Tuesday, 18 November 2008

A Place in the Auvergne, Monday, 17th November 2008

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New on Gulf's shopping list: Foreigners' farmland
The Associated Press
Monday, November 17, 2008
NAHEL, United Arab Emirates: In the dunes around this sun-scorched desert village, where camels still plod along dusty roads an hour south of Dubai's skyscrapers, farmers are making the wasteland bloom.
Row upon row of bell peppers grow plump in a temperature-controlled greenhouse. Lilies and roses bud nearby, and strawberries are on their way, all thanks to sophisticated water-saving irrigation.
Yet even high-tech establishments like the Mirak Agricultural Services farms here and elsewhere in this riverless country will never feed the region's rapidly growing population. It is that realization that is persuading wealthy Gulf Arabs to look far beyond their shores for more fertile acreage - tens of thousands of hectares, in some cases.
There are simply too many mouths to feed and not enough water. Lush urban landscaping and ambitious agricultural projects here and in Saudi Arabia, which once spent so much on farm subsidies that it exported surplus wheat, are quickly draining aquifers, including some that are millennia old and cannot be refilled.
That stark reality, and rising food prices, is sending the region's leaders scrambling to lock up even more long-term food supplies abroad. And where once the region was content to spend its petrodollars on food sold on the open market, Gulf nations now are quietly scouring the globe for rich farmland to rent or buy outright.
The prime ministers of Qatar and Kuwait traveled separately to Cambodia this year to discuss securing paddy land for rice-growing. Sheik Khalifa bin Zayed Al Nahyan, president of the United Arab Emirates, visited Kazakhstan in central Asia, where agricultural investments were on the agenda.
Dubai World, a sprawling conglomerate controlled by that emirate's government, last month said it was creating a new subsidiary targeting global investments in a wide range of commodities, including food.
Plans are also accelerating in the private sector.
The Saudi Binladin Group, for example, is considering investing more than $4 billion to grow food in Indonesia, said Salim Segaf al-Jufri, the Indonesian ambassador to Saudi Arabia. Under the proposed project, the company would produce basmati rice in Sulawesi, Papua and western Java.
Most such talks are continuing in private. Of those companies that could be reached for comment, none made officials available to discuss their investments in detail. That may be because many of the deals are being hatched in volatile countries, such as Pakistan and Sudan, that have serious domestic food concerns of their own. The idea of shipping off homegrown crops to feed rich foreigners could stir dissent.
"These are countries that come with a lot of political baggage," said Eckart Woertz, program manager for economics at the Gulf Research Center, which estimates the Gulf's conventional water resources will be gone within three decades. "People riot when they don't get food."
Experts say the agriculture investments could be a win-win situation. The Gulf gains food security, while poorer developing countries benefit from added jobs and improved technology.
But there are concerns, too.
The head of the UN Food and Agriculture Organization, Jacques Diouf, has warned that foreign land acquisition and long-term leasing schemes, if done poorly, risk "creating a neocolonial pact" and "unacceptable work conditions for agricultural workers."
Even so, some countries are seeking out investment.
Pakistan, already a key source of labor for the Gulf, has been among the most active. This spring, Islamabad helped organize a show in Dubai aimed at increasing investment in the country's agricultural and dairy industries.
Huma Fakhar, managing partner at MAP Services Group, a market research and trade consultant which sponsored the event, said Pakistan was a logical choice for Gulf investment.
Fakhar said an investor from Abu Dhabi, whom she declined to name, last year bought about 16,000 hectares, or 40,000 acres, of farmland in the Pakistani province of Baluchistan. Two UAE firms, Emirates Investments Group and Abraaj Capital, have also expressed interest in investing directly in Pakistani agriculture, she said.
12-year-old's a food critic, and the chef loves it
By Susan Dominus
Monday, November 17, 2008
Everyone's a critic, and apparently it's never too soon to start.
That's why David Fishman, an Upper West Sider who turned 12 last month, decided to take himself out for dinner one night last week. His parents had called him at home to say they were running late, suggesting that he grab some takeout at the usual hummus place.
Hummus, again? David thought he could do better than that.
He had recently passed by the newly opened Salumeria Rosi, a few blocks from his home, and had been intrigued by the reflective black back wall, the cuts of dried pork hanging from the ceiling, the little jars of cured olives and artichokes adorning the walls. If it was O.K. with his mom (and it turned out it was), he wanted to try that instead.
David aspires to be a food critic — he has some vague notion that he could make a living writing for the Zagat guides — and the new Italian spot on Amsterdam Avenue near 73rd Street seemed worthy of investigation.
That night, Tuesday, turned out to be one of the first that the restaurant was open to the public. David requested a menu, which the hostess handed him, and decided that it was within his budget ($25). Then he asked for a table for one and waited to see what she'd say. A year before, he had been turned away from a half-empty restaurant in Montauk and told that it did not serve children unaccompanied by adults. "I was angry, but I didn't show it," he said. "What can you do?"
Grown-up or not, tables were hard to come by that evening — every seat was booked, mostly by friends of the chef and owner, Cesare Casella, the Tuscan impresario behind Maremma in the West Village. Even a boldfaced name dropped by (Tony Danza, who, to the David Fishmans of the world, is just another old fogy). But the hostess decided to squeeze in the Salumeria's first unaccompanied customer under 4 feet 8, as long as he promised to be out by 8 p.m. It was a deal.
Nobody at the restaurant seemed terribly impressed by Tony Danza, but David Fishman — now that was something. People tried not to stare, but couldn't help themselves. Where were his parents? Was he enjoying the food? Cash or credit?
Normally passionate for seafood, David ordered a specialty of the restaurant, a prosciutto, as well as what the menu called una insalata di rucola e parmigiano. "Good variety," he wrote in the leather-bound notebook he brought along, restaurant-critic-like. "Softish jazz music. Seem to enjoy kids but not overly." In other words, no cloying smiles or insulting offer of grilled cheese.
An Australian couple seated beside him struck up a conversation — he had no idea how much the financial collapse here was affecting the Australian dollar! — and a young couple on the other side of his table insisted, against his polite but firm protestations, on buying him a chocolate mousse. In turn, he recommended that they try the arugula salad.
The kitchen workers were so intrigued by the young adventurous eater that they sent out a bowl of complimentary tripe stew, which he enjoyed, although, he allowed, "It wasn't my favorite." He was a little surprised to learn, subsequently, that tripe was prepared intestines. His eyes went wide. "Intestines of what?" he asked. (Somehow, that seemed to matter.)
Food is David's life — well, food and swimming and volunteering and student council and green rooftops (his school, Fieldston, has one). But he really likes food. At 6, he won a competition at the Crumbs Bakery for the best new cupcake concept (David's Peppermint Patty Cupcake). As a prize, he got a free cupcake every Wednesday for a year — and then, even though he wasn't technically supposed to, for more than a year after that. Sadly, eventually all the people who worked there were replaced. "Now they don't know anything about it," he said.
BUT the young foodie has cultivated a new fan in Chef Casella, a burly man who generally tours his restaurants with a trademark sprig of herb in his pocket. Casella came over the evening of David's big night out to extend a greeting, and sent him home with a gift of fine hazelnut spread. Though David was disappointed that the restaurant did not serve gelato, he got points with Casella for knowing a little something about Italian cuisine.
"He reminded me of me, when I was younger," said Casella, who used to drive all over Europe by himself to try the best restaurants. "He is so cool, though — more confident than I am when I eat out by myself."
Casella likewise made an impression on David. "He looked like a real meat guy," David said. Like a butcher? "Like a butcher-slash-guy who would eat a lot of meat," he clarified.
As independent as David is, he is not allowed to walk around much after dark by himself, so his mom swung by the restaurant to pick him up when he called. Once home, he wrote up the review, Zagat-style, in his private journal, giving the restaurant a 24 out of 25 for food, and a 23 out of 25 for décor.
"As I left," he wrote, "I knew that soon enough this would be one of the most 'hip' places in the city." If there was a weak spot, it was the service, in his opinion: 21 out of 25. In his notes, David remarked that the bread service was a little slow.
"I agree," the chef said when presented with the critique. "We're working on it."
http://www.iht.com/articles/2008/11/17/america/17bigcity.php
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UN data point to lower emissions
By Elisabeth Rosenthal
Monday, November 17, 2008
The United Nations released its latest global emissions figures on Monday, providing cause for hope and concern just two weeks before the world's environment ministers meet in Poznan, Poland, to discuss the creation of a new global agreement to curb climate changing greenhouse gas emissions.
The release of the new data comes against the backdrop of a global recession, and UN officials acknowledged that they were uncertain how economic hardship would affect countries' nascent commitment or ability to reduce emissions, which is sometimes costly.
"This is a critical moment for ministers and politicians," said Yvo de Boer, executive secretary of the United Nations Framework Convention on Climate Change, at a press conference in Bonn. He called the coming climate negotiations "the most complicated process the world has ever seen."
The newly released figures show that among a group of 41 industrialized countries that report emissions annually to the Unfccc, emissions decreased very slightly - one-tenth of 1 percent - in 2006 compared with 2005. But overall emissions had increased by 2.5 percent from 2000 to 2006, leading the agency to decry what it called "continued growth."
De Boer expressed some optimism about this year's figures.
"What I saw was a slowing of the increase in emission from industrialized countries," he said. But his statistician, Sergey Kononov, pointed out that the number was too small to indicate a significant downward trend, noting that it could have been caused by either improved policies or simply a warmer than normal winter.
Perhaps the biggest asterisk that must be attached to the new figures is that they tally only emissions from industrialized countries and do not include the so-called large emerging economies, like China and India, two of the world's largest emitters.
Just one year ago, the Unfccc convened the world's environment ministers in Bali, Indonesia, where the group pledged to hammer out a climate pact by 2009. Rich nations pledged to design a system that would help the poor cope with global warming. The current agreement, the Kyoto Protocol, expires in 2012 and does not cover developing nations like China or the United States, which never ratified it.
But the world has changed since Bali.
The United States, a reluctant participant in the UN meeting last year, now has a president-elect who has pledged to make climate change a centerpiece of his administration. Perhaps more important, fallout from a global economic crisis has turned the economics of climate change upside down.
On the one hand, oil is now cheaper than at any time in the recent past, which makes it tempting for struggling economies to fall back on this relatively dirty fossil fuel, rather than plowing ahead with efforts to develop less-polluting alternatives, like wind and solar power. On the other, stagnant economies mean less industrial production, which historically leads to a drop in emissions. Indeed, the dramatic downturn in industry in the former East Bloc countries in the 1990s after independence, led to a marked decrease in pollution there.
"It is clear that the financial crisis and subsequent economic downturn will have implications for climate negotiations," de Boer said Monday. But he added that "it will take time to see how."
Indeed, he and others have expressed hope that some nations will renew their economies by investing in green jobs and green growth, a proposal put forth by President-elect Barack Obama during the campaign and endorse by nongovernmental organizations like the Clinton Foundation.
De Boer said he hoped that the world would meet its climate goals by "relying on policy actions and not an economic turndown," adding: "I hope never to be in the situation where we say we made our Kyoto target, but everyone is starving."
UN officials said Monday that Obama would not attend the meeting but expressed hope that the U.S. delegation would be "liasing closely" with the incoming administration, which takes office in January.
In 2007, Bush administration officials nearly jettisoned a global agreement, signing on at the 11th hour after a delegate from Papua New Guinea famously told them to "please get out of the way."
Unlike the Bush administration, Obama supports a cap-and-trade system, similar to the one that currently operates in the European Union. Companies and industries are assigned emissions limits and must buy "carbon permits" to exceed them. Such permits can come from investing in emissions-reducing projects like planting trees or cleaning up a dirty coal mine in Asia, in theory "offsetting" environment damage done at home.
Despite the dismal economic situation, the coming climate talks could build on progress over the past year in carbon-trading systems, like the United Nations Clean Development Mechanism, which are now fully operational.
"These are no longer just numbers on paper," de Boer said. "They are used in transactions, and the number of trades is going up."
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Quake kills at least 3 in Indonesia
By Peter Gelling
Monday, November 17, 2008
JAKARTA: At least three people were killed and about 30 seriously injured after a powerful earthquake struck near the island of Sulawesi in central Indonesia early Monday.
The epicenter of the 7.5 magnitude quake was located underwater, several kilometers off the coast, prompting the Indonesian authorities to issue a tsunami warning. It was lifted several hours later.
The tsunami alert was the first since the Indonesian authorities officially started its long-awaited early warning system last week.
The authorities said that thousands of houses were damaged and that at least one school had collapsed in rural towns in central Sulawesi. Several aftershocks followed, sending villagers fleeing into the streets, fearing a possible tsunami. At least one hospital was evacuated.
More than 12 hours after the initial shock, residents remained outdoors on high ground, according to the Indonesian state news agency.
The 17,000 Indonesian islands, which straddle the Pacific "Ring of Fire," an area where the merging of three tectonic plates merge causes continuous seismic activity, is regularly struck by earthquakes, volcanic eruptions and tidal waves. In 2004, a 9.1 magnitude earthquake triggered a tsunami off the coast of Aceh, the northernmost Indonesian province, that killed more than 130,000 people.
Since then, the Indonesian government has improved its ability to respond to disasters, revamping its disaster management agency, mobilizing its military and installing the tsunami early-warning system.
President Susilo Bambang Yudhoyono said last week that the system was "crucial" in preventing the kind of devastation seen in Aceh in 2004.
A string of buoys set around the country are connected to sensors below the water's surface that quickly detect the kind of undersea earthquakes that cause tsunamis. Scientists said the system can also predict how high the waves will be and when they will arrive on land.
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Report finds Gulf War illness is real
Reuters
Monday, November 17, 2008
By Andy Sullivan
A report released on Monday concluded that Gulf War syndrome is a legitimate illness suffered by more than 175,000 U.S. war veterans who were exposed to chemical toxins in the 1991 Gulf War.
The congressionally mandated report could help veterans who have battled the government for treatment of a wide range of unexplained neurological illnesses, from brain cancer to multiple sclerosis.
The Research Advisory Committee on Gulf War Veterans' Illnesses concluded that Gulf War illness is a physical condition distinct from the mental "shell shock" suffered by veterans in other wars. Some earlier studies had concluded it was not a distinct illness.
"Scientific evidence leaves no question that Gulf War illness is a real condition with real causes and serious consequences for affected veterans," said the committee, which has been looking into the problem since 2002.
The committee, composed of independent scientists and veterans, said Congress should boost funding for research on Gulf War veterans' health to at least $60 million (40 million pounds) per year.
"This is a national obligation, made especially urgent by the many years that Gulf War veterans have waited for answers and assistance," the committee said.
Gulf War illness affects at least one-fourth of the 700,000 U.S. troops who served in the 1991 effort to drive Iraq out of Kuwait, or between 175,000 and 210,000 veterans in all, the report found. Few have seen their symptoms improve over the past 17 years, the report said.
Symptoms include persistent headaches, widespread pain, cognitive difficulties, unexplained fatigue, skin rashes, chronic diarrhoea and digestive and respiratory problems.
'DARK CHAPTER'
Many Gulf War veterans suffering these symptoms say they were met with scepticism when seeking treatment.
"Today's report brings to a close one of the darkest chapters of the 1991 Gulf War, and that is the legacy of Gulf War illness. For those who ever doubted that Gulf War veterans are ill, this report is definitive and exhaustive," said Anthony Hardie, a Gulf War veteran from Madison, Wisconsin.
Hardie was a 23-year-old sergeant at the time of the conflict. Today he works in Wisconsin's Veterans Affairs Department and suffers a host of ailments, including respiratory problems, fatigue and chronic widespread pain.
"The truth will prevail," said Adrian Atizado, assistant legislative director of the Disabled American Veterans, an advocacy group that represents 1.4 million veterans from the various conflicts in which the United States has fought.
"One can argue with merit that the federal government did hold back progress in allowing Gulf War veterans to seek health care and financial benefits," he said. "We hope now there will be a greater emphasis on finding effective treatments."
The panel found two possible causes: a drug given to troops to protect against nerve gas, known as pyridostigmine bromide, and pesticides that were used heavily during the war.
The panel said other possible causes could not be ruled out, including extensive exposure to smoke from oil-well fires and low-level exposure to sarin gas when captured Iraqi stocks were destroyed.
The U.S. government has spent roughly $440 million on Gulf War health research since 1994, but spending has declined in recent years and often is not focussed on improving veterans' health, the committee said.
(Additional reporting by Ross Colvin)


