl and the subsequent killing of the girl, her parents and younger sister, which had occurred a few days earlier.
The three soldiers were in the same unit as six that were charged with the rape and murder.Iraq to request new U.S. pact
The Iraqi government decided Tuesday to formally ask the United States to reopen negotiations on a proposed deal to keep U.S. troops here past the end of the year, The Associated Press reported from Baghdad.
The move cast doubt on whether the agreement could win parliamentary approval by the end of 2008, when the UN mandate expires - and with it the legal basis for U.S. operations in Iraq.
The United States has warned that without an agreement or an extension of the mandate, military operations would cease, including not only combat operations but also infrastructure projects and aid to the Iraqi government.
Ali al-Dabbagh, a government spokesman, said the decision to ask for more talks was taken after cabinet members submitted amendments to the draft. They asked Prime Minister Nuri Kamal al-Maliki to present them to the Iraqi negotiating team.
Dabbagh described the amendments as "essential" before the prime minister could submit the draft to Parliament. Maliki has said he would not submit the document to the 275-member legislature unless he was confident it can win overwhelming approval.
In Washington, the White House press secretary, Dana Perino, said the Bush administration might talk to the Iraqis about their proposed amendments, but that "it will just be a very high bar for them to clear for us to change anything" in the agreement.
She said that U.S. officials had not seen the amendments list.
"It might be something we can work with, it might not," Perino said. "We have provided them with our best thinking on it, our best offer. We think that the door is pretty much shut on these negotiations."
For nearly two weeks, Iraqi politicians have been considering the draft agreement, which would keep U.S. troops in Iraq through 2011 unless both sides agree that they could stay.
The draft would also give the Iraqis a greater role in supervising U.S. military operations and allow Iraqi courts to try U.S. soldiers and contractors accused of major crimes off duty and off base.
But critics say the draft does not go far enough in protecting Iraqi sovereignty, and major Shiite politicians said last week that the agreement stood little chance of approval in its current form.
One option being floated privately is to ask the UN Security Council to renew the mandate for six months or a year until a way out of the deadlock is found. It is unclear whether Russia, China and other council members may raise their own demands and delay the process.
By Alissa J. Rubin
Tuesday, October 28, 2008
BAGHDAD: An Iraqi criminal court on Tuesday sentenced to death a man accused in the kidnapping, torture and murder of three young U.S. soldiers on June 14, 2006, but acquitted his two co-defendants.
The man, Ibrahim Karim al-Qaraguli, 29, was part of a gang of militants operating in an area just south of Baghdad known as the Triangle of Death.
He appears to have been the driver of one of the vehicles that was used in the soldiers' abduction and torture.
The kidnapping and killing of the three soldiers, who belonged to the 101st Airborne Division, was one of the more horrific to occur in the course of the war.
Specialist David Babineau, 25, Private First Class Kristian Menchaca, 23, and Private First Class Thomas Tucker, 25, of the 1st Battalion 502nd Regiment of the 2nd Brigade of the 101st Airborne Division were attacked by a group of insurgents as they sat in their Humvee under a bridge near the Euphrates River.
Babineau was killed in the initial gunfight with the militants, but the other two soldiers were captured and tortured; one was beheaded.
The Mujahideen Shura Council, a militant Sunni group affiliated with Al Qaeda in Mesopotamia, claimed responsibility for the attack in a video saying that it was revenge for the rape of a 14-year-old girl and the subsequent killing of the girl, her parents and younger sister, which had occurred a few days earlier.
The three soldiers were in the same unit as six that were charged with the rape and murder.Iraq to request new U.S. pact
The Iraqi government decided Tuesday to formally ask the United States to reopen negotiations on a proposed deal to keep U.S. troops here past the end of the year, The Associated Press reported from Baghdad.
The move cast doubt on whether the agreement could win parliamentary approval by the end of 2008, when the UN mandate expires - and with it the legal basis for U.S. operations in Iraq.
The United States has warned that without an agreement or an extension of the mandate, military operations would cease, including not only combat operations but also infrastructure projects and aid to the Iraqi government.
Ali al-Dabbagh, a government spokesman, said the decision to ask for more talks was taken after cabinet members submitted amendments to the draft. They asked Prime Minister Nuri Kamal al-Maliki to present them to the Iraqi negotiating team.
Dabbagh described the amendments as "essential" before the prime minister could submit the draft to Parliament. Maliki has said he would not submit the document to the 275-member legislature unless he was confident it can win overwhelming approval.
In Washington, the White House press secretary, Dana Perino, said the Bush administration might talk to the Iraqis about their proposed amendments, but that "it will just be a very high bar for them to clear for us to change anything" in the agreement.
She said that U.S. officials had not seen the amendments list.
"It might be something we can work with, it might not," Perino said. "We have provided them with our best thinking on it, our best offer. We think that the door is pretty much shut on these negotiations."
For nearly two weeks, Iraqi politicians have been considering the draft agreement, which would keep U.S. troops in Iraq through 2011 unless both sides agree that they could stay.
The draft would also give the Iraqis a greater role in supervising U.S. military operations and allow Iraqi courts to try U.S. soldiers and contractors accused of major crimes off duty and off base.
But critics say the draft does not go far enough in protecting Iraqi sovereignty, and major Shiite politicians said last week that the agreement stood little chance of approval in its current form.
One option being floated privately is to ask the UN Security Council to renew the mandate for six months or a year until a way out of the deadlock is found. It is unclear whether Russia, China and other council members may raise their own demands and delay the process.
****************
OPINION
What Vietnam teaches us
By Henry A. Kissinger
Tuesday, October 28, 2008
For America, the Vietnam War was the traumatic event of the second half of the last century.
Entered into with a brash self-confidence after a decade and a half of creative and successful foreign policy, our engagement ended with America as divided as it had not been since the Civil War. As a result, Congress cut off aid to Vietnam two years after the troops had been withdrawn, and the last Americans left Saigon by helicopter from the roof of our embassy.
No account of that period adequate to the emotion and drama of the time has yet appeared. The dwindling number of witnesses of the period remains traumatized by its passions or divided by their own pasts.
For younger leaders, an understanding of the controversies of their fathers has proved elusive, obliging them to slide into the same dilemmas in their contemporary policies.
"Lessons in Disaster: McGeorge Bundy and the Path to War in Vietnam" does not fill that vacuum. It does, however, illuminate the five years (1961-1966) during which the defense of South Vietnam was Americanized. Tracing the efforts of one of the most prominent public servants of the time, it seeks to come to terms with America's entry into its tragedy.
Brilliant and fiercely articulate, McGeorge Bundy was a warm and thoughtful human being behind the Boston Brahmin crust. He had had a spectacular academic career, becoming the dean of the faculty at the age of 34. He was the dean when I was at Harvard.
In 1961, John F. Kennedy appointed Bundy (a Republican) as National Security Adviser. Bundy created the modern portfolio of that position. Since the flow of memoranda from various departments concerned with national security had become too vast, Bundy's office turned into a clearinghouse. Ever since, the National Security Council has prepared the range of options among which the president chooses.
For five years, Bundy performed his duties with articulateness and deftness. This included the Berlin crisis, the Cuban missile period and the nuclear test ban agreement. His grip loosened with the decline in the fortunes of the Vietnam War, whose public advocate and, to some extent, co-manager he had become.
Bundy became the target of David Halberstam's "The Best and the Brightest," which used him to illustrate the thesis that the cream of the establishment led America astray in Vietnam. The book set the tone for most of the subsequent assessment of the war. Bundy bore the opprobrium with dignity, never answering the criticisms directly and perhaps privately agreeing with some of them. He retired in 1966, never to hold public office again.
Toward the end of his life, he began, with a research assistant, to assemble materials for reconstructing the events that had pushed America from hope to despair. He died before he could begin the manuscript. Bundy's researcher, Gordon M. Goldstein, has now turned their collaborative effort and some fragments of Bundy's writing into "Lessons in Disaster." It's his own effort, representing the researcher's view, not authorized by the Bundy family. It is also a strange yet fascinating book.
No one is said to be a hero to his valet; this book permits one to extend the truism to research assistants. "Lessons in Disaster" is relentlessly hostile to its subject - not so much to Bundy's person, whom it treats respectfully, as his policies.
The book is an illuminating window into a seminal time. It is also further evidence of the inability of America to transcend the debates that tore it apart a generation ago.
Bundy successfully managed the legacy of America's postwar policy in Europe and towards the Soviet Union. Where he failed was in extending to Southeast Asia the policies that reconstructed Europe and eventually won the Cold War.
The difficulty was that Southeast Asia presented a different strategic problem. In Europe, governmental institutions had survived the ravages of the Second World War. The threats they faced were to their economic expectations, compounded by the Soviet troops along their borders. The Marshall Plan took care of the first threat; NATO addressed the second.
None of these conditions existed in South Vietnam. The dividing line in Vietnam was technically a demilitarized zone never accepted as an international frontier by Hanoi, attempting to undermine governmental institutions by guerrilla warfare.
In this war without front lines, military containment took on a different meaning. In Europe, the basic challenge was territorial integrity; in Southeast Asia, it was governmental legitimacy. The new Kennedy administration paid lip service to this distinction, but never solved how to act on it.
The administration accepted the conventional wisdom regarding the issues. Like its predecessors of both parties, it assumed containment to be indivisible and the domino effect of the collapse of South Vietnam to be a kind of natural law.
It even added a philosophical refinement: Vietnam was no longer treated as one of many fronts in the global Cold War but as the central front. Conventional aggression having been stymied by NATO, guerrilla warfare needed to be similarly frustrated in Vietnam.
With the perspective of nearly four decades, it is possible to challenge these assumptions. Communism has proved not to be monolithic; the dominos did not fall with the collapse of South Vietnam (though 10 years of effort may have helped steady them); the problem of how to deal with guerrilla warfare has grown worse, not better.
Goldstein argues with some justice that Bundy should have raised these possibilities. But one must remember that governments run by addressing conventional wisdom, not by challenging it. Caught between established convictions and his premonitions, Bundy concentrated on managing the crises in terms of familiar patterns. The administration slid into a series of ad hoc decisions that preempted Kennedy's strategic choice.
Reading the book, one is struck by the informal, almost conversational, tone of the process as Bundy was feeling his way. Thus, in November 1961, Bundy wrote to the president: "The other day at the swimming pool, you asked me what I thought, and here it is. We should now agree to send about one division when needed for military action inside Vietnam." Goldstein reports no accompanying options paper, no definition of the meaning of "about one division" no desired strategic outcome.
Goldstein leaves little doubt that Kennedy was opposed to sending combat troops to Southeast Asia. It was more the result of a visceral reluctance than a strategic judgment. In fact, on the formal level Kennedy was ambivalent, torn between considering the survival of South Vietnam essential for national security and being loathe to achieve this goal with American combat forces.
That decision could be postponed in 1963, but it became unavoidable in 1965 when Lyndon B. Johnson was president and Vietnam was on the verge of collapse. As it happened, Johnson's options and his dilemmas were made more acute by a decision taken in the last weeks of the Kennedy presidency.
On a weekend when both Kennedy and Bundy were out of town, the assistant secretary of state, together with an NSC staffer, contrived an instruction to the U.S. ambassador in Saigon that was used to trigger a military coup. President Ngo Dinh Diem and his brother were assassinated and a series of coups. Hanoi saw in this turmoil an opportunity to introduce regular combat troops into the South.
