Friday, 28 November 2008

A Place in the Auvergne, Thursday, 27th November 2008


U.S. food prices expected to keep going up
By Andrew Martin
Thursday, November 27, 2008
For more than a year, U.S. food manufacturers have been shaving package sizes and raising prices, declaring that they had little choice because of unprecedented increases in the cost of raw ingredients like corn, soybeans and wheat.
Now, with the price of grains and other commodities plunging, it may seem logical that grocery prices will follow. But while some grocery items like milk and fresh produce are dropping, the prices of most packaged items and meat are holding firm or even increasing. Experts warn that consumers should not expect lower prices anytime soon on most items at the grocery store or in restaurants.
U.S. government and industry economists project that the overall cost of food will continue to climb in 2009, led by increases for meat and poultry. A big reason, they say, is that food companies still have not caught up with the prolonged run-up in commodity prices, which remain above historical averages despite coming down from their highs early this year.
The Agriculture Department is forecasting that food prices will increase 3.5 to 4.5 percent in 2009, compared with an estimated 5 to 6 percent increase by the end of this year.
Some economists project even steeper increases next year. For instance, Bill Lapp, principal at Advanced Economic Solutions in Omaha, Nebraska, said he expected food prices to jump 7 to 9 percent next year.
"For the last 21 months, food manufacturers, restaurants and livestock producers have been absorbing significant costs that in my view are likely to be passed on to consumers in 2009 and beyond," said Lapp, a former chief economist at ConAgra Foods.
While predicting future food prices is an inexact science, data released by the Labor Department last week suggested the forecasters might be right.
Overall consumer prices recorded the biggest drop in the history of the Consumer Price Index, but food prices continued to inch upward, albeit at a slower pace than in previous months. The CPI showed that grocery prices rose 0.1 percent in October.
Some of the more visible items on grocery shelves, including produce and dairy products, dropped sharply in recent weeks, but not enough to offset the general trend of rising prices. Restaurant prices rose 0.5 percent in October.
Commodity prices began climbing rapidly in the fall of 2007, and food companies were hit hard by the increases. They tried to slow eroding profit margins by cutting operating costs, making packages smaller and raising prices.
Some companies, like Kellogg's and Heinz, have managed to offset the higher ingredient costs and post robust profits by using shrewd commodity hedges and by raising prices without losing many customers. They also benefited from a trend of consumers eating out less and buying more groceries.
But other food companies have struggled. Hershey's, for instance, locked in high cocoa prices this year only to see prices drop this fall, analysts say. And meat and poultry companies have been hit by higher feed costs and a limited ability to charge higher prices, at least in the short term.
Now, even though ingredient costs like corn and wheat have dropped, meat and poultry providers say they still have not raised prices enough to cover their increased costs. And packaged food manufacturers are unlikely to lower prices because commodity costs remain relatively high and they are still trying to rebuild eroded margins.
Michael Mitchell, a spokesman for Kraft Foods, said the company's food ingredient costs this year were running $2 billion higher than in 2007, a 13 percent increase, but that the company had raised its overall prices by only 7 percent.
William Roenigk, senior vice president and chief economist for the National Chicken Council, said his industry had been losing money for more than a year. Chicken producers are now trying to recover those costs by reducing production, which will eventually alter the balance between supply and demand. "The time is coming when we're going to see a very significant increase in the retail price of chicken," he said.
The restaurant industry, which has been battered by a sharp drop in customers, also says it has not been able to raise prices enough to keep pace with the cost of ingredients.
People in the restaurant business said they did not like raising prices during an economic downturn. "If anything in this environment, one would be looking at the ability to offer much greater emphasis on value pricing in restaurant menus," said Hudson Riehle, chief economist of the National Restaurant Association. "In contrast, exactly the opposite is happening. Our operators are being forced to raise menu prices at the highest rate since 1990."
Many economists acknowledge that predictions about food prices over the next couple of years are guesses, because commodity prices are unpredictable. Ephraim Leibtag, an economist for the Agriculture Department, said food inflation would slow by the middle of next year if commodity prices remained low. "Right now the forecast is about 4 percent, but that would be lowered if we do not see any surge in commodity costs over the next few months," he said.
A reason that overall food prices are expected to continue increasing is the lag between price increases for basic commodities and for finished food products in the grocery store, particularly for meat and processed foods. Consider the price of corn, an ingredient in things like cereal and breaded shrimp. It was not too long ago that corn hovered around $2 or $3 a bushel.
But corn prices began climbing last fall and peaked around $8 a bushel in June. They have since dropped to about $3.50 a bushel, still above the historical norm. Some food manufacturers locked in prices for corn and other commodities in the spring and summer, fearing that prices could go even higher. But prices fell instead, and they are now stuck with the higher prices until their contracts expire.
When costs go up for livestock producers, they are often unable to immediately raise prices because those prices are set on the open market, which is dictated by supply and demand. Instead, they begin reducing the size of their herds or flocks, which eventually leads to less meat on the market and higher prices. But reducing livestock production can take months to years, and in the interim it can actually suppress prices as breeding animals are slaughtered to reduce production.
The prospect of more food inflation is inflaming a debate over its causes. Many food manufacturers and economists maintain that one culprit is government policies promoting the use of ethanol fuel made from corn.
About a third of the corn crop is used for ethanol, putting ethanol producers in competition with livestock farmers and food manufacturers. The result, they contend, is that prices for corn are now higher and more volatile.
"The connection of oil prices to agricultural commodities is new as of 2007, and it's a major game changer for those in the food production business," said Thomas Elam, president of FarmEcon, a consultancy.
But ethanol advocates counter that the food industry's arguments have been proved false, saying that corn prices have declined as ethanol production is increasing. Matt Hartwig, spokesman for the Renewable Fuels Association, an ethanol industry group, said food companies were "very quick to tell the American public that they had to raise food prices because corn was so expensive, and that the reason corn was so expensive was corn-based ethanol."
Hartwig added: "Now, clearly, we know that relationship doesn't exist. If ethanol isn't the reason, what is the real reason for food prices going up?"

Expect commodities to come back
By Pratima Desai
Thursday, November 27, 2008
LONDON: Commodities' fall from grace in recent months has been fast and furious, and further losses cannot be ruled out as the economic and demand landscape deteriorates over coming months.
This will add to deflation fears, but not for long, because many commodities are expected to hit a floor soon as cuts in output curb supplies. The notable exceptions could be copper and oil.
"Just as the market was irrational on the way up, it will be irrational on the way down," said Ian Morley, a director at Quantum, a fund manager in Britain. "We're probably not too far from the bottom, but it doesn't mean oil can't fall further - another 20 percent is possible."
That could take crude to about $40 a barrel, a drop of about 70 percent since a record above $147 a barrel in July.
Some analysts say strong talk and production cuts from the Organization of Petroleum Exporting Countries, the oil producing group that controls about 40 percent of the world's supplies, could slow the descent to that level or even drive a swift rally if OPEC cuts output too deeply.
But Michael Lewis, global head of commodities research at Deutsche Bank, said cuts by OPEC could take about a year to have an effect.
"We're looking for a low of about $30-$35 a barrel by the end of next year," he said.
So for now, with prices falling, central banks slashing interest rates and recession being a reality in major economies from Japan to Germany, deflation remains a danger. After hitting high levels just a few months ago, inflation is falling in all industrialized economies as growth falters.
"We all know headline inflation rates will probably touch the zero line by the middle of next year," Klaus Wiener, head of research at Generali Investments, said. "Raw material prices will start rising again, but it won't happen in 2009."
The mood in the grains market is also somber. Prices of the benchmark U.S. corn futures contract for December have dropped by more than half to about 350 cents a bushel since July.
"Demand for meat appears to be waning," the Swiss bank UBS said in a recent note. "This will weigh on corn demand with over 65 percent of corn being used as feed in an average year." UBS expects to see corn prices average 450 cents a bushel this year and 400 cents in 2009.
Some industrial metals could also fall further, even though prices of copper, for example, at $3,600 a ton, are near the marginal cost of production for the most expensive processes, estimated at more than $3,500 a ton.
Average costs of production for copper, used in power and construction, are estimated at $2,000 to $3,000 a ton, depending partly on whether they include the revenue from byproducts like molybdenum, which is used in making steel.
Analysts expect the copper market to show a surplus of 100,000 tons this year and as much as one million tons next year. Some expect to see copper hit $2,800 a ton, a drop of nearly 70 percent since an all-time high of $8,940 in July.
"Prices are well above costs for many producers," said Catherine Virga, analyst at CPM Group. "We have not had significant enough cuts in copper production to move the market out of being in a surplus next year."
But in the long term, fund managers say that infrastructure spending plans and demand for commodities from fast-growing countries like China could mean the next upswing after 2009 could be sharper and much more inflationary.
They say the world could be facing a shortage of raw materials more acute than previously thought, partly because many companies are shelving expansion plans.
"We have growing scarcity of natural resources with fast-growing countries like China and India demanding more," said Wiener of Generali.
A series of government stimulus packages around the world could help stimulate demand. In China, the state media have reported that provincial governments' plans would add an extra 10 trillion yuan, or $1.5 trillion, to a plan costing 4 trillion yuan announced by central government earlier in the month.
Barack Obama has talked about a two-year plan to revive the U.S. economy after he becomes president. In October, he called for a $175 billion stimulus measure.
"New bridges, new roads and new power stations will all require more in the way of resources," said Andrew Cole, director of asset allocation at Baring Asset Management. "We're worrying more about long-run inflationary pressures then we are about short-term deflationary pressures."

New smokeless tobacco worries experts
By Roni Caryn Rabin
Thursday, November 27, 2008
Camel Snus, the latest smokeless tobacco product to hit the American market, is not your grandfather's chaw.
Available in three flavors and packaged in attractive tins, Snus does not have to be spit out and therefore can be used just about anywhere -- "at a concert, right in front of security guards," "on a jet from Miami to L.A.," or at an "overpriced tapas restaurant," a promotional brochure suggests.
And Snus delivers a powerful dose of nicotine: eight milligrams in each pouch, a spokesman for the R.J. Reynolds Tobacco Company, which manufacturers Snus, acknowledged on Wednesday. A pouch amounts to a single dose.
That's far more nicotine per gram than is present other popular chewing tobacco products, according to some researchers, who are concerned that Snus may turn out to be both carcinogenic and highly addictive.
Chewing tobacco regularly increases the risk of developing oral cancers; recent studies have associated heavy use with increased odds of pancreatic cancer, as well. The European Union banned sales of an earlier formulation of Snus in 1992 after a World Health Organization study determined the product could cause cancer. Snus is still sold in Sweden, where it originated, and in Norway.
Health officials in West Virginia analyzed a version of Snus marketed earlier this year in parts of the United States and found it contained five milligrams of nicotine per gram of tobacco, or about two milligrams per pouch serving, said Robert Anderson, deputy director of the prevention research center at West Virginia University.
Since then, he said, the amount of tobacco and the concentration of nicotine in each pouch appear to have increased. "The nicotine in these products doesn't happen by accident," Anderson said.
The latest packaging does contain more tobacco, 0.6 grams per pouch instead of 0.4 grams, and therefore more nicotine, according to R.J. Reynolds spokesman David Howard.
The disclosure dismayed some public health officials.
"It's so high in nicotine that the probability of becoming addicted to it with utilization of just one tin is going to be very high," said Bruce Adkins, director of the division of tobacco prevention of the West Virginia Bureau for Public Health in Charleston, West Virginia
R.J. Reynolds is hoping Snus will appeal to adult tobacco users because it "meets societal expectations as well," Howard said. "There is no second-hand smoke, no spitting."
But by providing users a nicotine fix without lighting up, Snus may tempt consumers to ignore initiatives designed to reduce tobacco use, such as indoor smoking bans, experts said.
Since Snus can be used discreetly, it may also appeal to teenagers, Anderson said. "The surreptitious aspects of it will be very obvious to them." More Articles in Health »

Study hints at health benefit of red wine
By Nicholas Wade
Thursday, November 27, 2008
A new insight into the reason for aging has been gained by scientists trying to understand how resveratrol, a minor ingredient of red wine, improves the health and lifespan of laboratory mice. They believe that the integrity of chromosomes is compromised as people age, and that resveratrol works by activating proteins known as sirtuins that restore the chromosomes to health.
The finding, published online on Wednesday in the journal Cell, is from a group led by David Sinclair of the Harvard Medical School. It is part of a growing effort by biologists to understand the sirtuins and other powerful agents that control the settings on the living cell's metabolism, like its handling of fats and response to insulin.
Researchers are just beginning to figure out how these agents work and how to manipulate them, hoping that they can develop drugs to enhance resistance to disease and to retard aging.
Sirtris, a company Sinclair helped found, has developed a number of chemicals that mimic resveratrol and are potentially more suitable as drugs since they activate sirtuin at much lower doses than resveratrol. This month, one of these chemicals was reported in the journal Cell Metabolism to protect mice on fatty diets from getting obese and to enhance their endurance in treadmills, just as resveratrol does.
Though the sirtuin field holds considerable promise, the dust has far from settled. Resveratrol is a powerful agent with many different effects, only some of which are exerted through sirtuin. So drugs that activate sirtuin may not be as splendid a tonic for people as resveratrol certainly seems to be for mice.
The new finding concerns maintenance of the chromosomes, the giant molecules of DNA that make up the genome.
Each cell has six feet, or 1.8 meters, of DNA packed into its nucleus, carrying the 20,000 or so genetic instructions needed to operate the human body.
Each cell must provide instant access to the handful of these genes needed by its cell type, but also keep the rest firmly switched off to avoid chaos.
Sirtuin's normal role is to help gag all the genes that a cell needs to keep suppressed. It does so by keeping the chromatin, the stuff that wraps around the DNA, packed so tightly that the cell cannot get access to the underlying genes.
But sirtuin has another critical role, one that is triggered by emergencies like a break in both DNA strands of a chromosome. After a double strand break, sirtuin rushes to the site to help knit the two parts of the chromosome back together. But in this salvage operation, it leaves its post, and the genes it was repressing are liable to come back into action, causing mayhem.
This, Sinclair and his colleagues suggest, may be a fundamental cause of aging in mice and probably people, too.
The gene-gagging role of sirtuin was discovered in the 1980s by biologists studying yeast, a standard laboratory organism. Sinclair and Leonard Guarente of the Massachusetts Institute of Technology found in 1997 that sirtuin could also repair a certain kind of genomic damage in yeast, and in doing so extended the yeast cell's lifespan.
But this particular kind of damage does not occur in mammalian cells, raising the puzzle of why extra sirtuin should be good for them.
Sinclair's new report, if verified, resolves this problem by showing that sirtuin has retained its genomic repair role in higher organisms but that the repair is focused on a different kind of genomic damage - that of breaks in a chromosome.
These experiments "elegantly demonstrate" that sirtuin works in much the same way in mammals as in yeast, Jan Vijg of the Albert Einstein College of Medicine wrote in a commentary in Cell. The question now is whether sirtuin is a pro-longevity factor in mammals, he said in an e-mail message.
Ronald Evans, a biologist at the Salk Institute, said the new report was provocative but did not prove the case that the relocation of sirtuin was a cause of aging. Tests with mice genetically engineered to lack the sirtuin gene could show if the mice suffered from premature aging, as Sinclair's idea would predict.
Sinclair said he agreed that the case for sirtuin's role in aging had not been proved. "We are careful not to say this is the cause of aging, but based on everything we know it's not a bad hypothesis," he said.
It would be nice to test aging in mice that lack the sirtuin gene, as Evans proposed, but they die too young, Sinclair said.
Sinclair has been taking large daily doses of resveratrol since he and others discovered five years ago that it activated sirtuin. "I'm still taking it, and I feel great," he said, "but it's too early to say if I'm young for my age."

Save the economy, and the planet
Thursday, November 27, 2008
Environment ministers preparing for next week's talks on global warming in Poznan, Poland, have been sounding decidedly downbeat. From Paris to Beijing, the refrain is the same: This is no time to pursue ambitious plans to stop global warming. We can't deal with a financial crisis and reduce emissions at the same time.
There is a very different message coming from the United States. President-elect Barack Obama is arguing that there is no better time than the present to invest heavily in clean energy technologies. Such investment, he says, would confront the threat of climate change, reduce dependence on foreign oil and help revive the American economy.
Call it what you will: a climate policy wrapped inside an energy policy wrapped inside an economic policy. By any name, it is a radical shift from the defeatism and denial that marked President Bush's eight years in office. If Obama follows through on his commitments, America will at last provide the global leadership that is essential for addressing the dangers of climate change.
Still two months from the White House, Obama has convincingly reaffirmed his main climate related promises. One is to impose (Congress willing) a mandatory cap on emissions aimed at reducing America's output of greenhouses gas by 80 percent by midcentury. According to mainstream scientists, that is the minimum necessary to stabilize atmospheric concentrations of carbon dioxide and avoid the worst consequences of climate change. Obama's second pledge is to invest $15 billion a year to build a clean economy that cuts fuel costs and creates thousands of green jobs. That includes investments in solar power, wind power, clean coal (plants capable of capturing and storing carbon emissions) and, as part of any bailout, helping Detroit retool assembly lines to build a new generation of more fuel-efficient vehicles.
Obama has surrounded himself with like-minded people who have spent years immersed in the complexities of climate change. His transition chief, John Podesta, was an early advocate of assisting the automakers and of finding low-carbon alternatives to gasoline. Peter Orszag, his choice to run the Office of Management and Budget (where environmental initiatives went to die during the Bush years) is an expert on cap-and-trade programs to limit industrial emissions of greenhouse gases.
Success is not guaranteed. At least on the surface, it seems counterintuitive to impose new regulations (and, in the short term anyway, higher energy costs) on a struggling economy. Obama will need all his oratorical power to make the opposite case.
The historical landscape from Richard Nixon onward is littered with bold and unfulfilled promises to wean the nation from fossil fuels, especially imported oil. What is different now is the need to deal with the clear and present threat of global warming. What is also different is that the country has elected a president who believes that meeting the challenge of climate change is essential to the health of the planet and to America's economic future.