GM asks Germany for €1 billion credit guarantee
By Brian Knowlton
Monday, November 17, 2008
WASHINGTON: As top Detroit auto executives prepared to make their most intense plea for aid to Congress on Tuesday, General Motors also pleaded Monday for a €1 billion credit guarantee from the German government to help its Opel subsidiary.
The request, greeted with some skepticism in Germany - Chancellor Angela Merkel promised a reply by Christmas - demonstrated how what had been building as a Washington drama involving efforts to save the venerable Detroit auto industry was fast becoming a story about how the international industry might be transformed by the spreading financial crisis.
Governments around the world, from Tokyo to Berlin, are mulling over pleas by auto industries that say their very survival may be at stake. In addition to GM's plea to the German government, the carmaker is selling its 3 percent stake in Suzuki Motor to raise $230 million.
"There's a high degree of urgency" for federal assistance if General Motors is to avert a full-blown crisis, Rick Wagoner, the company's chairman and chief executive, said in a joint appearance in Detroit with Ron Gettelfinger, who heads the industry's largest union, the United Auto Workers. "It's really time to move on this," Wagoner said.
Wagoner and Gettelfinger, who will be key witnesses at a hearing Tuesday before the Senate Banking Committee, are allies of convenience - particularly after President-elect Barack Obama said that any new aid should depend on automakers and labor coming together behind a plan to make the industry sustainable. Also testifying will be Alan Mulally, who heads Ford, and Robert Nardelli of Chrysler.
But in an atmosphere of rare hostility toward an auto industry whose huge size and long-time success generally meant that it got its way, Wagoner's very job might be at stake. When Senator Carl Levin, Democrat of Michigan, was pressed Sunday as to whether Wagoner should resign as part of any bailout, he told NBC, "I'd be happy to tell Rick Wagoner that he ought to consider resigning if that is the difference between getting this kind of support and not."
The Senate majority leader, Harry Reid of Nevada, was set to introduce legislation Monday to use $25 billion from the $700 billion bailout package for the struggling automakers. Democrats say Congress must act now to protect millions of well-paying jobs throughout the economy that depend on a stable auto industry.
The Democrats promise to impose tough conditions on the money and to create an oversight board, with power to veto company spending plans - such as, according to Representative Barney Frank of Massachusetts, "ventures that would take some of this money, maybe, and put it overseas."
But the White House, while suggesting Monday that its stance on aid to the industry had been cast in overly harsh terms, essentially repeated its position that any help should come from money Congress approved earlier - $25 billion to help the industry retool - not from an additional $25 billion to come from the larger bailout.
"The auto industry is an important part of our manufacturing base, and we want the industry to succeed and compete in the global economy," said Dana Perino, the White House spokeswoman. But, she added, "we believe this assistance should come from the program created by Congress that was specifically designed to assist the automakers - from the $25 billion Department of Energy loan program." The $700 billion rescue program, she added, was meant exclusively for the financial sector.
Analysts say several factors have contributed to the unusually stiff headwinds facing automakers: their longtime resistance to building more fuel-efficient vehicles, which cost them sympathy in many parts; the closing of some auto industry-linked plants in several states, eroding the political support Detroit once enjoyed there, even as foreign automakers built new facilities across the South; and the absence of high-profile Detroit leaders of the prominence of Lee Iacocca, who was essential in the 1979 Chrysler bailout.
Republicans in Congress have been highly critical of the Democratic-backed bailout efforts, saying that the industry is paying the price for decades of bad management, bloated payrolls and poor designs.
"I don't believe the $25 billion they're talking about will make them survive," said Senator Richard Shelby of Alabama, the senior Republican on the Senate Banking Committee. "It's just postponing the inevitable." The hearing Tuesday before the Banking Committee is one of several on the industry set for the coming days.
In Congress, the showdown between the Bush administration and the Democratic-controlled Congress appeared to budge a bit Monday when the Bush administration expressed its support at least in principle for helping the auto industry - as long as the $700 billion financial-sector rescue program was not involved. Obama personally asked Bush to provide help when they met last week at the White House.
But the president has given little clear leeway.
Prospects for any ambitious action this year appeared to dim. Jim Manley, a spokesman for Reid, said that the broad economic stimulus bill favored by Obama - and which might indirectly give a boost to the auto industry - was unlikely to pass this year.
Micheline Maynard contributed reporting from Detroit, and Carl Hulse from Washington.
http://www.iht.com/articles/2008/11/17/america/gm.php
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British experience shows bailouts might not suffice
By Nelson D. Schwartz
Monday, November 17, 2008
PARIS: A faltering auto giant whose brands are synonymous with the open road. Hundreds of thousands of unionized workers with potent political backers. And an urgent plea for the government to write a seemingly blank check.
Familiar as this might sound, it's not the story unfolding now on both sides of Atlantic as beleaguered automakers seek billions in government aid. It's actually the tale of British Leyland, which burned through today's equivalent of £11 billion, or $16.5 billion, of government money in the 1970s and '80s before eventually disappearing. Left behind are memories of iconic cars like the Triumph as well as a painful lesson about the limited effectiveness of government aid.
Now, with Ford Motor and General Motors edging closer to a government bailout in the United States, and the GM subsidiary Opel in Germany appealing to Berlin for help, analysts across Europe say they can't help being reminded again of British Leyland.
"It's all too evocative," said Leon Brittan, who served as a top official in the government of Margaret Thatcher, the free-market-minded prime minister who nevertheless backed the rescue. "At the time, the political pressure to do something was overwhelming. I'm not telling the U.S. what to do, but the lessons of the British experience is don't throw good money after bad. British Leyland carried on for a few more years, but they're not there now, are they?"
While the unhappy fate of British Leyland remains the classic example of a futile government bailout in Britain, on the Continent, the relationship between governments and automakers has been a bit smoother.
For half a century after World War II, Renault was majority-owned by the French government, and Paris still holds a 15 percent stake in the company. In the 1980s, the company got a bailout equal to nearly €4 billion, or $5.1 billion, in today's money, yet it is now highly profitable - at least compared with its U.S. counterparts.
Nevertheless, in response to Detroit's plea for help, as well as slowing sales worldwide, European automakers are seeking €40 billion in loans from the European Investment Bank, ostensibly to help develop cleaner cars.
In Berlin on Monday, the German chancellor, Angela Merkel, said her government would consider a request by Opel for financial help and reach a decision by Christmas. Opel is seeking more than €1 billion in credit guarantees, according to Carl-Peter Forster, GM's European chief, but Merkel was noncommittal.
"It's not decided yet whether these loan guarantees will become necessary," Merkel told reporters in Berlin after meeting with Forster and other senior Opel management and worker representatives. "If these guarantees become necessary, those funds should remain within Opel" in Germany, she added.
The four German states that have Opel factories should now enter talks with the company's management to determine whether the loan guarantees have to be made, Merkel said.
Despite the bailout talk in Europe, José Manuel Barroso, president of the European Commission, said in a French radio interview last week that he considered an aid package for Detroit could be "illegal" and threatened to bring the issue before the World Trade Organization.
As the U.S. Congress turns its attention to Detroit's fate this week, Europe's mixed experience with state intervention offers a mostly cautionary tale.
With roots stretching back even further than Henry Ford's Model T, British Leyland controlled 36 percent of the British market well into the 1970s, with mass-market brands like Austin and Morris and such premium offerings as MG and Jaguar.
But rising competition from Japanese and German automakers, shoddy workmanship and a breakdown in labor relations brought the company to the brink of bankruptcy by 1975, said Garel Rhys, head of the Center for Automotive Industry Research at Cardiff University in Wales.
Michael Edwardes, who took over as chief executive in November 1977, recalled that when he joined, no one even knew whether individual brands were even profitable. "It was a farce - no one knew what the costs were," he said.
As it turned out, every MG the company sold in the United States resulted in a loss of $2,000 for British Leyland.
Wildcat strikes consumed more than 32 million worker-hours in 1977, and the company became a symbol of labor strife, with some employees walking out the door with spark plugs in their coat pockets and engines in the trunk of their cars, Edwardes said.
Edwardes immediately began reducing the company's work force of roughly 200,000 - to 104,000 within five years - and closing 19 factories. He appealed to the Thatcher government for aid, arguing the money was needed if British Leyland was going to be able to afford to lay off workers while investing in new models.
Eventually, the government coughed up £3.6 billion, equal to £11 billion in today's money. But the rescue did not do much to preserve British Leyland's labor force or market share in the long-term.
By the time it received its last government infusion of cash in 1988, Rhys said, British Leyland's market share had slumped to 15 percent. British Leyland evolved into MG Rover, which was eventually acquired by Bayerische Motoren Werke, or BMW, then spun off, finally going bankrupt in 2005.
According to Rhys, just 22,000 workers remain at British Leyland's successor companies, about 10 percent of its work force in the mid-1970s.
"It was a very poor return," he said. "We felt collectively and nationally that we got our fingers burnt, and this was always used as a reason to avoid bailouts, both by Labour and Conservative governments in Britain."
Edwardes still defends the government aid, arguing it preserved parts of the company which remain in business now, like Jaguar and Land Rover, which were bought by Ford. They never made a profit for Ford, however, and were recently sold to Tata Motors of India for $2.3 billion - about half, adjusted for inflation, what Ford originally paid in 1989.
"I argued it was cheaper to have a go and spend some money than to close the whole thing," Edwardes said.
Despite the British experience, the case of Renault, which combined fresh money and new management in the 1980s, showed that government bailouts can work.
The French government help for Renault also came amid increasing losses for the company. But Rhys said unlike British Leyland, Renault was able to use the financing to create new car models that were ultimately successful. That, along with tough cost-cutting by a newly installed chairman, cleared the road to profitability by the time the government began privatizing Renault in the 1990s.
If Washington does go ahead and help Detroit, Edwardes said, it is crucial that the government overhaul the management of the Big Three. "Throwing money at them isn't enough," he said. "They need money and they need new management. They need both, not one or the other."
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The future if Detroit falls
By Louis Uchitelle
Monday, November 17, 2008
NEW YORK: The failure of one or more of the Big Three automakers would put a huge initial dent in U.S. manufacturing, but in time, car companies from overseas would pick up the slack by stepping up production in their U.S. plants, many industry experts and economists say.
Whether Washington should let that play out - risking hundreds of thousands of U.S. jobs - is a central question Congress will weigh this week as it hears testimony from Detroit leaders who are pushing for immediate government intervention, before the next administration takes over in January.
"Barack Obama has made it clear he understands the importance of the industry," Ron Gettelfinger, head of the United Automobile Workers union, said in an interview Friday, raising the prospect of a General Motors bankruptcy. "The question is, do we get that far? At this juncture, we are in a crisis that could have a major negative impact on this country."
But many industry experts say the big foreign makers are established enough to take control of the industry and its vast supplier network more quickly than is widely understood.
"You would have an auto industry in the United States more like that of Mexico and Canada: foreign-owned," said Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Michigan, which describes itself as a nonprofit organization that has "strong relationships with industry, government agencies, universities, research institutes, labor organizations" and other groups with an interest in the auto business.
The transition to that new equilibrium would surely be painful. The big U.S. companies employ about 240,000 workers, and their suppliers an additional 2.3 million, amounting to nearly 2 percent of the nation's work force.
The outright failure of General Motors would eliminate the biggest auto employer and more than 100,000 manufacturing jobs. That is about the number of jobs already lost this year at U.S. automakers and their suppliers.
GM is rapidly running out of cash and appealing to Washington for a multibillion dollar bailout to keep operating and continue the costly conversion to a leaner company producing efficient vehicles that people will buy.
GM's collapse would probably bring down some of its suppliers as well. Since many of them ship parts and subassemblies to the other automakers - domestic and foreign - auto production could be crippled until the supply system was reorganized around the newly dominant foreign car makers.
"The transplants, deprived of enough suppliers, would have to rely on imported vehicles while they scramble to reorganize the supply system," McAlinden said, speaking of the foreign companies with manufacturing plants in the United States. "That would take them about a year."
Given Chrysler's weakness, the new kings of the auto industry would presumably be Toyota, Honda, Nissan, Volkswagen, Ford, Mercedes-Benz, BMW and Hyundai-Kia. (Volkswagen has not yet opened a plant in the United States, and BMW and Hyundai each have one plant.)
Automakers in the United States continue to be big customers for steel, aluminum, plastics, glass, machine tools, computer chips and rubber.
"I don't think people appreciate the importance of this backward linkage to the rest of manufacturing," said Sanford Jacoby, an economic historian at the University of California, Los Angeles. "The automakers play a big role in sustaining other manufacturers."
Even in this year of plunging car sales, the automakers and their vast supplier network still account for 2.3 percent of the nation's economic output, down from 3.1 percent in 2006 and as much as 5 percent in the 1990s, according to government data. Economists say 20 percent of the shrinking manufacturing sector is still tied to the automobile industry.
The U.S. automakers, of course, have bought more and more parts from overseas. But 85 percent of their products are made in North America, compared with 60 percent for the foreign-owned automakers, said Dan Luria, research director at the Michigan Manufacturing Technology Center.
Vehicles constructed entirely abroad drive down the percentage at the foreign-owned automakers. The popular Toyota Prius, for example, is not yet manufactured in the United States. That will come soon, Toyota says. But given worldwide demand for the car, Toyota achieves economies of scale by centering production in Japan rather than using multiple sites.
Such an inclination on the part of foreign companies to keep their production out of the United States helps to explain the push by the Democrats in Congress to provide aid to keep the U.S. automakers alive. The government help would probably go first to GM, which says it will run out of cash by early next year and be forced out of business without federal help.
Rather than collapse outright, a carmaker could file for bankruptcy protection. If it obtained financing, the company could then continue operating and slim down to a more manageable size, with cuts occurring over a period of months or years. But some of its operations could be taken over by another automaker or it could even be forced to liquidate.
"If the Big Three go down, a bunch of the suppliers go down, and the transplants share a number of the suppliers," said Alan Reuther, director of the United Automobile Workers' Washington office - trying in effect to enlist the foreign-owned makers in the effort to save the Big Three.
So far those manufacturers have stayed on the sidelines, avoiding any suggestion that they would like to see any of the U.S. automakers disappear.
"Toyota strongly believes that a strong market with vigorous competition is in everyone's interest," said Tina Ewald, a Toyota spokeswoman.
The Japanese automakers broke into the U.S. market in the 1970s by exporting small, fuel-efficient vehicles during an energy crisis. They began putting factories here in the 1980s, when import quotas and anti-Japanese sentiment threatened to restrict their U.S. sales.
Fuel-efficient vehicles are still the strength of the Japanese and other foreign automakers at a time when such vehicles dominate what auto sales there still are in a rapidly sinking economy. The Big Three have not yet developed fuel-efficient cars as the mainstays of their fleets, and some in Congress are insisting they do that in exchange for any bailout.
But if the current downturn is prolonged, it might be too late.
In an industry capable of making 17 million cars a year, sales have dropped to an annual rate of only 10 million vehicles made here.
"None of the Big Three - and perhaps not the transplants - can make money at 10 million," Luria said. "The transplants are O.K. at 12 million and the Big Three at 15 million or so."
Annual sales of autos and light trucks have been at least 15 million through most of the last decade.
The downsizing in response to the slump has been harsh. More than 100,000 jobs have disappeared since January at the automakers and their suppliers, one in every 10 jobs lost in the United States this year. The three U.S.-owned companies were responsible for most of the loss. They employ 75 percent of the nation's 333,000 total auto workers when foreign-owned companies are included.
The elimination of many more workers, most of them union members and earning upward of $20 an hour, would be devastating in Michigan, Ohio and Indiana, where the U.S. automakers and many of their suppliers are concentrated. In fact, many of those jobs may disappear even if the companies win government assistance.
But other employers would take their place over time. As the foreign companies stepped up production to replace what would be lost by an U.S. company's collapse, the transplants would add to their existing work force of 78,000, replacing many of the lost jobs, although at lower wages, with fewer benefits and at nonunion factories in other parts of the country.
The auto industry's share of the gross domestic product would probably also revive, if the transplants were to build in the United States the vast majority of the cars they sold here, holding down imports.
Still, there would be one irreplaceable loss, McAlinden argued.
"Right now, we do $18.5 billion of automotive research and development in a year," he said, referring to innovative projects like the development of new types of batteries.
GM in particular is involved in the development of lithium ion batteries to power the next generation of cars. If GM disappeared, "the foreign companies would develop the batteries, but not here," McAlinden predicted. "We would lose all the additional development connected to that technology. It would be a technology opportunity lost."
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OPINION
What's good for GM is good for U.S. defense
By Wesley K. Clark
Monday, November 17, 2008
LITTLE ROCK, Arkansas:
America's automobile industry is in desperate trouble. Financial instability, the credit squeeze and closed capital markets are hurting domestic automakers, while decades of competition from foreign producers have eroded market share and consumer loyalty.
Some economists question the wisdom of Washington's intervening to help the Big Three, arguing that the automakers should pay the price for their own mistakes or that the market will correct itself.
But we must act: Aiding the American automobile industry is not only an economic imperative, but also a national security imperative.
When President Dwight Eisenhower observed that America's greatest strength wasn't its military, but its economy, he must have had companies like General Motors and Ford in mind. Sitting atop a vast pyramid of toolmakers, steel producers, fabricators and component manufacturers, these companies not only produced the tanks and trucks that helped win World War II, but also lent their technology to aircraft and ship manufacturing. The United States truly became the arsenal of democracy.
During the 1950s, advances in aviation, missiles, satellites and electronics made Detroit seem a little old-fashioned in dealing with the threat of the Soviet Union. The U.S. Army's requests for new trucks and other basic transportation usually came out a loser in budget battles against missile technology and new modifications for the latest supersonic jet fighter. Not only were airplanes far sexier but they also counted as part of our military "tooth," while much of the land forces' needs were "tail." And in those days, "more teeth, less tail" had become a key concept in military spending.
But in 1991, the Gulf War demonstrated the awesome utility of American land power, and the Humvee (and its civilian version, the Hummer) became a star. Likewise, the ubiquitous homemade bombs of the current Iraq insurgency have led to the development of innovative armor-protected wheeled vehicles for American forces, as well as improvements in Humvees, tanks, armored fighting vehicles, trucks and cargo carriers.
In a little more than a year, the army has procured and fielded in Iraq more than a thousand so-called mine-resistant ambush-protected vehicles. The lives of hundreds of soldiers and Marines have been saved, and their tasks made more achievable, by the efforts of the American automotive industry. And unlike in World War II, America didn't have to divert much civilian capacity to meet these military needs. Without a vigorous automotive sector, those needs could not have been quickly met.
More challenges lie ahead for our military, and to meet them we need a strong industrial base. For years the military has sought better sources of electric power in its vehicles - necessary to allow troops to monitor their radios with diesel engines off, to support increasingly high-powered communications technology, and eventually to support electric propulsion and innovative armaments like directed-energy weapons. In sum, this greater use of electricity will increase combat power while reducing our footprint. Much research and development spending has gone into these programs over the years, but nothing on the manufacturing scale we really need.
Now, as Detroit moves to plug-in hybrids and electric-drive technology, the scale problem can be remedied. Automakers are developing electric motors, many with permanent magnet technology, that will have immediate military use. And only the auto industry, with its vast purchasing power, is able to establish a domestic advanced battery industry. Likewise, domestic fuel cell production - which will undoubtedly have many critical military applications - depends on a vibrant car industry.
To be sure, the public should demand transformation and new standards in the auto industry before paying to keep it alive. And we should insist that Detroit's goals include putting America in first place in hybrid and electric automotive technology, reducing the emissions of the country's transportation fleet, and strengthening our competitiveness abroad.
This should be no giveaway. It is a historic opportunity to get it right in Detroit for the good of the country. But Americans must bear in mind that any federal assistance plan would not be just an economic measure. This is, fundamentally, about national security.
Wesley K. Clark, a retired U.S. Army general, is a senior fellow at the Burkle Center for International Relations at the University of California at Los Angeles.
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Hesitation in pursuit of a Green New Deal
By Paul Taylor
Reuters
Monday, November 17, 2008
LONDON: With Europe and the United States staring recession in the face, a growing chorus is calling for heavy public investment in clean, green energy to revive economic growth while fighting climate change.
Under the slogan of a "Green New Deal," leaders from the UN secretary general, Ban Ki Moon, to Al Gore, the former U.S. vice president, and the foreign minister of Germany, Frank-Walter Steinmeier, argue that industrialized countries can achieve two goals through a single effort and create millions of "green collar" jobs.
The idea of using tax breaks and extra public spending to promote energy efficiency, mitigate carbon emissions and develop renewable power sources, inspired by a U.S. public works program put in place during the Great Depression, sounds like common sense.
But it may not happen fast enough or on a sufficient scale to stimulate the economy, stop global warming or bring down for any length of time oil prices that reached $147 a barrel earlier this year.
"This is the big opportunity to get off the oil hook, but governments have to be bold, do it on a large scale and stick to it," said Tom Burke, co-founder of the environmental consultancy E3G and an associate professor at Imperial College, London.
He advocates sustained public investment in wind farms, photovoltaic and solar energy, developing so-called clean coal technology, connecting European electricity grids and combining heating and power from natural gas to make offices and homes more fuel efficient.
Yet governments that have collectively found about $5 trillion to rescue banks and galvanize economies hesitate to focus fiscal stimulus measures on clean energy because of the long lead time for many projects.
Indeed, there are signs that the financial crisis is causing cutbacks in public and private-sector investment in wind farms and solar and wave power, and economic angst may make the European Union scale back ambitious legislation to fight climate change.
The U.S. president-elect, Barack Obama, said in a campaign debate that the credit crunch could slow his plans for a $150 billion clean energy program, designed to reduce U.S. dependence on imported oil and create five million "green collar" jobs.
The research group New Energy Finance says new investment in clean power will decline by 4 percent this year compared with 2007 because of the crisis although the conditions for growth are intact. Total new investment in low-carbon technology is estimated at $142 billion in 2008, down from a record $148 billion in 2007.
Germany, the biggest economy in Europe, earmarked just a fraction of this month's €50 billion, or $62.45 billion, stimulus package for measures to renovate buildings and reduce emissions.
Governments are tempted to give money directly to voters in tax cuts or one-off payments to bring an immediate rise in consumption rather than take the slower route of investing in green infrastructure schemes, economists say.
A recession is also a difficult time to introduce new taxes that promote environmentally sustainable behavior.
Some governments have found ways to combine the two, but so far mostly on a modest scale.
Britain has spent public money on insulating homes of the elderly. Filling wall cavities and insulating roofs cuts pensioners' fuel bills, reduces energy consumption, curbs CO2 emissions and creates jobs.
France has created tax incentives to buy low-emission cars, with corresponding tax increases on gas guzzlers, that are changing driving habits and have prompted automakers to advertise their vehicles' green performance rather than acceleration or power.
To make an impact on gross domestic product next year, European countries would have to do far more, especially on energy efficiency, where environmentalists and EU officials say the biggest and quickest gains are to be made.
Achim Steiner, executive director of the UN Environment Program, said Britain could create thousands of jobs within two years by reducing the carbon footprint of buildings.
The European Commission's Strategic Energy Review, published last week, offers plenty of longer-term projects awaiting funds.