Kennedy was assassinated three weeks later. The decision to send combat troops became Johnson's. Goldstein traces the evolution of the debate, in which the principal advisors - Dean Rusk, Robert McNamara and Bundy - and the Joint Chiefs of Staff strongly advocated a significant build-up of combat forces.
Goldstein argues that Kennedy, while accepting the domino theory, would have lived with its consequences, including the Communization of all of Southeast Asia, rather than send a large expeditionary force to Southeast Asia. But we cannot know his reaction had he been presented with the united views of his principal foreign policy and security advisors.
When America goes to war, it should be able to describe to itself how it defines victory and how it proposes to achieve it. Or else how it proposes to end its military engagement and by what diplomacy. In Vietnam, America sent combat forces on behalf of a general notion of credibility and in pursuit of a negotiation whose content was never defined.
The credibility point was reflected in an amazing Bundy statement quoted by Goldstein: that it would be better for America's credibility to lose after sending 100,000 men than not to have resisted Hanoi at all.
Another self-inflicted handicap was the reluctance to view Indochina as a single strategic theater. Eisenhower was almost certainly right when he described a defense of Laos as essential to the defense of Vietnam. But Bundy resisted that proposition with the argument to Kennedy, according to Goldstein, that "Laos was never really ours after 1954. South Vietnam is and wants to be." This distinction produced the anomalous situation in which half a million Americans fought to achieve a stalemate in Vietnam, a military objective rendered nearly impossible by enemy bases in Cambodia and supply lines through Laos.
As for negotiation, Bundy argued that once Hanoi's efforts to dominate South Vietnam were thwarted, an undefined compromise would emerge through diplomacy - in effect, a strategy seeking stalemate, not victory.
But stalemate violates the maxim that the guerrilla wins if he does not lose. The effort required to bring about a compromise was indistinguishable from the requirements of victory - as the administration in which I served had to learn from bitter experience.
A reviewer cannot pretend to sum up a generation's travail in a book review. A few observations will be in order:
When the president is asked to consider going to war, he must be presented, above all, with an analysis of the global strategic situation on which the recommendation is based.
The purpose of war is victory. Stalemate is a last resort, not a desirable strategic objective.
Victory needs to be defined as an outcome achievable in a time period sustainable by American public opinion.
There has to be presented to the president a sustainable diplomatic framework.
Diplomacy and strategy must be treated as a whole, not as successive phases of policy.
Authority for diplomacy and strategy must be clearly assigned.
The administration as well as critics should conduct their debates with the restraint imposed by the knowledge that the unity of our society has been the hope of the world.
Should Bundy have come to conclusions such as these earlier? To do so, Bundy would have had to abjure the views of a generation avowed since Truman's disputes with MacArthur 15 years earlier, that force should be applied in minimum increments; that strategy and diplomacy were separate spheres to be conducted consecutively; that American principles applied in an undifferentiated manner globally were established maxims of a successful policy.
These principles were implemented in Vietnam in the early 1960s by the best, not the worst, of their generation. If the policymakers lacked perspective, their critics lacked compassion.
Throughout history, every problem America had recognized had proved soluble by the application of resources and idealism. Vietnam proved obdurate. Mourning the assassination of a president with whom it had identified, and perplexed by an impasse to which its own theories had contributed, the intellectual establishment ascribed its traumas to a failure of the American experience and the moral inadequacy of its leaders.
This turned the national debate from an argument over feasibility into a crusade increasingly settled by confrontations designed to demonstrate a moral indictment. In that sense, Bundy was victim as much as cause of the forces unleashed as America was obliged to adapt its history to a changing world.
Henry A. Kissinger served as national security adviser and as secretary of state in the administrations of Presidents Richard Nixon and Gerald Ford.
By Henry A. Kissinger
Tuesday, October 28, 2008
For America, the Vietnam War was the traumatic event of the second half of the last century.
Entered into with a brash self-confidence after a decade and a half of creative and successful foreign policy, our engagement ended with America as divided as it had not been since the Civil War. As a result, Congress cut off aid to Vietnam two years after the troops had been withdrawn, and the last Americans left Saigon by helicopter from the roof of our embassy.
No account of that period adequate to the emotion and drama of the time has yet appeared. The dwindling number of witnesses of the period remains traumatized by its passions or divided by their own pasts.
For younger leaders, an understanding of the controversies of their fathers has proved elusive, obliging them to slide into the same dilemmas in their contemporary policies.
"Lessons in Disaster: McGeorge Bundy and the Path to War in Vietnam" does not fill that vacuum. It does, however, illuminate the five years (1961-1966) during which the defense of South Vietnam was Americanized. Tracing the efforts of one of the most prominent public servants of the time, it seeks to come to terms with America's entry into its tragedy.
Brilliant and fiercely articulate, McGeorge Bundy was a warm and thoughtful human being behind the Boston Brahmin crust. He had had a spectacular academic career, becoming the dean of the faculty at the age of 34. He was the dean when I was at Harvard.
In 1961, John F. Kennedy appointed Bundy (a Republican) as National Security Adviser. Bundy created the modern portfolio of that position. Since the flow of memoranda from various departments concerned with national security had become too vast, Bundy's office turned into a clearinghouse. Ever since, the National Security Council has prepared the range of options among which the president chooses.
For five years, Bundy performed his duties with articulateness and deftness. This included the Berlin crisis, the Cuban missile period and the nuclear test ban agreement. His grip loosened with the decline in the fortunes of the Vietnam War, whose public advocate and, to some extent, co-manager he had become.
Bundy became the target of David Halberstam's "The Best and the Brightest," which used him to illustrate the thesis that the cream of the establishment led America astray in Vietnam. The book set the tone for most of the subsequent assessment of the war. Bundy bore the opprobrium with dignity, never answering the criticisms directly and perhaps privately agreeing with some of them. He retired in 1966, never to hold public office again.
Toward the end of his life, he began, with a research assistant, to assemble materials for reconstructing the events that had pushed America from hope to despair. He died before he could begin the manuscript. Bundy's researcher, Gordon M. Goldstein, has now turned their collaborative effort and some fragments of Bundy's writing into "Lessons in Disaster." It's his own effort, representing the researcher's view, not authorized by the Bundy family. It is also a strange yet fascinating book.
No one is said to be a hero to his valet; this book permits one to extend the truism to research assistants. "Lessons in Disaster" is relentlessly hostile to its subject - not so much to Bundy's person, whom it treats respectfully, as his policies.
The book is an illuminating window into a seminal time. It is also further evidence of the inability of America to transcend the debates that tore it apart a generation ago.
Bundy successfully managed the legacy of America's postwar policy in Europe and towards the Soviet Union. Where he failed was in extending to Southeast Asia the policies that reconstructed Europe and eventually won the Cold War.
The difficulty was that Southeast Asia presented a different strategic problem. In Europe, governmental institutions had survived the ravages of the Second World War. The threats they faced were to their economic expectations, compounded by the Soviet troops along their borders. The Marshall Plan took care of the first threat; NATO addressed the second.
None of these conditions existed in South Vietnam. The dividing line in Vietnam was technically a demilitarized zone never accepted as an international frontier by Hanoi, attempting to undermine governmental institutions by guerrilla warfare.
In this war without front lines, military containment took on a different meaning. In Europe, the basic challenge was territorial integrity; in Southeast Asia, it was governmental legitimacy. The new Kennedy administration paid lip service to this distinction, but never solved how to act on it.
The administration accepted the conventional wisdom regarding the issues. Like its predecessors of both parties, it assumed containment to be indivisible and the domino effect of the collapse of South Vietnam to be a kind of natural law.
It even added a philosophical refinement: Vietnam was no longer treated as one of many fronts in the global Cold War but as the central front. Conventional aggression having been stymied by NATO, guerrilla warfare needed to be similarly frustrated in Vietnam.
With the perspective of nearly four decades, it is possible to challenge these assumptions. Communism has proved not to be monolithic; the dominos did not fall with the collapse of South Vietnam (though 10 years of effort may have helped steady them); the problem of how to deal with guerrilla warfare has grown worse, not better.
Goldstein argues with some justice that Bundy should have raised these possibilities. But one must remember that governments run by addressing conventional wisdom, not by challenging it. Caught between established convictions and his premonitions, Bundy concentrated on managing the crises in terms of familiar patterns. The administration slid into a series of ad hoc decisions that preempted Kennedy's strategic choice.
Reading the book, one is struck by the informal, almost conversational, tone of the process as Bundy was feeling his way. Thus, in November 1961, Bundy wrote to the president: "The other day at the swimming pool, you asked me what I thought, and here it is. We should now agree to send about one division when needed for military action inside Vietnam." Goldstein reports no accompanying options paper, no definition of the meaning of "about one division" no desired strategic outcome.
Goldstein leaves little doubt that Kennedy was opposed to sending combat troops to Southeast Asia. It was more the result of a visceral reluctance than a strategic judgment. In fact, on the formal level Kennedy was ambivalent, torn between considering the survival of South Vietnam essential for national security and being loathe to achieve this goal with American combat forces.
That decision could be postponed in 1963, but it became unavoidable in 1965 when Lyndon B. Johnson was president and Vietnam was on the verge of collapse. As it happened, Johnson's options and his dilemmas were made more acute by a decision taken in the last weeks of the Kennedy presidency.
On a weekend when both Kennedy and Bundy were out of town, the assistant secretary of state, together with an NSC staffer, contrived an instruction to the U.S. ambassador in Saigon that was used to trigger a military coup. President Ngo Dinh Diem and his brother were assassinated and a series of coups. Hanoi saw in this turmoil an opportunity to introduce regular combat troops into the South.
Kennedy was assassinated three weeks later. The decision to send combat troops became Johnson's. Goldstein traces the evolution of the debate, in which the principal advisors - Dean Rusk, Robert McNamara and Bundy - and the Joint Chiefs of Staff strongly advocated a significant build-up of combat forces.
Goldstein argues that Kennedy, while accepting the domino theory, would have lived with its consequences, including the Communization of all of Southeast Asia, rather than send a large expeditionary force to Southeast Asia. But we cannot know his reaction had he been presented with the united views of his principal foreign policy and security advisors.
When America goes to war, it should be able to describe to itself how it defines victory and how it proposes to achieve it. Or else how it proposes to end its military engagement and by what diplomacy. In Vietnam, America sent combat forces on behalf of a general notion of credibility and in pursuit of a negotiation whose content was never defined.
The credibility point was reflected in an amazing Bundy statement quoted by Goldstein: that it would be better for America's credibility to lose after sending 100,000 men than not to have resisted Hanoi at all.
Another self-inflicted handicap was the reluctance to view Indochina as a single strategic theater. Eisenhower was almost certainly right when he described a defense of Laos as essential to the defense of Vietnam. But Bundy resisted that proposition with the argument to Kennedy, according to Goldstein, that "Laos was never really ours after 1954. South Vietnam is and wants to be." This distinction produced the anomalous situation in which half a million Americans fought to achieve a stalemate in Vietnam, a military objective rendered nearly impossible by enemy bases in Cambodia and supply lines through Laos.
As for negotiation, Bundy argued that once Hanoi's efforts to dominate South Vietnam were thwarted, an undefined compromise would emerge through diplomacy - in effect, a strategy seeking stalemate, not victory.
But stalemate violates the maxim that the guerrilla wins if he does not lose. The effort required to bring about a compromise was indistinguishable from the requirements of victory - as the administration in which I served had to learn from bitter experience.