Scientists crack iceberg mystery
Thursday, November 27, 2008
By Alister Doyle, Environment Correspondent
U.S. scientists have figured out how icebergs break off Antarctica and Greenland, a finding that may help predict rising sea levels as the climate warms.
Writing in Friday's edition of the journal Science, they said icebergs formed fast when parent ice sheets spread out quickly over the sea.
"It won't help the Titanic, but a newly derived, simple law may help scientists improve their climate models" and predict ice sheet break-up, they said in a statement. The Titanic sank in 1912 after hitting an iceberg, killing 1,500 people.
Ice cracking off into the ocean from Antarctica and Greenland could be the main contributor to global sea level rises in the future. If all the ice in Greenland and Antarctica melted, seas would rise by more than 60 metres (196 ft).
The formation rate of icebergs was less linked to factors such as ice thickness, width of the ice flow, distance from land or waves, the scientists said.
Ice sheets are giant frozen rivers, caused by snowfall, that slowly flow to the sea and then break up.
In Antarctica, the Ross Ice Shelf extends 500 miles (800 km) over the ocean before the edges snap off and form icebergs. Many other ice sheets stretch just a mile or two.
Computer models that predict how ice sheets behave in warmer weather generally gloss over exactly how icebergs break off because researchers have failed to understand the mechanism, known as calving.
"For iceberg calving, the important variable -- the one that accounts for the largest portion of when the iceberg breaks -- is the rate at which ice shelves spread," the study said.
A fast spread means cracks form throughout the shelf and make it crack up. A slower spread means that deep cracks do not form as fast and the ice sticks together.
"The problem of when things break is a really hard problem because there is so much variability," lead author Richard Alley, of Pennsylvania State University, said.
"Anyone who has dropped a coffee cup knows this. Sometimes the coffee cup breaks and sometimes it bounces," he said of the problems of understanding cracking.
The U.N. Climate Panel predicts seas will rise by 18 to 59 cm (7-23 inches) this century because of warming stoked by human use of fossil fuels.
(Editing by Catherine Bosley)

China dampers growth in airline industry
Thursday, November 27, 2008
SHANGHAI: China, the biggest air-travel market in Asia, will stop approving plane orders and the establishment of new carriers to avoid overcapacity during an economic slowdown, a regulatory official said Thursday.
Airlines will be able to buy planes that have already been approved, said the official, Liu Shaocheng, head of policy and research at the Civil Aviation Administration of China. Some orders would also be signed next month, he added, without saying when the ban would take effect.
Slowing capacity growth may help the nation's airlines cope with the global recession, which is expected to hold down air travel in China for as many as three years, according to the regulator. The government may also lower fuel prices and cut taxes after granting a 3 billion yuan, or $439 million, bailout to the parent of China Southern Airlines, the biggest carrier in the country.
The move to aid China Southern Airlines appears to be the first step in a government rescue of state-controlled airlines, including Air China and China Eastern, hit hard by weak air traffic demand and hefty losses on fuel price hedging.
"There is no doubt that Air China and China Eastern will both get similar aid packages soon," said Li Lei, an industry analyst with China Securities. "But they will probably all end up in the red this year as the cash injection is too late to bolster their bottom lines."
The regulator has applied to reduce domestic jet fuel prices to close a gap with international prices, Liu said. The proposal is awaiting approval from the National Development and Reform Commission. China controls fuel prices for domestic routes only.
The government is working on cutting taxes for airlines and on lowering tariffs imposed on imported plane parts, Liu said. Taxes account for 8.3 percent of Chinese airlines' operating costs, compared with an average 2 percent worldwide, he added.
Fewer orders in China may curb sales for Boeing and Airbus, which are counting on emerging markets to offset waning demand for aircraft in the United States and Europe. Airbus expects to conclude deals with China for 150 to 200 planes before the Chinese New Year in January, the chief commercial officer of the company, John Leahy, said this month.
China's economy, the biggest contributor to global growth, will expand at the slowest pace in almost two decades next year, the World Bank forecast this week.
The economic slowdown has cooled demand for air travel. China's air passenger numbers rose 2.4 percent in the first 10 months of 2008 from a year earlier, trailing the regulator's forecast of 14 percent for the full year. Chinese airlines had a combined 4.2 billion yuan loss in the period, according to the regulator.
China had a fleet of 1,256 aircraft as of Oct. 31. That is expected to rise to 1,550 in 2010, according to the aviation regulator's long-term plan.
Chinese airlines, which began to boom after the end of the 2003 SARS, or severe acute respiratory syndrome, crisis as China's brisk economic growth spurred business and leisure travel, saw a sudden reversal of fortune early this year with a series of natural disasters and a sudden economic slowdown.
With high levels of debt as they aggressively built up their fleets, and with notoriously low levels of service and efficiency after years in a stodgy state-run system, they had been especially vulnerable and were seeking partners to bolster their finances and operations even before the downturn.
China Southern said Wednesday it was considering transferring shares to its state parent in return for some government funds, although such a move would require government approval.
China Eastern's shares were suspended from trade Thursday as it announced that its parent company was also applying for state aid, while Air China's Hong Kong-listed shares rose 16 cents, a surge of 9.4 percent, to 1.86 Hong Kong dollars, or 24 U.S. cents, in anticipation that it would benefit as well.

As oil prices fall, tensions among OPEC members seem to deepen
By Jad Mouawad
Thursday, November 27, 2008
For the first time in a decade, oil producers are facing a real test of their unity.
As the OPEC cartel meets in Cairo on Saturday, exporters are being pummeled by a triple whammy of lower prices, falling demand and declining revenue. The group, whose members account for more than 40 percent of global oil exports, is desperately seeking ways to stop the drop in prices, which have fallen from their summer peaks at a record pace.
But the Organization of the Petroleum Exporting Countries is increasingly torn between its moderate members, led by Saudi Arabia, which can afford a period of lower oil prices, and countries with high government spending, like Iran and Venezuela, which have become much more dependent on high prices.
These two groups have often clashed in the past, and as prices plummet the tensions are once again bubbling to the surface.
When oil prices collapsed to $10 a barrel in 1998, OPEC producers managed to set aside their squabbles to push prices back up. Thanks mostly to a growing global economy and tightening supplies, producers saw a sharp rally in oil prices over the last 10 years.
But as the global economy sputters, the recent decline in oil prices has been staggering, and producers have been incapable of slowing the slide.
After rising above $145 a barrel this summer, oil prices have fallen below $55 a barrel, their lowest level in more than three years. Instead of coasting on growing demand, producers are confronted with a significantly different environment, and must adapt to a world of slowing consumption and overflowing oil supplies. They must also contend with hundreds of billions of dollars in lost revenue.
In the last two months, OPEC agreed to cut its output by two million barrels a day. While analysts say members of the cartel are generally abiding by their pledge, the effect on the market has failed to materialize so far.
Since the group's last meeting a month ago, OPEC's reference basket price — an average of oil grades sold by producers of the cartel, including Saudi Arab Light and Sahara Blend from Algeria — has fallen by more than half, reaching a low of $42 a barrel last week.
The cartel's traditional hawks have been pushing for a more aggressive cut in production this week, and there is talk of trying to rally non-OPEC producers to help stabilize the market. The oil minister of Venezuela, Rafael Ramirez, suggested the cartel should reduce its production by an additional one million barrels a day, a position that was endorsed by Iran.
But a decision is far from certain, and on Thursday the Ecuador Oil Minister Derlis Palacios said OPEC members will not decide to cut output at their Cairo meeting on Saturday, reported Reuters. He said members will instead leave any decision for the cartel's next gathering in December.
Cairo "is a preparatory meeting for the one in Algeria," Palacios told a local radio station. Other producers are dragging their feet. The president of OPEC, Chakib Khelil, said the group needed to see how well producers were complying with their prior commitments to pare supplies before agreeing to a new cut. The group is scheduled to meet again in Algeria next month.
"There are disagreements between producers," said Greg Priddy, an oil analyst at Eurasia, a political consulting group in Washington. "Some members are below their pain threshold, especially Iran. But the Saudis will not allow themselves to be strong-armed. They want to see how everyone is complying before agreeing to another round of cuts."
Guy Caruso, the former administrator of the Energy Information Administration, said the Saudis have been cautious so far, trying to balance their budget requirements with concerns about the global economy. Even if OPEC agreed to a new cut in production, analysts doubt that all the countries would abide by their quotas, and it would fall to Saudi Arabia to shoulder the brunt of the cutbacks.
"The Saudis have the longer-term view," Caruso said. "They don't want to be in the situation they were in the 1980s when almost all the burden fell on them to defend the price."
The drop in prices is threatening the economic and political foundations of many oil producers. Iran's populist president, Mahmoud Ahmadinejad, is expected to run for re-election next year while Hugo Chávez of Venezuela is being contested in local elections at home. Both countries need oil above $90 a barrel to balance their budgets, according to various estimates.
"The Iranians, the Russians and the Venezuelans, who had benefited the most from the rise in price, are the ones paying dearly now with the collapse," said Lawrence Goldstein, a veteran energy analyst.
But while different producers have competing agendas, the drop in prices has been so rapid that even moderates are feeling the sting.
"Prices have gotten to a point that they are hurting everybody now," Goldstein said. "A world of $50 oil or less is in no one's interest within the organization."
This weekend's meeting may include proposals to open consultations with producers outside of the cartel, the Iranian envoy has indicated, and could set the contours for a coordinated response between OPEC and non-OPEC producers like Mexico and Russia. In the late 1990s, Norway and Mexico trimmed their production to bolster oil prices after the Asian economic crisis.
The Russian energy minister, Sergei Shmatko, on Tuesday suggested that his country might reduce its output in tandem with OPEC. He said that Russia required $95 a barrel next year, otherwise its budget would be strained and its currency would suffer.
But with its production already declining this year because of a lack of investments, it is unlikely that Russia will follow through, analysts said.
Over the last decade, OPEC has stepped in three times with large production cuts to stop prices from falling — in 2001, 2003 and 2006. Only once, however, did producers fully comply with their pledges to trim their output, according to analysts at Barclays Capital.
When prices last fell toward $50 a barrel, at the end of 2006, members of the cartel agreed to cuts totaling 1.7 million barrels a day but they cut only 900,000 barrels a day, according to Barclays.
Yet prices rebounded because oil production from non-OPEC producers, like Mexico and Norway, was disappointing and consumption kept rising.
Now, even if OPEC agrees to reduce its output further, it is doubtful that oil will rebound soon. In the past, it has typically taken three to six months for oil prices to rise after OPEC trims supplies, according to Deutsche Bank.
"In terms of crude oil, we believe downward pressure on prices is likely to persist throughout next year," according to a report by Deutsche Bank. "OPEC will struggle to cut production as fast as world growth is slowing over the next 12 months."

Sharp plans joint solar venture with Enel
Thursday, November 27, 2008
TOKYO: Sharp of Japan, Enel of Italy and a third manufacturer will invest more than $2.6 billion in Italian solar power ventures to tap growing demand for cleaner energy.
Top solar power firms are hurrying to expand capacity even as the sector smarts from a worsening global economy, which is drying up financing for new ventures and forcing smaller solar power firms to push back investment.
Sharp, the world's No.2 maker of solar cells after the German company Q-Cells, said it and Enel planned to spend about ¥100 billion, or $1.05 billion, to set up solar power generating plants in Italy with a total generating capacity of 189 megawatts by the end of 2012.
Sharp and Enel, with an unnamed third manufacturer, also plan to build a factory in Italy to produce thin-film solar cells, aiming for initial output of 480 megawatts in 2010 and ultimately raising output to about 1 gigawatt.
Sharp said total initial investment for the factory is likely to be at least ¥72 billion, and analysts expect that investment to more than double to more than ¥150 billion when the factory reaches full capacity.
Sharp is stepping up investment in an effort to retake market share from Q-Cells, whose aggressive capital spending plans outstrip those of its rivals.
The consumer electronics maker is reinventing itself as a device maker, supplying or planning to supply liquid crystal display panels to Japanese TV makers like Sony, Pioneer and Toshiba.
Sharp will now sell equipment to the joint venture and charge fees for its technology and solar operations know-how in an effort to position itself in the solar power industry, its executive vice president, Toshishige Hamano, said Thursday. Sharp, which cut its annual profit outlook by one-third in October, could increase its sales in the short term by selling its technology and any equipment it develops in a joint venture with the semiconductor equipment maker Tokyo Electron.
But that could hurt its brand and deplete its technological edge in the long run, one analyst said. "With LCD prices sliding, Sharp is under more pressure to recover its initial investment quickly, and the temptation for a quick fix is understandable," said Yoshihisa Toyosaki, president of J-Star Global, an information technology consulting firm in Japan.
"But this raises the cost performance of rivals with lower personnel costs and government backing," he said. "It is not a strategy for a company with decades of experience and an established brand."
In the future, Sharp also plans to step up production of silicon wafers and join with a major U.S. polysilicon supplier to help it secure a steady supply of silicon starting in 2010.
Sharp first said it would take a 34 percent share in the solar power generating venture, with Enel holding the rest, but it later retracted the statement, saying that nothing has been decided, other than that Sharp will take a minority stake. Sharp will also take a minority stake in the solar cell venture.
Capital expenditure at Sharp, which also plans a solar plant in Japan at a cost of ¥72 billion with an initial output of 480 megawatts by March 2010, still lags that of Q-Cells, which has said it plans to raise capacity to 1,000 megawatts in 2009 and 2,500 megawatts in 2010.

Toyota credit ratings cut
Thursday, November 27, 2008
TOKYO: The top-notch credit ratings for Toyota Motor were cut Wednesday for the first time in a decade, affecting its shares and raising borrowing costs as an unprecedented slowdown reshaped the global auto industry.
Fitch Ratings downgraded Toyota's long-term foreign and local debt ratings to AA from AAA, with a negative outlook, saying the company needed to review its global investments, product mix and speed of expansion to address the challenges it faced.
"The negative developments in the industry are so substantial and fundamental that even the strongest player, Toyota, can no longer support an AAA rating," said Fitch director Tatsuya Mizuno.
Sales in the United States and Europe have plunged as access to credit has dried up, with the slowdown spreading to China, India, Russia and other markets on which automakers had placed their last hopes for near-term growth.
"It's impossible to tell where demand will go next year and beyond," Osamu Suzuki, chief executive of Suzuki Motor, said in Tokyo on Wednesday. "If there's a market that's not being affected by the United States, it's not on this planet."
In the latest evidence of slowing demand in emerging markets, Toyota is expecting vehicle sales next year in Russia to fall below the level this year, the Japanese news agency Kyodo reported, citing Tadashi Arashima, the head of Toyota's European operations.
The yen's strength against the dollar and most other currencies is dealing a double blow to Japanese carmakers, which have cut their profit forecasts in the past month.
Toyota, the world's largest automaker, had consolidated debt of ¥12.2 trillion, or $128 billion, as of March, according to Fitch. It remains the only automaker with the top Triple-A rating from Standard & Poor's and Moody's Investors Service. Moody's was the last ratings firm to cut Toyota, in 1998.
The cost of protection against a default in Toyota's debt rose after the Fitch downgrade, with five-year credit default swaps widening by 10 basis points to 180. That means an investor would pay $180,000 a year for protection against a default in $10 million of Toyota's underlying debt.
Shares in Toyota fell 4.6 percent in Tokyo on Wednesday.


Daimler may cut work week at four German sites

E.ON sees energy bill cuts next year if prices fall
Thursday, November 27, 2008
LONDON: German energy group E.ON said on Thursday it hopes to cut bills for its UK customers in 2009 if wholesale gas and electricity prices carry on falling.
"If we continue to see falling wholesale electricity and gas prices, we'd hope to reduce customers' prices as soon as we are able next year," E.ON UK Chief Executive Paul Golby said in a statement.
"We're obviously very aware of the difficulties our customers are experiencing, especially considering the current economic problems, and we're monitoring wholesale prices closely in the hope of making this move."
E.ON employs about 17,000 people in the UK and its British retail business has 5.5 million electricity and gas customers.
It said it was also introducing more measures to help customers struggling to pay their bills.
(Reporting by Philip Waller; Editing by David Cowell)

British brawn thwarts French élan in Champions League
By Rob Hughes
Thursday, November 27, 2008
The French and the English, not always the most cordial of neighbors, managed to settle some of their sporting differences in the stadiums rather than in the European corridors of power this week.
On Wednesday, while the politicians bickered in Biarritz, the real combatants played on either side of the English Channel. In Bordeaux, the home team drew, 1-1, against Chelsea. In Liverpool a solitary goal from the head of Steven Gerrard was just enough to see off the challenge from a Marseille team that at times looked superior.
Both contests were feisty. Both were disputatious to the end. Both results and performances were far closer than the current European Union debate would have us believe.
The nub of the politicking in Biarritz, where the 27 sports ministers of the EU were dining on Wednesday, is that France accuses England of buying unfair advantage by using unsecured bank loans to import the world's finest talents. Not only does Michel Platini, the head of Europe's soccer confederation, UEFA, believe this, his nation's president, Nicolas Sarkozy, is throwing state support behind the argument.
Maybe to prove a point it would have been better had Bordeaux and Marseille lain down and let the English teams roll over them. Not a bit of it. Indeed had either of the French clubs started the way they finished the matches they would have been victorious.
The most memorable cameo of the night was an absolutely breathtaking few seconds by Hatem Ben Arfa, Marseille's 21-year-old winger, who, surrounded by three Liverpool opponents, took them all on. With a shimmy to the right, a feint to the left, and sweet, instinctive variations of pace and direction, he emerged with the ball.
Two of the dumbfounded Liverpool trio were Fabio Aurelio and Javier Mascherano, talented men hired from Brazil and Argentina. Such was the blur of Liverpool confusion and the hypnotic attraction of Ben Arfa's movement, it was difficult to identify the third.
But another Spanish migrant to the English game, Liverpool's coach, Rafael Benítez, knew what he was seeing.
"Marseille have good players," he said after the game. "They have ability and pace, and some players who were technically better than us."
He gives thanks for Liverpool's irrepressible Englishness, for the redoubtable spirit of Gerrard. The captain's pulsating header midway through the first half won the match and ensured Liverpool will qualify as one of the 16 clubs that contest the next round.
That goal caught Marseille in a momentary lapse of concentration as its Ivorian forward Bakari Koné left Gerrard unmarked in a scoring position.
Gerrard was later abused by Marseille supporters, one of whom hit him with a cigarette lighter thrown from the stands. This is the downside to Marseille's soccer passion. Its fanatics were involved in crowd violence last month in Madrid, where Marseille fans fought with the local police.
UEFA blamed the home club, Atlético Madrid, for lack of preparation to prevent that violence. So Atlético had to play PSV Eindhoven this Wednesday in an empty stadium in Madrid.
Atlético scored two early goals, through its Portuguese winger Simão Sabrosa and its Argentine midfielder Maxi Rodríguez. Each goal was greeted by noise and passion, as the giant stadium screen and booming sound system replayed the support of fans locked out in the street but reacting to a radio commentary.
Atlético won this surreal encounter, 2-1, and joins Liverpool in the next phase of the Champions League.
Other things, some of them bordering on the unimaginable, were happening this night.
Inter Milan lost in its own San Siro Stadium to Panathinaikos as José Sarriegi scored the only goal.
"Panathinaikos's win was absolutely deserved," José Mourinho, the Inter coach, said. "People may say they were lucky, but I don't. After that, we don't deserve to go through, and after the joy of last Saturday, Inter fans have a sad moment and I am sorry."
Last Saturday, Inter beat Juventus in the Italian league. On Wednesday, it lost but qualified anyway for the knockout round of the Champions League.
This was because the Cypriot side Anorthosis Famagusta, which could have overtaken Inter, let slip a two-goal home lead over Werder Bremen. Famagusta could yet qualify, if it beats Panathinaikos in the final group match.
It sometimes takes a mathematician to work out the European differentials - but none were needed in another group which Barcelona so dominated that it had already secured first place with two matches to spare before Wednesday. Still, Barça scored another handful of goals, winning, 5-2, at Sporting Lisbon.
Lionel Messi, of course, scored and set up a goal. Thierry Henry scored his 46th goal in the Champions League on the night when he became the first Frenchman to play 100 matches in Europe's top competition.
So the French do have their talents and their triumphs on the Continent, even if it galls them that the likes of Henry make their fortunes and lend their fame to foreign teams like Arsenal and Barcelona.
Yet another of their exports, Nicolas Anelka, returned to France wearing the shirt of Chelsea. Just on the hour, knowing he was about to be replaced by the Ivorian Didier Drogba, Anelka broke the deadlock to put Chelsea ahead in Bordeaux.
That reverse stung Bordeaux into magnificent attack. Forward charged the French, onwards and upwards through tackles that, rightly, earned yellow cards from the referee, Frank De Bleeckere of Belgium, against all four Englishmen in the Chelsea ranks. The referee identified rash and punishable fouls by John Terry, Ashley Cole, Joe Cole and Frank Lampard as the "Rosbifs" responded with meaty effort to the French resistance.
In the 83rd minute, Bordeaux got what its efforts deserved, an equalizing goal. Yoann Gourcuff, the most creative player on the field and one lent back to Bordeaux from AC Milan, which owns a surplus of foreign riches, took a corner kick, and Alou Diarra, French of Malian descent, headed the goal.
Chelsea was furious. That manifested itself in Lampard's making another lunging, late tackle, which obliged the referee to send him off. It provoked Luiz Felipe Scolari, Chelsea's coach, to say: "The main problem was that they were better than us. I'm disappointed we didn't defend the corner properly, and if we fail to qualify in the last match, maybe I will have to go home to Brazil."