A senior ETA leader is arrested in France
By Victoria Burnett
Monday, November 17, 2008
MADRID: The French police have arrested one of the most high-ranking operational leaders of the Basque militant group ETA, the French and Spanish authorities said Monday.
Garikoitz Aspiazu Rubina, also known as Txeroki, or Cherokee, was detained in Cauterets, a town in the French Pyrenees near the Spanish border, a Spanish Interior Ministry spokeswoman said. A Spanish woman, also believed to be a member of ETA, was detained with Aspiazu, said the spokeswoman, who spoke on condition of anonymity under government rules.
Prime Minister José Luis Rodríguez Zapatero of Spain said the arrest was a "definitive operation in the fight against ETA."
"ETA has not lost the capacity to inflict pain, but this arrest has been a hard blow to them," he said in a televised news conference in Madrid.
Zapatero described Aspiazu as the head of ETA's operations and said he was suspected of shooting two Spanish policemen in the French coastal town of Capbreton in December last year.
Azpiazu is also believed to have ordered the December 2006 bombing of a parking lot at the Madrid Barajas International Airport, the Interior Ministry spokeswoman said. That bombing killed two people and put a halt to foundering peace talks between the Spanish government and the militant group.
"Nobody doubts that his detention will save lives," Zapatero said.
Azpiazu's arrest is the latest in a series of captures of suspected ETA operatives and the most high profile since May, when the French and Spanish police arrested the organization's top commander, Francisco Javier López Peña, also known as Thierry, in Bordeaux. ETA, which is considered a terrorist organization by the U.S. State Department and the European Union, has killed more than 800 people in what it says is a struggle for an independent Basque homeland.
Aspiazu was born in 1973, according to Spanish press reports, and came up through the ranks of ETA from the militant Basque youth movement that is behind spates of street violence and vandalism that plague many Basque towns." His age and apparent standing in ETA would be consistent with what Spanish security officials describe as a military structure that is increasingly composed of young militants.
The Associated Press quoted a French official as saying that guns, documents and computers had been confiscated from the house where Aspiazu was arrested, though the Spanish official could not confirm this.
Officials said the arrest was the result of a joint operation between the French and Spanish police. The French Interior Ministry said in a statement that the latest arrests brought the number of ETA suspects detained on French soil this year to 31.
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French appeals court restores marriage in virginity case
Reuters
Monday, November 17, 2008
DOUAI, France: A French appeals court overturned on Monday a ruling by a lower tribunal that had annulled the marriage of two Muslims because the bride had lied about being a virgin.
The marriage was annulled earlier this year when a court held that the woman had lied over what is called in French law an "essential quality," in this case her virginity. It ruled that the marriage contract was therefore invalid.
The case sparked outrage in both feminists and human rights activists, who were shocked that a court could consider virginity an "essential quality." Some politicians also expressed concern that conservative Muslim values were creeping into French law.
The couple, a computer specialist in his 30s and a trainee nurse in her 20s, were married in 2006 in the northern French city of Lille, but the husband rejected his wife after discovering on the wedding night that she was not a virgin.
Following the public uproar, the government ordered an appeal. The court in Douai ruled that virginity "is not an essential quality in that its absence has no repercussion on matrimonial life."
It also rejected the argument that by lying about her past love life, the wife had destroyed the mutual confidence needed in a marriage and that this was in itself grounds for annulment.
Justice Minister Rachida Dati, the daughter of North African immigrants, initially supported the annulment, saying it offered the woman a way out of a marriage she may not have wanted. But after a public outcry, she withdrew support and ordered state prosecutors to appeal.
The ruling Monday means that the marriage, which neither husband nor wife wished to continue, stands. After initially resisting the annulment, the woman consented and the marriage was annulled in April.
"We're back to the situation before the first ruling," a court official said.
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Taliban threaten Paris attacks and claim troops' killing
Reuters
Monday, November 17, 2008
DUBAI: The Taliban threatened to launch attacks in Paris unless France withdraws from Afghanistan, in a video aired by Al Arabiya television on Monday.
The video also claimed an ambush that killed 10 French troops in August was carried out by the Taliban. It was not clear when the recording was made.
"We have killed 10 French soldiers today as a message to the French so that they rectify their mistakes and withdraw from Afghanistan, and if they don't they will hear our response in Paris," said Mullah Farouq, identified as the commander of the unit that raided the French troops, on the video. His remarks were dubbed into Arabic by the station.
The video included footage of what appeared to be a French armoured unit being stalked by Taliban fighters. Some insurgents were later shown wearing uniforms of the French soldiers they had killed.
Taliban fighters killed the 10 French soldiers and wounded 21 in a major battle near the capital Kabul after ambushing their reconnaissance patrol in August, in the biggest single loss of foreign troops in combat there since 2001.
France's President Nicolas Sarkozy visited Afghanistan to honour those killed and said French troops must stay in Afghanistan to fight terrorism.
Sarkozy sent an extra 700 troops to Afghanistan this year, responding to U.S. pleas for its NATO allies to do more to help check the resurgent Taliban. That brought the number of French troops in Afghanistan to about 2,600.
(Reporting by Firouz Sedarat)
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Sarkozy and the political potshot
By John Vinocur
Monday, November 17, 2008
PARIS: For a temporary job, being Europe's leader for six months is a tough one, battling for Master of the Universe status with limited firepower and wavering support for big ideas.
Nicolas Sarkozy tries. He has sprayed concepts, some of them good ones, like buckshot from a scattergun at international issues and problems.
Sarkozy can be bold, emotional and refreshing. But if you go back to July, when France took over the European Union's rotating presidency, his distinguishing feature as Europe's point man may be his institutionalizing of the political potshot in place of coherent policy - firing off noise-making, important-sounding projects or plans that for the most part don't or are unlikely to work.
In Europe, over the past months, his modus operandi has met with a reticent reaction from France's neighbors:
A Sarkozy plan to create a Mediterranean Union with France as its locus of power was a no-go until it was stripped of blatant French control. His call for Europe to set up an "economic government" was rejected out of hand. An attempt to keep himself on as president of the group of euro currency countries after the Czech Republic becomes the EU president on Jan. 1? Forget it.
Approaching the wider stages of the G-20 financial crisis meeting in Washington over the weekend and an EU-Russia summit meeting in Nice last Friday, Sarkozy's energy and eagerness - in truth, his thrusting at importance without the caliber of influence, consistency or number of divisions (to quote Stalin) to carry it off - was similar.
For starters: His attempt to take advantage of the presidential interregnum in the United States and turn a meeting on global economic misery into a new world financial charter bearing his imprint just didn't happen.
Yes, the inclusion of Russia, China, Brazil and Saudi Arabia to the classic Western lineup of economic overseers was universally welcomed, although Sarkozy himself called the detailed results "not very glamorous."
But the meeting's regulatory recommendations came with individually stated caveats that they would be used "as appropriate" by participant countries. And reality said that instead of a 100-day action plan Sarkozy insisted a week earlier was imperative for the United States to accept, the reform process would wait to be revisited by May when he no longer speaks for Europe, and Barack Obama's voice will be dominant.
As a measure of Sarkozy's effective international weight, this was foreseeable.
What was not was Sarkozy's effort to become what the French press called "mediator" between Russia and the United States.
On Friday, startlingly, he said the Americans' (and Czechs' and Poles') plan to install an anti-missile shield against Iranian nukes "would bring nothing to European security." When Sarkozy made the comment, he was on a podium with Dmitri Medvedev, who the week before threatened to target missiles on EU and NATO countries. The Associated Press reported the Russian president smiled and pointed at Sarkozy in approval.
This was the same Sarkozy who has called Iranian nuclear weapons "inadmissible" and wants France to return to the NATO integrated command. On Saturday, after the Czechs and Poles said publicly that Sarkozy had no European mandate to talk about the missile shield, spoke without consultation and would have no influence on their decisions, Sarkozy shifted gears and acknowledged the shield could indeed parry a missile threat from Iran.
Before he did, Denis MacShane, who was Prime Minister Tony Blair's minister for Europe, attending a meeting of the NATO Parliamentary Assembly in Valencia, Spain, spoke of the group's "dismay" and said, "It looks as if Medvedev is playing Sarkozy for a fat, slow trout and reeling him in."
In fact, in a more generous interpretation, this was Sarkozy being Sarkozy, attracted to grand pronouncements and marking out a patch in history for himself, his mouth running ahead of reflection or his diplomats.
An adviser to Sarkozy offered this positive spin: "People are starting to understand how he works. He has an idea, says something serious, but not diplomatically, and then if necessary he'll correct himself. If there's a hullabaloo, he couldn't care less."
A senior U.S. official also sought to put an all's-well-that-ends-well tag on the incident. "I don't consider France is walking away from its commitment at the last NATO summit regarding the shield. Sarkozy may have gotten a little extra exuberance at the podium."
Still, Sarkozy's remark came in the context of his chairmanship of an EU-Russia summit meeting at which the EU lifted its suspension of talks on a strategic partnership agreement with Russia even though Moscow's troops are still in Georgia.
Piling the missile-shield remark on top of that was enough to tickle the suspicion among the EU and NATO members of the old Soviet bloc that the Sarko l'Américain of his 2007 election campaign was molting into the Sarkozy of equidistance between the United States and Russia.
Medvedev himself, behind Sarkozy's back, suggested he would not take bets on where the French scattergun might point next.
At a public discussion in Washington after the G-20 summit, Medvedev asked to stand to address the issue of the shield and Russian missiles. Then, gesticulating excitedly in what American news accounts called an imitation of Sarkozy, he assured his audience he would not speak "as emotionally" as the Frenchman.
It was the same Medvedev who a day earlier had pointedly shot down Sarkozy's notion of his greatest success during his time as Europe's postulant Master of the Universe: stopping the Russians from occupying all of Georgia.
To set history and Sarkozy's ego straight, Medvedev said, "I made the decision to stop operations" - before Sarkozy came to Moscow to discuss a cease-fire on Aug. 12.
Just FYI: The next scheduled French leadership semester at Europe's head, if the EU's rules don't change in the meanwhile, will not come until after 2020.
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Paris's newest and hippest shopping destination
By Suzy Menkes
Monday, November 17, 2008
PARIS: With the curlicues and flourishes of icing on a wedding cake, this white box of a store looks made for a celebration. And the elegant shop that Yohji Yamamoto opened last week in Paris does mark a fashion moment: a flagship on the cusp of haute couture and hip style for the Japanese designer, and the consecration of a discreet new shopping street.
The store is at the angle of the Rue Cambon, emblematic as the home of Chanel, and the Rue du Mont Thabor. And it is in the latter street where a quiet revolution has been taking place since the Maria Luisa store, with its raft of artfully selected designers, moved there after 20 years on Cambon. Now the nondescript street that runs parallel to the Rue de Rivoli and the Rue Saint-Honoré, is attracting quirky and original shops in contrast to the plate-glass grandeur of big brands.
Meanwhile, Colette at 213 Saint-Honoré, which became the epicenter, along with Hôtel Costes, of this new Right Bank shopping area, has had a facelift to mark its first decade, while incoming stores continue to refresh the surrounding spaces.
"The street has come together - it makes sense, it's coherent - and I feel very happy and proud - we have done something for fashion and a lot for real estate!" said Maria Luisa Poumaillou about Mont Thabor on the day of the Yohji Yamamoto opening party. She was referring to the view from her eponymous corner store, with its multitude of cutting-edge brands and intimate cavern of shoes. ("Thank you, Manolo, for always believing in us," she said.)
Mont Thabor has now become a family affair. There is an art gallery, where Poumaillou's daughter works. And Ferdi, the restaurant run by her sister Alicia and brother-in-law Jacques Fontanier.
Then there are other quirky shops: the Maison Darré, a design gem where the former fashion specialist Vincent Darré offers his graphic take on interior furnishings; and Masomenos, a shoebox of a store filled with funky and coup de cœur objects. Add an actual shoe store - Gianvito Rossi, opposite the Yamamoto store - and you have the ingredients of an intriguing and original shopping spot.
"I wanted it to be half a couture house and half a shop," said Yamamoto, who plans to make items to personal order. "It's by chance that we are on this street. Real estate things are sometimes like a love affair."
The windows, brushed elegantly with white paint, tell the story of the three-floor emporium, designed by the British architect Sophie Hicks. It is serene and spacious, with an unfolding origami made out of chestnut wood leading to a gallery-like space on the main floor, where clothes are displayed on seven mannequins. On each level - the men's downstairs and the women's on the upper area - chill-out zones with soft white couches increase the feeling of tranquillity. And the starkness of the "white box" is challenged by the geometry of a curving staircase and by marble-encrusted concrete.
The clothes? A seamless mix of the different lines, with red facing off black for women and bright male tartans among sharp tailoring. Accessories are laid out on a long table, while rails-on-wheels whizz chosen garments to the changing room.
There is a Japanese shopping vibe throughout this area: a sense of discovery and a desire to be tempted. Colette's mini-makeover by Masamichi Katayama and his Tokyo studio Wonderwall, has put a clear focus on sportswear, including a wall of wild and wondrous sneakers, brought to the front of the main floor among the techno gizmos, while beauty projects are now upstairs, fitted between the women's and men's clothes and Colette's art space.
"It's a continuity with before, but with better light and circulation, and giving more space to streetwear," says Sarah Lerfel, who opened the store with her mother Colette and says that everything is done "very spontaneously."
For Mina d'Ornano, whose minaPoe shop has moved to 382 Rue Saint-Honoré, across the street from John Galliano and facing the noble square around Notre-Dame de l'Assomption, the store is repositioned at a shopping hub. Adding to her whimsical accessories more clothes, each piece a unique and poetic meld of romantic modernism, the designer/owner says that moving house has been a voyage of discovery for herself.
"I know better who I am - and who I am not," d'Ornano says. "I want to create temptation and desire - I am incapable of making black pants - I want sculpture and color, embroidery and hand-painting."
The result? A store with a soul, where there is a sense of discovery rare in today's shopping experience.
Around the Cambon/St-Honoré epicenter, stores such as Jimmy Choo and Carlos Miele are installed. Roberto Cavalli is on the way. And a few minutes from Colette, Marc by Marc Jacobs has baptized the Marché St Honoré as yet another fashion destination to watch.





Maliki government dismissing oversight officials
By James Glanz and Riyadh Mohammed
Monday, November 17, 2008
BAGHDAD: The government of Prime Minister Nuri Kamal al-Maliki is systematically dismissing the oversight officials installed to fight corruption in Iraqi ministries by order of the American occupation administration, which had hoped to bring Western standards of accountability to the opaque and graft-ridden bureaucracy here.
The dismissals of the oversight officials, known as inspectors general, which were confirmed by senior Iraqi and U.S. government officials on Sunday and Monday, come as estimates of official Iraqi corruption soar, with one former Iraqi chief investigator recently testifying before Congress that $13 billion in U.S. taxpayer money had been lost to fraud, embezzlement, theft and waste in the reconstruction program by Iraqi government officials.
Word of the moves, which has not been publicly announced by Maliki's government, has begun to circulate through the layers of that bureaucracy as the Iraqi Parliament prepares to vote on a security agreement that sets the terms for continued American presence in Iraq beyond Dec. 31, but that also amounts to a framework for a steady reduction of that presence. The reduction will diminish the ability of U.S. officials to provide independent oversight of Iraqi institutions.
How many of the 30 Iraqi ministries have already received orders to dismiss their inspectors general - each cabinet-level office has one inspector general, supported by varying budgets and staffing - is a matter of disagreement among Iraqi governmental officials, but estimates range as high as 17. Several senior Iraqi and U.S. officials agreed that from 7 to 9 inspectors general already had been fired or forced into retirement. In another case, the post at the Ministry of Higher Education became vacant when the inspector general died.
Senior Iraqi officials and a number of the dismissed officials, many of whom asked not to be quoted by name for fear of further reprisals by the government, said the actions had already been taken in the ministries of Water Resources, Culture, Youth and Sport, Trade, as well as the cabinet-level Central Bank of Iraq and two religious ministries, the Sunni and Christian Endowments.
A senior Iraqi official said that the list also included the critical ministries of Electricity and Foreign Affairs, an assertion that could not be immediately confirmed through the ministries' public affairs offices.
Whatever the precise tally, the steps are provoking accusations that Maliki, who has never been an advocate of having his government's inner workings scrutinized, will either leave the posts vacant or stack them with supporters of his Dawa party. The secrecy surrounding the moves has only magnified suspicions that the government aims to cripple the oversight mechanisms put in place after the U.S.-led invasion in 2003.
"The government put a publicity blackout on it so they can do anything they like," said Sabah al-Saeidi, a Shiite lawmaker with the Fadhila party who heads the Integrity Committee in the Iraqi Parliament.
When Parliament recently proposed a law formalizing the professional requirements that must be met by a candidate for inspector general, Saeidi said, Maliki's cabinet strongly opposed it.
"They want it to become a political appointment," Saeidi said. "They are trying to restrict anti-corruption efforts all over the country."
At least two of the officials who were forced out are Christian women, Hana Shakuri of the Ministry of Culture and Samia Youssef Sha'ia of the Christian Endowment. But most are simply senior Sunni and Shiite technocrats who have been at their posts for years and in several cases were appointed in 2004 by Paul Bremer, the top administrator for the Coalition Provisional Authority.
Hassan al-Safi, who was forced out of his position in the Ministry of Youth and Sport, said that he has degrees in law, economics and auditing and was involved in the earliest anti-corruption efforts in Iraq after the invasion. "If I am not competent, prove it," said Safi, who said that he had already filed a lawsuit to regain his position.
Three senior advisors to Maliki declined to comment substantively when contacted about the dismissals. "Definitely I know about it, all the details," said Yasseen Majid, a press adviser to the prime minister. "But you know all the story, so why are you asking me? It's not my specialty, it's an administrative issue."
But Dr. Adel Muhsin, Maliki's coordinator of anti-corruption organizations and himself inspector general at the Health Ministry, said any allegation of political influence was false.
"This is absolutely completely nonsense," Muhsin said. The cabinet committee that recommended the changes, he said, "are mainly professional people, not political people. Therefore the selections, it is 100 percent based on professionalism."
Tariq Majer and Mohammed Hussein contributed reporting
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OPINION
Scarred forts and sandbagged pubs
By Don Duncan