A reviewer cannot pretend to sum up a generation's travail in a book review. A few observations will be in order:
When the president is asked to consider going to war, he must be presented, above all, with an analysis of the global strategic situation on which the recommendation is based.
The purpose of war is victory. Stalemate is a last resort, not a desirable strategic objective.
Victory needs to be defined as an outcome achievable in a time period sustainable by American public opinion.
There has to be presented to the president a sustainable diplomatic framework.
Diplomacy and strategy must be treated as a whole, not as successive phases of policy.
Authority for diplomacy and strategy must be clearly assigned.
The administration as well as critics should conduct their debates with the restraint imposed by the knowledge that the unity of our society has been the hope of the world.
Should Bundy have come to conclusions such as these earlier? To do so, Bundy would have had to abjure the views of a generation avowed since Truman's disputes with MacArthur 15 years earlier, that force should be applied in minimum increments; that strategy and diplomacy were separate spheres to be conducted consecutively; that American principles applied in an undifferentiated manner globally were established maxims of a successful policy.
These principles were implemented in Vietnam in the early 1960s by the best, not the worst, of their generation. If the policymakers lacked perspective, their critics lacked compassion.
Throughout history, every problem America had recognized had proved soluble by the application of resources and idealism. Vietnam proved obdurate. Mourning the assassination of a president with whom it had identified, and perplexed by an impasse to which its own theories had contributed, the intellectual establishment ascribed its traumas to a failure of the American experience and the moral inadequacy of its leaders.
This turned the national debate from an argument over feasibility into a crusade increasingly settled by confrontations designed to demonstrate a moral indictment. In that sense, Bundy was victim as much as cause of the forces unleashed as America was obliged to adapt its history to a changing world.
Henry A. Kissinger served as national security adviser and as secretary of state in the administrations of Presidents Richard Nixon and Gerald Ford.
*****************
Book review
Tuesday, October 28, 2008
The Devil We Know
Tuesday, October 28, 2008
The Devil We Know
Dealing With the New Iranian Superpower
By Robert Baer
279 pages. Crown Publishers. $25.95.
As the end of the Bush era draws near, it is clear that its policy of treating Iran as a country that must be weakened, punished and perhaps even overthrown has failed. Suddenly it has become fashionable to say that Iran must be recognized, respected and dealt with as the increasingly powerful nation that it is.
Earlier this month Henry Kissinger, who as secretary of state helped arm and prop up Iran's monarchy in the 1970s, said there was "no reason for the United States to resist a strong Iran" today. The goal should be to restore the old regional balance of power based on the pillars of two countries friendly to the United States, Israel and Iran, he added.
In his new book, "The Devil We Know," Robert Baer, a former CIA case officer turned author, goes further. He paints a picture of Iran as a disciplined, strategic, monolithic "police state" and military power driven by imperial ambitions. "At the bottom of Iran's soul is a newfound taste for empire," he states.
Baer, who is fluent in Arabic and says he has rusty Persian, spent years in the Middle East. He certainly knows places like Lebanon, Iraq and Saudi Arabia well. But Arabia is not Persia, and the lens of the Arab world can distort Iran rather than bring it into sharp focus.
Baer's Iran doesn't care about international boundaries or accept Western definitions of how the world should be organized. His Iran has "effectively annexed" the entire south of Iraq and could gain control of Iraqi oil. His Iran wants control of Islam's holiest sites, Mecca and Medina.
"I witnessed firsthand Iran's seismic shift, its rise from anarchy to statist power," Baer writes. But most of his eye-witnessing was done from afar. Baer says he was in Iran for a week in late 1978, just before the victory of the revolution. He visited again in 2005 - he doesn't say for how long - as part of a British television documentary team.
On that visit, he laments, he "couldn't find a single good restaurant in Tehran." He was invited to parties, which he heard were as "wild and hip" as anything in the West, but worried that he had "pressed his luck" and stayed away. Anyway, he adds, "I couldn't stay up that late."
Readers who enjoyed George Clooney's performance in "Syriana" (the character was modeled on Baer) might be disappointed that in real life Baer was too timid and tired to go to a party in a private Iranian home. He might have met some real Iranians there. And did he really have so few sources on the ground in Tehran that he could not find a good restaurant? (There are many.)
Perhaps Baer is unaware that Iranians operate in two worlds, the public and the private, and that just about everything meaningful in social and political life happens behind closed doors. Some of the best conversations - and the best meals - are in private homes.
"Iran is a culture completely alien to ours," he writes. But behind those walls are a lot of regular people from different backgrounds who want much the same things Americans do: a decent standard of living and secure futures for their children.
At times Baer describes Iran in sweeping absolutes. "For the last 15 years, Iran has demonstrated a consistent, coherent strategy: It tests its strategy, vets it proxies, judges who is serious and who isn't, and makes plans accordingly," he writes.
The statement ignores the fact that Iran's leadership sometimes behaves in unpredictable ways. Iran is a country of raw, often raucous politics where different points of view - within the ruling elite - are expressed, debated and accepted or rejected.
Then he shifts course, saying that Iran's lines of power and authority are "almost impossible to follow."
"They seem to change between morning and night," he continues.
Baer correctly points out that Iran is a place of checks and balances, where the supreme leader, Ayatollah Khamenei, "rules by a consensus obscure even to outsiders." But then he says with authority that President Mahmoud Ahmadinejad is merely a "figurehead," ignoring that he is an important player whose public declarations that Iran will never bow to the will of others in its nuclear program have been accepted as policy.
One of Baer's most honest assertions in "The Devil We Know" is toward the end, when he finally admits, "At all levels Iran is never what it seems."
Throughout the book readers may find themselves asking, "How does he know?" How does he know that in a secret address to Iran's National Security Council in October 2000, Ayatollah Khamenei put both hands on the conference table, looked around the room and announced, "Lebanon is Iran's greatest foreign policy success" and said that success would be repeated "until all of Islam was liberated."
Did the CIA have a secret video camera in the room? A spy?
How does he know that Iran's military is still a formidable, combat-hardened fighting force because of its experience on the battlefield in the Iran-Iraq war? That conflict ended 20 years ago.
Just because Iran thinks of itself as the pre-eminent power of the Gulf (look at its size, population and location) doesn't mean that it is bent on establishing an empire from the Middle East to South Asia. Just because Iran has based its military doctrine on a defensive strategy of asymmetrical warfare doesn't mean that it has expansionist designs.
Baer calls Iran "the only stable, enduring state in the gulf" and "a rational actor with fixed reasonable demands." The only real option, he adds, is to sit down together at the negotiating table, treat Iran as the power it has become and see what it has to offer.
The United States should also guarantee Iranian international security, conduct joint patrols in the Gulf, establish direct military-to-military communications there, ease sanctions so that Iran will not lust after Saudi oil and give Iran a defined security role in Iraq and Afghanistan, he writes.
Many of these ideas sound reasonable. Indeed, Iran is the most powerful and stable country in the Gulf, and the United States has for too long often treated it as an unruly child to be ignored or a criminal to be punished. But Baer undercuts the force of his argument when he throws out a list of more ambitious recommendations that would require the reshaping of the Middle East.
The United States should leave Iraq and "drop the mess" into Iran's lap. The partition of Iraq should happen as quickly as possible. Iran should not be prevented from being allowed to administer the holiest sites of Islam with Saudi Arabia. Jordan should be turned into a Palestinian state. Why not hold a referendum in Bahrain to determine whether it wants to return to its status as an Iranian island? Why not redraw the borders of the Middle East in both Israel's and Iran's favor?
These proposals could be the subject of Baer's next book. Perhaps he could begin it by explaining why he seems to hold the Iranians in such awe and the Arabs in such contempt. As he writes at one point, the Arabs "lack the spiritual and intellectual depth of Iranians." How does he know?
As the end of the Bush era draws near, it is clear that its policy of treating Iran as a country that must be weakened, punished and perhaps even overthrown has failed. Suddenly it has become fashionable to say that Iran must be recognized, respected and dealt with as the increasingly powerful nation that it is.
Earlier this month Henry Kissinger, who as secretary of state helped arm and prop up Iran's monarchy in the 1970s, said there was "no reason for the United States to resist a strong Iran" today. The goal should be to restore the old regional balance of power based on the pillars of two countries friendly to the United States, Israel and Iran, he added.
In his new book, "The Devil We Know," Robert Baer, a former CIA case officer turned author, goes further. He paints a picture of Iran as a disciplined, strategic, monolithic "police state" and military power driven by imperial ambitions. "At the bottom of Iran's soul is a newfound taste for empire," he states.
Baer, who is fluent in Arabic and says he has rusty Persian, spent years in the Middle East. He certainly knows places like Lebanon, Iraq and Saudi Arabia well. But Arabia is not Persia, and the lens of the Arab world can distort Iran rather than bring it into sharp focus.
Baer's Iran doesn't care about international boundaries or accept Western definitions of how the world should be organized. His Iran has "effectively annexed" the entire south of Iraq and could gain control of Iraqi oil. His Iran wants control of Islam's holiest sites, Mecca and Medina.
"I witnessed firsthand Iran's seismic shift, its rise from anarchy to statist power," Baer writes. But most of his eye-witnessing was done from afar. Baer says he was in Iran for a week in late 1978, just before the victory of the revolution. He visited again in 2005 - he doesn't say for how long - as part of a British television documentary team.
On that visit, he laments, he "couldn't find a single good restaurant in Tehran." He was invited to parties, which he heard were as "wild and hip" as anything in the West, but worried that he had "pressed his luck" and stayed away. Anyway, he adds, "I couldn't stay up that late."
Readers who enjoyed George Clooney's performance in "Syriana" (the character was modeled on Baer) might be disappointed that in real life Baer was too timid and tired to go to a party in a private Iranian home. He might have met some real Iranians there. And did he really have so few sources on the ground in Tehran that he could not find a good restaurant? (There are many.)
Perhaps Baer is unaware that Iranians operate in two worlds, the public and the private, and that just about everything meaningful in social and political life happens behind closed doors. Some of the best conversations - and the best meals - are in private homes.
"Iran is a culture completely alien to ours," he writes. But behind those walls are a lot of regular people from different backgrounds who want much the same things Americans do: a decent standard of living and secure futures for their children.
At times Baer describes Iran in sweeping absolutes. "For the last 15 years, Iran has demonstrated a consistent, coherent strategy: It tests its strategy, vets it proxies, judges who is serious and who isn't, and makes plans accordingly," he writes.
The statement ignores the fact that Iran's leadership sometimes behaves in unpredictable ways. Iran is a country of raw, often raucous politics where different points of view - within the ruling elite - are expressed, debated and accepted or rejected.
Then he shifts course, saying that Iran's lines of power and authority are "almost impossible to follow."
"They seem to change between morning and night," he continues.
Baer correctly points out that Iran is a place of checks and balances, where the supreme leader, Ayatollah Khamenei, "rules by a consensus obscure even to outsiders." But then he says with authority that President Mahmoud Ahmadinejad is merely a "figurehead," ignoring that he is an important player whose public declarations that Iran will never bow to the will of others in its nuclear program have been accepted as policy.
One of Baer's most honest assertions in "The Devil We Know" is toward the end, when he finally admits, "At all levels Iran is never what it seems."
Throughout the book readers may find themselves asking, "How does he know?" How does he know that in a secret address to Iran's National Security Council in October 2000, Ayatollah Khamenei put both hands on the conference table, looked around the room and announced, "Lebanon is Iran's greatest foreign policy success" and said that success would be repeated "until all of Islam was liberated."