Susan Pinkard's 'A Revolution In Taste'
By Caroline Weber
Thursday, November 27, 2008
A Revolution In Taste
The Rise of French Cuisine, 1650-1800.
By Susan Pinkard.
Illustrated. 317 pages. Cambridge University Press. $32; £20.00.
In the 1660s, discussing the culinary innovations that had recently taken root in Louis XIV's France, an English chef named Robert May bemoaned his French counterparts' newfound focus on "Sauce rather than Diet." To calorie counters who recoil in horror at the butter and cream that abound in French haute cuisine to this day, May's lament will strike a familiar chord. (Once, in the naïveté of youth, I was almost thrown out of a venerable Parisian restaurant for asking if the chef could prepare a "low fat" version of his lobster bisque.) But in fact, when discussing the meals served across the channel, the Englishman was distressed by something other than their high fat content. He was referring instead to a distinct change in the way the French had come to view and practice cooking. Historically, European cuisine had promoted the pseudomedical belief that particular seasonings and modes of preparation could - and should - eliminate imbalances in the human constitution. In the middle of the 17th century, however, leading French gastronomes let go of this idea and undertook the refinement of flavor for its own sake. Butter and cream sauces, whose value was gustatory (enhancing the taste of underlying ingredients) as opposed to medicinal (recalibrating the body's four "humors," as set forth by Hippocratic physicians), thus came to the fore, and an elegant, toothsome new brand of cooking was born.
In "A Revolution in Taste," Susan Pinkard, a historian at Georgetown University, explores the striking technical, material and philosophical shifts that profoundly altered French cooking between the second half of the 17th century and the revolution of 1789. Before this period in history, Hippocratic dietetics had maintained that disease was caused by excess humors (moist, hot, cold or dry) for which food could correct.
Seasonings, in particular, were thought to adjust a dish's elemental properties in crucial, therapeutic ways. For example, "dangerously cold and moist fish, such as lamprey eel (a surfeit of which was said to have killed Henry I of England), could be transformed by a sauce of pepper, garlic and marjoram into a delicious and healthy dish." Guided by these curative principles, ancient and premodern chefs relied heavily on spices, which masked underlying tastes and aromas. This practice gave rise to the conviction that fine cooking "fused many layers of flavor into a single, unitary whole, rendering individual ingredients unidentifiable to even sensitive palates." As Pinkard astutely points out, this culinary aesthetic persists today in regions ranging from Mexico to the Middle East.
"Mexican kitchen lore," she writes, "claims that if one can identify a recipe's ingredients by smelling the steam rising from the pot, the mixture must cook longer to achieve a perfect blend of flavors." This perspective held sway in French kitchens until the 17th century, when a population boom led to the expansion of suburbs outside Paris, thereby driving the moneyed families who had once spent summers in the city's immediate environs to seek bucolic escapes in the countryside proper.
Owning farms and vineyards soon became commonplace for rich Parisians, who thereby metamorphosed - intentionally or otherwise - into part-time farmers and vintners. A profusion of newly available garden-fresh ingredients in turn inspired techniques that enhanced the foods' intrinsic qualities instead of submerging them in spice. The result was a cuisine that one of its founding fathers, Nicolas de Bonnefons, called le goût naturel (the natural taste). "A cabbage soup should taste entirely of cabbage, a leek soup entirely of leeks, a turnip soup of turnips and thus for others," Bonnefons decreed in "Les Délices de la Campagne" ("The Delicacies of the Countryside"), his seminal 1654 cookbook. "Food should taste like what it is." While it might sound self-evident in the age of Chez Panisse and Whole Foods, this promotion of culinary simplicity and purity revolutionized the way the French thought about food. For starters, as Bonnefons's list of examples suggests, it sparked a new appreciation for vegetables. In the days before le goût naturel, vegetables had been unwanted guests at the sophisticated French table; even the great 14th-century chef Taillevent - who prepared dishes for the Valois kings and from whom one of Paris's most superb restaurants today takes its name - mostly excluded them from his repertoire. (The single exception was his recipe for stewed cress, which Taillevent recommended as a cure for gallstones.) With Bonnefons and his confrere La Varenne, whose influential work "Le Cuisinier François" ("The French Cook") appeared in 1651, vegetables assumed pride of place in French cooking, served only with mild seasonings and smooth, emulsified sauces that allowed for their essential flavors to shine through. Meat, fowl and fish soon received the same treatment, most notably with the development of "basic preparations" like roux, jus, coulis and marinade, as well as sauce blanche and sauce veloutée. Still essential to countless canonical French recipes, these enhancements represented a move away from old culinary practices in that they served "to accent the natural characteristics of principal ingredients, not to transform them chemically, nutritionally or aesthetically." During the Enlightenment, this emphasis on culinary naturalness took on a strong political dimension, as philosophes like Denis Diderot, the Chevalier Louis de Jaucourt and Jean-Jacques Rousseau railed against the aristocracy's inauthentic social posturing and wasteful spending habits. These practices, which functioned to maintain or improve people's standing in an unequal, prestige-obsessed social order, prompted Rousseau to champion a return to a simpler, more natural way of life. For him as for many of his contemporaries food prepared plainly and with an eye to its innate characteristics thus formed part of a broader social program: that of restoring dignity to man as he was born, not as an unjust, artificial society had made him. Although concerned with the rites of cooking and not the rights of man, Pinkard's lucidly argued and carefully researched account is, in this respect, more than just a story about food. It is the story of a society that broke with the past - and became modern.

Want a good French meal? Don't go to France
By Michael Johnson
Thursday, November 27, 2008
BORDEAUX: Only a few years ago you could be pretty sure to get an above-average meal at most any restaurant in France, priced right and served by people proud of their profession.
Ah, those were the days. John Mariani, food and wine critic of Esquire magazine, told me recently that he would never forget the aroma billowing from a plate of blanquette de veau he had ordered in a modest Paris establishment some years ago. "I can still smell it," he said. "Wonderful."
And I recall the taste of my first boudin noir and baked apples in a hole-in-the-wall restaurant in Paris in the 1970s. Combined with a red Burgundy, it set off my taste buds very nicely.
These happy encounters are becoming rare, however, as France appears to be losing its leadership in simple, honest cooking. Mariani says he would love to be able to "parachute in" and find fabulous food at random, as he once did, but it's "just not possible today".
My experience exactly. Mid-range restaurants are suffering from a bad case of what the French call "J'm'en foutisme" (I don't care-ism), which leads to indifference and finally déresponsibilsation (not my fault-ism).
Everyone seems to have a favorite restaurant disaster story, but a couple of recent experiences have really upped my dander. At the appropriately named Café de l'Esperance (Café of Hope) near Bordeaux, hope is just what you need when all the bustle is happening at the other tables. "Oops, I forgot to process your order," the waiter finally said. And at La Winery in the Médoc I counted seven dead flies on the window sill while waiting an hour between courses. In both cases, the cooking was a disappointment.
Traveling in New England recently, I got the feeling that it's easier to find good French food abroad. In Boston, after a fine meal of traditional French cooking, I asked to speak with the chef. Jacky Robert, owner of three moderately priced Petit Robert restaurants in the area, came out of the kitchen clad in his apron. I asked him about American trends. "It's very competitive here so we work hard to keep our standards up," he said. "Americans have become a lot more demanding."
Young French chefs gravitate to the United States, he said, where money flows more freely. "Americans are not afraid of being rich." The biggest problems for the new chefs are getting a U.S. visa and avoiding having their personal sets of knives confiscated by with Homeland Security officers.
French chefs also are heading for London, Tokyo and other major cities to make their careers. And it's not just the three star restaurants that are hiring them. Many are recruited for mid-range restaurants. Figures are hard to come by but in Paris an employment agency called International Services is actively recruiting for French restaurants abroad. "We recruit hundreds of chefs, pastry chefs and kitchen helpers every year," says its president, Marc Chetrit. "Some go to the U.S. but lots of them are taken up by the Emirates, Australia, East Europe and luxury cruise ships."
I recently sought out Pascal Rémy, a former Michelin inspector, and he was unequivocal. "We French used to be the strongest in good everyday cuisine in our own market," he said. "Now we're the weakest."
Rémy created a stir a few years ago with his book "L'inspecteur se met à table" (The inspector sits down to eat), in which he tells of bad habits creeping into the cuisine culture. Chefs in France are under pressure to find cheaper ingredients and achieve better financial results. He quotes one as telling a seafood supplier to provide lower-grade fish because "the public doesn't know the difference."
Rémy believes he has found the source of the problem. First, the culinary professions have lost their luster. Kitchen work and waiting tables has been "totally devalued" as a career. The French 35-hour work week has helped undermine pride in the profession.
Second, he says, even cooking schools have let standards slide. "The training of our young people is lamentable," he said.
I think another problem is that French chef have forsaken tradition for "creativity." "I have to control a lot of my young chefs who are too eager to be creative," Robert says.
At Petit Robert in Boston, my French companion went traditional and ordered the Hachi Parmentier, a country staple of mashed potatoes and ground beef. "This is excellent," she said, digging in. "Not like that horror we get in France."
Michael Johnson is a journalist based in Bordeaux.

Air New Zealand plane crashes off France with 7 aboard
By Caroline Brothers
Thursday, November 27, 2008
PARIS: At least one person was killed when an Airbus A320 jet operated by XL Airways Germany but owned by Air New Zealand crashed into the Mediterranean Sea on Thursday after setting off with seven crew members on a maintenance flight from the southern French town of Perpignan, officials said.
"A total of seven people are involved. One person has been fished out of the sea and six others have disappeared," said Christine Petit, a spokeswoman for the Perpignan prefecture. A spokesman for the Pyrénées-Orientales prefecture said one body had been recovered.
Florence Legrin, an official at the French air transport regulator GDAC, said the plane was heading for Frankfurt when the accident took place. Apart from the crew, no one else was on board, she said. Airbus said it delivered the jet in 2005. Air New Zealand was not available to comment.

China blames Sarkozy for EU summit withdrawal
Thursday, November 27, 2008
BEIJING: China on Thursday blamed French President Nicolas Sarkozy's planned meeting with the Dalai Lama for pulling out of a China-EU summit which may have forged a joint response to the global economic crisis.
France confirmed Sarkozy would meet the Tibetan spiritual leader, whom China brands a separatist, at a December 6 ceremony in Poland to mark the 25th anniversary of the award of the Nobel Prize to former Solidarity leader Lech Walesa.
China this month warned France, which holds the rotating EU presidency, that the European Union risked losing "hard-won" gains in ties with Beijing if Sarkozy met the Dalai Lama.
The decision could make it harder for the EU and China to cooperate on a host of pressing global issues and spill over into an often tricky bilateral trade relationship.
"It's a shame because China is a fundamental partner for Europe and Europe is a fundamental partner for China," EU Economic Affairs Commissioner Joaquin Almunia, who would have taken part in the summit, told French television channel Canal+.
Asked whether Sarkozy should have declined to meet the Dalai Lama, Almunia said: "It's important to have a clean and clear policy on human rights. We can't accept prohibitions or restrictions from our partners on which individuals, which leaders, which parties, which interlocutors we host in Europe."
At a meeting between Asian and EU leaders in Beijing last month the EU side backed a greater say for China in global financial bodies but urged China to use its clout to help to resolve the global economic crisis.
"To maintain good relations with France and the European Union, China has told France time and again to properly handle the Tibet issue so as to create necessary conditions for the China-EU summit," Chinese Foreign Ministry spokesman Qin Gang said in a statement posted on the ministry's website (
"Regrettably, the French side has not actively responded to (these) efforts, so that the summit cannot be held in a good atmosphere, nor achieve its expected goals. Under such circumstances, China has no choice but to postpone the summit."
Trade disputes between Brussels and Beijing have been on the rise as the EU trade deficit with China has ballooned, hitting 160 billion euros ($207.4 billion) last year.
This month Brussels imposed anti-dumping duties and raised tariffs on certain Chinese goods. China routinely accuses Europe of resorting to protectionism against its low-cost advantage.
The Dalai Lama fled Tibet in 1959 after a failed uprising against Chinese rule in the mountainous region, occupied by Chinese troops from 1950. China calls him a "splittist," but the Dalai Lama says he is merely seeking autonomy.
A senior European diplomat in Beijing said Chinese Premier Wen Jiabao, at a dinner with former Commission President Romano Prodi on Tuesday, passed on the message that China wanted to remain on good terms with Europe despite the cancellation.
He said China took umbrage not at the meeting itself but the fact that Sarkozy had announced it publicly. They had been "explicit and open" on that point, he said.
By penalising the EU, not just France, China was administering collective punishment, the diplomat added, saying France in no way was signalling support for Tibetan independence.
The diplomat said the EU had been told that the new "permanent dialogue" with the bloc would continue.
(Reporting by Ian Ransom and Alan Wheatley, additional reporting by Estelle Shirbon in Paris; editing by Michael Roddy)