Monday, November 17, 2008
A visit there today makes it clear that there are two Afghanistans. There's the Afghanistan at war, to the south, particularly in the provinces of Helmand and Kandahar. But there's an Afghanistan at peace, with varying levels of stability from jittery, paranoid Kabul to the carefree Mazar-i-Sharif in the north - Afghanistan's fourth largest city - where I spent most of my time during a reporting trip in May.
I stayed at the Barat Hotel, one of just two in the city. I had an entire floor to myself, as did each of the six other guests. The tourists had come to see what Afghanistan was like behind the headlines. One woman from Switzerland had come to understand the plight of the disabled; she was in a wheelchair and wanted to see how a country with 10 percent of its population disabled by war and disease is dealing with the problem. (Not very well.)
The Barat Hotel stands opposite the Blue Mosque, a complex of pools, green areas and zones of prayer which every evening becomes a bustling confluence of life. The sunsets are sublime; the dying rays catch thousands of white doves, the splash of children playing in the fountains, the flowing movement of burqas and wisps of smoke from men gathered to chat.
In Mazar and its surrounding region, I wanted to see how Afghanistan at peace had been changed through development. I also wanted to get a closer look at things that hadn't changed, relics of oppression both physical and psychic that have yet to become a thing of the past.
Qala-i-Jangi (House of War), a 19th-century fortress 20 kilometers outside Mazar, is a testament to the victory of Western forces in the north. The Taliban resisted there during the initial offensive by the Northern Alliance, backed by the U.S.-led coalition forces. Some 300 Taliban fighters held by the Northern Alliance in the fortress rose up and fought for seven days before being subdued by heavy artillery fire.
The bullet holes along the walls of the fortress remain unplastered. Rusty remnants of tanks and heavy artillery lie strewn around. Graffiti scratched into black scorched walls in Persian and in Urdu say "Long Live the Taliban" or "In Memory of Mullah Mohammad Jan Akhond," a Pakistani fighter with the Taliban who died in the conflict.
My tour guide, Shoib, knows this because he was there, as a translator for the U.S. Army. In the stable parts of Afghanistan, people like Shoib, who have worked as translators for the army and press since 2001, are playing guide to the tiny trickle of tourists.
Mazar-i-Sharif, and the surrounding region, is one of the most stable places in Afghanistan, which allows visitors to forget that much of the rest of the country is at war. Troops are nowhere to be seen in Mazar, and so it is easy to forget that this security is artificial, propped up by the presence of 71,000 foreign troops and dependent on the continued will of the United States and NATO to keep them there.
Walking around on one's own is not a problem. There are stores to buy crafted wood, woollen hats, Uzbek embroideries or handmade carpets, some of which depict key moments in Afghanistan's recent history - the end of the Soviet occupation in 1989, the World Trade Center attacks on 9/11, the arrival of the U.S.-led coalition forces later the same year.
The changes that have come to Mazar since 2001 are so great that some returning refugees struggle to find their bearings and the streets and houses where they once lived. Modern glass and concrete buildings have sprung up next to traditional adobe houses. Many roads have been paved, with elaborate roundabouts built in public-private partnership.
Signs of Western influence abound - new schools, wells and roads all have plaques attesting to the sponsorship of France, Japan or Sweden. Billboards along the new roads show smiling young professionals chatting on new mobile phones.
There are stories behind the smallest of things, legacies of the Taliban era. Windows on the fronts of most houses are narrow horizontal strips high up on the wall. Shoib says this was not always so. Afghans used to have windows that let in light from the street. But the Taliban deemed visibility of the domestic realm from the outside indecent, and ordered front windows to be bricked up.
The cracks along the walls of the Sultan Razia High School for Girls hark back to its previous function as a Taliban base. It was bombed by the U.S. Air Force in its assault on the Taliban strongholds of Mazar in 2001. Fresh plaster next to the cracks is testimony to the reconstruction of the building and its return to its intended purpose as a powerhouse of female literacy in Mazar. The school educates 5,000 young women, all denied education under the Taliban.
Every positive sign here has a negative parallel elsewhere in the less stable regions. The Taliban have made other girls' schools bombing targets in an effort to undo what they see as Western influence in Afghanistan. But here, in mid-afternoon, a woman rings a shrill bell and a sea of girls pours down the stairs, dressed in black tunics and white head scarves, flooding the courtyard outside where they don their pleated burqas as they advance toward the main gate.
Artillery and manpower are the key weapons against the Taliban to the war-torn south. In the rest of the country, the key weapon is concrete. Building roads through the once hard-to-control regions is a means of consolidating the hard-won stability. International development groups have spent over $2 billion on roads since 2001. The infrastructure improvements increase development in hard-to-reach areas and deprive the guerrilla side of asymmetrical warfare of its key asset: a territorial upper hand.
Among the people, things change a little more slowly. Psychological legacies of the Taliban era are all around. There is a fear of retribution, a reluctance to criticize authority - acts of such defiance would have landed you in jail or worse a decade ago.
People are afraid to speak about some issues, Shoib said, such as the government, the poppy harvest which has been eradicated and the hashish cultivation that has replaced it.
Mazar's feeling of security and stability begins to fall away as you get to Kabul, 45 minutes to the south by plane (or six hours by car). NATO and Afghan military personnel abound, there are checkpoints and sandbagged entrances, and Afghan hosts tend to chaperone Western visitors.
Since a suicide bomb attack in January on the posh Serena Hotel, Western-style establishments have increased security precautions. Popping down, say, to the Hare and Hounds pub in Sherpur Square for a beer means an armed driver from the hotel and walking through a wall of sandbags to a metal door. You knock, show your passport, get frisked, pass through another door, and another; each is locked behind you before the next one opens. Finally the last door opens to the interior of an English pub.
There is a greater mix of Afghan and foreign cultures in Kabul, an awkward cosmopolitanism. You find many young Kabulis at dusk up on Swimming Pool Hill, in T-shirts and jeans, with long hair blowing in the wind, riding on skateboards on the smooth floor of the swimming pool that the Soviets built there for soldiers stationed on the peak overlooking Kabul. The Taliban left it empty but used its high diving board to push criminals and homosexuals off onto the concrete below. If they survived, they were judged innocent. Few did.
The view from its peak is breathtaking: a panorama of Kabul and in the foreground, boys whizzing by on skate boards, dressed for California.
Don Duncan is a freelance journalist based in Hong Kong. His trip to Afghanistan was supported by the Pulitzer Center on Crisis Reporting, Washington. Distributed by Agence Global.
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OPINION
The Karzai question
By Daniel S. Markey
Monday, November 17, 2008
I watched Barack Obama's victory speech in Kabul, where his campaign promises have had particular resonance. The stage is now set for Washington to send thousands more U.S. troops to Afghanistan, and once Obama's new team reviews the complexities of the counterinsurgency mission there, I suspect the United States will match troop increases with greater civilian resources to support economic development projects and to help extend the writ of the Afghan state.
But an enormous gap still looms in U.S. policy: No one is sure what to do about President Hamid Karzai. Elections are scheduled for next fall, and the Afghan capital is buzzing with questions about whether Karzai can, or should, win another five-year term.
It would be nice to say that America should support the principle of free Afghan elections, and focus on process over personalities. Indeed, the defense of Afghanistan's nascent electoral institutions and culture is a worthy cause in and of itself. But Washington's unmatched influence in Kabul means that it cannot sit impassively - inaction will send as loud a message as action.
The Afghan state is on external life support. Its institutions require foreign donors and its security is guaranteed by international troops. Afghans understand these facts, so they are watching for any signal from Washington about whether Karzai will continue to enjoy American largesse, or if someone else will be anointed in his place. Karzai is also acutely aware of his dependence upon outside benefactors - he has always been uncomfortably sandwiched between the Afghan people and the international community.
By all measures, Karzai remains the favored candidate. He enjoys the benefits of incumbency, he has accumulated experience in international diplomacy, and he is one of Afghanistan's least divisive Pashtun politicians. Unlike many other leaders who emerged from decades of civil war, Karzai is neither feared nor hated by ethnic groups outside his own.
But practically any conversation in Kabul quickly exposes a wide range of harsh anti-Karzai criticism. Many international officials cite the alleged corruption of his family and political allies, note that he has proven himself a decidedly ineffective institution builder, and voice concern over his increasingly shrill, populist rhetoric. Liberal Afghans suggest that Karzai has now squandered his credibility with the public, infrequently ventures outside his presidential bubble, and is too weak-willed to get much done in a war-hardened society. Some accuse Karzai of pandering to Pashtuns, others say he hasn't cultivated a genuine base of Pashtun support.
Many of these complaints smell of sour grapes or the inevitable disillusionment of expectations unmet. Moreover, the vast majority of Karzai's critics tend to be united in one important way: They cannot identify a single individual likely to do a better job. The field of presidential aspirants is weak, and all rumored contenders are flawed. Some darlings of the international community lack grassroots constituencies. Those with great appeal in one ethnic community might alienate other influential ethnic groups and threaten prospects for national unity. Some are too bloodstained from Afghanistan's long civil wars; others who spent time outside the country are labeled cowards of questionable allegiance.
In the fog of Afghanistan's insurgency, the new Obama team will need to step forward quickly to determine whether Karzai is a minimally capable partner, or if is he so weak that his re-election would pose an insuperable obstacle to the effort to put the Afghan state-building project on the right track. If Karzai is deemed too great an impediment, the next question is whether - and how - to ease him out of the presidential race before his departure from the race would itself be destabilizing. If, on the other hand, Karzai is considered minimally acceptable, Washington must work overtime to make sure his increasingly heavy-handed efforts to sideline other contenders won't endanger the legitimacy of the election process.
Seizing upon Obama's campaign pledges, American, Afghan, and international officials in Kabul all expect more troops, more money, and more attention. Many still believe we can beat the Taliban, root out terrorists, and make steady progress in the long slog toward building a modern Afghan state. But first-order political questions are still outstanding, and they start with leadership. Afghanistan's own electoral timeline is already starting to dictate U.S. military plans and assistance priorities. On the Karzai question in particular, Obama has tough choices to make, and soon.
Daniel S. Markey is senior fellow for India, Pakistan and South Asia on the Council on Foreign Relations
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Afghan Taliban reject Karzai's safety vow
Reuters
Monday, November 17, 2008
By Sayed Salahuddin
A Taliban militant leader rejected on Monday an offer from Afghan President Hamid Karzai of safe passage for insurgent leaders who wanted to talk peace.
Karzai, back from a trip to Britain and the United States, said on Sunday he would guarantee the safety of Taliban leader Mullah Mohammad Omar if he was prepared to negotiate.
With the Taliban insurgency intensifying seven years after the hardline Islamists were forced from power, the possibility of talks with more moderate Taliban leaders is increasingly being considered, both in Afghanistan and among its allies.
The Afghan government says it is willing to talk to anyone who recognises the constitution.
The Taliban have ruled out any talks as long as foreign troops remain in Afghanistan. Karzai said on Sunday that condition was unacceptable.
Mullah Brother, deputy leader of the Taliban, rejected Karzai's offer of safe passage and again said foreign troops had to leave before negotiations could start.
"As long as foreign occupiers remain in Afghanistan, we aren't ready for talks because they hold the power and talks won't bear fruit ... The problems in Afghanistan are because of them," Brother said.
"We are safe in Afghanistan and we have no need for Hamid Karzai's offer of safety," he told Reuters by satellite telephone from an undisclosed location, adding that the Taliban jihad, or holy war, would go on.
Violence in Afghanistan has surged over the past two years, raising doubts about prospects for the country and Western efforts to establish peace and build a stable state.
Some 70,000 foreign troops, around half of them American, are struggling against the Taliban, whose influence, and attacks, are spreading in the south, east and west.
The prospect of a bloody, drawn-out stalemate has focussed attention on the possibility of talks. Negotiations with insurgents in Iraq are seen as having contributed to an improvement in security there.
"NO TALKS WITH AL QAEDA"
U.S. Defence Secretary Robert Gates said last month the United States would be prepared to reconcile with the Taliban if the Afghan government pursued talks but would not consider negotiations with al Qaeda.
U.S. President-elect Barack Obama has also suggested he was open to talks with more moderate Taliban leaders to explore whether the Iraq strategy would work in Afghanistan.
Analysts say the government and its Western allies hope to draw moderate Taliban, or perhaps opportunistic commanders, into talks to isolate hardliners close to al Qaeda.
A tentative first step towards talks was taken in September when a group of pro-government Afghan officials and former Taliban officials met in Saudi Arabia for discussions on how to end the conflict.
But the Taliban derided those talks and repeated their demand that foreign troops get out. However, Afghan government officials have said they expected another round.
Most Afghans, fed up with the interminable violence, think there will have to be talks at some stage.
Mullah Omar carries a $10 million U.S. bounty on his head and is generally believed to be a stalwart ally of al Qaeda leader Osama bin Laden.
Analysts say Karzai offered Mullah Omar safe passage not so much in the expectation he would take up the offer, but to emphasise his message to other Taliban.
Karzai also has an eye on a presidential election next year that he hopes to win, and wants to be seen by a war-weary electorate as making every effort to bring peace, analysts say.
(Additional reporting by Saeed Ali Achakzai; Editing by Robert Birsel and Jerry Norton)
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OPINION
Keep hope alive
By David Kimche
Monday, November 17, 2008
Every American president since Truman had to deal with the Israeli-Arab conflict. Now that the transition from the Bush to the Obama presidency is underway, Washington must recognize that the Israeli-Palestinian peace process is in a race against time.
The concept of a negotiated two-state solution - a Jewish state of Israel living in peace and security alongside an independent, economically viable Palestinian state - that has been widely accepted for more than 15 years is disappearing before our eyes.
More and more people in the region are talking seriously about three other options: one-state, three-state, or a Jordan solution. But these are not solutions at all. Rather, they are prescriptions for intensified conflict and violence in the Middle East or the end of Israel as a Jewish state.
The one-state solution would entail granting equal voting rights to everyone living in Israel and the Palestinian territories. Since Jews would then become a clear minority within a relatively short period, this scenario would mark the end of Israel as a Jewish and democratic state. The resulting binational state could only be a Jewish one if Jews ruled as a minority, much like apartheid-South Africa. And Israel would then be condemned and ostracized by the international community, including many Americans, as South Africa was.
The three-state solution envisions Israel, the West Bank, which is governed by the Palestinian Authority, and Gaza, now ruled by Hamas, as separate states. The Palestinians would never accept such a plan. Historically they are one people and cannot be divided artificially. The Hamas factions in the West Bank would be literally up in arms, creating additional military threats to Israel. Furthermore, are Israel, moderate Arab states and the West prepared to recognize the state of Gaza with an extremist Hamas government?
Third is the growing school of thought among some Israelis that the only solution to the Palestinian problem is through Jordan. Nearly all Jordanians, however, want nothing to do with such a plan and get angry whenever an Israeli politician raises this proposal: It would endanger the Hashemite Kingdom.
Despite these other plans gaining support, the Palestinian Authority still wants a negotiated two-state solution. Israel is strong enough to work out an accord. Officials in Israel's Foreign Ministry say that Israel can, at the very least, reach a shelf agreement with the Palestinian Authority without much difficulty.
That leaves the question of Hamas. Israel is also strong enough to talk to Hamas in order to reach an agreement with it. Israel is strong enough to even talk to Iran, as it is negotiating with Syria. We simply have no choice but to talk to our enemies.
There will always be some Palestinians who oppose reaching an agreement with Israel. There are also elements in Israel who oppose negotiating with Palestinians. But the intense feeling among the majority of Palestinians and Israelis in favor of an agreement must compel our leaders to work urgently and diligently toward a two-state solution.
The urgency is such that if the Palestinians and Israelis do not negotiate seriously, with the sustained assistance of the American administration, and if neither compromises, we will very soon find ourselves facing one of the other solutions, most likely the one-state, or a continuation of the status quo, which is getting worse for Israel and the Palestinians each year.
Fortunately, Israeli and Palestinian negotiators continue to talk. Israel Foreign Minister Tsipi Livni, who hopes to lead the next government, and Ehud Olmert, the current prime minister, have declared peace negotiations a top priority. Several of the Israeli and Palestinian negotiators told an Israel Policy Forum delegation in September that the two sides have never been closer. Thus, there is a new opportunity for the United States to advance Israeli-Palestinian peace.
The outgoing Bush and the incoming Obama administrations, as well as the Israeli and Palestinian leaders, must all come to grips with what is happening here and act decisively and quickly to reinvigorate the peace process and keep hope for a two-state solution alive.
Even during its remaining two months, the Bush administration can play a critically important role. It should develop bridging proposals to move the sides even closer to a two-state solution before that concept becomes history.
David Kimche, former director general of Israel's Foreign Ministry, is president of the Israel Council for Foreign Relations and a member of the Israel Policy Forum's Israel Advisory Council.
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ElBaradei says Syria uranium traces not conclusive
Reuters
Monday, November 17, 2008
By John Irish
Traces of uranium found at a Syrian site bombed by Israel last year were not sufficient evidence of nuclear activity there, the head of the U.N. nuclear watchdog said Monday.
"We won't be able to reach a quick conclusion unless we have credible information," Mohamed ElBaradei, told a news conference in Dubai. "There was uranium but it does not mean there was a reactor."
Diplomats in Vienna told Reuters earlier this month that particles of processed uranium were found in samples taken by International Atomic Energy Agency inspectors from the site in eastern Syria, and said the findings warranted further investigation before any conclusions were drawn.
Syrian Foreign Minister Walid al-Moualem has dismissed as politically motivated the disclosures about the uranium traces and said the uranium could have come from munitions used by Israel to bomb the site in September last year.
ElBaradei said a report on Syria's alleged covert atomic activity which the IAEA will release later this week will also not be conclusive.
"The report will say that there is still a lot of work to do. (There will be) no conclusion on whether there was a reactor or not," he said.
Both Syria and Israel should cooperate with the IAEA's investigation of Syria's alleged covert program, he said.
"We need cooperation from Syria; we need cooperation from Israel," he said. "I would still like more transparency from the Syrians," he added.
Washington, Israel's chief ally, says the site was a secret nuclear reactor that was almost complete when it was bombed by Israel, which embarked on indirect peace talks with Syria months later.
Syria says the target of the Israeli attack was a disused military building, denies it was a plutonium-making reactor under construction and says the U.S. intelligence was fabricated.
(Writing by Inal Ersan, editing by Tim Pearce)