Did the CIA have a secret video camera in the room? A spy?
How does he know that Iran's military is still a formidable, combat-hardened fighting force because of its experience on the battlefield in the Iran-Iraq war? That conflict ended 20 years ago.
Just because Iran thinks of itself as the pre-eminent power of the Gulf (look at its size, population and location) doesn't mean that it is bent on establishing an empire from the Middle East to South Asia. Just because Iran has based its military doctrine on a defensive strategy of asymmetrical warfare doesn't mean that it has expansionist designs.
Baer calls Iran "the only stable, enduring state in the gulf" and "a rational actor with fixed reasonable demands." The only real option, he adds, is to sit down together at the negotiating table, treat Iran as the power it has become and see what it has to offer.
The United States should also guarantee Iranian international security, conduct joint patrols in the Gulf, establish direct military-to-military communications there, ease sanctions so that Iran will not lust after Saudi oil and give Iran a defined security role in Iraq and Afghanistan, he writes.
Many of these ideas sound reasonable. Indeed, Iran is the most powerful and stable country in the Gulf, and the United States has for too long often treated it as an unruly child to be ignored or a criminal to be punished. But Baer undercuts the force of his argument when he throws out a list of more ambitious recommendations that would require the reshaping of the Middle East.
The United States should leave Iraq and "drop the mess" into Iran's lap. The partition of Iraq should happen as quickly as possible. Iran should not be prevented from being allowed to administer the holiest sites of Islam with Saudi Arabia. Jordan should be turned into a Palestinian state. Why not hold a referendum in Bahrain to determine whether it wants to return to its status as an Iranian island? Why not redraw the borders of the Middle East in both Israel's and Iran's favor?
These proposals could be the subject of Baer's next book. Perhaps he could begin it by explaining why he seems to hold the Iranians in such awe and the Arabs in such contempt. As he writes at one point, the Arabs "lack the spiritual and intellectual depth of Iranians." How does he know?
*****************
OPINION
The enemy is not India
By Maharaja Krishna Rasgotra and Stanley A. Weiss
Tuesday, October 28, 2008
NEW DELHI:
The road to stability in Afghanistan, it is now clear, runs through Pakistan - specifically the tribal areas that Taliban and al Qaeda fighters use as a sanctuary. Less understood is that the road to stability in the tribal areas, and across the region, also runs through India.
Old fears of India, with which Pakistan has fought three wars since their 1947 partition, are at the root of much of today's dangerous Pakistani behavior. Islamabad's long-running goal of achieving "strategic depth" with a compliant Afghanistan lingers in elements of its army and powerful spy agency, the Inter-Services Intelligence (ISI), and their support to anti-Afghan Islamic militants.
Even now, with those militants turning their guns on the Pakistani government and with Pakistani forces engaged in long-overdue offensive in the tribal areas, most of Pakistan's military remains deployed in the east - toward India and disputed Kashmir.
The result? When American officials recently pressed Pakistan's army chief Ashfaq Kayani to be more aggressive in the tribal areas, he claimed, according to Newsweek, that he lacked the military capability to confront several sizable insurgent strongholds at once.
Islamabad's fears of India are surpassed only by its fears of ethnic disintegration. Many of its ethnic parts, cobbled together like so many other post-colonial states, have never accepted Punjabi domination of the government and military, which - unlike in India - has prevented the emergence of stable federal structure of more or less equal, autonomous units.
Indeed, among Islamabad's greatest worries is that the tens of millions of Pashtuns on either side of the border with Afghanistan could realize their ancient dreams of an independent Pashtunistan.
Islamabad therefore misreads Indian efforts to promote security and economic development in Afghanistan, including New Delhi's massive $1 billion reconstruction program, as attempts to isolate or encircle Pakistan. The answer from Pakistani-backed militants? This summer's deadly suicide bombing of the Indian embassy in Kabul.
If old Pakistani fears of India are key to understanding Pakistani behavior toward Afghanistan, then removing those fears is key to changing that behavior.
As the dominant political and economic power in the region, India should take the lead. New Delhi should continue to assure Islamabad that India's only objective is a truly independent, united, stable and drug-free Afghanistan.
Specifically, India could offer credible assurances of the security of Pakistan's eastern frontier, explore mutual force reductions on that frontier and unilaterally open its borders - including the Line of Control that divides Kashmir - to tariff-free trade.
For its part, Islamabad must recognize that a stable Afghanistan to its west and a friendly India to the east will help prevent a catastrophic implosion in Pakistan. Finally assured of a secured eastern frontier with India, Pakistan should build on its recent offensive and deploy enough troops in the west to secure the border with Afghanistan, followed by extensive investments in education and development in the tribal regions.
Islamabad should put an end to financing, arming, training and infiltrating terrorists into Kashmir and other parts of India. This would pave the way for other confidence-building steps - visits of senior military leaders, free trade and joint economic ventures.
The United States could help allay any lingering fears in Islamabad by endorsing Indian assurances of the integrity of Pakistan's eastern frontier. More broadly, Washington should support Pakistan's fragile democracy by focusing aid on economic and social development rather than the military.
With Pakistan finally assured that India no longer poses a threat, India could then consider a truly historic step worthy of a great and growing power - contributing military forces to stabilizing Afghanistan.
Such a deployment would require a joint request from Kabul, Washington and the United Nations. Indian training teams could play a critical role in strengthening the Afghan military and police.
Reconciliation between Pakistan and India and the presence of Indian forces in Afghanistan may seem illusory. But the return of civilian government in Islamabad gives new hope. If attention can be focused on the real and growing terrorist threat to the region - not those imagined in Islamabad - then fear and loathing in Pakistan could finally give way to trust and cooperation in Afghanistan.
Maharaja Krishna Rasgotra, a former foreign secretary of India, is president of the Observer Research Foundation, a think tank in New Delhi. Stanley A. Weiss is founding chairman of Business Executives for National Security, a nonpartisan organization based in Washington.
By Maharaja Krishna Rasgotra and Stanley A. Weiss
Tuesday, October 28, 2008
NEW DELHI:
The road to stability in Afghanistan, it is now clear, runs through Pakistan - specifically the tribal areas that Taliban and al Qaeda fighters use as a sanctuary. Less understood is that the road to stability in the tribal areas, and across the region, also runs through India.
Old fears of India, with which Pakistan has fought three wars since their 1947 partition, are at the root of much of today's dangerous Pakistani behavior. Islamabad's long-running goal of achieving "strategic depth" with a compliant Afghanistan lingers in elements of its army and powerful spy agency, the Inter-Services Intelligence (ISI), and their support to anti-Afghan Islamic militants.
Even now, with those militants turning their guns on the Pakistani government and with Pakistani forces engaged in long-overdue offensive in the tribal areas, most of Pakistan's military remains deployed in the east - toward India and disputed Kashmir.
The result? When American officials recently pressed Pakistan's army chief Ashfaq Kayani to be more aggressive in the tribal areas, he claimed, according to Newsweek, that he lacked the military capability to confront several sizable insurgent strongholds at once.
Islamabad's fears of India are surpassed only by its fears of ethnic disintegration. Many of its ethnic parts, cobbled together like so many other post-colonial states, have never accepted Punjabi domination of the government and military, which - unlike in India - has prevented the emergence of stable federal structure of more or less equal, autonomous units.
Indeed, among Islamabad's greatest worries is that the tens of millions of Pashtuns on either side of the border with Afghanistan could realize their ancient dreams of an independent Pashtunistan.
Islamabad therefore misreads Indian efforts to promote security and economic development in Afghanistan, including New Delhi's massive $1 billion reconstruction program, as attempts to isolate or encircle Pakistan. The answer from Pakistani-backed militants? This summer's deadly suicide bombing of the Indian embassy in Kabul.
If old Pakistani fears of India are key to understanding Pakistani behavior toward Afghanistan, then removing those fears is key to changing that behavior.
As the dominant political and economic power in the region, India should take the lead. New Delhi should continue to assure Islamabad that India's only objective is a truly independent, united, stable and drug-free Afghanistan.
Specifically, India could offer credible assurances of the security of Pakistan's eastern frontier, explore mutual force reductions on that frontier and unilaterally open its borders - including the Line of Control that divides Kashmir - to tariff-free trade.
For its part, Islamabad must recognize that a stable Afghanistan to its west and a friendly India to the east will help prevent a catastrophic implosion in Pakistan. Finally assured of a secured eastern frontier with India, Pakistan should build on its recent offensive and deploy enough troops in the west to secure the border with Afghanistan, followed by extensive investments in education and development in the tribal regions.
Islamabad should put an end to financing, arming, training and infiltrating terrorists into Kashmir and other parts of India. This would pave the way for other confidence-building steps - visits of senior military leaders, free trade and joint economic ventures.
The United States could help allay any lingering fears in Islamabad by endorsing Indian assurances of the integrity of Pakistan's eastern frontier. More broadly, Washington should support Pakistan's fragile democracy by focusing aid on economic and social development rather than the military.
With Pakistan finally assured that India no longer poses a threat, India could then consider a truly historic step worthy of a great and growing power - contributing military forces to stabilizing Afghanistan.
Such a deployment would require a joint request from Kabul, Washington and the United Nations. Indian training teams could play a critical role in strengthening the Afghan military and police.
Reconciliation between Pakistan and India and the presence of Indian forces in Afghanistan may seem illusory. But the return of civilian government in Islamabad gives new hope. If attention can be focused on the real and growing terrorist threat to the region - not those imagined in Islamabad - then fear and loathing in Pakistan could finally give way to trust and cooperation in Afghanistan.
Maharaja Krishna Rasgotra, a former foreign secretary of India, is president of the Observer Research Foundation, a think tank in New Delhi. Stanley A. Weiss is founding chairman of Business Executives for National Security, a nonpartisan organization based in Washington.
Finding ways to dull the glamour of travel
By Joe Sharkey
Tuesday, October 28, 2008
In terms of perspective, it helps to have been toiling at this particular workbench for a while.
I remember the summer of 2000, when corporate travel departments were hyperventilating about soaring airfares and hotel costs. That was when Mark Walton, a travel policy consultant, gave a well-received talk during a seminar at the National Business Travel Association convention in Los Angeles.
Walton read a parody memorandum supposedly announcing new rules from the corporate travel department. Air travel was to be severely limited, the joke memo said. Instead, it said, "hitchhiking is strictly encouraged," though employees hitching rides would receive "luminescent safety vests" for nighttime travel.
Also, the memo said, "All employees are encouraged to stay with relatives and friends while on company business."
Everybody thought this was a riot — the hitchhiking and the idea that a proud, hard-charging road warrior might end up not in a nice Hilton but instead sleeping on a cousin's couch. The joke was on the corporate travel managers.
So I was a little startled last week during a telephone conference held by American Express Business Travel, the corporate travel management subsidiary of American Express, when Frank Schnur, a vice president of the company's Global Advisory Services, said that some corporate travel managers are actually making some of those suggestions.
"Another one of the things we're seeing companies ask their employees to do is stay with friends and families when traveling," Schnur said. "Or stay together, share hotel rooms, to avoid additional costs." He was listing some of the ways that corporate travel managers are now trimming costs by as much as 30 percent, while still having employees "travel the same amount."
It has been a long time since I last spoke with Walton, a co-founder of Consulting Strategies, which advises multinational corporations on travel.
I called him to ask: Have we finally come to this, to begging for space on a couch?