Standoff continues in Mumbai
By Somini Sengupta and Keith Bradsher
Thursday, November 27, 2008
MUMBAI: Indian commandos scoured through the flame and wreckage of two luxury hotels Thursday, searching for survivors and battling bands of gunmen who unleashed two days of chaos here in India's commercial capital.
A third group of gunmen, the remnants of well-organized squads of attackers, remained holed up in a Jewish community center.
By midnight, amid early indications that the sieges were ending, fears were growing that the death toll would rise past the more than 100 known. Smoke was still rising from one of the hotels; people who escaped reported stepping around corpses. Dozens had been trapped or held hostage by the heavily armed assailants; it was not known Thursday whether they had survived.
There remained much mystery around the group behind the attack, which was unusual in its scale and its targets: Westerners and tourist locales.
Two men who claimed to be among the gunmen called local television stations Thursday, demanding to speak with the government and complaining about the treatment of Muslims in India and about Kashmir, the disputed territory over which India and Pakistan have fought two wars.
"Are you aware how many people have been killed in Kashmir?" a caller who identified himself as Imran asked. "Are you aware how your army has killed Muslims?"
The men claimed to be Indian, but the attacks appeared to ratchet up tensions in an already volatile region. The Indian prime minister, Manmohan Singh, in a televised speech, blamed forces "based outside this country" for the attacks, a thinly veiled accusation that Pakistan was involved.
The attacks thus risked threatening recent American efforts to reduce the overall enmity between Pakistan and India, so that Pakistan has more military resources against the rising threat of the Taliban in the nation's lawless tribal areas.
Singh issued a warning that seemed clearly aimed at Pakistan, which India has often blamed for allowing terrorist groups to plot anti-Indian attacks.
"The group which carried out these attacks, based outside the country, had come with single-minded determination to create havoc in the commercial capital of the country," he said. "We will take up strongly with our neighbors that the use of their territory for launching attacks on us will not be tolerated, and that there would be a cost if suitable measures are not taken by them."
Security officials and experts agreed that the assaults represented a marked departure in scope and ambition from other recent terrorist attacks in India.
The Mumbai assault was "uniquely disturbing," said Sajjan Gohel, a security expert in London, because it seemed directed at foreigners, involved hostage-taking and was aimed at multiple "soft, symbolic targets." The attacks "aimed to create maximum terror and human carnage and damage the economy," he said in a telephone interview.
An e-mail message to Indian media outlets taking responsibility for the attacks in Mumbai on Wednesday night said the militants were from a group called Deccan Mujahedeen. Almost universally, experts and intelligence officials said the name was unknown.
Deccan is a neighborhood of the Indian city of Hyderabad. The word also describes the middle and south of India, which is dominated by the Deccan Plateau. Mujahedeen is the commonly used Arabic word for holy fighters. But the combination of the two, said Gohel in London, is a "front name. This group is non-existent."
Bruce Hoffman, a professor at the School of Foreign Service at Georgetown University and the author of the book "Inside Terrorism," said: "It's even unclear whether it's a real group or not."
An Indian security official, who spoke in return for anonymity because he was not authorized to be identified, said the name suggested ties to a group called Indian Mujahedeen, which has been implicated in a string of bombing attacks in India killing about 200 people this year alone.
On Sept. 15, an e-mail published in Indian newspapers and said to have been sent by representatives of Indian Muhajedeen threatened potential "deadly attacks" in Mumbai.
The message warned counterterrorism officials in the city that "you are already on our hit-list and this time very, very seriously."
Several high-ranking law enforcement officials, including the chief of the anti-terrorism squad and a commissioner of police, were, indeed, reported killed in the attacks in Mumbai.
Christine Fair of the RAND Corporation, was careful to say that the identities of the terrorists could not yet be known. But she insisted the style of the attacks and the targets in Mumbai suggested the militants were probably Indian Muslims and not linked to Al Qaeda or Lashkar-e-Taiba, another violent South Asian terrorist group.
"There's absolutely nothing Al Qaeda-like about it," she said of the attack. "Did you see any suicide bombers? And there are no fingerprints of Lashkar. They don't do hostage-taking and they don't do grenades." By contrast, Gohel in London said "the fingerprints point to an Islamic Al Qaeda-affiliated terrorist group."
Hoffman said the attacks, which he called "tactical, sophisticated and coordinated," perhaps pointed to a broader organization behind the perpetrators.
An Indian official suggested the foot soldiers in the attack might have emerged from an outlawed militant group of Islamic students.
"There are a lot of very, very angry Muslims in India," Fair said. "The economic disparities are startling, and India has been very slow to publicly embrace its rising Muslim problem."
While many of the targets seemed to indicate a focus on tourists and Westerners, most of the victims were native Indians, who had packed into the hotels' banquet halls and restaurants, according to witnesses and officials; even street vendors in the main train station were sprayed with bullets.
The Maharashtra state chief minister, Vilasrao Deshmukh, told CNN-IBN, a private television station, that six foreigners were killed and seven wounded. The dead included a Japanese, a German and a British national, according to their respective governments.
A spokeswoman for the German Foreign Ministry in Berlin said it was impossible to know how many Germans had been wounded because some were still believed to be trapped in the hotels. A British High Commission spokesman in Delhi said seven Britons were among the wounded. The U.S. Embassy said it was unaware of any American casualties, though at Bombay Hospital, one of several hospitals where the wounded were being taken, there were at least three wounded Americans.
Several high-ranking law enforcement officials, including the chief of the anti-terrorism squad and a commissioner of police, were reported killed.
Throughout Thursday, Indian soldiers and paramilitary forces fanned out across the normally bustling but now deserted southern tip of the city, where two hotels and the Jewish center are located. Stores were shuttered. Cars sailed along the empty streets. Most offices were closed, along with the Bombay Stock Exchange.
For most of the day, smoke billowed out of one of the besieged hotels, the Taj Mahal Palace & Tower, one of the city's most famous landmarks.
Throughout the afternoon, loud explosions could be heard from inside the Trident Hotel, also known as the Oberoi, also in South Mumbai near the Arabian Sea, and after sundown, a fire broke out on its fourth floor.
It was impossible to know precisely what was going on inside the two hotels, except that there were intense firefights between security forces and an apparently audacious band of gunmen.
Occasionally, a curtain would part, a window would open, and the figure of a guest would emerge.
Hospitals were mobbed with men and women searching for their kin. Doctors said the wounded bore bullet wounds. Morgues saw a steady stream of corpses. On the shaded steps of the Regal Cinema nearby sat a handful of dazed spectators. The cinema was closed; "A Quantum of Solace" would not be playing Thursday.
The Leopold was one of the first sites targeted by a group of gunmen who appear to have come ashore at the Sassoon Docks, not far from there. They moved onto the Chhatrapati Shivaji train station, the old Victoria Terminus, and then opened fire on Cama Hospital, where some of the wounded had been taken. At one point, they hijacked a police vehicle and opened fire at journalists and spectators gathered near a famous cinema, called Metro.
Security camera footage of the gunmen, along with the testimonies of witnesses, show that they are young men, dressed in jeans and trendy T-shirts, bearing rucksacks and guns. It is not clear who they are, what they want, nor how many still survive.
Early Thursday, several guests and workers managed to leave the Taj, but gunmen opened fire on their pre-dawn exodus, and some remained behind. In the late afternoon, about 10 hostages left the Oberoi, waving and looking relieved, but answering no questions.
The Chabad-Lubavitch center, a Jewish community hall located in a densely crowded residential area roughly between the two hotels, was also singled out for attack. The whereabouts of Rabbi Gavriel Holtzberg, who runs the center, remained unknown, according to the organization. Puran Doshi, a local developer and ex-city councilman, said the rabbi and his wife and child had been evacuated earlier in the day.
Air France issued a statement saying that 15 of its crew members, due to work on a Paris-bound flight, had been unable to get out of an unspecified hotel in Mumbai. The company spokeswoman said she could not provide any more details, except to say that the flight was canceled. Many international flight crews stay at the Trident-Oberoi.
The state's highest ranking police official, A.N. Roy, told NDTV, a private news channel, that paramilitary National Security Guards, aided by police and army and navy troops, had scoured the Taj hotel room by room for remaining civilians and moving cautiously through the Oberoi Hotel because of the likelihood of hostages. He said 14 police officers had been killed, along with 5 gunmen.
"We are not negotiating at all. We will get them and get them soon," he told the station. "We have some definite clues and leads. It was a very well-planned and very well-executed operation."
Reporting was contributed by Jeremy Kahn from Mumbai, Heather Timmons and Hari Kumar from New Delhi, Alan Cowell from Paris and Mark McDonald from Hong Kong.

Eyewitness to terror
By Rahul Singh
Thursday, November 27, 2008
I was attending a Parsi wedding on Wednesday night, not very far from the Taj Mahal Hotel, when, just before 10 p.m., cellphones began ringing and the sound of gunfire broke out.
First reports seemed to indicate that a gunman had gone berserk. It was only later that the full extent of the operation - which is continuing even as I write - became evident. Clearly, this was a carefully coordinated and intricately planned terrorist attack carried out by professionals and aimed at hurting tourism and undermining the Indian economy.
Mumbai is no stranger to terrorism. In 1993, in the wake of the destruction of the Babri Mosque by Hindu nationalists in north India and a wave of communal riots, a series of blasts took place all over the city, killing more than 200 people. Then, just two years ago, bombs planted in the city's commuter trains killed more than 150.
India has also witnessed terror attacks in its major cities - Jaipur, Ahmedabad, Bangalore, Hyderabad and New Delhi - which have killed another 500. Indeed, apart from Iraq and Afghanistan, more people have died from terrorist attacks in India in recent years than in any other country in the world.
Nevertheless, the terrorist attack that broke out on Wednesday night in Mumbai, India's financial capital, is unprecedented. Several terrorists (their exact number is still not known), heavily armed with AK-47 assault rifles, hand grenades and explosives landed in rubber boats near the Gateway of India, a British era building near the southern tip of the city and next to the Taj Mahal Hotel, one of India's most famous and iconic hotels.
Indian intelligence officials said they believe the terrorists came in a larger boat from nearby Karachi in Pakistan and then moved into the smaller rubber boats at the entrance of Mumbai harbor. A hitherto unknown group calling itself "Deccan Mujahedeen" is claiming responsibility for the attack, though accusing fingers are being pointed at the Pakistan-based Lashkar-e-Taiba, one of the largest and most active Islamist militant organizations in South Asia. The Lashkar-e-Taiba has denied responsibility, according to Reuters. Prime Minister Manmohan Singh said the attack came from "outside India."
From the Gateway, the terrorists fanned out. One group went to the Leopold Café, which is just five minutes walk from their landing place and a popular hangout for foreign tourists. There they opened indiscriminate fire, killing several people. They then moved to the Taj Mahal Hotel, entered the lobby, and began shooting. According to one of the guests who escaped, they asked people with British and American passports to come to one side, taking some hostage.
In all, 10 places were apparently targeted for attack, including another five-star hotel, the Trident, as well as the city's biggest railroad station and a hospital. Over 100 people have died, but with bodies being taken out of the Taj Hotel at the time of this writing and several hundred guests and staff members still holed up in the Trident - at least 30 of them being held hostage - the final toll is bound to be higher. Five of the terrorists have been killed, according to the Mumbai police commissioner, A.N. Roy. He added that at least 14 policemen were also killed, including the highly decorated head of the state's anti-terrorism squad, Heman Karkare. (One of my fellow guests at the Parsi wedding was Julio Ribeiro, one of India's most prominent police officers, who was largely responsible for tackling Punjab terrorism in the 1980s and who has himself survived two assassination attempts by Sikh terrorists.)
In all, at least 300 commandos and 800 Indian troops have been deployed to neutralize the terrorists.
Terrorists were also targeting the Nariman House - which contains the city headquarters of the ultra-orthodox Jewish outreach group Chabad Lubavitch - which happens to be less than 100 yards from where I reside in the Colaba area of south Mumbai. The terrorists were reported to be holding at least two Israeli hostages - three others had managed to escape. The attackers apparently lobbed a grenade at a Bharat Petroleum gasoline pump just below the building, setting it afire.
When I went there Thursday morning, a mangled motorcycle lay in the road, along with two shattered cars. Across the road, broken glass was scattered all over the pavement. A baby was carried out of the building as commandos were inching their way forward.
The terrorists must have known that Nariman House, where several of the city's Jewish families live, is a popular spot for visiting Israelis and foreign Jewish tourists.
Last night, I also heard a loud explosion coming from the direction of the Taj Mahal Hotel, which is close to my residence. I later learned that the explosion had taken place near the dome of the hotel, setting part of the top floor on fire. That fire is still burning.
This is the first time that south Mumbai, a favorite of foreign tourists and the city's financial center, has been targeted in such a big way. Clearly, the terrorists wanted to hit India where it hurts, scaring off investors and tourists.
Meanwhile, hard questions are being asked of the Indian security agencies and the military: How were the terrorists able to enter Mumbai harbor, an area crawling with Indian warships? Why did the country's intelligence services fail to detect the threat of an operation involving so many terrorists that must have taken several months to plan?
Whatever the answers, there is no question that Mumbai, indeed the entire Indian nation, faces its sternest test.
Rahul Singh is a former editor of "Reader's Digest" and "Indian Express."

For hotel guests, celebrations became a night of horror
By Somini Sengupta
Thursday, November 27, 2008
MUMBAI: For Amit and Varsha Thadani, Wednesday night in the Crystal Ballroom of the Taj Mahal Palace and Tower Hotel was supposed to be a night they would treasure forever: It was the lavish start of their life together, with a wedding reception for more than 200 family members and friends.
It turned out to be a night they may well dread forever.
It was about 9:45 pm, they had just finished dressing for their party, in a second floor room in the heritage wing of the hotel, when they heard the first crackle of gunfire, followed by commotion outside their room and instructions from the hotel front desk to stay put.
They did stay put, for more than seven hours, much of it huddling on the floor of their bathroom, trying to keep themselves calm. Their phones rang constantly, with updates and questions. At one point, Varsha confessed, she stopped answering. She did not want to talk to anyone.
There was more gunfire, along with two loud explosions, one of which flung open their door and windows. Next door, they heard gunmen shoot a female guest, and then her screams. "We could sense she was being dragged around," Varsha recalled.
In the Crystal Ballroom, friends had begun trickling in. They, too, were startled by gunfire. A window shattered, sending everyone scampering under tables. Eventually, they were led by hotel staff into a private, more inaccessible set of rooms. Ballroom by ballroom, restaurant by restaurant, guests were ushered into what was thought to be a safer cavity of the hotel, a private club called The Chambers.
At the Golden Dragon Restaurant on the ground floor, a woman peering through the frosted glass could see the gunmen parade through the lobby of the hotel and open fire, any which way. She had come to celebrate her husband's birthday, along with both sets of parents.
They were also led through kitchens and staff stairwells into safer quarters, where they huddled until nearly 4 a.m. She and her parents slipped out through the back staff exit, but with so many cellphones trilling, they drew the attention of the gunmen inside the hotel. They began firing at those who were trying to flee.
Her husband and his parents were left behind. Eight hours later, in the shadow of the hotel, she stood waiting for them to come out. Her husband's cellphone wasn't answering. She was still dressed in her black dinner blouse.
Gary Samore, director for studies at the Council on Foreign Relations in New York, was staying at the Taj with his wife and daughter, squeezing in a family holiday in Mumbai alongside a lecture that he delivered Wednesday evening on the nuclear challenges facing the next president of the United States.
The Samores stayed in their room and tried to remain calm. The television was not working. He had no local phone. Friends kept him apprised of developments by sending e-mails to his BlackBerry. At 3:30 am, Samore recalled, came very heavy gunfire. The American consulate called to say the hotel was on fire.
The family collected their passports, made a set of wet towels to help them get through a smoke corridor and found their way to a service stairwell and then a second floor terrace, from where they could summon Indian soldiers.
"My BlackBerry," he said, "may have saved our lives."
In the kitchen of the Chambers, Raghu Deora, the chef, hid under a table. Four gunmen came before dawn and found him. "What do you do?" they asked in Hindi, and then they ordered him to stand up and turn around. They shot him from behind, his wife, Nandita, said this afternoon. A bullet entered through one side and came out of the other. There were four gunmen, he told her, all in their mid-20s, well dressed.
Close to dawn Thursday, the newlyweds, the Thadanis, crept out of the window of their room, and with the help of firefighters, climbed down a ladder and touched ground. This afternoon, they counted their blessings - and ate a home cooked meal.