Japanese economy in recession
By Martin FacklerReuters
Monday, November 17, 2008
TOKYO: Japan, the world's second-largest economy after the United States, has officially slipped into recession, hurt by weak export growth and steep cuts in corporate spending during the deepening global slowdown, the Japanese government said Monday, warning of more troubles ahead.
The Japanese gross domestic product shrank at an annual rate of 0.4 percent from July to September after declining a revised 3.7 percent in the previous quarter, the government said. It was the first time since 2001 that Japanese economy had contracted for two quarters, the most common definition of recession.
The results were worse than expected by many economists, who had predicted the $5 trillion economy would narrowly avert a recession by posting slight growth.
"Downside risks to the economy are growing further," Kaoru Yosano, the Japanese economic minister, told reporters. "Japan is in a very serious situation."
Economists say the worst is yet come, in Japan and abroad. The results Monday do not include most of the global financial panic this autumn, which sent Tokyo stock markets to 26-year lows last month. Analysts also expect Japan to suffer an even more severe contraction in the current quarter, ending in December, as spooked U.S. consumers and businesses cut back even further on spending.
The weakness is also expected to feed into the Japanese domestic economy, as declining exports hurt corporate profits, pushing many smaller companies into bankruptcy, economists said. This could lead to more cuts in corporate spending, as well as declining wages and rising unemployment, further undermining the already sluggish domestic economy.
"The really dark period hasn't even reached us yet," said Hideo Kumano, chief economist for Dai-Ichi Life Research Institute, based in Tokyo. "The stock declines are going to have a freezing effect. The end-of-year retail sales season will be miserable."
The Japanese stock market took the poor growth figures in stride Monday, with the benchmark Nikkei 225 index erasing early losses to end the day 0.7 percent higher. But the index is 44 percent below where it started the year.
Most other markets in the region staged modest losses, with the Hang Seng in Hong Kong easing 0.1 percent Monday, the Taiex in Taiwan falling 0.3 percent and the Straits Times index in Singapore down 0.5 percent. The Australian bourse fell 2.5 percent, partly on account of weak retail sales statistics.
Kumano and other economists predicted the downturn in Japan would keep worsening until about the middle of next year. That is when economists expect the benefits from government spending packages in Japan and its biggest export markets, China and the United States, to revive economic activity.
Economists said the decline would likely increase calls for Tokyo to take additional steps to stimulate growth, beyond the $70 billion in stimulus already pledged. But few economists said they expected more action as politicians gird for national elections that must be held before next September. The Bank of Japan, the central bank, also moved last month to help the economy by cutting overnight lending rates to 0.3 percent.
Some economists said a true recovery will take another year at least, as the United States fixes deep structural problems in its housing market and banking system. Takahide Kiuchi, senior economist at Nomura Securities in Tokyo, said he expected the downturn to last until late 2010, with some respite next year from stimulus measures.
"This will be a long but uncomplicated downturn for Japan," Kiuchi said.
"Japan will take a hit on exports, but it has no big structural problems to fix, unlike the United States."
That would make it one of the longest economic contractions here since World War II. Even during the so-called Lost Decade in the 1990s, the Japanese economy seesawed between short recessions and stretches of anemic growth.
The severity of the downturn is underscored by numerous other signs of mounting distress in the economy. Data last week showed that corporate bankruptcies rose 13.4 percent in October from a year before, while machine tool orders plunged 40.4 percent in the same month. Rent prices in new commercial buildings in Tokyo also declined in October for the first time in six years.
Until now, Japan has stood apart from most other developed nations because its banks were relatively unscathed by the financial crisis, which resulted from financial institutions and investors in Europe and the United States taking on risky housing debt. But the data Monday showed that the U.S. economic woes had reached Japan through its exports, as U.S. consumers and companies spent less on Japanese vehicles, televisions and machine tools.
Japan is particularly sensitive to these swings in the United States because the Japanese economy has depended largely on sales abroad for growth. Domestic consumption has remained weak in this rapidly aging society, keeping the overall economic growth rates low even during its long expansion that extended from 2002 until this year.
Faltering overseas demand and higher imported energy prices reduced economic growth in Japan by 0.2 percentage points in the July-September quarter.
In apparent anticipation of declining exports, Japanese companies cut spending on new factories and machinery by 1.7 percent from the previous quarter, the third straight decline. Household consumption, which reflects consumer behavior, rose 0.3 percent from the previous quarter.
The Japanese decline adds to the increasingly grim outlook for the global economy, after Hong Kong and the European Union released data Friday that showed their economies were in recession. The largest European economy, Germany, announced separately last week that it was in recession. The United States may soon follow, after Washington said last month that the U.S. economy contracted in the July to September quarter.
Still, economists said they expected the recession in Japan to be milder than that in the United States, reflecting the fact that the Japanese financial system and housing markets appear healthy so far.
The Organization for Economic Cooperation and Development, based in Paris, has forecast the Japanese economy will shrink by 0.1 percent next year, versus declines of 0.9 percent in the United States and 0.5 percent in the European Union. The OECD, an association of democratic and developed countries, also predicted that the combined economies of its 30 member nations would contract by 0.3 percent next year before rebounding in 2010.
Bettina Wassener contributed from Hong Kong.
http://www.iht.com/articles/2008/11/17/business/yen.php
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COLUMNIST
James Carroll: The cosmic center
Monday, November 17, 2008
The cosmic center
One definition of the word economy is "an orderly, functional arrangement of parts; an organized system." But neither orderly, nor functional, nor organized were terms that came to mind watching Treasury Secretary Henry Paulson in his press conference last week.
Insisting that "the facts changed," Paulson tried to explain the government's shift from an asset-purchase plan to the recapitalization of troubled banks. As he tried to explain, the public tried to understand - and neither succeeded. The overall impression Paulson made was of an exhausted man, grasping at straws. I have no idea what's happening. No surprise that the stock market tanked again.
That the housing crisis is at the heart of the economic collapse is fitting since the Greek word oikos, which gives us "economy," means house. Managing household affairs seems to have been the originating meaning, and though confidence in the way the U.S. government is managing America's affairs has been shaken, broad anxiety has also settled into households. And with good reason. What is at risk for many suddenly is not just savings for the future, but the structure of the present - the literal structure, which is home. That is reflected in news reports of retirees facing the prospect of having to replace assets lost in the stock market by selling their houses or condos. But who is buying now?
At the other end of the age-scale, many young families are caught in a house that is worth less than the outstanding mortgage. Those are the bad debts that roil the banking system, but first they wreak havoc in the lives of families. What used to be home is now a financial albatross, which is enough to make the place feel like jail. Not even renters are immune from such anguish, since, as jobs disappear or threaten to, the loss of steady income can make the first of each month a debtor's nightmare.
The drastic outcomes of job loss, foreclosure, eviction, or forced sale need not actually take place for fear to grab people by the throat - the fear of losing home.
What is home? More than the place where humans live; more than the physical location defined by roof, walls, doors, and windows; more even than shelter, refuge and privacy - home is the moral center of a universe. The political philosopher Michael Walzer observes that a hotel room can offer safety and comfort, but it is not a home because it fails to offer "the dense moral culture" that locates a person in time and space. Home, in everything from familiar furniture to the clutter of mementos to the imperfections of chipped dinnerware, is a visible manifestation of the golden tie between past and present; between choices made long ago and consequences that present new choices to this day. Life is not a series of unconnected episodes, but a flowing drama, across generations and phases, driven by intense emotions, which are understood only in the tranquility of familiar rooms. Home is not just the stage on which the human drama plays out, but is the character against whom all other characters find their measure.
Home, in shared quarters with family, and in proximity to neighbors, and in the less personal but still precious fabric of civic association, nurtures life in community, which is the only life. Home is the cosmic center, the secure spot on the earth from which men and women venture forth, and from which children test themselves. Thus the economy exists to protect the human home.
If the present crisis has made a broad population newly sensitive to the fragility of the social arrangements by which people live, and how easily those arrangements can be upended, perhaps the crisis can also open the eyes of the relatively well-off to the situation of those for whom the word is not home, but homeless. Where is the orderly, functional arrangement of which they are part?
November is the time of lowering the storm windows against the weather, of gathering around the fire. Soon, families and friends will come home for the holidays. Home coming. Home cooking. Home made. Home. These comforts, this year, will not be taken for granted.
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A deregulator looks back, unswayed
By Eric Lipton and Stephen Labaton
Monday, November 17, 2008
WASHINGTON: Back in 1950 in Columbus, Georgia, a young nurse working double shifts to support her three children and disabled husband managed to buy a modest bungalow on a street called Dogwood Avenue.
Phil Gramm, a former U.S. senator, often told that story of how his mother acquired his childhood home. Considered something of a risk, she took out a mortgage with relatively high interest rates that he likened to today's subprime loans.
A fierce opponent of government intervention in the marketplace, Gramm, a Republican from Texas, recalled the episode during a 2001 Senate debate over a measure to curb predatory lending. What some view as exploitive, he argued, others see as a gift.
"Some people look at subprime lending and see evil. I look at subprime lending and I see the American dream in action," he said. "My mother lived it as a result of a finance company making a mortgage loan that a bank would not make."
On Capitol Hill, Gramm became the most effective proponent of deregulation in a generation, by dint of his expertise (a Ph.D. in economics), free-market ideology, perch on the Senate banking committee and force of personality (a writer in Texas once called him "a snapping turtle"). And in one remarkable stretch from 1999 to 2001, he pushed laws and promoted policies that he says unshackled businesses from needless restraints but his critics charge significantly contributed to the financial crisis that has rattled the nation.
He led the effort to block measures curtailing deceptive or predatory lending, which was just beginning to result in a jump in home foreclosures that would undermine the financial markets. He advanced legislation that fractured oversight of Wall Street while knocking down Depression-era barriers that restricted the rise and reach of financial conglomerates.
And he pushed through a provision that ensured virtually no regulation of the complex financial instruments known as derivatives, including credit swaps, contracts that would encourage risky investment practices at Wall Street's most venerable institutions and spread the risks, like a virus, around the world.
Many of his deregulation efforts were backed by the Clinton administration. Other members of Congress — who collectively received hundreds of millions of dollars in campaign contributions from financial industry donors over the last decade — also played roles.
Many lawmakers, for example, insisted that Fannie Mae and Freddie Mac, the largest U.S. mortgage finance companies, take on riskier mortgages in an effort to aid poor families. Several Republicans resisted efforts to address lending abuses. And congressional committees failed to address early symptoms of the coming illness.
But, until he left Capitol Hill in 2002 to work as an investment banker and lobbyist for UBS, a Swiss bank that has been hard hit by the market downturn, it was Gramm who most effectively took up the fight against more government intervention in the markets.
"Phil Gramm was the great spokesman and leader of the view that market forces should drive the economy without regulation," said James Cox, a corporate law scholar at Duke University. "The movement he helped to lead contributed mightily to our problems."
In two recent interviews, Gramm described the current turmoil as "an incredible trauma," but said he was proud of his record.
He blamed others for the crisis: Democrats who dropped barriers to borrowing in order to promote homeownership; what he once termed "predatory borrowers" who took out mortgages they could not afford; banks that took on too much risk; and large financial institutions that did not set aside enough capital to cover their bad bets.
But looser regulation played virtually no role, he argued, saying that is simply an emerging myth.
"There is this idea afloat that if you had more regulation you would have fewer mistakes," he said. "I don't see any evidence in our history or anybody else's to substantiate it." He added, "The markets have worked better than you might have thought."
Rejecting Common Wisdom
Gramm sees himself as a myth buster, and has long argued that economic events are misunderstood.
Before entering politics in the 1970s, he taught at Texas A & M University. He studied the Great Depression, producing research rejecting the conventional wisdom that suicides increased after the market crashed. He examined financial panics of the 19th century, concluding that policy makers and economists had repeatedly misread events to justify burdensome regulation.
"There is always a revisionist history that tries to claim that the system has failed and what we need to do is have government run things," he said.
From the start of his career in Washington, Gramm aggressively promoted his conservative ideology and free-market beliefs. (He was so insistent about having his way that one House speaker joked that if Gramm had been around when Moses brought the Ten Commandments down from Mount Sinai, the Texan would have substituted his own.)
He could be impolitic. Over the years, he has urged that food stamps be cut because "all our poor people are fat," said it was hard for him "to feel sorry" for Social Security recipients and, as the economy soured last summer, called the United States "a nation of whiners."
His economic views — and seat on the Senate banking committee — quickly won him support from the major U.S. financial institutions. From 1989 to 2002, U.S. government records show, he was the top recipient of campaign contributions from commercial banks and in the top five for donations from Wall Street. He and his staff often appeared at industry-sponsored speaking events around the country.
From 1999 to 2001, Congress first considered steps to curb predatory loans — those that typically had high fees, significant prepayment penalties and ballooning monthly payments and were often issued to low-income borrowers. Foreclosures on such loans were on the rise, setting off a wave of personal bankruptcies.
But Gramm did everything he could to block the measures. In 2000, he refused to have his banking committee consider the proposals, an intervention hailed by the National Association of Mortgage Brokers as a "huge, huge step for us."
A year later, he objected again when Democrats tried to stop lenders from being able to pursue claims in bankruptcy court against borrowers who had defaulted on predatory loans.
While acknowledging some abuses, Gramm argued that the measure would drive thousands of reputable lenders out of the housing market. And he told fellow senators the story of his mother and her mortgage.
"What incredible exploitation," he said sarcastically. "As a result of that loan, at a 50 percent premium, so far as I am aware, she was the first person in her family, from Adam and Eve, ever to own her own home."
Once again, he succeeded in putting off consideration of lending restrictions. His opposition infuriated consumer advocates. "He wouldn't listen to reason," said Margot Saunders of the National Consumer Law Center. "He would not allow himself to be persuaded that the free market would not be working."
Speaking at a bankers' conference that month, Gramm said the problem of predatory loans was not of the banks' making. Instead, he faulted "predatory borrowers." The American Banker, a trade publication, later reported that he was greeted "like a conquering hero."
At the Altar of Wall Street
Gramm would sometimes speak with reverence about the U.S. financial markets, the trading and deal making that churn out wealth.
"When I am on Wall Street and I realize that that's the very nerve center of American capitalism and I realize what capitalism has done for the working people of America, to me that's a holy place," he said at an April 2000 Senate hearing after a visit to New York.
That viewpoint — and concerns that Wall Street's dominance was threatened by global competition and outdated regulations — shaped his agenda.
In late 1999, Gramm played a central role in what would be the most significant financial services legislation since the Depression. The Gramm-Leach-Bliley Act, as the measure was called, removed barriers between commercial and investment banks that had been instituted to reduce the risk of economic catastrophes. Long sought by the industry, the law would let commercial banks, securities firms and insurers become financial supermarkets offering an array of services.
The measure, which Gramm helped write and move through the Senate, also split up oversight of conglomerates among government agencies. The Securities and Exchange Commission, for example, would oversee the brokerage arm of a company. Bank regulators would supervise its banking operation. State insurance commissioners would examine the insurance business. But no single agency would have the authority over the entire company.
"There was no attention given to how these regulators would interact with one another," said Cox of Duke. "Nobody was looking at the holes of the regulatory structure."
The arrangement was a compromise required to get the law adopted. When the law was signed in November 1999, he proudly declared it "a deregulatory bill," and added, "We have learned government is not the answer."
In the final days of the Clinton administration a year later, Gramm celebrated another triumph. Determined to close the door on any future regulation of the emerging market of derivatives and swaps, he helped pushed through legislation that accomplished that goal.
Created to help companies and investors limit risk, swaps are contracts that typically work like a form of insurance. A bank concerned about rises in interest rates, for instance, can buy a derivatives instrument that would protect it from rate swings. Credit-default swaps, one type of derivative, could protect the holder of a mortgage security against a possible default.
Earlier laws had left the regulation issue sufficiently ambiguous, worrying Wall Street, the Clinton administration and lawmakers of both parties, who argued that too many restrictions would hurt financial activity and spur traders to take their business overseas. And while the Commodity Futures Trading Commission — under the leadership of Gramm's wife, Wendy — had approved rules in 1989 and 1993 exempting some swaps and derivatives from regulation, there was still concern that step was not enough.
After Mrs. Gramm left the commission in 1993, several lawmakers proposed regulating derivatives. By spreading risks, they and other critics believed, such contracts made the system prone to cascading failures. Their proposals, though, went nowhere.
But late in the Clinton administration, Brooksley Born, who took over the agency Mrs. Gramm once led, raised the issue anew. Her suggestion for government regulations alarmed the markets and drew fierce opposition.
In November 1999, senior Clinton administration officials, including Treasury Secretary Lawrence Summers, joined by the Federal Reserve chairman, Alan Greenspan, and Arthur Levitt Jr., the head of the U.S. Securities and Exchange Commission, issued a report that instead recommended legislation exempting many kinds of derivatives from federal oversight.
Gramm helped lead the charge in Congress. Demanding even more freedom from regulators than the financial industry had sought, he persuaded colleagues and negotiated with senior administration officials, pushing so hard that he nearly scuttled the deal. "When I get in the red zone, I like to score," Gramm told reporters at the time.
Finally, he had extracted enough. In December 2000, the Commodity Futures Modernization Act was passed as part of a larger bill by unanimous consent after Gramm dominated the Senate debate.
"This legislation is important to every American investor," he said at the time. "It will keep our markets modern, efficient and innovative, and it guarantees that the United States will maintain its global dominance of financial markets."
But some critics worried that the lack of oversight would allow abuses that could threaten the economy.
Frank Partnoy, a law professor at the University of San Diego and an expert on derivatives, said, "No one, including regulators, could get an accurate picture of this market. The consequences of that is that it left us in the dark for the last eight years." And, he added, "Bad things happen when it's dark."
In 2002, Gramm left Congress, joining UBS as a senior investment banker and head of the company's lobbying operation.
But he would not be abandoning Washington.
Lobbying From the Outside
Soon, he was helping persuade lawmakers to block congressional Democrats' efforts to combat predatory lending. He arranged meetings with executives and top Washington officials. He turned over his $1 million political action committee to a former aide to make donations to like-minded lawmakers.
Gramm, now 66, who declined to discuss his compensation at UBS, picked an opportune moment to move to Wall Street. Major financial institutions, including UBS, were growing, partly as a result of the Gramm-Leach-Bliley Act.
Increasingly, institutions were trading the derivatives instruments that Gramm had helped escape the scrutiny of regulators. UBS was collecting hundreds of millions of dollars from credit-default swaps. (Gramm said he was not involved in that activity at the bank.) In 2001, a year after passage of the commodities law, the derivatives market insured about $900 billion worth of credit; by last year, the number had swelled to $62 trillion.
But as housing prices began to fall last year, foreclosure rates began to rise, particularly in regions where there had been heavy use of subprime loans. That set off a calamitous chain of events. The weak housing markets would create strains that eventually would have financial institutions around the world on the edge of collapse.
UBS was among them. The bank has declared nearly $50 billion in credit losses and write-downs since the start of last year, prompting a bailout of up to $60 billion by the Swiss government.
As Gramm's record in Congress has come under attack amid all the turmoil, some former colleagues have come to his defense.
"He is a true dyed-in-the-wool free-market guy. He is very much a purist, an idealist, as he has a set of principles and he has never abandoned them," said Peter Fitzgerald, a Republican and former senator from Illinois. "This notion of blaming the economic collapse on Phil Gramm is absurd to me."
But Michael Donovan, a former SEC lawyer, faulted Gramm for his insistence on deregulating the derivatives market.
"He was the architect, advocate and the most knowledgeable person in Congress on these topics," Donovan said. "To me, Phil Gramm is the single most important reason for the current financial crisis."
Gramm, ever the economics professor, disputes his critics' analysis of the causes of the upheaval. He asserts that swaps, by enabling companies to insure themselves against defaults, have diminished, not increased, the effects of the declining housing markets.
"This is part of this myth of deregulation," he said in the interview. "By and large, credit-default swaps have distributed the risks. They didn't create it. The only reason people have focused on them is that some politicians don't know a credit-default swap from a turnip."
But many experts disagree, including some of Gramm's former allies in Congress. They say the lack of oversight left the system vulnerable.
"The virtually unregulated over-the-counter market in credit-default swaps has played a significant role in the credit crisis, including the now $167 billion taxpayer rescue of AIG," Christopher Cox, the chairman of the SEC and a former congressman, said Friday.
Gramm says that, given what has happened, there are modest regulatory changes he would favor, including requiring issuers of credit-default swaps to demonstrate that they have enough capital to back up their pledges. But his belief that government should intervene only minimally in markets is unshaken.
"They are saying there was 15 years of massive deregulation and that's what caused the problem," Gramm said of his critics. "I just don't see any evidence of it."
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Write-downs: A painful way to revisit big deals
By James B. KelleherReuters
Monday, November 17, 2008
CHICAGO: If the fear stalking Wall Street has you nostalgic for the days of confident deal-making, not to worry - a trip down memory lane is around the corner.
Over the next few quarters, experts say investors are likely to get plenty of reminders of those headier, happier days as dozens of companies that participated in the greatest merger and acquisition wave in history revisit those deals with their auditors - and admit how much they overpaid.
It won't be pretty.
"We're going to see an avalanche of these things," says James Cox, a corporate securities and accounting expert at the Duke University School of Law. "In the euphoria of the times, they overpaid, and they overpaid because money was cheap."
With the credit markets frozen, asset prices falling and regulators pushing auditors to do their jobs, it is time for executives to admit they made some "pretty damned dumb decisions," Cox added.
The corporate confessions, in fact, have already begun as the downturn in stock prices compels companies to reassess deals signed when their shares were much higher.
Last Monday, Sirius XM Radio took a $4.8 billion write-down related to Sirius Satellite Radio's acquisition of its rival XM. The company blamed the write-down on the significant decline in its share price from February 2007, when the merger was first announced. At that time, Sirius traded at about $3.79, compared with 26 cents at the Friday close.
In an SEC filing last week, Google said it believed its 2005 investment in the Time Warners AOL unit was impaired. And although it said it would continue to carry the $1 billion investment on its books at its original cost in the hope that the situation might right itself, Google warned it might need to take a future charge that "could be material."
Late last month, the computer server maker Sun Microsystems took a $1.44 billion charge related to its 2005 acquisition of Storagetek for $4.1 billion, citing a "sustained decline in Sun's market capitalization."
Several factors, including accounting rules that require companies to test assets on their books for impairment, are driving the disclosures.
So too is the stepped-up oversight of accountants that resulted from the Enron and WorldCom corporate scandals.
The head of the Public Company Accounting Oversight Board, which was set up after the high-profile financial scandals of this decade, said in an interview that his staff was urging auditors to perform their jobs with extra diligence.
"Due to the spread of the crisis, we are monitoring the situation closely and encouraging auditors to be mindful of risks in all sectors, and plan their audits accordingly," said Mark Olson, the chairman of the agency.
The real impetus for the confessions is the sell-off on Wall Street, which is forcing companies to confront past miscalculations or lose whatever credibility they have left with investors.
"You have a lot of companies out there now selling below book value, which isn't a trigger in the accounting literature, but it's a pretty good indication that there's no confidence in the market that you're going to get adequate returns on the investment you made," said Jack Ciesielski, editor and publisher of The Analyst's Accounting Observer, an advisory service.
"If they're not taking charges, I think they'd lose some credibility in the market, especially if their competitors are in a similar position and are taking the charges."
But this is Wall Street, so calculation and greed are playing a role, too.
One of the things companies insist on as they book these impairment charges is that they are not real - because they involve taking down numbers on a balance sheet, not paying out cash.
But the truth is that the impairment charges usually represent dollars - either in the form of cash or the value of shares - that a company laid out at some point to buy an asset. Indeed, goodwill is really just an accounting euphemism. It is the amount buyers pay above and beyond the value of the operating assets they purchased.
"Real money is involved. But it's real money that was spent years ago," Ciesielski said.
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Annan urges rich nations not to drop aid to Africa
By Katrin Bennhold
Monday, November 17, 2008
PARIS: Kofi Annan, one of the world's most outspoken activists for Africa, issued a stern warning to rich nations on Monday not to use the current economic turmoil as an excuse to turn their back on his continent.
"It would be incredibly short-sighted - as well as immoral - for wealthy countries to use this financial crisis to drop promises to help the poorest," Annan said at a debate in Paris.
Instead, the former secretary general of the United Nations urged harnessing the current momentum for an overhaul of international financial institutions to revive stalled efforts for a more representative UN Security Council.
Speaking with some emotion about the election of Barack Obama, and the pressures on the president-elect to deal with recession at home, Annan made a direct appeal to Obama: "Some international issues cannot wait."
Praising the weekend Group of 20 meeting in Washington as a blueprint for more cooperation between advanced and emerging economies, Annan said the combination of a truly global crisis and election of a multiethnic American president offered a rare chance to realign international governance to match 21st-century realities.
"The time is now," Annan said on the margins of the debate, arguing that rich countries had a choice between "collaboration and destructive competition."
Annan, a native of Ghana who is now chairman of the nongovernmental Africa Progress Panel, has long lobbied for institutional changes.
On his watch at the UN, a far-reaching shake-up of the world body was proposed before being significantly watered down. Efforts to enlarge the Security Council failed.
Speaking with characteristic elegance at the Forum for New Diplomacy, co-hosted by the International Herald Tribune, Annan said that he had been deeply moved by the election of Obama, an event he said he had not expected to see in his lifetime.
"I think Obama represents something that for the United States and for all of us is a dream. He transcends what until recently defined Americans," Annan said.
"He is an American, he is an African, he is an Asian," Annan said, in an apparent reference to Obama's Kenyan father, his Muslim second name - Hussein - and a stint in Indonesia during his childhood years.
"He is a man who has a capacity to unite," Annan added, "and this is what we need in the world today."
Annan warned that the financial turmoil must not distract wealthy countries from mass poverty and violent conflict in several African countries. Food shortages and migration related to climate change now compound a drying up of foreign investment, he said.
He urged advanced nations to live up to their commitment to double aid to Africa by 2010, warning: "Unless something dramatic is done, we will not even come close." Traditional donors like the Europeans should work with newer ones, like China, in particular on infrastructure.
He said the international community should send a rapid reaction force to Congo, "to allow time and space for negotiation to go on." In part, this seemed motivated by reflections on the world's failings in Darfur.
Responding to a claim by Secretary of State Condoleezza Rice, for example, who said Washington had worked "day and night" to end human rights violations in Darfur, Annan smiled before remarking: "I don't know about day and night. It depends how long your days and your nights are."
"The world could not give them 18 helicopters," he said. "We could have done more - and should."
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Book review: The Great Inflation and Its Aftermath
Monday, November 17, 2008