"I honestly have not heard that, and obviously the social aspect would prohibit most companies from having that kind of change," he said. I thought immediately of the prospect of sharing a room on the road with the likes of Dwight Schrute, the repellent cubicle dweller played by Rainn Wilson in the television comedy "The Office."
On the other hand, Walton said, staying with friends and relatives, if not actually willingly sharing a hotel room with a co-worker "might be an option some people think of" when left to their own discretion to decide how to reduce travel costs.
This might sound counterintuitive, but Walton thinks that most people actually like to take the occasional business trip and want to remain in the corporate travel lineup.
"As much as people complain about traveling, who ever says that they really don't want to travel again? Nobody says that," Walton said. "People want to get in an airplane once in a while. There is still some enjoyment in that, and people are going to figure out a way to still travel."
Hotel costs have risen so much in recent years that lodging exceeds air transportation at some companies as a percentage of overall travel spending, he said.
The American Express forecast, by the way, generally predicted slower growth and, in some cases, an actual reduction, in airfares and hotel rates next year. But there was no indication of an end to the proliferation of airline fees, which are not counted in the fare and which, American Express said, can add 15 percent to the cost of flying.
Airlines are seeing at least a short-term "bonanza" from oil prices that have dropped below $70 a barrel, Walton said.
We can only speculate whether that, coupled with a decrease in travel caused by a poor economy, will translate into airfare reductions.
"Both suppliers and buyers of travel and travel-related services are expected to face new operating challenges in the coming year," the American Express forecast said.
So reality imitates parody?
"It's all a function of the marketplace," Walton said.
By Joe Sharkey
Tuesday, October 28, 2008
In terms of perspective, it helps to have been toiling at this particular workbench for a while.
I remember the summer of 2000, when corporate travel departments were hyperventilating about soaring airfares and hotel costs. That was when Mark Walton, a travel policy consultant, gave a well-received talk during a seminar at the National Business Travel Association convention in Los Angeles.
Walton read a parody memorandum supposedly announcing new rules from the corporate travel department. Air travel was to be severely limited, the joke memo said. Instead, it said, "hitchhiking is strictly encouraged," though employees hitching rides would receive "luminescent safety vests" for nighttime travel.
Also, the memo said, "All employees are encouraged to stay with relatives and friends while on company business."
Everybody thought this was a riot — the hitchhiking and the idea that a proud, hard-charging road warrior might end up not in a nice Hilton but instead sleeping on a cousin's couch. The joke was on the corporate travel managers.
So I was a little startled last week during a telephone conference held by American Express Business Travel, the corporate travel management subsidiary of American Express, when Frank Schnur, a vice president of the company's Global Advisory Services, said that some corporate travel managers are actually making some of those suggestions.
"Another one of the things we're seeing companies ask their employees to do is stay with friends and families when traveling," Schnur said. "Or stay together, share hotel rooms, to avoid additional costs." He was listing some of the ways that corporate travel managers are now trimming costs by as much as 30 percent, while still having employees "travel the same amount."
It has been a long time since I last spoke with Walton, a co-founder of Consulting Strategies, which advises multinational corporations on travel.
I called him to ask: Have we finally come to this, to begging for space on a couch?
"I honestly have not heard that, and obviously the social aspect would prohibit most companies from having that kind of change," he said. I thought immediately of the prospect of sharing a room on the road with the likes of Dwight Schrute, the repellent cubicle dweller played by Rainn Wilson in the television comedy "The Office."
On the other hand, Walton said, staying with friends and relatives, if not actually willingly sharing a hotel room with a co-worker "might be an option some people think of" when left to their own discretion to decide how to reduce travel costs.
This might sound counterintuitive, but Walton thinks that most people actually like to take the occasional business trip and want to remain in the corporate travel lineup.
"As much as people complain about traveling, who ever says that they really don't want to travel again? Nobody says that," Walton said. "People want to get in an airplane once in a while. There is still some enjoyment in that, and people are going to figure out a way to still travel."
Hotel costs have risen so much in recent years that lodging exceeds air transportation at some companies as a percentage of overall travel spending, he said.
The American Express forecast, by the way, generally predicted slower growth and, in some cases, an actual reduction, in airfares and hotel rates next year. But there was no indication of an end to the proliferation of airline fees, which are not counted in the fare and which, American Express said, can add 15 percent to the cost of flying.
Airlines are seeing at least a short-term "bonanza" from oil prices that have dropped below $70 a barrel, Walton said.
We can only speculate whether that, coupled with a decrease in travel caused by a poor economy, will translate into airfare reductions.
"Both suppliers and buyers of travel and travel-related services are expected to face new operating challenges in the coming year," the American Express forecast said.
So reality imitates parody?
"It's all a function of the marketplace," Walton said.
******************************
Qantas and BA agree price-fixing fines
Reuters
Tuesday, October 28, 2008
By Mark Bendeich
Australia's Qantas Airways agreed on Tuesday to pay a A$20 million (7.95 million pound) fine for its part in a price-fixing case and vowed to help regulators as they probed 30 other airlines over the issue.
British Airways said it had also agreed to pay A$5 million (1.98 million pounds), bringing an end to its involvement in the investigation, according to a statement.
Qantas said the fine was part of a settlement with Australia's competition regulator. The agreement still needs approval from Australia's Federal Court, where the local regulator is suing both Qantas and British Airways for alleged price-fixing on air freight between 2002 and early 2006.
"Qantas is one of the first airlines to settle its liability in Australia," Qantas Chief Executive Geoff Dixon said in a statement, offering an unreserved apology.
"Since being advised of the allegations in May 2006, Qantas has cooperated fully with investigations," he added.
Last May, a former Qantas executive accepted an eight-month jail term as part of a plea agreement with the U.S. Department of Justice, which had also secured guilty pleas by British Airways, Japan Airlines and Korean Air Lines.
The Australian Competition and Consumer Association (ACCC) continues to investigate other airlines, "some of which are assisting voluntarily, while others are not," the regulator said in its statement.
"The ACCC expects to be able to resolve its investigations with other cooperating airlines shortly."
In April, Japan Airlines pleaded guilty to conspiring to fix air cargo prices and paid a $110 million fine (70 million pounds). British Airways and Korean Air Lines pleaded guilty last year and paid $300 million fines.
In February 2006, U.S. and European officials raided airlines as part of the probe, which centred on the imposition of fuel surcharges in the international air cargo market.
British Airways last year also paid a fine of 121.5 million pounds after admitting to a collusion with arch rival Virgin Atlantic to fix fuel surcharges. Four former and then current executives were subsequently charged.
(Additional reporting by John Bowker in London; Editing by James Thornhill and John Stonestreet)
Reuters
Tuesday, October 28, 2008
By Mark Bendeich
Australia's Qantas Airways agreed on Tuesday to pay a A$20 million (7.95 million pound) fine for its part in a price-fixing case and vowed to help regulators as they probed 30 other airlines over the issue.
British Airways said it had also agreed to pay A$5 million (1.98 million pounds), bringing an end to its involvement in the investigation, according to a statement.
Qantas said the fine was part of a settlement with Australia's competition regulator. The agreement still needs approval from Australia's Federal Court, where the local regulator is suing both Qantas and British Airways for alleged price-fixing on air freight between 2002 and early 2006.
"Qantas is one of the first airlines to settle its liability in Australia," Qantas Chief Executive Geoff Dixon said in a statement, offering an unreserved apology.
"Since being advised of the allegations in May 2006, Qantas has cooperated fully with investigations," he added.
Last May, a former Qantas executive accepted an eight-month jail term as part of a plea agreement with the U.S. Department of Justice, which had also secured guilty pleas by British Airways, Japan Airlines and Korean Air Lines.
The Australian Competition and Consumer Association (ACCC) continues to investigate other airlines, "some of which are assisting voluntarily, while others are not," the regulator said in its statement.
"The ACCC expects to be able to resolve its investigations with other cooperating airlines shortly."
In April, Japan Airlines pleaded guilty to conspiring to fix air cargo prices and paid a $110 million fine (70 million pounds). British Airways and Korean Air Lines pleaded guilty last year and paid $300 million fines.
In February 2006, U.S. and European officials raided airlines as part of the probe, which centred on the imposition of fuel surcharges in the international air cargo market.
British Airways last year also paid a fine of 121.5 million pounds after admitting to a collusion with arch rival Virgin Atlantic to fix fuel surcharges. Four former and then current executives were subsequently charged.
(Additional reporting by John Bowker in London; Editing by James Thornhill and John Stonestreet)
Coverage of U.S. election now lacks suspense
By Alessandra Stanley
Tuesday, October 28, 2008
News shows should probably come with a spoiler alert: the following program contains images and language that seem to jump to a foregone conclusion.
Cable news and network anchors are not saying point-blank that the election is over. Instead they are saying, "We're not saying it's over ..." with a "but" that speaks volumes. One week away from the election news anchors and commentators have the taut, self-conscious demeanor they don on election nights when the exit polls are in, but when they are duty-bound not to declare a winner.
Sometimes, however, they can't quite stifle the blue-stained maps in their minds.
On "Meet the Press" on Sunday, Chuck Todd, NBC's political director, said there was something "Shakespearean" about the way McCain appears to be losing Hispanic voters in the West — despite having challenged his party on the issue of immigration reform. "You know, the S in John McCain is going to stand for Shakespeare, I think, when this campaign is over," Todd said.
It's not over, but terms like "highly favored," "touchdown favorite," "comfortable lead" and even "a near-insurmountable lead" are bouncing all over television these days. They fill many viewers, regardless of their party affiliation, with opposite but parallel forms of dread: inevitability, or the illusion of it, breeds complacency on one side, and defeatism on the other.
Gratifying as it may be, it's not really fair to blame the news media: there is a flood of predictive data available, and reporters cannot realistically dam it up. (If anything, they are to be commended for not trying to boost ratings by artificially prolonging suspense.)
For viewers who feel unnerved by so much suppressed certainty, it's an opportune time to check out the Fox News Channel. The election coverage there is not so much fair and balanced as it is a useful counterbalance.
On Monday talk turned to Ohio, where Senator Barack Obama has a five-point lead in some polls. "Yet at the same time, the polls in the last midterm election in 2006 — they were sort of all over the place," the Fox anchor Jon Scott told a reporter from The Columbus Dispatch, with a glint of hope in his voice. "We could be looking at poll numbers here that aren't exactly what everybody seems to think they are."
While CNN and MSNBC wallow in maps, charts and delegate counts, Fox is focused on the latest flare-ups that could still put a dent in Obama's lead. On Monday Fox bore down on a radio interview Obama gave in 2001 in which he lamented that the civil rights movement had focused on the courts and did not do enough to further "redistributive change," or as Scott put it, "the redistributive wealth thing."
Byron York, a writer at National Review, told the Fox anchor Megyn Kelly that in the interview Obama had used "old lefty terms like economic justice" to justify progressive taxation. York noted that any government relies on some form of wealth redistribution, and that Obama's remarks merely suggested that he wanted to take it further.
Kelly noted that the interview mostly "reaffirmed" what Obama told Joe the Plumber.
Viewers may not agree with Joe the Plumber, or even understand exactly who he is, but the lavish attention paid to him — and Obama's use of the words "spread the wealth" to explain his tax plan — is a reliable indicator of where Fox senses vulnerability.
Fox is not exactly optimistic about Senator McCain's chances, however. Karl Rove, the Republican strategist and former adviser to President George W. Bush who is now a Fox contributor, deplored the infighting within the McCain campaign about strategy and Sarah Palin as a bad omen.