In hotel attack, terrorists target India's growing global class
By Anand Giridharadas
Thursday, November 27, 2008
On an evening not long ago at the Taj Mahal Palace and Tower Hotel in Mumbai, a Bollywood star named Preity Zinta rushed up the stairs and into Wasabi, a Japanese restaurant. She joined long-waiting friends at their table and apologized for being late.
But before long, she had risen again. She had seen at a nearby table Adi and Parmeshwar Godrej, billionaires, socialites and fellow jet-setters. A good amount of air-kissing ensued. Then she was introduced to Imran Khan, the Pakistani cricketer-turned-politician, who just happened to be in town.
Before long, a bottle of imported red wine arrived and was poured into a silver-tipped glass decanter, as platters of miso-encrusted sea bass and rock-shrimp tempura floated through the restaurant on upraised hands.
When violent attackers besieged the Taj, as it is universally known, and embarked on a murderous rampage Wednesday night, they targeted one of the city's best known landmarks.
But they also went after something larger: a hulking, physical embodiment of India's deepening involvement with the world.
The Taj is where privileged Indians come when they want a world-class meal. It is where pinstriped foreign executives come when deciding whether to invest in India or outsource jobs here. It is where Mick Jagger, Liz Hurley, Angelina Jolie and Brad Pitt stay when they are in town.
And it is owned by a conglomerate, the Tata Group, that appears to buy another foreign company every few months in its quest to be a multinational: hotels in Sydney, New York and London; a truck producer in South Korea; the British steel maker Corus; the storied automotive brands Jaguar and Land Rover.
Overnight Wednesday, the Indian writer Suketu Mehta, who wrote a defining book on Mumbai called "Maximum City: Bombay Lost and Found," said that an attack on the Taj was "as if terrorists had taken over the Four Seasons and the Waldorf-Astoria and then were running around shooting people in Times Square."
The Four Seasons and the Waldorf-Astoria, however, could never claim the pivotal role in New York life that the Taj could claim in Mumbai.
It is not another Hilton or Sheraton in another Asian city. Its cash cow may be foreign guests, but it is equally a fixture of local Mumbai life, the aorta through which anything glamorous, sentimental, confidential or profitable passes in the city.
The hotel stands across from the Gateway of India, in the historic Colaba quarter. Those who would not dream of paying $3 - a good daily wage here - for one of its fresh-lime sodas sit outside the hotel, leaning against the stone wall above the Arabian Sea. They take in the scene, admire the finely dressed people breezing in and out.
It may not be their time for the Taj right now; but should a fortune ever bless them, into the Taj they will saunter.
The Taj, like many productive endeavors, was born out of spite.
Legend has it that Jamsetji Tata, a 19th-century Indian industrialist of Persian descent, was turned away from a hotel in British-era Mumbai. His crime was being Indian. He decided, in an inventive vision of revenge, to build the best hotel in the country, outfitted with German elevators, French bathtubs and other refinements from around the world.
Those refinements come with a price: at least $300 a night for one of the hotel's simplest rooms, or much more for better accommodation or in times of peak demand. And yet to pay that price and stay in that room is to enter a world that in India is hard to match.
The honking, scorching chaos of Mumbai fades away. A certain quiet comes. You can breathe again. The rooms come with all the latest gadgets. But there are also those indelible aspects of colonial life that refuse to wash away: The turbaned bodyguards, the grown men in the restrooms who refuse to let you twist the tap or squeeze the soap yourself, insisting on doing it for you.
For wealthy visitors, as well as many of the city's elite, the hotel had become so etched into their routine that it was like a second home, taken almost for granted - until its placid calm was broken when terrorism entered its halls.
Indian forces tighten grip on Mumbai
By Somini Sengupta and Keith Bradsher
Thursday, November 27, 2008
MUMBAI: The crisis in Mumbai appeared to ease early Friday as Indian commandos scoured through two charred luxury hotels, searching for survivors of the bands of gunmen who unleashed two days of chaos here. A third group of gunmen, the remnants of well-organized squads of attackers, apparently remained holed up in a Jewish community center.
Amid early indications that the sieges were ending, fears were growing that the death toll would rise past the 119 known. Late Thursday, smoke was still rising from one of the hotels; people who escaped reported stepping around bodies. Dozens of people, perhaps many more, remained trapped in the hotels, though it remained uncertain if any were being held hostage by the heavily armed assailants. The injured numbered some 300.
There remained much mystery around the group behind the attack, unusual in its scale, its almost theatrical boldness and its targeting of locales frequented by wealthy Indians and foreigners.
Two men who claimed to be among the gunmen called local television stations, demanding to speak with the government and complaining about the treatment of Muslims in India and about Kashmir, the disputed territory over which India and Pakistan have fought two wars.
"Are you aware how many people have been killed in Kashmir?" a caller who identified himself as Imran asked. "Are you aware how your army has killed Muslims?"
The men said they were Indian, but the attacks appeared to ratchet up tensions in an already volatile region: The Indian prime minister, Manmohan Singh, in a televised speech, blamed forces "based outside this country" for the attacks in a thinly veiled accusation that Pakistan was involved.
The attacks thus risked threatening recent American efforts to reduce the overall enmity between Pakistan and India, meant to enable Pakistan to focus more military resources against the rising threat of the Taliban in its lawless tribal areas.
Singh issued a warning that seemed clearly aimed at Pakistan, which India has often accused of allowing terrorist groups to plot anti-Indian attacks. "The group which carried out these attacks, based outside the country, had come with single-minded determination to create havoc in the commercial capital of the country," he said. "We will take up strongly with our neighbors that the use of their territory for launching attacks on us will not be tolerated, and that there would be a cost if suitable measures are not taken by them."
While many of the targets seemed to indicate a focus on tourists and Westerners, most of the victims were native Indians, who had packed into the banquet halls and restaurants in the hotels, according to witnesses and officials; even street vendors in Mumbai's main train station were sprayed with bullets.
The chief minister of Maharashtra State, Vilasrao Deshmukh, told CNN-IBN, a private television station, that six foreigners had been killed and seven injured
Hisashi Tsuda, 38, a businessman and father of two from Tokyo, was killed in the attacks, his company announced on Thursday.
A German, Ralph Burkei, 51, suffered fatal injuries when he jumped out of the front of the Taj. According to several reports citing the Munich newspaper, Abendzeitung, Burkei, a co-owner of an independent television production company in Munich, called a friend from his cellphone and said: "I have broken every bone in my body. If no one helps me now, I'm finished." He died on the way to the hospital.
A spokeswoman for the German Foreign Office in Berlin said it was impossible to know how many Germans had been injured because some were still believed to be trapped in the hotels. The British authorities said one Briton had been killed and seven injured.
The American Embassy said it was unaware of any American casualties, though at least three wounded Americans were at Bombay Hospital, one of several hospitals where the injured were being taken.
Several high-ranking law enforcement officials were reported killed, including the chief of the antiterrorism squad and a commissioner of police.
Throughout Thursday, Indian soldiers and paramilitary forces fanned out across the normally bustling, now deserted southern tip of the city, where the attacks were focused. Stores were shuttered. Cars sailed along the empty streets. Most offices were closed, along with the Bombay Stock Exchange.
Near the Café Leopold, a popular restaurant that was among the first places struck Wednesday night, a bloodied shoe lay on the ground beneath a car with smashed windows.
For most of the day, smoke billowed out of one of the besieged hotels, the Taj Mahal Palace & Tower Hotel, one of the city's most famous landmarks. Loud explosions could be heard throughout the afternoon from inside the Trident Hotel, also known as the Oberoi, also in South Mumbai near the Arabian Sea. After sundown, a fire broke out on its fourth floor.
The state's highest-ranking police official, A. N. Roy, told NDTV, a private news channel, that National Security Guards, aided by the police and army and navy troops, had scoured the Taj hotel, room by room, for remaining civilians and were moving cautiously through the Oberoi because of the likelihood of hostages. He said 14 police officers had been killed, along with five gunmen.
"We are not negotiating at all" Roy told the station. "We will get them and get them soon. We have some definite clues and leads. It was a very well-planned and very well-executed operation."
It was impossible to know precisely what was going on inside the two hotels, except that there were intense firefights between security forces and an apparently audacious band of gunmen.
Occasionally, a curtain would part, a window would open and the figure of a guest would emerge.
Hospitals were mobbed with men and women searching for their kin. Doctors said the wounded had been shot. Morgues received a steady stream of bodies. On the shaded steps of the Regal Cinema nearby sat a handful of dazed spectators. The cinema was closed; "A Quantum of Solace" would not be playing.
The gunmen appear to have come ashore at the Sassoon Docks, not far from the Leopold. They moved onto the Chhatrapati Shivaji train station, the old Victoria Terminus, and then opened fire on Cama Hospital — where some of their earlier victims suffered a second round of gunfire. At one point, they hijacked a police vehicle and opened fire on journalists and spectators gathered near a famous cinema, called the Metro.
Witnesses and security camera video of the gunmen built a portrait of them: young men, dressed in jeans and trendy T-shirts, bearing rucksacks and guns. It remained unclear who they are, what they want, or how many survive.
Earlier on Thursday, Indian news channels received a claim of responsibility from a group called Deccan Mujahedeen; the name may refer to the Deccan Plateau, which dominates the middle and south of India. But security experts said the group might not exist.
The casualties ran the gamut of Mumbai society. A street vendor was shot and killed near the train station, where he sold a famous snack known as bhel puri. A manager at the Oberoi survived a bullet wound to his leg, but was taken to the Cama Hospital, where a shootout broke out; he died after being transferred to a second hospital. A chef at the Taj who had been hiding under a kitchen table for most of the night was discovered by four gunmen, made to stand up and shot from behind.
Escape attempts took place sporadically at the hotels. Before dawn on Thursday, several guests and workers managed to leave the Taj, but gunmen opened fire on them, some remained behind.
In the late afternoon, about 10 hostages left the Oberoi, waving and looking relieved, but answering no questions.
The director general of the paramilitary National Security Guard, J. K. Dutt, told television that troops were trying to coax frightened people out of the Oberoi. "They are in their rooms. They are not prepared to open their doors," he told the station. "As far as terrorists are concerned, we know exactly where they are."
Reuters quoted the state's deputy chief minister, R. R. Patil, as saying 100 to 200 people could be inside the Oberoi. "We cannot give you the exact figure, as many people have locked themselves inside their rooms," he said.
The Chabad-Lubavitch center, a Jewish community hall in a crowded residential area roughly between the two hotels, was also singled out for attack. The whereabouts of Rabbi Gavriel Holtzberg, who runs the center, remained unknown, according to the organization. Puran Doshi, a local developer and former city councilman, said the rabbi and his wife and child had been evacuated earlier in the day.
By then, the gunmen inside had killed several locals, apparently shooting anyone they could find. Around 10 p.m., the lights were turned out in and around the building, known as Nariman House. It was not clear whether, or when, security forces might advance into the building.
Shortly after 11 p.m., television showed as many as a half-dozen people, including several elderly ones, being escorted out of Nariman House by security forces. The authorities said they believed gunmen might still be holed up there.
Air France issued a statement saying that 15 of its flight crew members had been unable to get out of a hotel in Mumbai. The company spokeswoman did not name the hotel or provide any more details, except to say that the Paris-bound flight they were due to work on was canceled. Many international flight crews stay at the Trident-Oberoi.
The suspicions raised by the attack seemed a blow to relations between India and Pakistan, which had been recovering from a low earlier this year after India blamed the Pakistani intelligence agency for abetting the bombing of the Indian Embassy in Afghanistan. India has frequently accused Pakistan-based militant groups of fueling terrorist attacks on Indian soil, though lately it has also acknowledged the presence of home-grown Muslim and Hindu militant organizations.

Blogs feed information frenzy on Mumbai attacks
Thursday, November 27, 2008
SINGAPORE: Bloggers across Mumbai fed live updates of the action after Islamist gunmen attacked the heart of the Indian financial capital, highlighting the emergence of citizen journalists in news coverage.
Some, including a blogger named Vinu, were furiously uploading photos of damage from the attacks that killed at least 101 people and injured at least 314. Scores of foreigners, including Westerners, were trapped in luxury hotels.
Images of the attacks also surfaced on the photo-sharing Web site Flickr. Some bloggers provided running descriptions and commentaries from near the action, while others vented emotions.
"I've been tweeting almost all night, too, from Mumbai. Upset and angry and bereft," a businesswoman, Dina Mehta, wrote on her blog.
Twitter, the popular "micro-blogging" site where users communicate with short "tweets" of 140 characters or less, saw intense activity on Thursday.
Several hours after the attack, 80 messages were posted within five seconds. Posts included offers of help for the news media and updates on the situation. Several local news channels were reported to have carried a live feed of Twitter updates.
"One terrorist has jumped from Nariman house building to Chabad house - group of police commandos have arrived on scene," one person wrote.
But some said Twitter was giving too many details that possibly help the gunmen who may have been monitoring blog sites.
"It's a terrorist strike. Not entertainment. So tweeters, please be responsible with your tweets," said a blogger identified as primaveron@mumbai.
Trying to aid weak Indian public services, Mumbai Metblog posted the telephone numbers of hospitals on its Web site, encouraging readers to donate blood. The blog Mumbai Help offered advice to those with loved ones in the city: "Suggest you avoid calling. Lines are bound to be screwed."
Cherian George, a new media analyst, said the events have spotlighted the emergence of citizen journalism.
"If the event is highly dispersed and affects very large numbers of people, it would be physically impossible for a very large news organization to keep track of every development," George said.


Amid the horror: Who are the attackers?
By Alan Cowell and Mark McDonald
Thursday, November 27, 2008
A day after the terror attacks in Mumbai that killed more than 100 people, one question remained as impenetrable as the smoke that still billowed from one of the city's landmark hotels: Who carried out the attack?
Security officials and experts agreed that the assaults represented a marked departure in scope and ambition from other recent terrorist attacks in India, which targeted local people rather than foreigners and hit single rather than multiple targets.
The Mumbai assault, by contrast, was "uniquely disturbing," said Sajjan Gohel, a security expert in London, because it seemed directed at foreigners, involved hostage-taking and was aimed at multiple "soft, symbolic targets." The attacks "aimed to create maximum terror and human carnage and damage the economy," he said in a telephone interview.
But the central riddle was the extent to which local assailants had outside support. The Indian prime minister, Manmohan Singh, said the attacks probably had "external linkages," reflecting calculations among Indian officials that the level of planning, preparation and coordination could not have been achieved without help from experienced terrorists, particularly groups affiliated to Al Qaeda.
The planning of the attack has profound political implications for both India and its neighbor, Pakistan. But the identities of the Mumbai attackers remained a mystery.
An e-mail message to Indian media outlets taking responsibility for the attacks in Mumbai on Wednesday night said the militants were from a group called Deccan Mujahedeen. Almost universally, experts and intelligence officials said the name was unknown.
Deccan is a neighborhood of the Indian city of Hyderabad. The word also describes the middle and south of India, which is dominated by the Deccan Plateau. Mujahedeen is the commonly used Arabic word for holy fighters. But the combination of the two, said Gohel in London, is a "front name. This group is non-existent."
"It's even unclear whether it's a real group or not," said Bruce Hoffman, a professor at the School of Foreign Service at Georgetown University and the author of the book "Inside Terrorism."
An Indian security official, who spoke in return for anonymity because he was not authorized to be identified, said the name suggested ties to a group called Indian Mujahedeen, which has been implicated in a string of bombing attacks in India killing about 200 people this year alone.
On Sept. 15, an e-mail published in Indian newspapers and said to have been sent by representatives of Indian Muhajedeen threatened potential "deadly attacks" in Mumbai.
The message warned counter-terrorism officials in the city that "you are already on our hit-list and this time very, very seriously."
Several high-ranking law enforcement officials, including the chief of the anti-terrorism squad and a commissioner of police, were, indeed, reported killed in the attacks in Mumbai.
Christine Fair of the RAND Corporation, was careful to say that the identities of the terrorists could not yet be known. But she insisted the style of the attacks and the targets in Mumbai suggested the militants were probably Indian Muslims and not linked to Al Qaeda or Lashkar-e-Taiba, another violent South Asian terrorist group.
"There's absolutely nothing Al Qaeda-like about it," she said of the attack. "Did you see any suicide bombers? And there are no fingerprints of Lashkar. They don't do hostage-taking and they don't do grenades." By contrast, Gohel in London said "the fingerprints point to an Islamic Al Qaeda-affiliated terrorist group."
Hoffman said the attacks, which he called "tactical, sophisticated and coordinated," perhaps pointed to a broader organization behind the perpetrators.
The Indian security official said the attackers probably had ties to Lashkar-e-Taiba, a guerrilla group run by Pakistani intelligence in the conflict with India in the disputed territory of Kashmir. On Thursday, the group denied involved in the Mumbai attacks. India blamed Lashkar-e-Taiba for a suicide assault on its Parliament by gunmen in December, 2001 that led to a perilous military standoff with Pakistan.
Gohel said the Mumbai assaults seemed to blend the tactics of the attack on Parliament and an event two years earlier - the 1999 hijacking of an Air India flight to Afghanistan that affected foreigners and involved hostage-taking.
The Indian official also suggested the foot soldiers in the attack might have emerged from an outlawed militant group of Islamic students. Photographs from security cameras showed some youthful attackers carrying assault rifles and smiling as they conducted the operation.
"There are a lot of very, very angry Muslims in India," Fair said. "The economic disparities are startling and India has been very slow to publicly embrace its rising Muslim problem."
Reflecting a widespread assessment in Pakistan, Moonis Ahmar, a professor of international relations at Karachi University, called the attacks a well-thought out conspiracy designed to destabilize relations between India and Pakistan and sabotage efforts at reconciliation.
Hindus make up about 80 percent of India's 1.13 billion population and Muslims 13.4 percent.
Experts disputed the complexity of the operation. "These aren't just a bunch of radical guys coming together to cause mayhem," Hoffman said. "This takes a different skill set. It doesn't take much skill to make a bomb. This is not just pressing a button as a suicide bomber and dying. You don't learn this over the Internet."
But Fair did not agree that the attacks Wednesday necessarily required deep planning and training.
"This wasn't something that required a logistical mastermind," she said. "These were not hardened targets."
Alan Cowell reported from Paris and Mark McDonald from Hong Kong. Reporting was contributed by Souad Mekhennet in Frankfurt and Salman Masood in Islamabad.

**************** India must regain executives' confidence
Thursday, November 27, 2008
The terrorist attacks on India are a watershed moment in the subcontinent's fragile history, and perhaps for global markets. It doesn't look as if the Mumbai massacre, in which more than 100 people were killed and nearly 300 wounded, will cause the Indian stock market to collapse; but for the first time, Islamic extremists have singled out tourists and the financial district. Both are critical to India's growth and international standing.
Investors have long played down geopolitical risk. Stocks plummeted after the Sept. 11, 2001, terrorist attacks in the United States. But since then politics have hardly shaken the market march to global prosperity. Even the assassination of the Pakistani opposition leader Benazir Bhutto in December 2007 barely moved stocks in a traditionally volatile market.
But security is often a weak point in developing countries, and the fear of violence can derail otherwise sound economies.
The Mumbai attacks add more than political instability to the investment equation. They will make foreigners think four or five times before visiting India. Traders can work from anywhere, but international banks and businesses need people on the ground. Visiting bigwigs will now be less willing to stay at high-end business hotels like the Trident-Oberoi and Taj Mahal Palace & Tower, which were at the heart of the attacks.
Worse, the turmoil comes just as friendly overtures from Pakistan had raised hopes that one of the subcontinent's main fault lines might be healing. The Indian government is being careful not to blame its Muslim neighbor for the latest atrocity, but relations are still at the mercy of a potential flaring in Hindu-Muslim communal tensions.
International investors and business executives cannot expect the Indian government to create perfect religious harmony, but they will want to see that the authorities are fighting back with some success. India has its work cut out to demonstrate that it is still an attractive place to do business. - Una Galani


IHT conference postponed
Thursday, November 27, 2008
The International Herald Tribune has decided to postpone its annual luxury conference, which was to have taken place at the Imperial Hotel, New Delhi, from Dec. 2-4.
"Following the terrorist attacks on Mumbai, we felt it was inappropriate to hold the conference at such a difficult time for India," said Stephen Dunbar-Johnson, publisher of the IHT. "We plan to be back as soon as the situation is stabilized," he added, noting also the sensitivity to safety concerns for all participants.
Speakers who were to have participated on the subject of "Sustainable Luxury" included Kamal Nath, minister of commerce and industry in India, and François-Henri Pinault, chairman and CEO of PPR, as well as leading fashion designers and Indian CEOs.