The Great Inflation and its Aftermath
The Past and Future of American Affluence
By Robert J. Samuelson 309 pages. Random House. $26.
Robert J. Samuelson, an economics columnist for Newsweek and The Washington Post, says historians have not understood the significance of the "Great Inflation" that raged through the economy in the late 1970s and early '80s. It was, he argues in "The Great Inflation and Its Aftermath," one of those watershed moments in U.S. history, not at the level of the Civil War or the Great Depression, to be sure, but perhaps the major turning point of the postwar era.
In 1976, the Consumer Price Index rose by 4.9 percent; over the next few years it climbed steadily until it reached double digits, 13.3 percent in 1979 and 12.5 percent in 1980. And with these rising prices, productivity declined, standards of living fell, investors fled the stock market, debt crises followed one upon another. Almost everyone was affected.
As he writes, "'The economy' is also a social, political and psychological process," and the Great Inflation, he explains, did real damage to the American psyche, engendering a feeling of hopelessness, causing citizens to lose confidence in their political and economic institutions. An inflationary psychology took hold, creating a self-fulfilling prophecy as wages chased prices in an ever more destructive cycle.
And who was to blame? According to Samuelson, we all were.
His tale of culpability begins at the end of World War II. With the Depression a recent memory, Americans entered peacetime worried above all about the return of widespread joblessness. In 1947, Harry S. Truman declared, "The job today is to see to it that America is not ravaged by recurring depressions and long periods of unemployment." Dwight D. Eisenhower agreed. But it was under John F. Kennedy that the nation ambitiously shifted from fighting unemployment to promoting "full employment."
Armed with the tools of Keynesianism, Kennedy's team of economic advisers believed they could fine-tune the economy. Lyndon B. Johnson, Richard M. Nixon and Jimmy Carter went along with the new thinking, as did the economists at the Federal Reserve, whose easy-money policies abetted the politicians' full-employment aspirations. A bipartisan consensus had been achieved. But, Samuelson says, the consensus was wrong.
Beginning in the mid-1960s policies intended to promote full employment - tax cuts, budget deficits, low interest rates, easy credit - were pushing prices up. Presidents, both Democratic and Republican, chose to ignore the warning signs, or to administer weak palliatives until it was too late. Once the inflationary mentality set in, only the harshest medicine would work.
At this point, Samuelson's story enters its heroic phase: Ronald Reagan and Paul Volcker stepped onto the stage. As chairman of the Federal Reserve, Volcker proceeded to fight inflation with stern determination. Unemployment climbed to 10.8 percent, and everyone screamed. But his medicine broke the inflationary fever by the mid-1980s, and prices stabilized.
Reagan's role in all this was to provide Volcker with crucial political cover, insisting that inflation be brought under control. Samuelson concludes, "Of all Reagan's economic achievements," his successful battle against inflation "was the most definitive. The rest of his economic record was mixed."
The remainder of "The Great Inflation and Its Aftermath" is anticlimax. In fact, the narrative dissolves. In bringing his story down to the present, Samuelson identifies current economic problems and proposes solutions. Some of his arguments are irrefutable: The country is going to have to find a way of reforming Social Security and Medicare.
But for the most part he gets lost, and loses his readers, in a morass of on the one hand, on the other. We should trim back the welfare state - but we should also worry about fairness. We should deal with the problems of globalization - but consensus will be difficult to achieve. The final third of Samuelson's book has none of the sweep and clarity of the earlier sections.
Worse, perhaps because Samuelson finished his book before the current financial crisis fully hit, he spends too much time fighting the last war (or even the one before that). His first policy recommendation, his "unambiguous message," is that we must maintain control over inflation. But at a time when unemployment is predicted to reach 8 percent or higher, and when the economy is feeling deflationary, not inflationary, pressures, a sermon about the evil of rising prices is not the one President-elect Barack Obama most needs to hear.
What's more, Samuelson says the larger lesson of his history of the Great Inflation is to demonstrate the dangers of good intentions. "Skepticism," he writes, "ought to qualify and restrain our reformist impulses." And as a warning against economic activism he adds, "Just because something isn't perfect doesn't mean it can be improved."
Fair enough. We should always question our intentions, heed the naysayers. And since politicians and policy makers almost inevitably overstep, the skeptic is usually proved correct - eventually. But skepticism can only raise questions; it can't provide answers or solve problems.
It's fine to maintain a healthy distance from politicians and their hired guns, the economists, as Samuelson urges. Yet in this moment of crisis we would undoubtedly be wiser to be skeptical about Samuelson's skepticism.
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UBS joins Goldman in canceling bonuses for top executives
By Ben White
Monday, November 17, 2008
NEW YORK: UBS on Monday joined Goldman Sachs in saying its top executives would get no bonus this year, as public scrutiny of bankers' compensation intensifies amid the taxpayer rescue of the financial sector.
UBS said its chairman, Peter Kurer, chief executive, Marcel Rohner, and other members of the executive board would receive only their fixed salaries this year and that all other employees would have their 2008 bonuses reduced. The bank, based in Zurich, received a Swiss government bailout of about $60 billion in October after losing nearly $50 billion since the the credit crisis began last year.
UBS said that beginning next year, top executives would be paid according to a long-term compensation model that "rewards realized value creation and takes business risk into account." In profitable periods, the executives will be paid performance-based variable compensation, but in hard times, no bonus will be paid. In addition, it said, "a 'malus' can be deducted from bonus accounts" when performance merits.
UBS made the announcement a day after top executives at Goldman Sachs sent a request to the company's directors asking that they receive no bonus pay for their work in 2008, a company spokesman said. Their request was granted, he said.
The moves by UBS and Goldman Sachs turns up the heat on their competitors, including Morgan Stanley, to take similar action as they decide on year-end bonus figures in the coming weeks. Last month, Josef Ackermann, the chief executive of Deutsche Bank, announced that he would forgo his bonus this year as "a very personal sign of solidarity."
"We may see more of such bonus decisions at the top of the tree," said Andrew Oliver, managing director at Profile Search & Selection, an executive search firm in Hong Kong, on Monday.
The decision by Goldman Sachs could also ease political pressure and reduce adverse reaction to what is expected to be a bleak fourth-quarter earnings report in December, including perhaps the bank's first loss of the credit crisis. Goldman's bailout package includes some strictures on executive pay, but the industry does not view them as especially strong.
It comes after banks worldwide have been awarded or promised hundreds of billions of dollars in taxpayer bailouts. Numerous European officials, including President Nicolas Sarkozy of France and Angela Merkel, the German chancellor, have called for limits on bank executives' pay.
In the United States, public officials including the New York attorney general, Andrew Cuomo, and Representative Henry Waxman, a Democrat of California, have been warning banks not to use any taxpayer money to award bonuses to executives. Industry lobbyists and interest groups have also warned executives at the banks that any big pay numbers this year could generate a significant public backlash.
There is a widespread belief that the way Wall Street awarded bonuses in recent years helped feed the risky behavior that eventually created big losses on exotic debt securities and helped create the current crisis.
UBS acknowledged as much Monday, noting that a report it submitted in April to the Swiss Federal Banking Commission concluded that "disproportionately large risks" had been assumed within its investment bank and that the bonuses there, linked to earnings, "had not been sufficiently tied to the amount of assumed risk. In addition, the bonus payments were calculated based on short-term results, without sufficient appraisal of the quality or sustainability of those earnings."
Morgan Stanley and other banks are still formulating bonus figures. Morgan Stanley's chief executive, John Mack, took no bonus last year. Morgan Stanley, which took a loss in the fourth quarter last year but has been profitable all of this year, declined to comment Sunday. Morgan Stanley posted better results in the third quarter than Goldman Sachs.
In September, Goldman Sachs and Morgan Stanley transformed themselves into bank holding companies that take deposits, take less risk and are subject to more government oversight. That new structure may limit their ability to generate big profits, because they cannot use as much borrowed money to make big investment bets.
In the past several years, Goldman Sachs has posted some of the biggest profits and paid out some of the biggest bonuses in Wall Street history. The company's chief executive, Lloyd Blankfein, received a salary and bonus package last year worth $68.5 million.
Goldman Sachs paid its two co-presidents, Gary Cohn and Jon Winkelried, about $67.5 million each last year, more than most chief executives. All three will receive no bonuses this year.
Others forgoing bonuses at Goldman Sachs will include the chief financial officer, David Viniar, and the vice chairmen, J. Michael Evans, Michael Sherwood and John Weinberg.
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Credit crisis hurts microfinance programs in South Asia
By Rina Chandran
Reuters
Monday, November 17, 2008
MUMBAI: A global credit crisis that has felled large investment banks and prompted multi-billion dollar bailout packages is also hurting unlikely victims half a world away: small South Asian businesses that depend on microfinance.
Microfinance has helped poor women and farmers in Bangladesh and India set up businesses and grow crops since the 1970s.
But as credit tightens and largess from corporations and socially minded investors dries up, microfinance will be affected and will have an impact on poor people who have no other access to finance.
"A liquidity crisis is the very worst-case scenario for microfinance institutions," said Roy Jacobowitz, managing director of development and communications at ACCION International in Boston, which backs microfinance institutions. "The demise of microfinance will be devastating. It will leave people that depend on it in a very, very bad situation. They could go from a level of success back to poverty."
South Asia accounts for the most microfinance borrowers, making up more than half of global demand, according to Sa-Dhan, an association of community development finance institutions.
While ACCION has not seen a "catastrophic impact" on microfinance institutions there yet, Kashf Foundation, one such institution in Pakistan, is now seeking international lines of credit, he said.
In India and Bangladesh, microfinance has given hope to hundreds of thousands, especially women. But these may now be under threat because of tighter credit.
"There's less money out there, so there's less money for MFIs," said Siddhartha Chowdri, a manager for ACCION in India, referring to microfinance institutions.
"For MFIs, the cost of their funds has gone up, and at the same time, they're under pressure not to raise lending rates to their borrowers. At some point that becomes unsustainable."
Microfinance shot into the spotlight in 2006 when the Nobel Peace Prize went to Bangladesh's Muhammad Yunus and his Grameen Bank, which pioneered giving small loans without collateral.
But today in Bangladesh, one of the poorest nations in the world, microfinance borrowers and workers are a worried lot.
Kulsum Bibi, a 45-year-old mother of three, set up a nursery with a loan of 3,000 taka, or $44, from Bangladesh Rural Advancement Committee, or BRAC, after her husband left her and their children.
"I felt as if I was sinking in a deep sea," said Kulsum, who also enrolled in a BRAC school for adults, and can now read and write and maintain the accounts of her small but profitable business selling plants and saplings. It employs 10 people.
BRAC is one of the largest providers of financial services to the poor in Bangladesh, having disbursed more than $5 billion to nearly seven million people since 1972, mostly women.
"If commercial banks are affected, then the expansion of the microfinance program will be affected," said Mahabub Hossain, an executive director at BRAC, adding that its donor-dependent efforts in education, health care and family planning are at risk.
"I am deeply worried," said the village health worker Hosne Ara, who works on programs for tuberculosis and family planning. "I have been working on this program for many years now, and if it stops, my family will be deprived of a regular income."
In neighboring India, microfinance programs were serving 10.5 million clients at the end of 2007, according to Sa-Dhan. The market is forecast to expand to 50 million clients by 2012, with the outstanding loan portfolio rising to $6 billion from about $769 million now.
Indian banks have focused on the programs as part of the government's "priority lending" requirement of 40 percent of all lending to ensure smaller businesses and entrepreneurs can access funds.
About 500 commercial, regional and cooperative banks are indirectly involved in microfinance, including State Bank of India, ICICI Bank and Yes Bank.
Global heavyweights including Standard Chartered Bank and HSBC are also this area of finance.
But with banks turning cautious, the microfinance programs may suffer, particularly smaller outfits that cannot afford higher interest rates or have access to private equity or venture capital.
"Now that banks themselves are facing the heat, they might either resist lending to MFIs or increase interest rates on loans further," said Prathima Rajan, an analyst at the research firm Celent.
"On the flip side, MFIs might resist borrowing," she said, adding that this would hurt their chances for growth and success.
When they see the programs cutting back, borrowers may also be unwilling to repay loans, which is critical to maintaining liquidity and giving fresh loans, Jacobowitz said.
"That will lead to belt-tightening, and for poor people it means tightening a belt that is already tight," he said.
However, if banks could overcome their doubts, then the case for lending to microfinance candidates for small, high-margin loans with low defaults is stronger than ever, said Somak Ghosh, group president of corporate finance and development banking at Yes Bank.
"This is actually a good time for banks to raise lending to MFIs, as their business model is a lower risk than large loans for a few big corporates, which are anyway seeing a slowdown."
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EDITORIAL
The bailout's next 60 days
Monday, November 17, 2008
A month into the Bush administration's $700 billion bank bailout, the effort has become as fractured as the ad hoc rescues that it was supposed to replace. As a result, the modest easing the bailout initially brought about in the credit markets is now being reversed over doubts about the Treasury's stewardship of the plan.
The rates for loans between banks have begun edging up again, and consumer borrowing costs are also up - that is, assuming consumers can find a bank willing to lend. President-elect Barack Obama's transition team is reportedly planning how the new administration will better manage the bailout.
But two months is a long time to wait while the Bush Treasury burns through the bailout billions, with little to show in terms of enhanced stability and even less in terms of enhanced confidence. Last week Treasury Secretary Henry M. Paulson Jr. outlined a complex new bailout strategy intended to promote consumer borrowing.
Paulson defended this latest iteration, saying he would never apologize for changing his approach as the facts change. But it is not surprising that everyone else is feeling whiplashed.
Before the bailout even got under way in October, Paulson had to sideline his original strategy - to buy up banks' bad assets - because, he soon came to realize, it was too complex and indirect to deliver the swift jolt the financial markets needed.
He indicated that he would return to that strategy later, but to get the bailout started, he opted instead to directly invest $250 billion in the nation's banks. The about face was necessary, but it raised uncertainty about whether the Treasury really had a firm grasp of the problem - exactly what spooked markets don't need. Since then, the doubts have grown among investors and the public.
Paulson invested the taxpayers' money on terms so lenient that banks have felt free to hoard it, or to buy other banks - while refusing to bolster lending to consumers and small businesses.
He has diverted another $40 billion of the fund to American International Group, the reckless insurance company that had already received $85 billion in federal assistance. If government officials know where all that money is going, they haven't shared their knowledge with the public.
Last week Paulson disappointed investors by ditching the plan to buy up banks' bad assets. Instead, he expanded the bailout to include investing money in nonbank financial companies, like GMAC, the lending arm of General Motors, and the other carmakers' lending units. He also announced that the Treasury and the Federal Reserve were considering a plan to use taxpayer money to jump-start consumer lending via credit cards, car loans and student loans. The Fed quickly said the plan was still in early development.
The one approach Paulson stubbornly refuses to consider is using bailout money to help homeowners avoid foreclosure. His reasoning - that the money is to be used to stabilize the financial system - inexplicably ignores the fact that the instability he is seeking to quell is rooted in the housing bust.
Over the next two months, Paulson must impose some coherence and clarity on the bailout. Otherwise he will only fan anxieties and mistrust, which will undermine the effectiveness of his good decisions and amplify the fallout of his bad ones. With markets gyrating wildly and the economy deteriorating rapidly, the nation needs clear leadership and a sound plan.


DOCUMENTARIES
When getting into preschool becomes an obsession
By Susan Dominus
Published: November 17, 2008
NEW YORK: When Marc Simon, a lawyer and filmmaker, started thinking about making a documentary about the famously cutthroat process of gaining admission to New York City's elite private preschools, he had no kids and no plans to have any soon. He had little in common with the parents whom he intended to profile. Then, like so many of them, he found he couldn't get in.
Simon approached an organization coordinating a panel discussion on the admission process to see if he could bring a camera, but got turned down flat. He was told that preschool was a sensitive issue in New York - very, very sensitive, so sensitive that parents would be terrified to see cameras anywhere in the room.
This was a filmmaker who had just won a Special Jury Prize at the Sundance Film Festival for "After Innocence," a documentary on the lives of inmates who had been exonerated by DNA evidence. He'd interviewed some of them while they were still in maximum-security prisons. "That was sensitive," he said last week.
But the rebuff from the private school administrator only fueled Simon's interest in making the preschool film, an interest first piqued by the crazed anxiety of a law firm colleague in the midst of applying.
"It just didn't seem right," Simon said about the supposedly sensitive nature of the system. "Let's prioritize things - how scary a process can this be?"
The result of his perseverance, "Nursery University," was shown publicly in New York City for the first time on Saturday evening at the Margaret Mead Film and Video Festival at the American Museum of Natural History, with a limited run expected in movie theaters in the spring.
At the film festival, the study of anxious New York City parents falls into the category of fascinating anthropological subculture, along with primate researchers in Abkhazia and the Kwakwaka'wakw indigenous people of British Columbia.
Here are a mother and father squabbling over whether to say in the application that their child hopes to "engage" or "explore" the school's cultural activities. Here are mothers, fathers, even nannies furiously speed-dialing various preschools, over and over, in the hopes of breaking through busy signals just to get an application. Here is another mother worrying about whether she will be the only prospective parent donating a gift worth less than $500 to the auction of a school where she hopes her daughter will be admitted.
Though it was made just a few years ago, at moments, the documentary has a distinct other-era feel. One preschool director jokes about making sure her graduates will be prepared to take direction on their first days of work at Goldman Sachs.
Brian Lehrer, the public radio host on WNYC, is shown asking an admissions expert about whether the pace will ever slow down in New York City for private schools. "So the rich are only getting richer in Manhattan since the last time we talked about this," he says.
Rumors are flying all over New York about strapped parents yanking their kids out of private schools, but Gabriella Rowe, head of school at the Mandell School, which is depicted in the film, said in an interview that at a recent meeting of preschool directors, no one reported a decline in applications.
Even now, after all the market turmoil, they are not seeing people drop out of the application process in greater numbers than in previous years. Not that a recession would have been an ideal way to solve New York's private preschool crunch anyway.
New York parents, neurotic as they may be, actually have some reason for anxiety when they cannot even get an application to the school of their choice without hiring a small army of phone-dialers.
Simon, who first became interested in the subject after he watched another lawyer rush out of the office to attend preschool interviews, found the sheer struggle just to apply an unnerving element of the process.
But some parents in the film ultimately found some measure of success that they could live with (a feat more remarkable given the documentary cameras at their backs).
He was also pleasantly surprised to find that the process was not all about connections or donations or prestige or even parents' personalities. "It's all part of the package," he said. "But an adorable, precocious kid who really gets their attention - that can do it, too. The child absolutely matters."
Any admission story has suspense built in. This one has a surprise ending.