"This is, again, as you say, not the kind of thing you like to have happening in your campaign," Rove told Chris Wallace of Fox on Sunday. "And it's generally a sign that people are throwing in the towel and thinking that they're going to lose."
Even on Fox, there are some signs of discord about the McCain campaign's tactics, most notably during a lively exchange on Saturday between two Fox stars, Geraldo Rivera and Sean Hannity, over Obama's ties to the former '60s radical William Ayers, whom Hannity describes as a "domestic terrorist."
Rivera told Hannity that he was doing the McCain campaign a "disservice" by harping on Ayers at the expense of economic issues, calling the focus "an unsavory fixation." Hannity disagreed, so Rivera took it further.
"I used to be friends with Yasser Arafat," Rivera said. "Does that make me a terrorist?"
They parted amicably and, most important, they didn't call the election.
By Alessandra Stanley
Tuesday, October 28, 2008
News shows should probably come with a spoiler alert: the following program contains images and language that seem to jump to a foregone conclusion.
Cable news and network anchors are not saying point-blank that the election is over. Instead they are saying, "We're not saying it's over ..." with a "but" that speaks volumes. One week away from the election news anchors and commentators have the taut, self-conscious demeanor they don on election nights when the exit polls are in, but when they are duty-bound not to declare a winner.
Sometimes, however, they can't quite stifle the blue-stained maps in their minds.
On "Meet the Press" on Sunday, Chuck Todd, NBC's political director, said there was something "Shakespearean" about the way McCain appears to be losing Hispanic voters in the West — despite having challenged his party on the issue of immigration reform. "You know, the S in John McCain is going to stand for Shakespeare, I think, when this campaign is over," Todd said.
It's not over, but terms like "highly favored," "touchdown favorite," "comfortable lead" and even "a near-insurmountable lead" are bouncing all over television these days. They fill many viewers, regardless of their party affiliation, with opposite but parallel forms of dread: inevitability, or the illusion of it, breeds complacency on one side, and defeatism on the other.
Gratifying as it may be, it's not really fair to blame the news media: there is a flood of predictive data available, and reporters cannot realistically dam it up. (If anything, they are to be commended for not trying to boost ratings by artificially prolonging suspense.)
For viewers who feel unnerved by so much suppressed certainty, it's an opportune time to check out the Fox News Channel. The election coverage there is not so much fair and balanced as it is a useful counterbalance.
On Monday talk turned to Ohio, where Senator Barack Obama has a five-point lead in some polls. "Yet at the same time, the polls in the last midterm election in 2006 — they were sort of all over the place," the Fox anchor Jon Scott told a reporter from The Columbus Dispatch, with a glint of hope in his voice. "We could be looking at poll numbers here that aren't exactly what everybody seems to think they are."
While CNN and MSNBC wallow in maps, charts and delegate counts, Fox is focused on the latest flare-ups that could still put a dent in Obama's lead. On Monday Fox bore down on a radio interview Obama gave in 2001 in which he lamented that the civil rights movement had focused on the courts and did not do enough to further "redistributive change," or as Scott put it, "the redistributive wealth thing."
Byron York, a writer at National Review, told the Fox anchor Megyn Kelly that in the interview Obama had used "old lefty terms like economic justice" to justify progressive taxation. York noted that any government relies on some form of wealth redistribution, and that Obama's remarks merely suggested that he wanted to take it further.
Kelly noted that the interview mostly "reaffirmed" what Obama told Joe the Plumber.
Viewers may not agree with Joe the Plumber, or even understand exactly who he is, but the lavish attention paid to him — and Obama's use of the words "spread the wealth" to explain his tax plan — is a reliable indicator of where Fox senses vulnerability.
Fox is not exactly optimistic about Senator McCain's chances, however. Karl Rove, the Republican strategist and former adviser to President George W. Bush who is now a Fox contributor, deplored the infighting within the McCain campaign about strategy and Sarah Palin as a bad omen.
"This is, again, as you say, not the kind of thing you like to have happening in your campaign," Rove told Chris Wallace of Fox on Sunday. "And it's generally a sign that people are throwing in the towel and thinking that they're going to lose."
Even on Fox, there are some signs of discord about the McCain campaign's tactics, most notably during a lively exchange on Saturday between two Fox stars, Geraldo Rivera and Sean Hannity, over Obama's ties to the former '60s radical William Ayers, whom Hannity describes as a "domestic terrorist."
Rivera told Hannity that he was doing the McCain campaign a "disservice" by harping on Ayers at the expense of economic issues, calling the focus "an unsavory fixation." Hannity disagreed, so Rivera took it further.
"I used to be friends with Yasser Arafat," Rivera said. "Does that make me a terrorist?"
They parted amicably and, most important, they didn't call the election.
Mind's Museum: A hands-on guide to mental illness
By Elisabetta Povoledo
Tuesday, October 28, 2008
ROME: The logo of the Mind's Museum is an overturned funnel. It is a reference to a 15th-century painting by Hieronymus Bosch that depicts a doctor using a scalpel to extract an object (the supposed "stone of madness") from the skull of a patient. The doctor is wearing a funnel as a hat.
"It's one of the earliest icons of madness," said Pompeo Martelli, the psychiatrist turned director of this unusual museum, which is in the former psychiatric hospital of Santa Maria della Pietà on the northwestern outskirts of Rome. (In its earlier days "there was an out of sight, out of mind mentality," he said.) The painting, now in the Prado Museum in Madrid, invites the obvious question of who is more mad, the doctor or the hapless patient.
The Santa Maria hospital was closed in 1978 after Italy passed a law substituting community services for institutionalized care for many of the mentally ill.
Overturning preconceptions about mental illness is the leitmotif of the eight-year-old Mind's Museum (museodellamente.it), which reopened this month after a high-tech overhaul by Studio Azzurro, a Milan-based art collective that works mostly with interactive and video environments.
"The idea was to make it extremely participatory, a museum that can register and note the impressions of the visitor," said Paolo Rosa, who founded Studio Azzurro with two other artists in 1982. "It's not a static but a dynamic project, in continuous flux."
In one interactive installation, next to a painted sign that reads, "Up close, no one is normal," visitors try to synchronize recorded and mirror images of themselves. "It's about seeking a balance between what you are and what you see," Martelli said.
In another, visitors sit for a photograph that is projected onto a board along with photos of past patients at the institution, who recount their life stories in sad, lilting taped monologues.
In yet another, visitors are invited to sit at a desk and hold their hands over their ears to hear the singsong whispers of unseen voices. "That's one of the symptoms of madness, isn't it?" Martelli said, smiling.
Explaining the concept, Rosa said: "The spectator assumes madness and unconsciously adopts the guise of someone on the inside. We didn't want to dramatize but to include drama, and to let loose the imaginative dimension that madness elicits, which can be fertile even for those who think themselves as sane."
The Mind's Museum is a more hands-on - and heads-on - experience than other European psychiatric museums like the Dr. Guislain Museum in Ghent, Belgium, or the Het Dolhuys Museum in Haarlem, the Netherlands.
Unlike some directors and curators in this museum field, Martelli was not interested in examining the role that art can play in treating mental illness. There is no collection of patient paintings like that of the Prinzhorn collection of the Psychiatric University Hospital in Heidelberg, Germany, for example. (Still, the artwork of two inmates and that of a doctor is included in two installations.)
"It's nice - it's a way of lightening everything that happened in here," said Maria Morena, a former psychiatric nurse at the hospital who can remember a time when patients lived 60 to a pavilion, eating with spoons (nothing sharp) and sleeping on cotton sheets so stiff that "they scratched like sandpaper."
The museum is on the main floor of Pavilion 6 of the former psychiatric complex, which today also houses national health system offices.
"Our mission is linked to public health, but we're somewhat atypical," said Martelli, whose mandate includes preserving more than 250,000 case histories of patients who were treated there since around 1850. "We are preserving and protecting that patrimony."
It is the largest historical psychiatric archive in Italy, Martelli said. Using software developed by his staff, other Italian psychiatric archives have been following his lead, and a resulting network will provide researchers with a database that tracks past psychiatric trends and tendencies in Italy.
Yet the museum's target audience is not scholars or specialists, but rather high school and middle school students, which explains its embrace of Studio Azzurro's high-tech interactive approach. (At the end of the day, it takes museum workers about 10 minutes to go through the dozen rooms and shut down all the computers and instruments.)
"Today it's not enough to go into a classroom and hand out pamphlets about schizophrenia or anorexia," Martelli said. "Young people are on another wavelength."
Originally, the museum, which opened in 2000, followed a more traditional line, with objects and panel explanations. "It wasn't that useful to opening a discourse" on the stigma of mental illness, Martelli said. But it was set up by a group of psychiatrists rather than curators or museum experts.
On a recent day Chiara Preti, a high school teacher who grew up nearby, toured the refitted museum as part of a training course with other colleagues. She said she found the experience useful. "The point the museum makes is that mental illness is a disease," she said. "It doesn't give a moral or a political judgment."
She recalled that in her childhood, her father would give spare change to former patients who hung around the grounds even after the hospital had shut down.
"It was a part of the city," she said. "And with the museum, it's kind of nice having its history be part of your life."
By Elisabetta Povoledo
Tuesday, October 28, 2008
ROME: The logo of the Mind's Museum is an overturned funnel. It is a reference to a 15th-century painting by Hieronymus Bosch that depicts a doctor using a scalpel to extract an object (the supposed "stone of madness") from the skull of a patient. The doctor is wearing a funnel as a hat.
"It's one of the earliest icons of madness," said Pompeo Martelli, the psychiatrist turned director of this unusual museum, which is in the former psychiatric hospital of Santa Maria della Pietà on the northwestern outskirts of Rome. (In its earlier days "there was an out of sight, out of mind mentality," he said.) The painting, now in the Prado Museum in Madrid, invites the obvious question of who is more mad, the doctor or the hapless patient.
The Santa Maria hospital was closed in 1978 after Italy passed a law substituting community services for institutionalized care for many of the mentally ill.
Overturning preconceptions about mental illness is the leitmotif of the eight-year-old Mind's Museum (museodellamente.it), which reopened this month after a high-tech overhaul by Studio Azzurro, a Milan-based art collective that works mostly with interactive and video environments.
"The idea was to make it extremely participatory, a museum that can register and note the impressions of the visitor," said Paolo Rosa, who founded Studio Azzurro with two other artists in 1982. "It's not a static but a dynamic project, in continuous flux."
In one interactive installation, next to a painted sign that reads, "Up close, no one is normal," visitors try to synchronize recorded and mirror images of themselves. "It's about seeking a balance between what you are and what you see," Martelli said.
In another, visitors sit for a photograph that is projected onto a board along with photos of past patients at the institution, who recount their life stories in sad, lilting taped monologues.
In yet another, visitors are invited to sit at a desk and hold their hands over their ears to hear the singsong whispers of unseen voices. "That's one of the symptoms of madness, isn't it?" Martelli said, smiling.
Explaining the concept, Rosa said: "The spectator assumes madness and unconsciously adopts the guise of someone on the inside. We didn't want to dramatize but to include drama, and to let loose the imaginative dimension that madness elicits, which can be fertile even for those who think themselves as sane."
The Mind's Museum is a more hands-on - and heads-on - experience than other European psychiatric museums like the Dr. Guislain Museum in Ghent, Belgium, or the Het Dolhuys Museum in Haarlem, the Netherlands.