A rare glimpse into a forgotten Hindu world
By Souren Melikian
Thursday, November 27, 2008
WASHINGTON: Immense and infinitely diverse, India remains the great repository of hidden cultural secrets in South Asia. "Garden and Cosmos: The Royal Paintings of Jodhpur," at the Arthur M. Sackler Gallery until Jan. 4 before reopening at the Seattle Art Museum on Jan. 29, reveals for the first time a virtually unknown school of monumental Hindu painting on paper that thrived from the 1720s to the mid-19th century.
Not even specialized scholars had set eyes on the 60 works from the Marwar area, now part of the state of Rajasthan, that are preserved in the Mehrangarh Museum in the Fort of Jodhpur.
The loan of important unpublished works of art by an Indian institution to a Western museum is a first in international museum relations. This sensational coup was pulled off by Debra Diamond, a curator at the Sackler Gallery, with the generous help of the maharajah of Jodhpur, Gaj Singh II, a direct descendant of the Rathore maharajahs under whom the school flourished, and of his spouse the Maharani Hemata Rajye. The curator of the Mehrangarh Museum, Karni Singh Jasol, gave his whole-hearted support to this unique undertaking, which will culminate in Delhi when the exhibition reopens on its last leg in November 2009.
Another equally important coup was achieved by Diamond and Catherine Glynn, an independent researcher, in displaying paintings from a Hindu court, not as a succession of quaint images but as the expression of a culture, both in its literature written in Hindi and in its metaphysical aspects.
The result is a fascinating lesson in the avatars of Hindu life and history that comes together with the art.
Some early Jodhpur paintings show that the blending of elements taken over from the distant heritage of late-15th-century Iranian manuscript painting and of stylistic conventions rooted in the Indian past was already under way by the mid-17th century. A remarkable example of this artistic syncretism is illustrated in the important exhibition book edited by Diamond, but unfortunately did not make it to the show. The painted page, preserved in the San Diego Museum of Art, formed part of a series of ragmalas, or musical pieces, accompanied by poetical texts. The simplified figures and the naïve handling of the architecture have a kind of folkloric pithiness that was carried over in more polished form into 18th-century Jodhpur painting.
Another source of influence on Jodhpur art was court painting from the Moghul empire of which Marwar was part. A page from a dispersed album loaned by the British Museum portrays a character in Moghul garb, identified by Diamond as Gaj Singh I, one of the first Rajput princes on whom the Moghul emperor Shah Jahan bestowed the title maharajah. The carefully observed features bear witness to the impact that European figural art had on Moghul painting, but the return to the timeless stylization of the East is otherwise already manifest.
The rejection of naturalism was consummated when a new school of Hindu painting took off at Nagaur under the reign of Maharajah Bakhat Singh (1725-1751).
In a series of paintings from the 1730s, which relate to royal pastimes, any attempts at rendering perspective in Moghul fashion have been given up. No effort is made to convey depth or volume in essentially linear compositions.
Stylization and symbolism prevail in a scene where Maharajah Bakhat Singh and Prince Vijay Singh watch singers and dancers perform in the palace courtyard. The maharajah seated on his heel is twice the size of the young prince and the female performers, thereby signifying his exalted status, and the clouds in the sky are done like scrolling bands borrowed from Chinese decorative art.
In a large outdoor scene relating to the celebration of Holi, the great Hindu festival, the Moghul legacy survives in the importance given to the architectural setting that defines the composition, but the handling of detail is radically different. Oversimplification was setting in. The stereotyped faces are handled in quasi-cartoon like fashion.
The trend affected even scenes dealing with religious subjects. The "Maharajah Bakhat Singh Worshiping Krishna," hands raised in prayer, has a comical look. Yet, here too memories of Moghul tradition linger. Krishna is seated on a gold throne studded with green and red stones, probably emeralds and rubies or spinels, in the manner of Shah Jahan's throne described in the chronicle of his reign, the Shah Jahan-Nama.
A Moghul-style triangular banner is stuck on the dome of the open pavilion in which the god is seated and the Hindi inscription hailing the maharajah paraphrases the titulature of Moghul emperors that itself echoed the Iranian protocol. Add the golden vessels in wall niches following a Moghul custom that imitated the Iranian palatial style and the persistent admiration for past Moghul court fashion is not in doubt in this painting for a Hindu ruler.
Faint traces of this taste subsisted in the religious paintings produced in Jodhpur 10 or 20 years later. In "Vishnu and Lakshmi in their Heavenly Palace," painted around 1755-1760, the architectural setting is a throwback to the palatial courtyard in which Maharajah Bakhat Singh and Prince Vijay Singh are entertained by dancers and singers. But rhythmical stylization changes everything. Gone is the empty white ground. Instead, a scrolling pattern swirls around a lobed rosette borrowed from the Iranian art of the book via its Moghul derivations.
While the dainty white marble construction with red and green stone inlay may immortalize the memory of an actual palace, it looks more like an elevation produced in an architect's studio than a real monument. A powerful rhythm is created through repetition wherever feasible - in the flower beds, in the trees beyond the arcade, even in the peacocks perched in trees and the white geese flying across the sky.
Soon, rhythmical repetition became the painter's overriding preoccupation, leading to some of the most striking creations of the Jodhpur school of royal painting. Its most extraordinary works were inspired by the Ramayana, the ancient epic originally composed in Sanskrit. Recast in late-16th-century verse by the poet Tulsidas, who wrote in vernacular Hindi, the epic which recounts the story of the heroic god Rama gained a renewed popularity. By the second half of the 18th century, Diamond notes, the Hindi version of Tulsidas spread by itinerant ascetics had traveled from Varanasi in eastern India, where it was composed, to Rajasthan in the western part of the country. It was recited at court and selected scenes from it were re-enacted.
A series of monumental folios painted around 1775 deal with it, projecting visions of an enchanted fairy-tale world.
In a landscape representing the forest of the monkey kingdom Kishkindha, pink peaks shoot up above low turquoise-green hills where groups of seated monkeys deliberate. In the lower area, bears stand talking to one another. Right at the top, white geese perched in trees fly off into the sky. Colors and motifs achieve a rhythm in tune with the rhythm of chanted verse.
While the paintings are rather coarse, betraying the decadence that hit Indian art in the 18th century, the poetic feeling remains remarkable.
Not much of that spirit survived a quarter of a century later when Man Singh (1803-1843) redefined the royal regime in Marwar and made the cult of the immortal ascetic Jallandharnath an essential part of religious observance. In a painting that shows Man Singh worshipping the ascetic on Diwali, the Indian festival of lights, the maharajah is seen bowing deeply as Jallandharnath places a ceremonial shawl on his shoulders.
Diamond provides an illuminating analysis of the image and its meaning. The flame pattern on Man Singh's red robe, the candelabra and the many oil lamps all refer to Diwali. Jallandharnath is depicted with detailed precision in his personal appearance and his attributes. The ash pale skin, the saffron garment, the dreadlocks all identify him as a Shaiva ascetic while the conical hat and the deer horn whistle more specifically designate him as a Nath or member of a yogic order. The iconography is as rigorous as the art is dry. The spirit had ceased to blow in the art of India whether Hindu, Islamic or Sikh.
Yet the exhibition is gripping right through the end. The display is superb in an elegantly restrained manner. The concise labels like the book relate the images to their concepts. There is as much to think about as to gaze at. This is the great Asian show of the year.

Former Prime Minister V.P. Singh of India dies
The Associated Press
Thursday, November 27, 2008
NEW DELHI: Former Prime Minister V.P. Singh of India, remembered for his policy of reserving a larger share of jobs for the country's disadvantaged castes, died Thursday after a long battle with cancer.
Singh, 77, who was suffering from blood cancer and chronic renal failure, died Thursday afternoon in the Apollo hospital of New Delhi, a hospital spokesman said.
Singh served as finance and defense minister in Prime Minister Rajiv Gandhi's cabinet, but parted ways with Gandhi and led a coalition that defeated him in the 1989 elections.
He is best known for his policy of reserving government jobs for India's disadvantaged castes, which sparked widespread protests from the upper classes. Singh's policy, aimed at empowering the oppressed poorer castes, fragmented the country's politics and led to the emergence of strong caste-based parties.
Hugh Mulligan, who in a half-century with The Associated Press covered everyone from presidents and popes to astronauts and combat soldiers, died Wednesday. He was 83.
Mulligan died at Danbury Hospital in Danbury, Connecticut, his brother John Mulligan said. He had been recently diagnosed with pancreatic cancer, according to his family.
Mulligan roamed the globe, visiting nearly 150 countries from Europe to equatorial Africa to Tibet. He covered more than half a dozen wars, including three reporting tours in Vietnam.
In 1970 stories about war's sudden impact on Cambodia, he described a novice army that "rode to war on Pepsi-Cola trucks."
In Mulligan's words, the Delta Queen wasn't just plying the Mississippi, she was "spinning rainbows from her stern wheel." The streets of Saigon before the war were "a whisper of bicycles."


Even for Taliban, too much opium
By Kirk Kraeutler
Thursday, November 27, 2008
UNITED NATIONS, New York: Afghanistan has produced so much opium in recent years that the Taliban are cutting back poppy cultivation and stockpiling raw opium in an effort to support prices and preserve a major source of financing for the insurgency, says the head of the United Nations drug office, Antonio Maria Costa.
Costa made his remarks last week as his office prepared to release its latest survey of Afghanistan's opium crop. Issued Thursday, it showed that poppy cultivation had retreated in much of the country and was now overwhelmingly concentrated in the 7 of 34 provinces where the insurgency remains strong, most of those in the south.
The result was a 19 percent reduction in the amount of land devoted to opium in Afghanistan, the United Nations found, even though the total tonnage of opium produced dropped by just 6 percent.
The high output per acre was attributed to a good growing season in the south, a heavily irrigated area where the Taliban maintain a strong presence in five provinces and have for several years "systematically encouraged" opium cultivation as a way to finance their insurgency, the study said.
Last year, the insurgents made as much as $300 million from the opium trade, by United Nations estimates. "With two to three hundred million dollars a lot of war effort can be funded," said Costa, an Italian diplomat who has served at the UN Office on Drugs and Crime for six years.
But after three years of bumper crops, including this one, the Taliban have succeeded almost too well, producing opium in amounts far in excess of world demand. The result, Costa said, was a glut that was putting downward pressure on the price, which had dropped by about 20 percent.
The fact that prices had not collapsed, he said, was evidence that the Taliban, drug lords and even some farmers have stockpiled the opium, more and more of which is also being processed in Afghanistan. "Insurgents have been holding significant amounts of opium," Costa said.
The surplus - as much as 11,000 tons, or more than twice world demand in the last three years - now threatened to devalue even those stockpiles, Costa said. In 2008, Afghanistan produced 8,500 tons of opium, the United Nations found. World demand was estimated at about 4,400 tons a year.
This year, the Taliban are taking a "passive stance" toward cultivation, apparently putting less pressure on Afghan farmers to plant opium poppy. "They have called a moratorium of sorts as a way of keeping the stocks stable and supporting the price," Costa said.
He said the information came from undercover surveyors in Afghanistan who closely observed the autumn planting season and the buzz around markets where opium is traded.
The dynamics of the opium market pointed up the problems American and NATO forces face as they try to tamp down the narcotics trade. Eradication itself can drive up the price and put more money into the hands of the Taliban, while alienating poor Afghans who depend on the crop for their livelihoods.
He has suggested an emphasis not on eradication of poppy crops once they are planted, but on disrupting the trade by hitting the open-air markets where opium is bought and sold, the convoys that transport it and the labs where it is processed into more potent drugs.
NATO countries agreed to the logic of such an approach at a meeting in Budapest in October, Costa said, but he added that for many years, "The international community has undervalued the role of narcotics in creating the conditions for insurgency in Afghanistan."
Despite the still-high opium output, he was encouraged that an estimated one million fewer Afghans were involved in opium cultivation this year. The reasons varied, and included drought in some provinces beyond the south. But it also appeared to reflect some progress among provincial governors and shuras, or local councils, in persuading farmers not to plant poppy, Costa said.
Part of the incentive for farmers was the expectation of government assistance if they planted legal crops, he said. But higher prices for food crops also helped. The revenue from wheat, for instance, has tripled since 2007, the United Nations said.
But without better economic opportunities, poppy will remain an attractive alternative for many in Afghanistan, the source of more than 90 percent of the world's opium. Growth has lagged so badly, Costa noted, that the drug trade still accounts for a third of the Afghan economy. Other estimates put it at as much as one-half.
Any progress this year remained vulnerable, he warned. The biggest threat was if insecurity continued to spread to previously stable parts of Afghanistan, as it has in recent months. Could the United Nations, NATO and U.S. forces keep up the declines in opium cultivation in the face of decreased security? "The answer is no," Costa said.

Taliban seen earning up to 304 mln pounds from opium
Thursday, November 27, 2008
By Luke Baker
The Taliban has earned up to $470 million (304 million pounds) from the Afghan opium trade this year alone, the United Nations said Thursday, money that is being used to finance the insurgency against U.S. and Afghan forces.
As well as the income earned from directly taxing farmers' output and from levies on opium processing and on trafficking the drug, there is evidence the Taliban is hoarding opium stocks to prop up prices, the U.N. said in a report.
This suggests the Taliban may not be overly worried in the short-term by U.S-led efforts to eradicate poppy fields because lower supply may end up lifting prices, potentially allowing the militant movement to increase its earnings.
"Despite the drop in opium cultivation, production and prices, the Taliban and other anti-government forces are making massive amounts of money from the drug business," the U.N.'s Office on Drugs and Crime said in its 2008 Afghan opium survey.
This revenue rise comes at a time when the Taliban is stepping up attacks throughout Afghanistan, especially in the south and east, across the border from Pakistan, where the U.S. military says al Qaeda and Taliban cells are now based.
The U.N. report estimated the Taliban earned $50-$70 million from imposing a 10 percent charge, called ushr, on economic activities such as opium farming this year, as well as $200-$400 million from levies on opium processing and heroin trafficking.
"With so much drug-related revenue, it is not surprising that the insurgents' war machine has proved so resilient, despite the heavy pounding by Afghan and allied forces," Antonio Maria Costa, UNODC executive director, said in the report.
The income -- the first time the United Nations has put such a high figure on the Taliban's revenue stream -- does not include money the Taliban is believed to be making from exports of cannabis, another widely produced Afghan crop.
In its report, the U.N. said opium poppy production -- the raw material for heroin that is exported to Europe, the Middle East and the United States -- had actually fallen substantially in 2008 following a U.S. and Afghan government crackdown.
It said opium cultivation declined by 19 percent to 157,000 hectares countrywide, almost all in the south, with production down by six percent and prices falling by around 20 percent.
"As a result, the value of opium to farmers dropped by more than a quarter between 2007 and 2008, from $1 billion to $730 million," the report said.
"The export value of opium, morphine and heroin (at border prices in neighbouring countries) for Afghan traffickers is also down, from $4 billion in 2007 to $3.4 billion this year."
As a result of that revenue decline, and the fall in international prices, Costa said there was evidence the Taliban and its associates were hoarding opium stocks in order to manipulate market prices.
"Since they are hoarding opium, they have the most to gain from lower cultivation," he said. "This would drive up prices, and result in a re-evaluation of their stocks."
At the same time, he emphasised that the strategy of tackling opium production and encouraging farmers to grow alternative crops was the right one and should be reinforced.
"If the Taliban can disrupt the market, so can NATO. Drug production and trafficking would be slowed by destroying high value targets like drug markets, labs and convoys -- which the Afghan army, backed by NATO, are starting to do," Costa said.
"The downward trend in Afghanistan's opium economy would gain speed with more honest government and more development assistance."
(Reporting by Luke Baker; Editing by Sophie Hares)


Kabul car bombing kills at least 4 and wounds 17
By Kirk Semple
Thursday, November 27, 2008
KABUL: A suicide car bomber plowed into rush-hour traffic on a commercial boulevard in Kabul on Thursday, killing at least four people and wounding up to 17, the police and hospital authorities said.
The bomber seemed to have been aiming at a passing convoy of NATO troops, the Interior Ministry said in a statement, but several witnesses said there were no security forces, either Afghan or foreign, in the immediate vicinity.
The explosion occurred about 135 meters, or 450 feet, from a major traffic circle and a heavily guarded entrance to an access road leading to the American Embassy, raising speculation that the bomber may have intended to blow himself up there but detonated prematurely.
Within minutes of the attack, the victims had been evacuated, and government investigators had begun sifting through the wreckage. But more than an hour later, the bloodied, twisted body of the suicide bomber still lay in the street, about 45 meters from the blast site where only the mangled front end of his car remained.
According to witnesses, the bomber have been weaving through traffic and then hit a pedestrian and a series of cars before exploding. "I thought he was drunk," said Salih Muhammad, 35, a street cleaner who was part of a nine-man crew working that stretch of road when the attack occurred. "Then there was this huge explosion."
Qari Ayob, 37, the owner of a small store near the blast site, said he was in his shop at the time. "At first I felt a huge flame and then heard a very big explosion," he said. "I felt as if the flame came into my shop. Then a darkness came and it blinded me for a while." Two of the cleaning crew members were wounded in the blast and their co-workers rushed them to a nearby hospital. Muhammad stood with another street cleaner outside the emergency room waiting for news. His hands and orange work clothes were covered in blood.
Noor Agah Akramzada, director of the hospital, said it had received 10 wounded and one body. A handwritten notice taped to the wall of the hospital listed the names and ages of the wounded. Officials at a military hospital in the neighborhood said they were treating at least seven other victims.
Ayob, the shopkeeper, said he felt lucky because at that time of day he usually stood outside his shop warming up in the sunshine. But Thursday morning he did not, he said. As he spoke, workers were cleaning up glass from his shattered shop window. The store would remain open for business, Ayob said, "There is no alternative."
Abdul Waheed Wafa contributed reporting.

Book reviews: 'American Lightning'
Reviewed by David Oshinsky
Thursday, November 27, 2008
American Lightning
Terror, Mystery, Movie-Making, and the Crime of the Century
By Howard Blum
339 pages. Crown Publishers. $24.95.
In the early morning hours of Oct. 1, 1910, a huge explosion rocked the headquarters of The Los Angeles Times, killing 21 people and leaving the building in ruins. It soon became apparent that this was the work of a bomber, not the result of a match struck carelessly near leaking gas, and a national manhunt began. What followed - the arrests, the trial, the confessions - would grab headlines intermittently before sliding into the memory hole of history.
The more sensational press accounts from that era portrayed the bombing as "the crime of the century," even though the century still had 90 years to run. Since that time, authors and headline writers have claimed this title for a host of other crimes (and trials): Leopold and Loeb, Sacco and Vanzetti, the Scottsboro boys, the Lindbergh baby kidnapper, Alger Hiss, Julius and Ethel Rosenberg, Lee Harvey Oswald, James Earl Ray, the Manson family, the Watergate crowd and O. J. Simpson.
Howard Blum, a contributing editor at Vanity Fair, isn't shy about stretching the relevance of his story. The 1910 bombing was a watershed event in U.S. history, he insists, with dire consequences for the 20th century and a dark warning for the 21st.
Blum tells the story through the intersecting lives of three characters: Billy Burns, the detective who tracked down the bombers; Clarence Darrow, the lawyer who defended them; and D. W. Griffith, the filmmaker who had assisted the detective on an earlier murder case.
The motive for the bombing seemed apparent from the start. The Los Angeles Times was a "fiercely conservative" newspaper, Blum says, and its publisher, Harrison Gray Otis, had vowed to turn Los Angeles into "a bustling, nonunion metropolis." Employing his army of detectives, Burns traced the conspiracy, as well as other terrorist acts, to the Indianapolis headquarters of the Structural Iron Workers union and its secretary-treasurer, John J. McNamara, whose accomplices included his brother Jim.
Business leaders praised Burns for saving capitalism from the clutches of working-class thuggery. But the union movement rushed to the McNamara brothers' defense. "I have investigated the whole case," said Samuel Gompers, president of the American Federation of Labor. "Burns has lied!" With aid from the growing Socialist Party, organized labor raised the war chest needed to give the McNamara brothers the finest defense. Enter Clarence Darrow.
Blum spends more time on Darrow's romantic failings than on his courtroom successes, though he does note that Darrow had previously defended labor leaders accused of violent acts. What made the Los Angeles case different, he adds, was the prosecution's airtight case: the evidence against the McNamaras was overwhelming. So Darrow seems to have taken part in a conspiracy to pay off a potential juror. In the end, the brothers pleaded guilty to murder in return for long sentences that spared their lives. Burns emerged as the hero, Darrow the beaten man.
And what of D. W. Griffith? He remains a transient figure, shoehorned into the story, one suspects, to tie the McNamara trial to the sexy culture of Hollywood. We learn a bit about Griffith's moviemaking skills, his sympathy for the downtrodden and his influence on an awful film about the McNamara case, "A Martyr to His Cause."
Although Blum makes repeated claims for the importance of the Los Angeles Times bombing and casually compares it to the terrorist attacks of 9/11, he adds no historical bedrock to support either assertion. What's missing is both a feeling for the pulse of everyday life in Los Angeles in 1910 and an understanding of the enormous industrial, technological and demographic changes that had ignited the violent impasse between labor and capital in California, and beyond.
For Americans a century ago, the bombing offered a brief whiff of Armageddon, a society on the brink. This alone makes it a memorable story, one that still begs to be told. - Reviewed by David Oshinsky