Is your president this cool?
By Alex Beam
Monday, November 17, 2008
For the first time in eight years, we Americans have a president who is cool. It starts with the Ray-Bans. Ray-Bans are the ultimate cool sunglass brand, evoking memories of the John F. Kennedy presidency, of sunny cruises off Cape Cod on his sloop Victura, with the tame photographers from Life magazine in tow.
Obama wears cool suits, too: plain blue, wool, two-button affairs from Hartmarx. Even the $1,500 price point is cool. It doesn't say, "I'm in the pocket of insurance pirates AIG" - those are $5,000 suits. But it doesn't say "Men's Wearhouse" either. Why pretend? Who wants a Ford Focus president? Make mine a Lincoln.
Like a lot of American politicians, Obama has plenty of dough. But unlike Legacy Boy Bush, Obama earned his stash. He's made $5 million in book royalties, plus or minus. A friend points out that Obama is the first president since Woodrow Wilson to have a prose style, and the first president since Ulysses S. Grant to have a good prose style. Pretty cool.
The list goes on. Unlike Bush, who labors on the exercise machines for a desultory hour each day, Obama plays basketball. His brother-in-law coached basketball at modish Brown University. Too cool! Obama dines at cool restaurants with names like Spiaggia and Topolobampo, and during a particularly boring moment in the campaign he sampled a rap song, Jay-Z's foul-mouthed "Dirt Off Your Shoulder." Writing in the New Republic, novelist Paul Beatty opined that "I bet dude knows how many chambers there are in the Wu-Tang."
Of course you picked up the reference to the Wu-Tang Clan album "Enter the Wu-Tang (36 Chambers)."
But is Obama the coolest head of state in the world? For instance, is he as cool as ...
... Vladimir Putin?
Putin used to work for the KGB, which was a veritable ice pack full of chilling customers back in the day. He and Obama and France's Nicolas Sarkozy have one thing in common: They are the only world leaders willing to be photographed with their shirts off. Putin is one buff fella; a few keystrokes on YouTube will take you to his recently released martial arts video, "Let's Learn Judo With Vladimir Putin." Obama may be draining the treys, but Putin is president of his local dojo. Cool that.
Did I mention that he's married to a flight attendant? And that he supposedly subdued a rare Siberian tiger with a tranquilizer gun? Alas, the incident was not captured on film.
In the voice-over to his video, Putin calls judo "a lesson in collaboration and cooperation." He is all about collaboration. The day after Obama's win, the Russian czar let slip that he was thinking of stationing short-range missiles about four seconds away from Obama's new allies in Poland. That's sort of a cool - nay, Cold War - way of saying: Welcome to the neighborhood, Barack.
... Nicolas Sarkozy?
Sarkozy first achieved prominence in 1993, when, as mayor of the posh Paris suburb of Neuilly, he entered a nursery school alone to negotiate with a hostage-taking lunatic who called himself the Human Bomb. The Bomb had strapped explosives to his torso. Sarkozy emerged from the school surrounded by kids and the French police subsequently defused M. Bomb, by killing him.
Even Putin isn't that cool.
The rest is history. Sarko edged out the World's Most Beautiful Socialist, Segolene Royal, to win the French presidency last year, then promptly dispatched his gorgeous ("darkly beautiful" - The New Yorker) and accomplished wife Cecilia to Libya, to handle a delicate negotiation with the mercurial Colonel Muammar el-Qaddafi. The negotiation succeeded, but the marriage failed.
Sarko quickly drafted a gorgeous and accomplished replacement, the Italian-born siren-singer-songwriter Carla Bruni. Bruni needs no introduction here. Michelle Obama is cool, but Bruni, who has dated reprobates Eric Clapton and Mick Jagger, takes the thermometer down several more degrees. And Bruni digs fellow cool cat Obama. Last week she trashed Italian prime minister/vulgarian-at-large Silvio Berlusconi for "joking" about Obama's "suntan."
... Daniel Craig?
Not a head of state, you say? Perhaps not, but Bond boy Craig is permanent ambassador to the sovereign republic of Chillaxin' (capital Ice Station Zebra). Nobody is as cool as Craig. But Obama comes darned close.
**************
A time of hope, marred by an act of horror
By Dan Barry
Monday, November 17, 2008
SPRINGFIELD, Massachusetts: As Election Night made way for a new day, a pastor named Bryant Robinson Jr. clicked off his television to accept a sleep of sweet promise. His mostly black congregation now had two blessings awaiting it in 2009: the inauguration of the first African-American president and the finished construction of a new church.
Give praise.
He could not have been asleep two hours before his telephone rang. It was his brother Andrew, whose home abuts the blessed construction site. "They're burning our church," shouted Andrew Robinson, who still doesn't know why he said "they."
Soon Bishop Bryant Robinson, pastor of the Macedonia Church of God in Christ, was standing at the grassy edge, as firefighters sprayed arcs of water meant not to save the building but to contain a fire clearly set. Black embers the size of fists shot skyward, only to float down like broken pieces of the cold New England night.
Someone eased him into a chair — he is 71, with bad knees and high blood pressure — and placed a blanket around his weary shoulders. He stayed there past dawn, when this new day's light revealed a smoldering test of faith: a skeleton of scorched steel and a cracked foundation upon which a church could no longer be built.
Sitting there, stunned, emotional, Bishop Robinson sought context for what had just occurred: a black president is elected, a black church is burned. He thought of dreams realized and dreams denied.
"It was so close I could taste it," he says. "I could just see it."
You could say that dream began more than 60 years ago, the moment his father, Bryant Robinson Sr., left Alabama for a place where his children could drink from fountains of their choice. As soon as he arrived in Springfield he wanted to flee, so foreign was the place. But his train ticket, courtesy of a local pastor, was one way, so he settled in this community known as the City of Homes and sent for his family.
Though working as a parking attendant and then as an assembly-line worker, he found his true calling in the Church of God in Christ. Eventually the church's revered leader, C. H. Mason, resolved tension within the Springfield flock by directing the elder Robinson to start his own congregation, one that would be called the Macedonia Church of God.
For a while the congregation shared a storefront with another church, until it raised enough money to buy a former synagogue that featured rooms used for transitional housing. "Housing for people coming from the South," Bishop Robinson recalls. "Escaping segregation."
Finally, in 1961, the elder Robinson, now working as a stain spotter at a dry cleaners, persuaded his congregation to buy an old Episcopalian church that sat on a small corner lot on King Street.
For decades he juggled the dual tasks of cleaning clothes and saving souls. He immersed believers in the baptismal pool, presided over their weddings, talked Bible to them on Sundays, led others in prayer after they had gone. Years of footsteps formed grooves in the red stone steps leading to the church's wooden door.
The elder Robinson died in 2001 at age 86. Bryant Robinson Jr., his co-pastor and the oldest of his five children, took over the congregation, switching gears after more than 30 years as a civic leader and educator; at one time he had served as the city's interim superintendent of schools.
Bishop Robinson soon decided the church on King Street, now more than a century old, could no longer meet the congregation's needs. Parking was minimal, the maroon carpet old, the windows small and high; Oh Lord, could it get hot in those pews on a late summer Sunday.
We deserve a church meant for us, built by us, he told his congregants, and they agreed. The weekly tithing and special offerings took on added urgency, as the bishop reminded people that when you invest in Kingdom's church, you cannot lose.
The church eventually bought four wooded acres on Tinkham Road, about five miles away, from Andrew Robinson, both a brother of the bishop and the congregation's music director. ("We got a favorable rate," the bishop says, smiling.) Where others saw tall pine trees and sandy soil, he envisioned a soaring church with plenty of parking.
As time passed, enthusiasm flagged; the project sometimes seemed to be nothing more than an architectural sketch hanging in the back of the old church. As it changed in scope and required the purchase of more land, Bishop Robinson tried to re-ignite interest and to convey his commitment by announcing that he had long ago stopped drawing a salary.
The response, he says, was "marginal."
Still, the project inched forward, thanks in part to the guidance of the church's lawyer, Bradford Martin Jr. He helped to secure a $1.9 million construction loan, and worked to allay the concerns of neighbors opposed to having a church in their backyard.
Finally, in April 2007, dignitaries and elders joined Bishop Robinson in breaking ground with shovels painted gold. "I was so elated that day," he says. "At one point I said we may be standing in the sanctuary. And you know where we were? In the parking lot."
After a while, though, parishioners who previously visited the site to mutter "This is too small" and "That's not right" would gaze upon the 18,000-square-foot structure and say only, "Wow."
"That became the descriptive word," the bishop says. "Wow."
Hardly a day would pass without a visit from the bishop. He would sit in his car, watch the workers — and visualize.
You would enter a foyer large enough for people to chat with one another after services. To the right, a men's room; to the left, a spacious ladies' lounge with large mirrors, because he remembered his father's fear of the sermon he would have to give if women stopped attending: "Finally, brothers, farewell."
A large meeting hall in the back, suitable for weddings and church gatherings. A row of prayer rooms to the right. A pastor's office in the left corner. A food prep room. A chandelier one day, but not now. And, of course, the 500-seat sanctuary, designed to be intimate, with video equipment to project the full-immersion baptisms on a screen for all to see.
Oh, and plenty of parking for a congregation sure to grow.
By Election Day, 75 percent of the construction was finished, with the entire exterior nearly done and construction workers planning to lay the water line in the morning. The bishop could taste it. He watched the election returns, felt pride in his country and turned out the light. And during his short sleep, someone set fire to his dream.
Investigators say the cause was arson, but so far they have no suspects or evidence that the crime was rooted in racism. Still, the bishop cannot shake the timing of it — timing that will now forever link two events, one of joy and pride, another of loss and horror.
As Election Night melted away, as memories of the past tempered thoughts of the future, the bishop sat in that chair, thinking, praying. Behind him were stacked five gold-painted shovels from the groundbreaking; in front of him, the fire; above him, the mysterious pitch of the night. And the thought came to him: Build again.
***************
Albino boy killed and body dismembered in Burundi
Reuters
Monday, November 17, 2008
BUJUMBURA: A six-year-old boy was killed and his body dismembered in the east African state of Burundi, an official said Monday, the latest in a series of attacks in the region on albinos, whose bodies are prized by witchdoctors.
"The young albino was assassinated by two men who cut him into pieces here in Kinyinya district near the border with Tanzania," said Remy Nkengurutse, a local administrator.
Albino murders are common in parts of Africa where their arms, legs, hair, skin and genitals are sold to witchdoctors.
Since last year, 30 albinos have been killed in Tanzania and four in Burundi, according to data from an albino advocacy group in Tanzania.
The Tanzania Albino Society has urged the government to use the army to stop attacks on albinos. "More needs to be done to stop these people," said Ernest Kimaya, the society's chairman.
Earlier this month, a mother in a refugee camp in western Tanzania was injured in a struggle with people who forced their way into her house seeking her albino daughter.
Police arrested a man in southwest Tanzania for planning to sell his albino wife to a businessman from the Democratic Republic of Congo for 3.6 million Tanzania shillings (1,900 pounds).
Tanzania has more than 200,000 albinos in a population of 40 million, the advocacy group said.
(Reporting by George Obulutsa in Dar es Salaam and Patrick Nduwimana in Bujumbura; editing by Wangui Kanina and Catherine Bosley)















Navy carrier makes maiden voyage in Pacific
By Eric TalmadgeThe Associated Press
Monday, November 17, 2008
ABOARD THE U.S.S. GEORGE WASHINGTON: Rear Admiral Rick Wren's office is near the flight deck, above the two nuclear reactors. When the mood strikes, he can take a short walk to the bridge and look out at his new neighborhood, though most of the time that's just blue water from horizon to horizon.
Wren has a unique command.
No country in the world has anything like the George Washington. It is a floating air base with 67 aircraft ready to fly; it's a city unto itself, with a population of around 5,000; and it's an armory carrying about 4 million pounds, or 1.8 million kilograms, of bombs.
It is, Wren likes to say, the big dog on the block.
And a big part of being the big dog is being seen.
Just two weeks into its maiden voyage in the Pacific, the GW has been to Japan, its new home port; South Korea; and Guam. It will be at sea probably about half the year, supplied by incoming cargo planes and desalinating its own water.
Down in the hangar bay, the scuttlebutt among the sailors is that a Chinese sub is out there somewhere chasing the carrier and its battle group - a pair of cruisers, plus a sub and a destroyer, which Wren also commands.
Wren doesn't doubt for a minute that he is being watched. That is, after all, part of the game. But he is coy when it comes to specifics.
"Most of what I do is classified," he said.
Especially when it comes to the other big dog out there - China.
"Enemy" and even "threat" are words officers aboard the George Washington avoid.
"China" is another.
Wren, the most senior officer aboard, is no exception regarding the first two. But he is quick to talk about China and the challenges it poses.
"This is where the submarines that we look for live and operate," Wren said. "I look for, and count the best I can, Chinese submarines twice a day."
Wren said that one of the primary missions of the aircraft carrier is to "sanitize" the seas around it. That means using active and passive sonar, helicopters and an array of secret gadgetry to inspect the surrounding waters for Chinese submarine activity.
"They are tough to hunt," he said.
Encounters rarely are made public. But two years ago, off Okinawa and far from Chinese waters, a Chinese submarine came within torpedo range of the Kitty Hawk - the George Washington's predecessor in the Pacific Ocean.
The following year, the Kitty Hawk was at the last minute denied a port call in Hong Kong, and China has never offered an explanation.
Occurring while the Chinese military, and particularly its submarine capabilities, are rapidly modernizing, these and other incidents have left many U.S. military planners concerned.
Traditionally, much of the U.S. focus has been on China's hostility toward Taiwan, which it sees as a secessionist province. As the George Washington began its Pacific cruise, Washington and Beijing were again at odds over a multibillion-dollar weapons deal the United States had just signed with Taipei.
But Wren said China increasingly presents a broader strategic rivalry.
"Our presence, we believe, adds to the stability and security of the Pacific theater," Wren said. "We all encourage China to become a responsible global participant. But the way they are growing their military is confusing. Why do you need a missile that can go thousands and thousands of miles if you are a defensive force? The total number of submarines they have, and their capabilities, sure doesn't point to a defensive or even an 'active defense force,' as they like to call it.
"To me, it points to establishing an offensive, blue-water navy."
Wren stressed, however, that "no one wants a confrontation with China."
The carrier is the crown jewel of the U.S. Seventh Fleet, a huge armada of 60 to 70 ships, 200 to 300 aircraft and 20,000 sailors and marines, most of whom are, like the George Washington, based just south of Tokyo.
The fleet is responsible for everywhere from the international date line to the east coast of Africa, pole to pole - in all, 52 million square miles, or 135 million square kilometers. That is a vast expanse of the globe. Within its watery realm operate ships from five of the world's largest militaries - China, Russia, India and North and South Korea.
At the front of a ready room for fighter pilots attached to the George Washington's Carrier Air Wing 5, a photo of Mao Zedong, Communist China's founding father, is projected onto a white board above the caption, "We Stood Up."
Experts from the Massachusetts Institute of Technology and the Naval Postgraduate School have just finished a get-to-know-the-neighborhood lecture, focusing on regional politics, and the pilots are breaking up into little groups to digest what they have learned.
If a crisis occurs, these pilots, mostly men in their 20s, are sure to be in the thick of it.
But Captain Michael White, the air wing commander, says that for the pilots the location of the ship - be it the western Pacific or the Gulf off Bahrain - doesn't matter that much. They are trained to fly multiple missions and are prepared to use their fighters in many conditions and theaters.
When deployed in this complicated and increasingly crowded sea, however, politics can't be completely ignored.
"Working in this area of the world, we have to be knowledgeable of the major players, their governments, their economies and their capabilities," he said.
On that last topic, he said, the George Washington speaks for itself.
An aircraft carrier is one thing the Chinese don't have, and aren't likely to acquire for quite some time, though there has been a lot of talk that they want one.
In the meantime, White has a dog analogy of his own.
"The way I see it is that there are a lot of sheep out there, and some wolves," White said. "We are the sheepdogs."
****************
Chinese official hints that navy may seek aircraft carrier
By Andrew Jacobs
Monday, November 17, 2008
BEIJING: A high-ranking Chinese military official has hinted that China's fast-growing navy is seeking to acquire an aircraft carrier, a move that would surely stoke tensions with the United States military and its allies in Asia.
In an interview published in The Financial Times of London on Monday, the official, Major General Quan Lihua, did not say whether China was in fact building a carrier. But the general, a senior official of Chinese Ministry of National Defense, said that having one is the dream of any great military power and he suggested that United States had nothing to fear should China acquire one for strictly defensive purposes.
"The question is not whether you have an aircraft carrier, but what you do with your aircraft carrier," he said in the interview. "Even if one day we have an aircraft carrier, unlike another country we will not use it to pursue global deployment or global reach."
In recent years, Pentagon officials have been warily following Beijing's ambitious naval buildup. Since 2000, China has constructed at least 60 warships, and its fleet of 860 vessels includes about 60 submarines.
Tensions between China and the United States were heightened last month after the Pentagon announced the sale of $6 billion in advanced weapons to Taiwan. China reacted angrily to the news, warning that the move could worsen relations between the two countries. The deal includes Apache attack helicopters and a sophisticated array of missiles, radars and antiaircraft defense systems.
In the interview, the general insisted that China would not deploy a carrier with aggressive intent. "Navies of great powers with more than 10 aircraft carrier battle groups with strategic military objectives have a different purpose from countries with only one or two carriers used for offshore defense," he said.
Although he did not mention any country by name, his comments were clearly aimed at the United States, which has 11 aircraft carriers, including the George Washington, which was recently deployed to Japan. Of the handful of other nations that have aircraft carriers, including Britain, France, Italy and Russia, none has more than two.





For wealthy Mexicans, bodyguards are a necessary expense
By Marc Lacey
Monday, November 17, 2008
MEXICO CITY: When José hops into his Ferrari, presses his Ferragamo loafer to the floor and fills the night air with a deep roar, his bodyguards hustle into a black sport utility vehicle with their weapons at the ready, tailing their fast-moving boss through the streets.
José, a business magnate in his 30s who said he was afraid to have his full name published, makes sure his two children get the same protection. Bodyguards pick them up from school and escort them even to friends' birthday parties - where the bodyguards meet other bodyguards, because many of the children's classmates have similar protection.
With drug-related violence spinning out of control and kidnappings a proven money-maker for criminal gangs, upper-class Mexicans find themselves juggling the spoils of their status with the fear of being killed.
Dinner party chatter these days focuses on two things that are making their lives, still the envy of the country's masses, far less enviable: the financial crisis, which is chipping away at their wealth, and the wave of insecurity, which is making it more perilous for them to enjoy what remains.
Violence in Mexico afflicts both rich and poor, but the nation's income gap is so pronounced that criminals scour the society pages for potential kidnapping victims, for whom they demand, and often receive, huge sums in ransom. A recent report by the Organization for Economic Cooperation and Development found that Mexico had the largest divide between rich and poor of the group's 30 member nations, virtually assuring that wealthy targets stand out.
Wealthy Mexicans have long hired bodyguards, but experts say the numbers of those seeking protection have jumped since President Felipe Calderón challenged the drug cartels, bringing unprecedented levels of related violence - which had been mainly confined to the areas bordering the United States - into the major cities.
High-profile and sometimes gruesome crimes have stoked people's fears.
In one of the worst cases, a 5-year-old boy from a poor family was plucked from a market this month and killed by kidnappers, who injected acid into his heart.
Early this month, doctors in Tijuana protested after one of their own, a prominent kidney specialist, was abducted from outside his office by heavily armed men. He has since been released.
"It's out of control," said Hector Rico, the leader of the local medical association.
Confronted by the irate doctors at a public meeting, José Guadalupe Osuna Millán, the governor of Baja California State, said the answer to the rising insecurity was to come together and fight.
"We're not going to cede one millimeter of territory to these criminals," he said of the federal government's war on drug traffickers.
But hundreds of well-off families along the border have become so consumed by their fears that they have moved out of Mexico, at least temporarily, often using business visas granted because of their work in the United States.
"It's a bad feeling to have to leave your country behind," said Javier, a prosperous Tijuana businessman, who moved his family across the border to San Diego last year after a group of armed men tried to kidnap him. "But I didn't really have a choice." He insisted that his last name not be used, out of fear that criminals might track him.
"There's an exodus, and it's all about insecurity," said Guillermo Alonso Meneses, an anthropologist at the Colegio de la Frontera Norte in Tijuana. "A psychosis has developed. There's fear of getting kidnapped or killed.
"People don't want to live that way," he continued, "and those who can afford it move north."
Still, most of the wealthy have chosen to stay put, hiring armies of protectors to continue enjoying their gilded lives.
Although there are few firm figures for the number of Mexicans employed to guard their fellow citizens - most security companies ignore requirements to register with the government - experts say business is booming for the estimated 10,000 security companies operating in the country.
In the border state of Chihuahua, the Mexican Employers' Association recently reported a 300 percent increase in the number of bodyguards. In that violence-torn state, some luxury hotels now offer their guests bodyguards and bulletproof vehicles.
For many affluent families, the guards and bulletproof cars, homes and even clothing have become a way of life. Some Mexicans say the protection has even become a status symbol.
In Mexico City, some people being protected by men wearing earpieces strut along in designer clothes, using their armed guards to clear a path.
A stylish woman at a Starbucks in the well-off Coyoacán neighborhood held out her cappuccino the other day while chatting with friends. A member of her two-man security detail discreetly slipped a cardboard sleeve on the cup so that the woman's fingertips were protected, along with the rest of her.
"It's a different life," said José, the well-protected Ferrari driver, who agreed to provide a glimpse of that life. "I've gotten used to it."
Indeed, José hands out designer clothing and other expensive gifts to his family's two dozen or so bodyguards and invites them to his mother's house weekly for a meal. He is being benevolent but also practical, given that many crimes in Mexico are inside jobs.
"I want them to feel like they're part of the family," he said. "And if something happens to me, I want them to react. They won't risk their life for a paycheck. They will risk their life for a friend, for family."
Some security consultants and academics point out that at least the upper crust has options, while other Mexicans must rely on law enforcement agencies, known for their corruption and ineffectiveness, to protect them from the violence. Many families who struggle to make ends meet find their loved ones grabbed for ransom. And shootouts between traffickers and the police and soldiers pursuing them erupt with no regard for the income level of bystanders.
"There's reason for everyone to be fearful," said Alonso, the Tijuana anthropologist, who hears gunfire at night in his middle-class neighborhood and, like many others, rarely ventures out after dark.
http://www.iht.com/articles/2008/11/17/america/mexico.php




