Unlike some directors and curators in this museum field, Martelli was not interested in examining the role that art can play in treating mental illness. There is no collection of patient paintings like that of the Prinzhorn collection of the Psychiatric University Hospital in Heidelberg, Germany, for example. (Still, the artwork of two inmates and that of a doctor is included in two installations.)
"It's nice - it's a way of lightening everything that happened in here," said Maria Morena, a former psychiatric nurse at the hospital who can remember a time when patients lived 60 to a pavilion, eating with spoons (nothing sharp) and sleeping on cotton sheets so stiff that "they scratched like sandpaper."
The museum is on the main floor of Pavilion 6 of the former psychiatric complex, which today also houses national health system offices.
"Our mission is linked to public health, but we're somewhat atypical," said Martelli, whose mandate includes preserving more than 250,000 case histories of patients who were treated there since around 1850. "We are preserving and protecting that patrimony."
It is the largest historical psychiatric archive in Italy, Martelli said. Using software developed by his staff, other Italian psychiatric archives have been following his lead, and a resulting network will provide researchers with a database that tracks past psychiatric trends and tendencies in Italy.
Yet the museum's target audience is not scholars or specialists, but rather high school and middle school students, which explains its embrace of Studio Azzurro's high-tech interactive approach. (At the end of the day, it takes museum workers about 10 minutes to go through the dozen rooms and shut down all the computers and instruments.)
"Today it's not enough to go into a classroom and hand out pamphlets about schizophrenia or anorexia," Martelli said. "Young people are on another wavelength."
Originally, the museum, which opened in 2000, followed a more traditional line, with objects and panel explanations. "It wasn't that useful to opening a discourse" on the stigma of mental illness, Martelli said. But it was set up by a group of psychiatrists rather than curators or museum experts.
On a recent day Chiara Preti, a high school teacher who grew up nearby, toured the refitted museum as part of a training course with other colleagues. She said she found the experience useful. "The point the museum makes is that mental illness is a disease," she said. "It doesn't give a moral or a political judgment."
She recalled that in her childhood, her father would give spare change to former patients who hung around the grounds even after the hospital had shut down.
"It was a part of the city," she said. "And with the museum, it's kind of nice having its history be part of your life."
Evidence of early Nazi pogrom in German garbage dump
By Rachel Nolan
Tuesday, October 28, 2008
KLANDORF, Germany: Seventy years ago next month, anti-Semitic rioters wreaked orchestrated nationwide havoc on their Jewish neighbors in Germany, wrecking and torching thousands of synagogues, private businesses and homes.
Michael Blumenthal, a former U.S. Treasury secretary who now heads the Jewish Museum in Berlin, was 12 then, but he still has sharp memories of the night of Nov. 9, 1938. Looters destroyed his parents' store in Berlin, and Blumenthal's father was among about 30,000 men between the ages of 16 and 60 rounded up and sent to concentration camps that night.
"The ninth of November is a symbol because it was the beginning of the end," Blumenthal said of Kristallnacht, a Nazi euphemism meaning "night of broken glass."
Physical evidence of the state-sponsored pogrom has always been scarce. The Jewish Museum holds numerous letters describing the night, but the only other related object in the collection is a 38-second black-and-white film of a synagogue burning in Bielefeld, a university town in western Germany.
Last week, however, an Israeli researcher reported finding a trove of such evidence - piles of looted Jewish possessions about 50 kilometers, or 30 miles, north of Berlin. Locating the find turned out to be as simple as asking one of 180 Klandorf residents for the whereabouts of their local trash dump.
The day after Kristallnacht, trains loaded with personal and religious items arrived in the woods outside Klandorf. Political prisoners from a nearby camp unloaded the goods and threw it all in a dump here.
"It is no secret in our town that things stolen during Kristallnacht are there," said Arno Gielsdorf, 49. His family owns a section of the Klandorf refuse heap, which is roughly the size of four soccer fields. He says his father told him that the dump was extraordinarily busy right after Kristallnacht.
The story might have remained a bit of local lore but for a chance encounter last December. A retired forester named Werner Russ was out gathering mushrooms when he ran into an Israeli writer and former detective, Yaron Svoray, who was researching stolen artifacts once stashed in the nearby hunting lodge of the Luftwaffe commander, Hermann Göring. Russ told Svoray what the whole town of Klandorf had always known about their local dump.
"We're away from everything here, I thought surely it would not interest anyone," said Russ, 73.
Svoray, though, was decidedly interested. He returned the following spring, bringing three friends with shovels and picks. They dug up a green bottle with a Star of David stamped into the bottom, mezuzas and burned armrests of chairs found in synagogues. Svoray also found an ornamental swastika made of a metal alloy.
Germany remains wary after hoaxes like the "Hitler Diaries," published in Stern magazine in 1983 and quickly exposed as a forgery. But no one has raised serious doubts about the authenticity of this find.
"We have confirmed that the relics are from that period," said Tanja Ronen-Loehnberg, a historian at the Ghetto Fighters' House, a Holocaust museum and research center in Israel.
For now, the refuse heap remains unmarked in an obscure forest dotted with wooden watchtowers for hunting wild boar and deer. Double lines of dead grass where the train rails used to lie, as well as broken porcelain and bottles underfoot, are the only hints of the past.
Archaeologists will not find a pristine historical record in Klandorf. Locals said looters have been combing the site for decades, looking for Meissen porcelain, silverware sets and anything of value to sell in the flea markets of Berlin and Leipzig. In 2005, Gielsdorf and four other private owners secured a court injunction against trespassers, some of whom drove tractors and bulldozers to the dump.
"Someone needs to at least guard the place so it doesn't become eBay special for skinheads," said Svoray, who travels with bodyguards in Germany, after receiving death threats.
The former police investigator is best-known for going undercover among neo-Nazis in Germany to research "In Hitler's Shadow," a book about German neo-Nazis that was made into a television movie in 1995.
Gielsdorf's daughter Angelika, 25, said neighbors drop by regularly to check for looters, "but we can't come every day."
The Ghetto Fighters' Museum hopes to set up a living history center bringing young Germans and Israelis together to sift through the contents of the dump. Such a project could give a boost to the area, one of many economically depressed regions of the former East Germany.
Distinct sections of the dump hold Berlin refuse from different eras, said the area's mayor. But many of the castoffs are mixed together, as demonstrated by the swastika buried near burned Jewish articles. Even with forensic studies it can be difficult to pinpoint dates.
By Rachel Nolan
Tuesday, October 28, 2008
KLANDORF, Germany: Seventy years ago next month, anti-Semitic rioters wreaked orchestrated nationwide havoc on their Jewish neighbors in Germany, wrecking and torching thousands of synagogues, private businesses and homes.
Michael Blumenthal, a former U.S. Treasury secretary who now heads the Jewish Museum in Berlin, was 12 then, but he still has sharp memories of the night of Nov. 9, 1938. Looters destroyed his parents' store in Berlin, and Blumenthal's father was among about 30,000 men between the ages of 16 and 60 rounded up and sent to concentration camps that night.
"The ninth of November is a symbol because it was the beginning of the end," Blumenthal said of Kristallnacht, a Nazi euphemism meaning "night of broken glass."
Physical evidence of the state-sponsored pogrom has always been scarce. The Jewish Museum holds numerous letters describing the night, but the only other related object in the collection is a 38-second black-and-white film of a synagogue burning in Bielefeld, a university town in western Germany.
Last week, however, an Israeli researcher reported finding a trove of such evidence - piles of looted Jewish possessions about 50 kilometers, or 30 miles, north of Berlin. Locating the find turned out to be as simple as asking one of 180 Klandorf residents for the whereabouts of their local trash dump.
The day after Kristallnacht, trains loaded with personal and religious items arrived in the woods outside Klandorf. Political prisoners from a nearby camp unloaded the goods and threw it all in a dump here.
"It is no secret in our town that things stolen during Kristallnacht are there," said Arno Gielsdorf, 49. His family owns a section of the Klandorf refuse heap, which is roughly the size of four soccer fields. He says his father told him that the dump was extraordinarily busy right after Kristallnacht.
The story might have remained a bit of local lore but for a chance encounter last December. A retired forester named Werner Russ was out gathering mushrooms when he ran into an Israeli writer and former detective, Yaron Svoray, who was researching stolen artifacts once stashed in the nearby hunting lodge of the Luftwaffe commander, Hermann Göring. Russ told Svoray what the whole town of Klandorf had always known about their local dump.
"We're away from everything here, I thought surely it would not interest anyone," said Russ, 73.
Svoray, though, was decidedly interested. He returned the following spring, bringing three friends with shovels and picks. They dug up a green bottle with a Star of David stamped into the bottom, mezuzas and burned armrests of chairs found in synagogues. Svoray also found an ornamental swastika made of a metal alloy.
Germany remains wary after hoaxes like the "Hitler Diaries," published in Stern magazine in 1983 and quickly exposed as a forgery. But no one has raised serious doubts about the authenticity of this find.
"We have confirmed that the relics are from that period," said Tanja Ronen-Loehnberg, a historian at the Ghetto Fighters' House, a Holocaust museum and research center in Israel.
For now, the refuse heap remains unmarked in an obscure forest dotted with wooden watchtowers for hunting wild boar and deer. Double lines of dead grass where the train rails used to lie, as well as broken porcelain and bottles underfoot, are the only hints of the past.
Archaeologists will not find a pristine historical record in Klandorf. Locals said looters have been combing the site for decades, looking for Meissen porcelain, silverware sets and anything of value to sell in the flea markets of Berlin and Leipzig. In 2005, Gielsdorf and four other private owners secured a court injunction against trespassers, some of whom drove tractors and bulldozers to the dump.
"Someone needs to at least guard the place so it doesn't become eBay special for skinheads," said Svoray, who travels with bodyguards in Germany, after receiving death threats.
The former police investigator is best-known for going undercover among neo-Nazis in Germany to research "In Hitler's Shadow," a book about German neo-Nazis that was made into a television movie in 1995.
Gielsdorf's daughter Angelika, 25, said neighbors drop by regularly to check for looters, "but we can't come every day."
The Ghetto Fighters' Museum hopes to set up a living history center bringing young Germans and Israelis together to sift through the contents of the dump. Such a project could give a boost to the area, one of many economically depressed regions of the former East Germany.
Distinct sections of the dump hold Berlin refuse from different eras, said the area's mayor. But many of the castoffs are mixed together, as demonstrated by the swastika buried near burned Jewish articles. Even with forensic studies it can be difficult to pinpoint dates.
*******************
Karadzic says war crimes case is moving too quickly
The Associated Press
Tuesday, October 28, 2008
THE HAGUE, Netherlands: Radovan Karadzic said his genocide case is moving too quickly. The United Nations judge in charge said it is going too slowly.
At a 15-minute pretrial conference Tuesday, the former Bosnian Serb leader said he is at a disadvantage in preparing his defense because the Yugoslav war crimes tribunal case is moving so fast.
Iain Bonomy, the Scottish judge overseeing trial preparations, disagreed and reprimanded both Karadzic and prosecutors for not being adequately prepared for the hearing.
Karadzic, who was arrested in July after 13 years on the run, faces charges of genocide and crimes against humanity for allegedly masterminding atrocities by Bosnian Serb forces throughout Bosnia's 1992-1995 war, including the massacre of 8,000 Muslim men at Srebrenica and the deadly four-year siege of the capital, Sarajevo.
He has chosen to defend himself but is assembling a team of legal experts to advise him.