Gordon Goldstein's 'Lessons in Disaster'
By Richard Holbrooke
Thursday, November 27, 2008
Lessons in Disaster
McGeorge Bundy and the Path to War in Vietnam.
By Gordon M. Goldstein.
300 pages. Times Books/Henry Holt & Company. $25; £16.81.
In 1961, John Fitzgerald Kennedy brought to Washington a new generation of pragmatic young activists who came to be known as the New Frontiersmen. When the journalist Theodore White later wrote a memorable photo essay about them for Life magazine, he called them the "action-intellectuals." The most celebrated were Secretary of Defense Robert S. McNamara and McGeorge Bundy, whose title - modest by today's standards - was special assistant to the president for national security affairs, but whose importance was great (today the position has a more grandiose title - national security adviser). McNamara, of course, became one of the most controversial public servants in modern times, while Bundy got less attention, except for Kai Bird's excellent 1998 dual biography of him and his brother William (who had served as assistant secretary of state for East Asia).
But in "Lessons in Disaster," Gordon Goldstein's highly unusual book, Bundy emerges as the most interesting figure in the Vietnam tragedy - less for his unfortunate part in prosecuting the war than for his agonized search 30 years later to understand himself.
Bundy was the quintessential Eastern Establishment Republican, a member of a family that traced its Boston roots back to 1639. His ties to Groton (where he graduated first in his class), Yale and then Harvard were deep. At the age of 27, he wrote, to national acclaim, the "memoirs" of former Secretary of War Henry L. Stimson. In 1953, Bundy became dean of the faculty at Harvard - an astonishing responsibility for someone still only 34. Even David Halberstam, who would play so important a role in the public demolition of Bundy's reputation in his classic, "The Best and the Brightest," admitted that "Bundy was a magnificent dean" who played with the faculty "like a cat with mice.? As he chose his team, Kennedy was untroubled by Bundy's Republican roots -the style, the cool and analytical mind, and the Harvard credentials were more important. "I don't care if the man is a Democrat or an Igorot," he told the head of his transition team, Clark Clifford. "I just want the best fellow I can get for the particular job." And so McGeorge Bundy entered into history - the man with the glittering résumé for whom nothing seemed impossible.
Everyone knows how this story ends: Kennedy assassinated, Lyndon B. Johnson trapped in a war he chose to escalate, Nixon and Kissinger negotiating a peace agreement and, finally, the disastrous end on April 30, 1975, as American helicopters lifted the last Americans off the roof of the embassy. (Well, actually it was a nearby rooftop, but the myth is somehow more accurate than the literal truth.) Bundy had left the Johnson administration a decade earlier, after a dispute with Lyndon Johnson over process, not policy, and he went on to serve as president of the Ford Foundation. But for five years, he had been present at the most critical moments of the escalation, and he had supported all of them; he was one of the primary architects and defenders of the war.
The columnist Joseph Kraft, a friend of Bundy's, once described him as "a figure of true consequence" and "perhaps the only candidate for the statesman's mantle to emerge in the generation that is coming to power." When Bundy died in 1996, another friend, Arthur Schlesinger Jr., said, "a single tragic error prevented him from achieving his full promise as a statesman." Bundy spoke only occasionally about Vietnam after he left government, but when he did, he supported the war. Yet it haunted him. He knew his own performance in the White House had fallen far short of his own exacting standards, and Halberstam's devastating portrait of him disturbed him far more deeply than most people realized. After remaining largely silent, - except for an occasional defense of the two presidents he had served - for 30 years, Bundy finally began, in 1995, to write about Vietnam.
He chose as his collaborator Gordon Goldstein, a young scholar of international affairs. Together they began mining the archives, and Goldstein conducted a series of probing interviews. Bundy began writing tortured notes to himself, often in the margins of his old memos - a sort of private dialogue with the man he had been 30 years earlier - something out of a Pirandello play.
Bundy would scribble notes: "the doves were right"; "a war we should not have fought"; "I had a part in a great failure. I made mistakes of perception, recommendation and execution." "What are my worst mistakes?" For those of us who had known the self-confident, arrogant Brahmin from Harvard, these astonishing, even touching, efforts to understand his own mistakes are far more persuasive than the shallow analysis McNamara offers in his own memoir, "In Retrospect." In the middle of the research for the book, Bundy died, five days after his last session with Goldstein. Left with fragments of a work that would never be written, Goldstein spent years piecing them together and finished a manuscript, based on the interviews, which was approved for publication by Yale University Press. But Mary Bundy, who had at first encouraged Goldstein in his project, withdrew her consent for the book, and its publication was permanently shelved.
Goldstein then produced a different book with no involvement from the Bundy family, using his interviews and Bundy's notes to himself, which are now in the public collection of the John F. Kennedy Library in Boston. Goldstein thus writes from a unique perspective)not quite inside Bundy's head but not an outside observer. As he says, "In no way is this a book by McGeorge Bundy but rather it is a book about him." The result is a compelling portrait of a man once serenely confident, searching decades later for self-understanding. Did he sense that his time was running out? From the evidence in this book, it seems possible.
For today's readers, what's most important about "Lessons in Disaster" is not the details of how the United States stumbled into a war without knowing where it was going; that story has been told in hundreds of other books. Goldstein's achievement is quite different: it offers insight into how Bundy, a man of surpassing skill and reputation, could have advised two presidents so badly. On the long shelf of Vietnam books, I know of nothing quite like it. The unfinished quality of Bundy's self-inquest only enhances its power, authenticity and, yes, poignancy.
Goldstein has organized the book chronologically, giving each chapter the title of a "lesson" Bundy derived from his career. This is a sly tribute to one of Bundy's most notable qualities - his wry, ironic sense of humor, which often distanced him from the real-life human consequences of policy.
From the 1961 Bay of Pigs invasion, for example, Bundy concludes, "Never Trust the Bureaucracy to Get It Right" - a trivial lesson compared with the human and political costs, but characteristic of Bundy's obsession with process rather than underlying causes. Similarly, the all-important decisions by Johnson that turned Vietnam irrevocably into an American war in 1965 are summarized under the title "Never Deploy Military Means in Pursuit of Indeterminate Ends." Even as he searches for truth, Bundy remains Bundy. It is striking how little interest he shows in Vietnam itself, and how little concern he shows for the huge death toll of the war. At one point, he coolly tells Johnson that we should send ground troops even though the chances for success "are between 25 percent to 75 percent" because it would be better for America to lose after sending troops than not to send troops at all! War, to Bundy, seems more an abstraction than a horrible reality.
The one exception - the only time Bundy seemed moved by something real and tangible on the ground - came in February 1965, when Johnson sent Bundy to Vietnam for his only firsthand look.
While he was in Saigon, the Vietcong attacked the American air base outside the central highlands town of Pleiku, killing nine American soldiers and wounding 137. Although it was later learned that the Communists did not even realize Bundy was in Saigon, and hardly knew who he was, Johnson and Bundy both assumed Pleiku was a direct answer to Bundy's visit. Bundy was annoyed that the reaction to his hurried visit to Pleiku the next morning was later characterized by others as emotional. But the evidence is strong that his visit to the wreckage at Pleiku, apparently the closest he ever came to the awful waste of war - moved him greatly, and prompted him even more strongly to advocate bombing North Vietnam.
As it happens, I was part of a small group that dined with Bundy the night before Pleiku at the home of Deputy Ambassador William J. Porter, for whom I then worked. Bundy quizzed us in his quick, detached style for several hours, not once betraying emotion. I do not remember the details of that evening - how I wish I had kept a diary! - but by then I no longer regarded Bundy as a role model for public service. There was no question he was brilliant, but his detachment from the realities of Vietnam disturbed me. In Ambassador Porter's dining room that night were people far less intelligent than Bundy, but they lived in Vietnam, and they knew things he did not. Yet if they could not present their views in quick and clever ways, Bundy either cut them off or ignored them. A decade later, after I had left the government, I wrote a short essay for Harper's Magazine titled "The Smartest Man in the Room Is Not Always Right." I had Bundy - and that evening - in mind.
One of the most important conclusions Bundy reached before he died is in Goldstein's final chapter, "Intervention is a Presidential Choice, Not an Inevitability." For 40 years there has been a debate over whether Kennedy, had he lived, would have followed the same course as Johnson in Vietnam. In "Counsel to the President," the book I wrote with Clark Clifford, Kennedy's lawyer and McNamara's successor as secretary of defense, Clifford concluded that Kennedy "would have initiated a search for either a negotiated settlement or a phased withdrawal." Bundy comes to the same conclusion, and carries the thought further. Having watched the two presidents up close as they grappled with Vietnam, Bundy concluded that we must "better understand the indispensable centrality of the commander in chief's leadership." A re-elected Kennedy, he says, would "not have to prove himself in Vietnam." Bundy never believed in negotiations with the Vietcong or the North Vietnamese. This, coupled with his enduring faith in the value of military force in almost any terrain or circumstance, were his greatest errors. They contributed to a tragic failure. With the nation now about to inaugurate a new president committed to withdraw combat troops from Iraq and succeed in Afghanistan, the lessons of Vietnam are still relevant. McGeorge Bundy's story, of early brilliance and a late-in-life search for the truth about himself and the war, is an extraordinary cautionary tale for all Americans.

In Vietnam, a haven overlooks hills and history
By Martha Ann Overland
Thursday, November 27, 2008
TAM DAO, Vietnam: At the turn of the last century, Vietnam's colonial rulers chose the lush hilltop town of Tam Dao to build their summer homes and resorts. When Hanoi's temperatures soared, the French came here to enjoy the cool mountain air, walk in the pine forests and gaze at the dramatic vistas.
The American writer Nguyen Qui Duc has settled in Tam Dao for many of the same reasons. "I get a sense like I did when I was 8 years old, before the fighting got bad," Duc said, referring to the war in Vietnam. "I come here and the memories of that terrible time are all gone."
Duc is one of a growing number of returning Vietnamese-Americans. He was a teenager when he fled the country as Communist forces swept into Saigon. (It would be 16 years until he was reunited with his father, who was imprisoned.)
Eventually he made his way to the United States but began coming to Vietnam as a reporter in the late 1980s, when the country began to open up to Westerners again.
Then, in 2006, he quit his job as the host of the public radio program "Pacific Time," packed up his San Francisco apartment, sold his car and moved to Hanoi. He opened a café and art gallery there.
Like the French, Duc longed to find a peaceful retreat outside the steamy capital. Today's expatriates usually head for the beach but he wanted something more authentic, somewhere more like the Vietnam he grew up in. He made an intensive search and, in the summer of 2007, he bought a 500-square-meter, or 5,400-square-foot, parcel in the mist-filled mountains of Tam Dao, a two-hour drive from Hanoi.
When planning the house, Duc decided to work mostly with glass and stone, easily available materials that local workers were familiar with. Yet rather than following his neighbors' lead by building several stories high to squeeze more living space onto the narrow plot, he anchored the single-story modernist structure into the cliff. From town, all that is visible is a stone wall on the edge of the mountain.
"The locals ask me all the time," Duc said with a grin, "'when are you going to finish building your house?"
The neighbors' confusion doesn't end there. The house has no front door, at least not in the traditional sense.
Steps from the main road into town lead to a traditional wooden Vietnamese house, used as a guest room, and Duc's fishponds. From there, paths of stone and wooden planks diverge. One dead-ends in a sunken Japanese rock garden; another seems to lead across a foundation wall with an unforgiving edge. Once across it, the visitor can see that a glass pyramid-shaped skylight is really a sliding trap door, leading into an open living space of about 100 square meters.
Duc is quick to concede that he is no architect. A pyramid just seemed the most interesting way to climb down into the house, he said.
He did get professional advice but, in the end, the design - a New York City loft cantilevered over the jungle - was largely his.
"All I wanted was to capture the view," Duc said, watching the mist turn and twist up the side of the mountain. "I wanted to feel I was floating in the clouds."
It was a challenge to install the soaring eight-meter, or 25-foot, floor-to-ceiling windows to capture this feeling. "I wanted to use local craftsman but build a Western design," he said. And, as he fought to budge the sliding glass door that leads to an infinity pool, Duc concedes that his design ideas weren't always successful.
Later, as rain lashed the house, he shrugged as water trickled down the entryway stairs into the sunken living room and out a well-placed drain. "It's a work in progress," he said.
Duc, who came up on weekends from Hanoi to oversee the work, conceded that he wasn't always able to communicate what he wanted. But it wasn't a language problem. "I went out and found these beautiful old tiles and I came back to find that someone scrubbed them clean," Duc moaned. Nor did the workers think much of his rustic, open-plan kitchen. When he was away they put up a wall and hung faux French cornices. He had them all taken down.
Watching the house take shape, oddities and all, has been part of the adventure, he said.
"The day they were to pour the concrete, the chicken was boiled, I did the prayers and then they started drinking, and it was only seven in the morning!" said Duc, referring to the ceremony that asks the local gods for their blessing to build. "It's a difficult house to maneuver around. Especially if you are drunk."
Rooftop walkways and steep drop-offs into a stone courtyard are not the only things Duc has to navigate deftly.
Vietnam does not permit most foreigners to own private property, though exceptions recently were made for long-term expatriates and returning Vietnamese. Duc knows that the laws could change again and he could lose the $100,000 that he spent to buy the land and build the house.
He said he believed that the land has doubled in value since he bought it, noting that adjacent lots are on the market for $220 a square meter. It is hard to quantify values in Vietnam as houses tend to be handed down within a family, even the three-story, concrete-block structures in Duc's neighborhood, and land sales comparisons are not readily available.
Duc says he has enough confidence in the future that he plans to add an extra bedroom to the house. He envisions the property as a meeting place for Vietnamese and American artists. Eventually he hopes to offer the house to writers who need a quiet place to work.
But above all, it is his retreat. For much of his life, he was unable to return to Vietnam. Now, having just turned 50, he says he is finally home.

David Vann's 'Legend of a Suicide'
By Tom Bissell
Thursday, November 27, 2008
Legend of a Suicide
By David Vann.
172 pages. University of Massachusetts Press. $24.95
Suicide is an exploded bridge that can never be repaired. All its secondary victims can do is stare across the chasm and hope the other side is more peaceful than this one. In his first book, "A Mile Down," David Vann wrote of his attempt to surpass the modest seafaring efforts of his father, who killed himself when Vann was a boy. In search of answers, Vann built a ship and set out for the watery depths - only to come close to reuniting with his father in the void. This was an exorcism that wound up needing an exorcism. One hopes, for Vann's sake, that the novella and five stories in his second book, "Legend of a Suicide," helped provide it. An author more haunted by paternal amputation would be difficult to imagine. A sadder book about fathers and sons would be impossible to imagine.
The book's central character is a boy named Roy. The novella and four of the five stories take place in Alaska, where Vann himself grew up, and only the novella steps outside Roy's first-person narration. While the father's suicide is dramatized explicitly just once, it exerts its gravitational pull on every page.
From the shores of Vann's Alaska one can see the Russia of Turgenev's "Fathers and Sons." One can also see Richard Ford's "Rock Springs" and Tobias Wolff's archipelago of perpetual struggle.
Structurally dependent on epiphany and defiantly plainspoken, "Legend of a Suicide" is about as unfashionable as fiction published in 2008 can possibly be. Its language ranges from the undeniably evocative ("I slipped out into the soft, watery world of Alaskan rain-forest night") to the iffier register of quasi-Hemingway. Thankfully, examples of the former vastly outnumber the latter.
A few passages nevertheless have a confession-booth, vaguely essayistic feel. In "Ketchikan," a 30-year-old Roy returns to his Alaskan hometown and, after listing its many eccentricities, notes, "This was overwrought, but it seemed in keeping with the indulgence of this trip, with the extravagance of an attempted return to childhood." At the story's end, Roy tells us that "the divorce and suicide that I had let shape my life so permanently had been something else altogether. . . . And what, then, of what I had become?"
It is hard to know who, exactly, is speaking: the art or the artist? In his acknowledgments, Vann writes, a little inelegantly, that his stories are "fictional, but based on a lot that's true." Fifty years ago, when writers were romanticized differently, it was less problematic to imagine an author and his narrator as an essentially Siamese-twin phenomenon. Today, such a determined blurring may strike some readers as self-consciously therapeutic or, worse yet, self-serving. Vann's narrator speaks of the "last beautiful, desperate, far-ranging circlings" of his father's life, but he may as well be describing the overall method of these stories.
In "Ichthyology," Roy watches two "slick and merciless" silver-dollar fish, recently introduced to his aquarium, attack a "lazy, boggle-eyed" tankmate, sucking out both its eyes. The story returns, stunningly, to this image in its final lines. Much of Vann's book works this way. The smallest moments of unease are placed on the narrative scale as if they were lead bars. Suicide gives everything it has not destroyed a dreadful, unfamiliar weight.
In the novella, "Sukkwan Island," the powerful and supremely vexing centerpiece of the collection, Roy and his father make a final attempt at reconciliation. The father has bought a cabin in the Alaskan wilderness with the intent of spending a year there with his son, homesteading and living off the land. The first half of the novella is narrated from Roy's close third-person perspective, the second half from the father's. In the first few pages Vann shows the reader an unassuming set of rustic implements: some rope, a few screws, a battery. By the story's end the rope has become a noose, the screws have been driven into the reader's fingernails, and the battery is wired someplace unspeakable.
The father, a dentist who has quit his practice in Fairbanks, imagines himself as a high-north survivalist. He is, in fact, woefully unprepared. He does not know the name of the nearest inhabited island or how to build a cache for winter food or how to repair the cabin's damaged roof or how to keep the bears away. (Not everyone who lives in places like Alaska is born knowing how to MacGyver a water filter out of bark.) The father does not even have the sense to prevent his increasingly terrified son from overhearing his hopeless nighttime sobs.
"Sukkwan Island" is about the love of a powerless boy for a weak father. While his father goes to pieces, Roy busies himself with fishing and chores, activities that showcase Vann's grimly observant facility with natural-world detail. When Roy bashes in the head of a Dolly Varden trout, he hunches down "to look at it and watch its colors fade." An early pink salmon lies "gasping and wild-eyed" after the boy scoops it up by the gills and heaves it onto the beach. (Warning: the fish-trauma-per-page ratio here makes "The Old Man and the Sea" seem like a paean to ichthyophilia.)
Every night, Roy goes to bed to the sound of his father's weeping. "I'm sorry, Roy," he eventually tells his son. "I'm really trying. I just don't know if I can hold on." Later, after he confesses that he once got crab lice from a prostitute and passed them along to the boy's stepmother, he asks, "Do you think I'm a monster?" Soon enough, a bit of dialogue as innocent as "Maybe we should go for a hike" becomes a portent of doom.
And yet this man is never hateful. You'd have to go back to books like "The Mayor of Casterbridge" or "The Great Santini" to find a father capable of such loathsome deeds brought to life with such empathy. After one bit of appalling fatherly negligence, Vann writes, "There were no good times after this." And there are 50 pages to go.
The central event of "Sukkwan Island," shocking for several reasons, appears to take place in a parallel universe. The Roy and the father of the other stories cannot be the Roy and the father of this story. Vann does not choose to explain this, and he should not have to. But it is strange, like encountering Borges, in waders, within "A River Runs Through It."
The reportorial relentlessness of Vann's imagination often makes his fiction seem less written than chiseled. One cannot say that Vann does not do humor well because - here, at least - he does not do humor at all. What he does do well is despair and desperation. In spite (or maybe because) of this, he leads the reader to vital places. A small, lovely book has been written out of his large and evident pain. "A father, after all," Vann writes, "is a lot for a thing to be." A son is also a lot for a thing to be; so is an artist. With "Legend of a Suicide," David Vann proves himself a fine example of both.