A pilgrimage to Calcutta recalls Armenian history
By Leonard M. Apcar
Monday, November 17, 2008
CALCUTTA: Before there were call centers and Indian conglomerates, before the East India Co. or the British Raj, there were Armenians who made their way to India to trade and to escape religious persecution from the Turks and, later, Persians.
Entrepreneurial and devout Christians, but familiar with the Islamic ways of Mughal emperors, Armenians arrived in northeast India in the early 1600s, some 60 years before British adventurers became established traders here. They acquired gems, spices and silks, and brought them back to Armenian enclaves in Persia such as Isfahan.
Eventually, some Persian Armenians - including my ancestors - left and set up their own businesses and communities here, landing first on India's western flank in Surat and nearby Bombay, the present-day Mumbai, and then moving to the river banks in northeast India that led to Calcutta's founding as a sprawling manufacturing and port city.
At its zenith, Calcutta was the British Empire's "second city." Its vast manufacturing centers rivaled the English Midlands, and wealth flowed freely to Jews, Britons, Armenians and some Indians. They in turn poured money into elaborate colonial mansions, Victorian memorials and a luxurious Western way of life virtually transplanted to the wilting jungle of West Bengal.
The British are gone now, of course, and that way of life is literally crumbling in the dusty, clogged streets of Calcutta. All but gone, too, are the Armenians who began leaving India long before the British.
But last week Armenians with Calcutta roots gathered here again from around the world. More than 250 people came officially for the 300th anniversary of the oldest church in Calcutta, a finely preserved Holy Church of Nazareth tucked inside the narrow, winding alleys and chaotic bazaars of the north section of this city.
But they also came to be together again and to honor an extraordinary restoration effort of all five Armenian churches and assorted graveyards in northeast India.
I came from Hong Kong, but many came from England, Iran, the United States and Australia. We walked the cemeteries looking for graves of grandparents and great-grandparents, toured the 187-year-old Armenian school, admired the ambitious renovation work recently completed on the churches and cemeteries and at the gleaming white church in downtown Madras.
Armenians never amounted to more than a few thousand people in Calcutta, but in the 18th and 19th centuries they ran trading companies, shipping lines, coal mines, real estate developments and hotels. A few served in the colonial government, and some had sewn themselves so finely into the fabric of colonial India that they were decorated with British titles and were leaders of private English-only clubs.
"They ran Calcutta," one alumnus of the Armenian school, David Alexander, said with a touch of exaggeration.
By the time the British left, and an independent India was on a socialist and anti-colonial bent, the Armenians had mostly cleared out. Wealthier, educated and more confident as entrepreneurs, they left not for Armenia itself, then a Soviet-controlled postage stamp of a state, but for London, where some Calcutta Armenians had second lives, or new frontiers in Australia or the United States.
My great-grandparents left earlier; as a young couple they headed for Japan in 1890, and their descendants ended up staying and trading for 50 years.
Of the nine million Armenians in the world, only about a third are in Armenia. The bulk are in Russia, the United States and France, with a smattering along the trading routes of Asia. Armenian churches and graveyards dot India in Agra, Delhi, Hyderabad, Madras, Mumbai, Surat and, of course, Calcutta. But they are also in Dhaka, Bangladesh; Yangon in Myanmar; on Penang Island off the coast of Malaysia; Singapore; and parts of Indonesia - all places where Armenians settled, traded and worshiped.
Worship is the social adhesive that binds Armenians together. Clannish and wary of outsiders, the church has always been the focus of their socialist and cultural lives. Given Armenia's pride as the first state to adopt Christianity as its religion, it was not surprising that last week with the families came Karekin II, Catholicos of all Armenians, as the leader of the Holy Armenian Apostolic Church is known, and a choir of two dozen from the church's seat in Etchmiadzin, Armenia.
But the real stars in Calcutta were its five churches. Only a few years ago four of them were weed-infested snake pits looking like Roman ruins. Now, in the midst of southeast Calcutta's horrid slums, on gritty, rutted roads, rises Holy Trinity Chapel in the Tangra district with a new dome and a manicured graveyard. Inside, I found the refurbished graves of my great-great grandparents, who in the 1880s lived in Calcutta and Rangoon, as Yangon was known then.
"These things had to be recreated," said Haik Sookias Jr., who helped lead the reconstruction effort in Calcutta. "If we let our churches go, then Armenians will never come back to India, and people will walk by and say 'the Armenians used to live here.' But by renovating these churches, Armenians will live here forever."
Richard Hovannisian, a historian and professor of Armenian studies at the University of California at Los Angeles, said what distinguished the Armenian diaspora in India was that the Armenians never accompanied their trading ambitions with military force. Nor did they try to enforce cultural supremacy. "They succeeded within the structure of the adopted communities," he said.
At base, Armenians were survivors with a fortunate sense for sometimes picking the right side when superpowers clashed. When it became clear that the British were going to overpower other Europeans and Arabs to take control of India, Armenians agreed to ship all their goods to Europe and the Middle East exclusively with British ships instead of the Arab fleets they had used before.
When the Dutch ruled what is now Indonesia, and their ships ran out of money during long, storm-delayed sailings around the Cape of Good Hope, the story goes that Armenians loaned money to the Dutch. It wasn't purely a banking transaction. It also ensured that Armenian businesses might continue to prosper in the Java rice fields.
Over time, Armenian merchant princes were overpowered by the rise of merchant banking institutions in Europe and the large international companies they financed, Hovannisian said.
As Indians took control of their country, Armenians were looked on as holdovers from a colonial past. Many large Armenian family enterprises in India were either sold off or closed.
Today, there are only a few hundred Armenians in the entire Calcutta region of about 15 million people. The Armenian school here has long relied on students from abroad to fill its dormitories.
While the Armenian community in Calcutta has all but disappeared, there is hardly a serious guidebook or history book of the city that does not mention their influence, charities and churches.
That is a source of pride and communal strength reflected in last week's commemoration. "When the economic powers of Indian communities weakened and waned, there were greater challenges to figure out how to establish deep roots here," said Professor Hovannisian. "It drew the Armenians closer."
****************
Ancient glory still felt in modern Egypt
By Michael Slackman
Monday, November 17, 2008
CAIRO: Deep below the Egyptian desert, archaeologists have found evidence of yet another pyramid, this one constructed 4,300 years ago to store the remains of a pharaoh's mother. That makes 138 pyramids discovered here so far, and officials say they expect to find more.
Tourists will, no doubt, care.
Egyptians probably will not, unless they work in tourism.
But for citizens and foreigners alike, there is no escaping the truth that Egypt is inextricably linked in the public consciousness with pyramids, especially the Great Pyramids of Giza. The nation's premier newspaper is called Al Ahram, or The Pyramids. Egypt's best-known research center is the Al Ahram Center for Political and Strategic Studies.
Yet living in the shadow of past greatness is not always easy.
The pyramids are proof of Egypt's endurance and what distinguishes it from modern confections, like Saudi Arabia, a nation founded 76 years ago, named after a family and built on oil wealth. But these monuments to Egypt's early ingenuity are also an ever-present symbol of faded glory. It is hard to escape comparisons between an Egypt that once led the world in almost everything and modern Egypt, where about 40 percent of the population lives on $2 a day.
"Can you believe our government can do nothing for us, and this thing that was built thousands of years ago is still helping me feed my family?" Ahmed Sayed Baghali, 49, said as he sat in a plastic chair selling postcards to tourists outside the Egyptian Museum here, which displays millenniums of antiquities. "Who would buy my things if they were not about the pharaohs? People come here from very far to see the pyramids, not to see Cairo."
Baghali's Cairo is a city of about 18 million people that is layered with history stretching back to the birth of civilization. The ubiquitous nature of antiquities - stick a shovel in the ground almost anywhere, and it is difficult not to find something - has helped mold a collective consciousness, a national identity, that is uniquely Egyptian.
"A man without history is a man without humor," said Galal Amin, an economist and author who has written about Egypt's modern decline.
"A man with history is more likely to have humor, because he is more likely to see the irony in things, how things were and how they turned out to be. And patience."
Egyptians, as a group, are extremely patient, though given the growing pressure of daily life, a bit less than they used to be. Their it-is-what-it-is attitude is often attributed to a strong religious faith and a conviction that all events are God's will.
Yet growing up and living amid so much history has something to do with that view, too; the abundant antiquities in everyday life are a constant reminder of one's place in time.
People come and go, pharaohs come and go, even President Hosni Mubarak, who has ruled Egypt for 27 years, will go, too (though talk of that certainty is discouraged).
No need to worry.
Or as Egyptians like to say, "Maalesh," which, depending on the circumstance, means "Never mind" or "Oh, well."
"When other people talk about hoping to see something happen soon, they probably mean within the next few months," said Aly Salem, an Egyptian playwright. "For an Egyptian, it could mean in the next 50 or 60 years. An Egyptian has a particular pace. His pace is different than an American's. And a long history can do this."
These days, Egypt is rarely spoken of in a positive context. The education system is in crisis, and unemployment, traffic and pollution are all major problems. Top to bottom, the state seems to have seized up.
When the historic Parliament building burned recently, firefighters bungled for hours before bringing the blaze under control. When a rock slide crushed a neighborhood, the authorities responded slowly, infuriating rather than rescuing.
And at nearly every level, there is anxiety over who will rule when Mubarak is gone. The president, who is 80, refuses to clarify the issue of succession and seems out of touch with daily life in his country. His son Gamal Mubarak, who appears positioned to inherit the job, says that it is premature to discuss succession.
He counsels patience.
Amin mused: "This deep conviction, 'Leave it to time, leave it to God, God will resolve it, don't worry too much, everything will be all right in the end' - can't this also be the result of the length of history? When you have a short amount of time, you can't rely on bad things to be corrected or mistakes to be corrected. But in the long run, things are bound to be all right at the end."
And there is ample evidence that Egypt itself can be expected to continue to endure. It may be down for the moment, but this country has survived the test of the time, a lot of time, where so many others have not.
The most recent proof that Egypt's contemporary troubles amount to a blip in its long history, the 138th pyramid, was unearthed in a vacant patch of sand. The discovery, announced last week, was made not far from Sakkara, the step pyramid that, at 5,000 years old, is the oldest known pyramid in Egypt.
Twenty years ago, Zahi Hawass, now Egypt's chief of antiquities, began excavating the area around Sakkara, which is in Giza, part of Greater Cairo. Remains of the newest pyramid were found about two months ago, seven meters, or 23 feet, beneath the surface of the desert.
Hawass said it appeared that the pyramid was built for the queen Sesheshet, the mother of the pharaoh Teti, the first pharaoh of the Sixth Dynasty, who ruled from about 2345 to 2333 B.C. Little remains of what is believed to have been a 14-meter pyramid.
One day last week, Abdel Hakim Karar, director of the excavation, escorted visitors into the pit. "In this small space, you see about 2,000 years of history," he said, with pride and a sweep of his hand.
Right at the edge of the pit was a dirty-yellow building constructed relatively recently to serve as offices of a government magazine. Its walls were cracking. A short way down in the pit, he pointed to mud brick houses that were built in 300 B.C. and were found as part of the excavation. And then he pointed to the wall that had enclosed the 4,300-year-old pyramid. The massive stones, carved in antiquity, were still square with each other and were exactly where they had been placed long ago. "It took patience, dedication and hard work to build this pyramid," he said.
Karar watched as a group of poor Egyptians, peasant farmers from a nearby village, slowly, very slowly, hauled satchels of sand and rock on their backs out of the pit. "They don't know how to work," he complained.
The men, mostly barefoot, said they were paid 13 Egyptian pounds a day, a bit more than $2, to haul the debris - and were glad to have the work. The pyramids, they could take them or leave them.
"We feel the might of this history when we get paid," said Sayyid Saber Shabaan, 21, when he stopped to take a 10-minute break. "But if we don't get paid, we feel nothing. We are used to these things. We are always here."
Mona el-Naggar contributed reporting.
******************
History textbook causes an uproar in South Korea
By Choe Sang-Hun
Monday, November 17, 2008
SEOUL: To conservative critics, a popular textbook's version of how U.S. and Soviet forces took control of Korea from Japanese colonialists in 1945 exemplifies all that's wrong with how South Korean history is taught to young people today.
The facts no one disputes are that, at the end of World War II, the Soviet military swept into northern Korea and installed a friendly Communist government while a U.S. military administration assumed control in the south.
But then the high school textbook takes a direction that is raising hackles among conservatives. It argues that the Japanese occupation was followed not by a free, self-determining Korea, but by a divided peninsula dominated once again by foreign powers.
"It was not our national flag that was hoisted to replace the Japanese flag," reads the textbook published by Kumsung Publishing. "The flag that flew in its place was the American Stars and Stripes. Our liberation through the Allied forces' victory prevented us from building a new country according to our own wishes."
The critics include the government of President Lee Myung Bak, the conservative who came to power this year with a pledge to overturn a decade of liberal policies that Lee said coddled North Korea and denigrated the U.S. alliance - the alliance that liberals, for their part, accused of propping up South Korean dictators in the name of anti-Communism.
On Oct. 30, the Ministry of Education, Science and Technology demanded that the authors of the Kumsung book and five other textbooks currently used in high schools delete or revise 55 sections in their texts that it said "undermine the legitimacy of the South Korean government."
"A textbook of modern history should be written in a way that does not hurt our national pride," it said.
The authors rejected the interference, saying their critics were trying to "beautify" the country's problematic history, overlooking Korean collaboration with the Japanese occupiers and postwar dictatorships. The liberal opposition in Parliament said the government's attempt to censor the textbooks raised the specter of those dictatorships, which once controlled everything from what books South Koreans could read to the proper length of women's skirts.
"National pride? Patriotism? They should be based on historical facts," said Hong Soon Kwon, a history professor and co-author of the Kumsung textbook.
South Korea used to teach its teenagers with a single government-issued modern history textbook. But in 2003, to encourage diversity in historical views, the government approved six privately published history textbooks for high school use.
Ever since, the textbooks have drawn criticism from conservatives, sharpening the larger debate in South Korea over how to appraise past leaders - such as the founding president, Syngman Rhee, and the military strongman Park Chung Hee - and the complicated relationship with the United States.
Conservatives say the "left-leaning" textbooks poison the minds of teenagers by reveling in dark corners of history. The books, they say, inspire a "masochistic" view of Korean history by demeaning the role of the Allied forces in Korea's liberation from Japan, casting the United States as an imperial power and dwelling on the faults of South Korean dictators while slighting their achievements, such as their contributions to the country's rapid economic growth.
"The textbooks are teaching a patricidal history," said Park Hyo Chong, a professor of ethics education at Seoul National University and head of Textbook Forum, a conservative group that campaigns against the textbooks. "They teach that South Korea is a country that should not have been born."
Complaints like these were brushed aside by the previous liberal government. But after Lee took office in February, government agencies issued their own complaints about the books.
One popular textbook, published by the Institute for Better Education, says that Rhee, revered as the nation-builder by the conservatives but detested by liberals as someone who ruthlessly suppressed dissent in the name of anti-Communism, exploited the North Korean threat to "shore up his dictatorial regime."
The Ministry of National Defense has demanded that this be rewritten to read: "He did his best to contain Communism."
According to the Kumsung textbook, Park Chung Hee - who seized power in a coup in 1961 and tortured political dissidents while mobilizing the nation for export-driven economic growth - was "a president who placed himself above the nation's Constitution."
The Defense Ministry wants this to be replaced with: "a president who contributed to the nation's modernization."
As for the "sunshine policy" of engagement with North Korea espoused by former President Kim Dae Jung, whose inauguration in 1998 ousted the conservative establishment and brought many former dissidents into positions of power, the Ministry of National Unification now suggests that this term be replaced in textbooks with the official if drier "policy of reconciliation and cooperation."
Park, the conservative scholar, said that in the past decade students had been inculcated with a "left-leaning" nationalism thanks to the new textbooks and a younger generation of teachers who have no memory of the 1950-53 Korean War and are readier to reconcile with the Communist North.
They came of age amid other formative experiences: Many were students during campus protests against Chun Doo Hwan, who took power after the assassination of Park Chung Hee in 1979 and who, in 1980, deployed troops to kill hundreds of pro-democracy protesters in the southern city of Gwangju.
When the United States, which technically had command of the combined U.S.-South Korean forces, did not prevent Chun's junta from unleashing troops against its own people, students turned against Washington. If the division of the peninsula engendered a mistrust of big powers, Gwangju helped shape views of the United States, historians say.
That resentment persists and surfaced in the huge demonstrations against American beef imports this year.
Younger South Koreans' view of their history was best summarized by former President Roh Moo Hyun, who inherited the liberal government from Kim in 2003. That year, the same year the new textbooks were distributed to schools, Roh said: "Our modern history is a painful one, in which justice was defeated and opportunism gained the upper hand."
Conservatives seethed with anger as the Kim and Roh administrations delved into long-hidden aspects of the recent past - collaboration with Japanese colonialists (Park Chung Hee was a Japanese Imperial Army officer), mass killings of civilians during the Korean War and the abuse of political dissidents.
They argued that these liberals ignored the difficult choices faced by earlier South Korean leaders.
"In the turbulent era we lived through, no one could be completely innocent, no one could live by law alone," Cho Gap Je, 63, a conservative columnist, said to the cheers of elderly South Koreans who gathered recently to denounce liberal teachers. "When necessary, we shed blood, sweat and tears, so that our children no longer have to shed tears."
In the months since Lee assumed the presidency, the swing back to the right is palpable, and not just on the education front.
In July, the Defense Ministry banned 23 "seditious books" from military barracks on the grounds that the country's security was threatened by these "pro-North Korea, anti-government, anti-American and anti-capitalism" works, including two by the American linguist and political activist Noam Chomsky.
After the list was leaked to the media, sales of the banned books soared. The military was further embarrassed on Oct. 22, when seven of its own lawyers appealed to the Constitutional Court, saying the book ban violated soldiers' basic rights.
Even Chomsky chimed in.
"Perhaps, for the sake of honesty, it should be renamed: 'Ministry of Defense against Freedom and Democracy,"' he offered in an interview with the "Seditious Books Club," a new Web site created to discuss the banned books.

Britain, like Iceland, in big trouble
breakingviews.com
Monday, November 17, 2008
It was unwise for a senior politician to say that Britain faced a possible "sterling collapse" if Prime Minister Gordon Brown weren't careful about his borrowing. Top elected officials, even those in the opposition, should not predict runs on their currency - as that itself could provoke panic. Even so, George Osborne, the opposition's finance spokesman, has certainly put his finger on a serious issue.
Put simply, Britain has an air of Iceland about it. The tiny island state was brought down when foreigners lost trust in the government's ability to bail out a banking system with massive foreign currency debt at a time when the country was also running a huge trade deficit. After foreigners refused to finance its banks, they went bust and the currency sank like a lead balloon.
Britain's excesses are much less extreme, but too large for comfort. British banks' foreign currency liabilities were nearly three times gross domestic product at the end of June - compared with seven times in Iceland. Of course, British banks also had massive foreign currency assets. But there was a mismatch. Their liabilities were $381 billion more than their assets. The flip side of this excess foreign currency debt is an excess of sterling assets. But if the pound keeps falling, the debts will loom larger when translated into sterling and a hole could develop in the banks' balance sheets.
One might think that doesn't matter. After all, the government has just recapitalized the big banks and offered to guarantee up to £250 billion of their borrowings. What's more, it is even guaranteeing borrowing in foreign currencies. The snag is that the government's own foreign currency reserves are pathetically small. They are only a 10th of the size of the banks' currency mismatch. If push came to shove, therefore, the state could have to beg or borrow hard currency to make good on its guarantees.
If the private sector was earning lots of foreign currency through trade, the state could find the cash at home. But it isn't. Britain has a big trade deficit. Again, this is not remotely as bad as Iceland's, which has consistently exceeded 10 percent of gross domestic product since 2004. But at 3 percent of GDP, Britain is still dependent on attracting net foreign funds of about £340 billion a year to plug the trade deficit.
Finally, there is the problem that Osborne mentioned - Brown's own borrowing. The government has a large budget deficit that will expand naturally as the recession bites and tax revenue declines. Brown is now planning to increase the deficit further to try to stop a recession from turning into a slump. Taking everything into account, the deficit could reach 5 percent of GDP next year.
Normally, Brown would borrow the money by just selling gilts, many to foreign buyers. But, in these febrile times, there may be a limit to the amount of sterling debt the world wants to swallow.
There has already been a sharp fall in the pound: 10 percent in the last month against a trade-weighted basket of currencies, and even more against the dollar. But if there is a loss of confidence, things could unravel more rapidly. It might not just be foreigners who were reluctant to finance Britain's borrowing. There might be capital flight as locals turned their pounds into harder currencies.
Such a scenario is far from inevitable. But it would clearly be better not to get even close to the edge. Unfortunately, there is no quick fix for any of the three sources of vulnerability - the banks' foreign currency mismatch, the trade deficit and the budget deficit. And, indeed, in the short run, Brown is right to advocate a modest fiscal stimulus to cushion the recession - provided it is temporary.
All this could so easily end in tears if the prime minister doesn't also come up with a credible medium-term plan to balance the budget and the current account - as well as fix the regulatory framework to discourage banks from currency mismatches.
Words alone will not work. Brown talked too often of prudence when he was finance minister for him to have credibility on this score now. What is needed is an institutional framework that forces governments to save money when the good times return. And this is even harder for Brown to promise, as he's unlikely still to be prime minister then.
Ideally, there would be bipartisan agreement on the way forward. Sadly, with the government and the main opposition party trying to use the economic crisis as a way of scoring points off of one another, that does not look likely. - Hugo Dixon and Edward Hadas
******************
Wallaby forwards earn rare praise after dominating England
Reuters
Monday, November 17, 2008
SYDNEY: Australia's often-maligned forwards were hailed as demon slayers after leading the Wallabies to a convincing 28-14 win over England at Twickenham on Saturday.
The Australian pack had been ridiculed by British media in the lead-up to the match after their scrum was demolished by England in recent meetings, including last year's World Cup quarter-final in Marseille.
But the Australians silenced their critics with a dominant display, overpowering their opponents in the set-pieces to lay the foundation for their biggest win at Twickenham since 1984.
"They've buried a demon today," Australian scrum coach Michael Foley told reporters in London.
"To come over here and venture into largely unknown territory, which has been an unhappy stamping ground for us in recent years, and to perform like they did, well, we are all just so proud to share it with them."
Australia's unexpected dominance in the scrum earned hooker Stephen Moore a rare man-of-the-match award and vindicated the selection of prop Al Baxter, lampooned as the Wallabies' weakest link in the lead-up to the test.
"This was satisfying more than anything else," Baxter said.
"All the comments made about us in the press were in the end really just fluff on the side. We weren't really concerned about the history, because we feel we're a new side and have moved on."
POKE FUN
Australian media could not resist the temptation to poke fun at the performance of the English scrum.
"The England scrum heaved. It also huffed and puffed. But it couldn't blow down the Wallabies' house of cards," Wayne Smith wrote in The Australian newspaper.
"Given the history between the sides, the pre-match sniping of the English press and the widespread ridicule directed at the Wallabies front row in general and prop Al Baxter in particular, the fact Australia earned two full penalties, a couple of short-arms and two tightheads at the expense of the England scrum was nothing short of delicious."
The Sydney Morning Herald's chief rugby writer Greg Growden said the Wallabies had beaten the English at their own game.
"They beat them in the scrum. They beat them in field position. And they beat them in relentlessly kicking over the penalties," Growden wrote.
"It was like a traditional England Twickenham triumph, except this time it was the team in green and gold who followed the script word perfect."
(Reporting by Julian Linden; Editing by Ed Osmond)


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1 comment:

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