"I don't have the necessary resources; I don't have a defense team," Karadzic told Bonomy. "With the speed with which matters are proceeding ... I am afraid that I will be in an even less equal position and I'd like you to be aware of that."
However Bonomy said the case is not moving quickly at all. If Karadzic is having trouble keeping pace with proceedings, it is his own fault for choosing to defend himself, he said.
He pointed out that prosecutors are still waiting for the court to approve planned changes aimed at streamlining Karadzic's indictment — a process likely to take several weeks.
"You were here on July 30 and we are only now at the stage of considering a motion to amend the indictment," Bonomy said. "That's a period of three months and we've gone virtually nowhere. Rest assured, that is not a fast rate of speed for any trial, for any court to progress."
While Karadzic is entitled under the UN court's rules to defend himself, the tribunal fears his decision could lead to a repeat of the defects in the trial of his political mentor, Slobodan Milosevic, the former Yugoslav president.
Acting as his own counsel, Milosevic dragged out his genocide trial for four years before the case was aborted without a verdict when he died of a heart attack in his UN jail cell in March 2006.
With that in mind and pointing out the complexity of the case, Bonomy repeatedly has urged Karadzic to hire an attorney.
"It's your own choice, as you know very well, that you should represent yourself and I'm afraid that carries particular problems which you have been told about repeatedly," he said.
Early in Tuesday's hearing, Bonomy expressed his anger at the pace of proceedings by walking out of court when the prosecutor, Alan Tieger, could not give him details of several documents that have not yet been sent to Karadzic.
Bonomy adjourned the hearing, saying, "that's the sort of simple information this trial chamber is entitled to have in front of it whenever it comes to court."
The Associated Press
Tuesday, October 28, 2008
THE HAGUE, Netherlands: Radovan Karadzic said his genocide case is moving too quickly. The United Nations judge in charge said it is going too slowly.
At a 15-minute pretrial conference Tuesday, the former Bosnian Serb leader said he is at a disadvantage in preparing his defense because the Yugoslav war crimes tribunal case is moving so fast.
Iain Bonomy, the Scottish judge overseeing trial preparations, disagreed and reprimanded both Karadzic and prosecutors for not being adequately prepared for the hearing.
Karadzic, who was arrested in July after 13 years on the run, faces charges of genocide and crimes against humanity for allegedly masterminding atrocities by Bosnian Serb forces throughout Bosnia's 1992-1995 war, including the massacre of 8,000 Muslim men at Srebrenica and the deadly four-year siege of the capital, Sarajevo.
He has chosen to defend himself but is assembling a team of legal experts to advise him.
"I don't have the necessary resources; I don't have a defense team," Karadzic told Bonomy. "With the speed with which matters are proceeding ... I am afraid that I will be in an even less equal position and I'd like you to be aware of that."
However Bonomy said the case is not moving quickly at all. If Karadzic is having trouble keeping pace with proceedings, it is his own fault for choosing to defend himself, he said.
He pointed out that prosecutors are still waiting for the court to approve planned changes aimed at streamlining Karadzic's indictment — a process likely to take several weeks.
"You were here on July 30 and we are only now at the stage of considering a motion to amend the indictment," Bonomy said. "That's a period of three months and we've gone virtually nowhere. Rest assured, that is not a fast rate of speed for any trial, for any court to progress."
While Karadzic is entitled under the UN court's rules to defend himself, the tribunal fears his decision could lead to a repeat of the defects in the trial of his political mentor, Slobodan Milosevic, the former Yugoslav president.
Acting as his own counsel, Milosevic dragged out his genocide trial for four years before the case was aborted without a verdict when he died of a heart attack in his UN jail cell in March 2006.
With that in mind and pointing out the complexity of the case, Bonomy repeatedly has urged Karadzic to hire an attorney.
"It's your own choice, as you know very well, that you should represent yourself and I'm afraid that carries particular problems which you have been told about repeatedly," he said.
Early in Tuesday's hearing, Bonomy expressed his anger at the pace of proceedings by walking out of court when the prosecutor, Alan Tieger, could not give him details of several documents that have not yet been sent to Karadzic.
Bonomy adjourned the hearing, saying, "that's the sort of simple information this trial chamber is entitled to have in front of it whenever it comes to court."
Google settles suit over book-scanning project
By Miguel Helft
Tuesday, October 28, 2008
Google said Tuesday that it had agreed to pay $125 million to settle two copyright lawsuits brought by book authors and publishers over the company's plan to digitize and show snippets of in-copyright books and to share digital copies with libraries without the explicit permission.
Under the settlement, which is subject to court approval, the money will be used to set up a book registry, resolve existing claims by authors and publishers and cover legal fees. Copyright holders will also be able to register their works and receive payment for book sales and use by individuals and for subscriptions by libraries. Revenue from those programs will be split between Google, the publishers and the authors.
If approved, the settlement could expand online access to millions of in-copyright books available at libraries participating in Google's Book Search program
The settlement left unresolved the question of whether Google's unauthorized scanning of copyrighted books was permissible under copyright law.
"We had a major disagreement with Google about copyright law, we still do and probably always will," said Paul Aiken, executive director of the Authors Guild, one of the plaintiffs in the suit. Aiken said the parties were able to set aside those differences to reach a settlement that benefits everyone.
The settlement agreement resolves a class-action suit filed on Sept. 20, 2005, by the Authors Guild and certain authors, and a suit filed on Oct. 19, 2005, by five major publisher-members of the Association of American Publishers: the McGraw-Hill Companies, Pearson Education, Penguin Group, John Wiley & Sons and Simon & Schuster. It is subject to approval by the United States District Court for the Southern District of New York.
In Britain, a 'nation of shopkeepers,' small businesses try to survive
By Julia Werdigier
Tuesday, October 28, 2008
LONDON: When John Banwell, who owns a professional cleaning business in southern England, contacted his bank recently to renew his £20,000 line of credit, he was shocked to learn that the interest rate had almost doubled.
Banwell tried to tell the manager of his HSBC branch that he needed the overdraft - the equivalent of about $32,000 - to pay his four employees and his bills while he waited for his customers to pay him. He received a written apology, saying there was nothing the bank could do about his rate, which had risen to 7 percent above the prime lending rate.
Banwell was able to borrow the money from a friend instead, but that did not solve his long-term problem: how to keep his business in the seaside town of Weymouth alive as credit tightened in the middle of an economic downturn.
"Fuel and material costs have gone up and we'll have to increase our prices, but I'm afraid it may erode sales," Banwell said. "Money definitely should be made available where needed."
The economic downturn is making life tougher for businesses of all sizes. But Britain, famously called "a nation of shopkeepers," has a special place in its heart for small business. And Banwell's experience is at the heart of a battle that has erupted between representatives of small businesses and the government over how much help companies should receive as the country enters its first recession in 17 years.
Backed by a strong business lobby, the opposition Conservative Party and the two biggest tabloid newspapers in the country, small businesses are demanding more affordable credit and tax breaks after a multibillion-pound government bank bailout failed to immediately free up credit.
Although small businesses account for more than half of Britain's gross domestic product and employ more than 13 million people, their plea is controversial. The sector, arguably, faces the same problems of higher borrowing costs and declining consumer spending as larger companies. But some analysts said small businesses are more vulnerable to a downturn because they depend more on financing.
"A large company has more options to raise money," said Philip Shaw, chief economist at Investec Securities in London.
But others said smaller companies are actually at an advantage because they are more flexible and can adapt better to slowing demand.
That may be true, but small businesses say they are feeling the pinch as banks introduce charges for processing overdraft applications, increase their fees for managing accounts or request additional collateral for loans, according to the British Chambers of Commerce.
The changes are a result of higher interbank lending rates, a deteriorating economic outlook and the more conservative attitude by banks toward risk.
The British government tried to free up credit by making its bailout of Royal Bank of Scotland, Lloyds TSB and HBOS this month dependent on the banks' returning to "2007 levels" of lending to small businesses.
The chancellor of the Exchequer, Alistair Darling, met with executives of other major British banks this month to convince them to reduce borrowing costs for smaller businesses.
But instead of freeing up lending, the entreaties led to criticism by some investors that the government was repeating the mistake it had made during the boom: encouraging borrowing.
"Businesses are anticipating banks will be supportive, reflecting the support they have received themselves," said Neill Thomas, head of debt advisory at KPMG in London. But "the reality for companies is the tap remains blocked," he added. "We expect only a trickle of liquidity to return to debt markets in the period through to Christmas."
That would be bad news for many of Britain's 4.7 million small businesses, and it infuriated those that helped turn small businesses from net borrowers to net depositors over the past 17 years. The owners of small companies now keep £1.48 billion pounds with their banks, making them one of the biggest groups of depositors.
One of them is William Mullings, who runs a small jewelry store in London founded by his family in 1798. He is upset that the government bailed out the banks, which are now still reluctant to lend. "If you are running a business, any business, you should be able to do so without the help of the government," Mullings said.
Higher borrowing costs are not the only problem for small businesses. They also struggle as customers increasingly fall behind with payments, sometimes up to several months. Late payments can be a matter of life and death for smaller businesses.
The debate has started to threaten the Labor Party's traditionally close relationship with small business and has moved small businesses into the center of a feisty political debate between Britain's two major parties about economic competence.
The government is keen to be seen as a supporter of small businesses because they are perceived as "struggling, small and hard-working," said Robert Blackburn, professor of small business studies at Kingston University in London. "There are a lot of votes in small businesses and there is a realization that this is quite a powerful group of people."
It is also widely believed that it will ultimately be small businesses that will lead Britain out of recession.
"People running Britain's small businesses are the lifeblood of our economy," said Peter Mandelson, the government's business secretary.
The popularity of Prime Minister Gordon Brown has already taken a hit because many voters blame him for creating the borrowing and spending boom, and subsequent bust, during his time as chancellor of the Exchequer.
The government has pledged to pay its own bills to smaller businesses within 10 days, but David Cameron, the Conservative Party leader, called for more drastic steps.
In an open letter to The Sun newspaper, Cameron suggested that small businesses should be allowed to delay payments of value-added taxes and backed a cut in their tax rates to help them cope with "the economic downturn made in Britain and designed by Gordon Brown."
Demands by the Federation of Small Businesses went even further, including a £1 billion rescue fund for small businesses backed by the European Investment Bank and a policy of publicly identifying customers that pay late.
At his cleaning shop in the south of England, Banwell seemed to take a pragmatic approach.
"I have no problem with having to tighten the belt and don't think banks should be forced to lend more - they are businesses, too - but the belt tightening needs to be evenly spread," he said.
Interventions to strain banks
Global intervention efforts should steady the banking system but it will also put big constraints on banks, the Bank of England said Tuesday, Reuters reported.
In its twice-yearly financial stability report, the central bank also said losses from the crisis might be much less than many investors expected. The report was much more cautious than the bank's report in April, which gave an upbeat assessment of how severely the credit crunch would affect the economy.
ALL PHOTOGRAPHS COPYRIGHT IAN WALTHEW 2008
Auvergne
Auvergnate
Auvergnat
Auvergnats
France
Rural France
Living in France
Blogs about France
Paris / Montmartre/ Abbesses holiday / Vacation rental apartment
Posts
1 comment:
Minors at ages 16 and 18 should not be allowed to consume liquor yet. Their young bodies are going to suffer the illnesses caused by alcohol. They are also going to face a sick future ahead if the government isn't going to act on this.
Post a Comment