ElBaradei prods Syria on atom probe
Thursday, November 27, 2008
By Mark Heinrich
The U.N. nuclear watchdog chief prodded Syria on Thursday to open up military sites to investigators and said he would soon show Damascus satellite images which Washington says indicate covert atomic activity.
A November 19 International Atomic Energy Agency report said a Syrian building bombed to rubble by Israel in 2007 bore similarities to a nuclear reactor. Uranium traces, possibly remnants of pre-enriched atomic fuel, had been found nearby.
The findings, based on U.S. satellite intelligence and one on-site IAEA inspection, were preliminary, the report said, but further, broader IAEA access and Syrian documentation to prove its denials of illicit work were crucial to draw conclusions.
"For the agency to complete its assessment, maximum transparency by Syria and the full sharing with the agency of all relevant information which other states may have are essential," IAEA Director General Mohammed ElBaradei said.
He was alluding in particular to Israel, which has never commented on the nature of the site its air force took out.
"Syria should also agree, as a transparency measure, to let the agency visit other locations. I am confident modalities can be developed which will protect the confidentiality of military information," he told a meeting of the IAEA governing board.
Last week, a senior Syrian official dismissed the notion of further IAEA visits as these would involve checks at three military bases Damascus deems off-limits on national security grounds, citing its state of war with Israel.
Inspectors believe these sites could harbour items, possibly for fabricating nuclear fuel, linked to the bombed site, or which may have been whisked away from it soon after the attack -- and after the IAEA asked for access to examine it.
ElBaradei said it was "regrettable, indeed baffling" why there was no high-resolution satellite imagery of the site available for the period right after the bombing.
That would have been before Syria carted away potentially relevant evidence like rubble and equipment, diplomats say.
Diplomats close to the inquiry said it was possible that the seven states with commercial satellite networks pulled pictures for that period from circulation for undetermined security reasons, or Syria had bought them up to impede investigators.
The seven countries are the United States, Israel, France, Russia, China, India and Japan, said a senior diplomat, who like others, asked for anonymity because they were discussing restricted information.
ElBaradei said the IAEA recently won permission to show Syria some pictures from member state satellites taken of the site "shortly after the bombing" to elicit a response. He did not say what they showed or how sharp the images were.
One diplomat said the IAEA recently had found some pictures from the attack aftermath but they were not high-resolution.
ElBaradei cautioned that satellite pictures were no panacea in difficult nuclear investigations. "Because the agency cannot verify the authenticity of such imagery, we rely on it only as an auxiliary source to corroborate other information ... It is never the sole basis of our assessments," he told the governors.
Syria has said Israel's target was a conventional military building, the U.S. intelligence was forged and the uranium particles came with munitions used in Israel's air raid.
The U.S. intelligence report asserts that Syria was close to completing an illicitly undeclared reactor with North Korean technical help, designed to produce plutonium for atom bombs, when Israeli warplanes struck in September 2007.
Separately, ElBaradei urged Iran to stop impeding an agency probe into intelligence material that Washington says shows Tehran illicitly studied how to design atom bombs. Iran denies this but has not provided back-up evidence, the IAEA says.
(Additional reporting by Sylvia Westall; editing by Philippa Fletcher)

Iran says navy can strike well beyond its coast
Thursday, November 27, 2008
TEHRAN: Iran's navy can strike an enemy well beyond its shores and as far away as Bab al-Mandab, the southern entrance to the Red Sea that leads to the Suez Canal, an Iranian naval commander said on Thursday.
Naval Commander Mahmoud Mousavi also repeated Iran's assertion that it could control the Strait of Hormuz, the entrance to the strategic Gulf waterway that is on Iran's coast, Fars News Agency reported.
The United States, Iran's arch-foe which has a naval base in Bahrain on the Arab side of the Gulf, has not ruled out military action if diplomacy fails to end a row over Iran's nuclear plans which Washington says is to make bombs. Tehran denies this.
"We have now attained the capacity to take our defence capability to the depth of the seas, oceans and the Red Sea and face the enemy at the Bab al-Mandab strait if the enemy should have an evil intention," Mousavi said.
Bab al-Mandab is also close to the Gulf of Aden, where Somali pirates have been hijacking commercial ships. Two ships operated by Iran have been seized in that region and one is still being held.
Several foreign warships are already operating in the area against the pirates and Iran has also said it could use force against the hijackers.
"One of the world's most sensitive and strategic spots is the Strait of Hormuz. Any country which holds sovereignty and control over the Strait of Hormuz will be the field's victor as happened in the war with the Iraqi regime," Mousavi added.
Iran's 1980s war with Iraq included a period that became known as the tanker war when oil carriers and other energy installations became targets by both sides. This led to the United States stepping in to protect oil shipping.
The Iran-Iraq war ended with a cease-fire in 1988.
Iran has previously said it could close the Strait of Hormuz to shipping, through which about 40 percent of the world's globally traded oil passes. The United States has pledged to protect shipping routes.
(Reporting by Hashem Kalantari, writing by Edmund Blair; Editing by Dominic Evans)

Israel's Lebanon war showcased cluster bomb horrors
Thursday, November 27, 2008
By Alistair Lyon, Special Correspondent
Israel inadvertently galvanised an international campaign to ban cluster munitions by hastily raining bomblets over south Lebanon before a U.N.-agreed halt to its 2006 war with Hezbollah fighters could take effect.
"It was the massive use of cluster munitions in the last 72 hours of that conflict that outraged the world," Mary Wareham of the New York-based Human Rights Watch group told Reuters.
Norway initiated negotiations on a treaty outlawing cluster munitions which about 100 nations -- but not Israel, the United States, Russia or China -- are due to sign in Oslo next week.
The Beirut government pushed hard for the treaty and Foreign Minister Fawzi Salloukh says he will be in Norway to sign it.
Cluster bombs are still killing and maiming people in south Lebanon, a hilly region of towns and farming villages where nearly all the land is used for crops or grazing.
Rasha Zayoun was at home sorting through a bag of thyme gathered by her father last year when her hand snagged on the ribbon of a cluster bomblet. The blast blew off her left leg.
"There was a power cut, I didn't see it was a cluster bomb," said the shy 18-year-old in a headscarf, sitting at a sewing machine in a school for disabled people in Sarafand, near Tyre.
With a prosthetic limb under her jeans, she has learned to walk again and hopes one day to open a tailor's shop.
Zayoun is among more than 270 people wounded by cluster munitions in Lebanon since the war. About 40 have been killed.
Lamis Zein, site supervisor for an all-woman battle area clearance team in the south, recalled how villagers returned after the conflict to find their homes infested with bomblets.
"They were in backyards, on rooftops, in the fields," said the feisty mother of two, who trained in January to join clearance efforts run by Norwegian People's Aid (NPA).
"People couldn't enter their houses or even pick their fruit and vegetables. They had to keep children inside."
Zein, who will go to Oslo to encourage more nations to sign the treaty, said her biggest reward was to see children playing in their gardens after her team had cleared them of bomblets.
Israel, which attacked Lebanon after Hezbollah seized two of its soldiers in a cross-border raid, says it uses cluster bombs in line with international law, which doesn't bar them outright.
Human Rights Watch, which has reported that Hezbollah also used some rockets with cluster components indiscriminately, says Israel violated prohibitions on targeting civilian areas when it sprayed the munitions from planes, rockets and artillery.
"If you know there are civilians in the area, you don't deploy cluster bombs," Wareham said. "Many fail to detonate on impact. They become de facto anti-personnel landmines posing clearance risks and risks to civilians for years to come."
More than two years on, clearance teams have cleared 48 million square metres of cluster bombs and other unexploded weaponry in the south, according to Dalya Farran, spokeswoman for the U.N Mine Action Coordination Centre in Lebanon.
Large areas still need to be cleared beneath the surface. Some lower-priority places have yet to be searched properly.
"Every inch of the suspected hazardous area has to be checked," said Knut Furunes, a Norwegian ex-soldier who manages NPA's mine action programme. "It's a massive task."
Lebanon and the United Nations say Israel's refusal to disclose targeting data on cluster strikes complicates the task of finding bomblets in the south's rugged hills and valleys.
"The sub-munitions are delivered in great numbers -- fired by rocket they come 640 at a time," Furunes said. "We just have to look and keep looking until we don't find any more."
Children are particularly at risk from the bomblets, many of which have white ribbons as part of their detonation mechanism. "Kids play with everything and they tend to have more severe (blast) injuries," said Furunes, displaying various types of bomblets, along with a bird's nest made mostly with the ribbons.
Campaigners for the treaty, adopted by 107 states in Dublin in May, say they are mostly delighted by its terms, requiring signatories to renounce the use, production, stockpiling and trade in cluster munitions. It also requires states to assist victims and family members and communities affected.
Some countries had argued for cluster munitions with self-destruct mechanisms to be exempted, but the agreed text of the convention exempts only a much narrower category.
"The Lebanon conflict provided us with some of our strongest evidence to go into the treaty discussions and say we don't want an exemption for cluster bombs that 'self-destruct', because in our experience, they don't, they fail," HRW's Wareham said.
At least 10 percent of sub-munitions dropped by Israel failed to explode, according to an NPA study. But the study included only cluster bombs that released their load perfectly. The actual failure rate was closer to 40 percent, Furunes said.
Wareham predicted that the Oslo convention would stigmatise cluster munitions and deter even non-signatory countries. "It would be very damaging for Israel if it used them again."
Mirna Ashour, 21, a woman cluster bomb searcher who will also go to Oslo, said she had a simple message for Israel, its main ally the United States, and other users of the weapons.
"I would tell them it's enough, stop war. Let us live in peace and safety. We are tired of war."
(Editing by Dominic Evans)

Happiness conference convenes in San Francisco
By Patricia Leigh Brown
Thursday, November 27, 2008
SAN FRANCISCO: The stock market has been on a roller coaster, banks are going under, unemployment is skyrocketing and foreclosed homes pepper the landscape. What better time for a happiness conference?
In this dopamine-laden city, where the pursuit of well-being is something of a high art, a motley array of scientists, philosophers, doctors, psychologists, navel-gazing Googlers and Tibetan Buddhists addressed the latest findings on the science of human happiness - or eudaemonia, the classical Greek term for human flourishing.
Planned before the current crises, the first American "Happiness and Its Causes" conference was equal parts Aristotle and Oprah. It brought together heavy hitters like Paul Ekman, the psychologist known for deciphering facial "microexpressions" that reveal feelings, and Robert Sapolsky, the Stanford biologist. They considered topics like "Compassion and the Pursuit of Happiness" and "Why Zebras Don't Get Ulcers."
The conference is the latest manifestation of the booming happiness industry, subject of a growing number of books, scholarly research papers and academic courses. The concept began in Sydney in 2006 and has since expanded, its profile raised by the Dalai Lama's participation in Sydney in 2007.
The two-day gathering in San Francisco this week, which cost $545, benefited a nonprofit group offering Buddhist teachings to prisoners.
It knitted together many currents in the cultural ether: positive psychology, neuroplasticity, mindfulness-based stress reduction, the role of emotional support in cancer and the yogic ideal of "being in the present moment."
"We know more about gloominess than cheerfulness," Ekman said before exploring cross-cultural definitions of happiness, including nachas, the Yiddish expression of pride in the achievements of one's offspring.
Fortunately, given recent events, a growing number of studies over the past decade have suggested that money does not equal happiness, among them one concluding that the Inuit of northern Greenland and the Masai in Kenya were just as happy as members of the Forbes 400 list of richest Americans.
The latest word on happiness from the front lines of medicine and science was condensed, à la SparkNotes, into user-friendly, 15-minute nuggets.
Dr. David Spiegel, a professor at the Stanford School of Medicine and the director of its Center on Stress and Health, discussed the positive effects of group therapy on metastatic breast cancer patients and his belief that people can live longer if they face their illnesses directly with proper emotional support. "I've never lost a patient to terminal crying," Spiegel said. "Suppressing sadness is the devil's bargain."
Sapolsky made a similar point about humans and baboons.
Modern stress disorders contributing to hypertension, heart disease and other illnesses are the result of a disjuncture between primitive conditions and our own - or, as he put it, "running for your life in the savannah versus 30-year mortgages."
The relatively new field of behavioral neurogenetics is exploring a handful of genes that seem to be related to depression, anxiety, addictive personality, sensation seeking and other traits. But, Sapolsky said in a follow-up e-mail message, a person's risk seems not predetermined but rather the result of interactions of genes and the environment, especially stressors in childhood.
Social support is vital, no matter how healthy you are, he told the crowd. "How much you groom somebody else is more important than who grooms you."
The audience, composed largely of the helping professions, also included a senior vice president of a large mortgage company, who would not give her name. She said she had laid off more than 500 people in the last six months and was there to learn how to bolster the morale of employees working weekends and holidays and making do with bonuses cut in half.
"What truly makes people happy is a higher calling," she said, adding that companies like hers were not totally at fault for the mortgage crisis. "Western society is too focused on blame," she said. "In order for our customers to be happy, they have to understand that they're accountable."
"Happiness entrepreneurs" promoted themselves in the tea break that ended with the ting of a Tibetan prayer bell. Aymee Coget, who wants to be the Suze Orman of happiness, handed out fliers for her "Happiness Makeover," a three-month route to "sustainable eudaemonia." Coget said, "I guarantee happiness in three months."
In California's Bay Area, the happiness business has been in full flower.
James Baraz, a revered meditation teacher, has a 10-month course in Berkeley on "Awakening Joy." Among the exercises and meditations are suggestions for improving your life, including singing every day, making lists of things that made you happy and getting a "joy buddy."
The course has become a bona fide phenomenon since an article about it appeared in O, Oprah Winfrey's magazine, with 300 people taking it in Berkeley and 2,500 taking it online.
"Neuroscience and spirituality are coming together," Baraz said by telephone. "It's not airy-fairy stuff."
Nevertheless, a few renegades at the conference suggested that happiness was overrated. "Unhappiness about not being happy is a modern condition," said Darrin McMahon, a professor of history at Florida State University. "We cannot feel good all the time, nor should we."
Yet the national embrace of "Yes We Can" hung in the air.
"We've had a period of borrowing money, personal gratification, consumption and self-interest," said Dacher Keltner, a professor of psychology at the University of California, Berkeley, and a director of the Greater Good Science Center. "Now we will have a president who is talking about sacrifice."
"Human beings are wired to care and give," Keltner added, "and it's probably our best route to happiness."

Ellen Goodman: The new longevity
Thursday, November 27, 2008
The new longevity
Did you miss this in the post-election news? Senator Robert Byrd, 91, announced that he will give up the chairmanship of the Senate Appropriations Committee to Senator Daniel Inouye, 84. The torch has passed to a new generation.
I don't say this snidely, although I was charmed at Inouye's hope that he was "sufficiently prepared to succeed my mentor." I say it, rather, because this year, the air has been filled with talk of generational change. Ted Kennedy, the ailing elder of Democratic politics, set the tone when he took his brother's torch and passed it verbally to Barack Obama. Since then, torches have illuminated the conversation.
In 1961, the transition from 70-year-old Ike to 43-year-old JFK symbolized the arrival of the postwar, post-Depression New Frontier. Now the election of Obama is alternately described as the arrival of the Twitter age, the Jon Stewart era, or the ascendancy of the post-racial and post-partisan generation.
Of course, Obama took that mantle of change on his own shoulders last year when he addressed his civil rights elders at the 42nd anniversary of the Selma march. Expressing gratitude to the "Moses generation," he identified himself as part of the "Joshua generation." If Moses led the people through the desert years, Joshua was anointed to lead them into the promised land. Obama both praised and put the "Moses generation" in its place: history.
Generational change was not without tension this year. In the black community, Jesse Jackson bristled at his minor role. The man who had stood with Martin Luther King Jr. and won more than a dozen presidential primaries was heard on an open mike slamming the new kid on his turf.
In turn, 67-year-old Jesse was upbraided by his 42-year-old son, Jesse Jr., for his "ugly rhetoric." Yet on election night, one of the most emotional images was of the tears trailing down the senior Jackson's face.
There was generational tension as well among women during the primary when many second-wave feminist mothers supporting Hillary split with daughters supporting Obama. Mothers felt daughters had "sold out." Daughters bristled at mothers patronizing or, should I say, matronizing them. It was, perversely, their joint opposition to Sarah Palin that healed this rift.
Still, it does seem odd that the imagery of generational change would be in the forefront right now when the most profound social change may be from something else: longevity.
When the torch was passed to JFK, the average life expectancy was 74. As Obama becomes president, it is 78. Today, there are 16 million Americans in their 70s, and 9 million in their 80s.
We are not just living longer, but also healthier. Age itself is undergoing a vast transition like those magazine covers that boast 60 is the new 50 or even the new 40. Twenty years ago, one in 10 seniors worked; now it's one in six. About 70 percent of boomers expect to work after 65. Even before the economic meltdown, older workers were postponing retirement. At 55 and 65, many are thinking more about renewing than retiring.
Indeed in the real world of politics, the torch of vice president has been passed to Joe Biden, age 66. Hillary Clinton is being considered as the new secretary of state at age 61. In the Senate, the average age is 62.
There are, to be sure, still fault lines along the old generational borders. Aging baby boomers are blamed if they stay at work, blocking access to the next rung up the ladder. Boomers are also blamed if they retire, devouring the incomes of their children, who are paying for Medicare and Social Security.
But it seems to me that one of the great challenges of our time is not going to be passing or wresting torches. It will be easing these generational struggles. We will need older Americans - is Joe Biden their mentor? - who can elevate and work for younger leaders without feeling dissed or threatened. We'll need younger people to accept elders as their experienced peers. We'll need an economy and psychology that accommodate the new longevity.
As for the Joshua generation? Have we forgotten that Moses lived to be 120?

Americans celebrate Thanksgiving at St. Paul's Cathedral in London
By John F. Burns
Thursday, November 27, 2008
LONDON: As they have for 50 years, Americans in London packed St. Paul's Cathedral on Thursday for an annual Thanksgiving service that, as evocatively as any event on the calendar, nurtures the home thoughts from abroad that are a staple of expatriate life.
Four marines from the detachment at the U.S. Embassy in London, three of them veterans of the Iraq war, carried the Stars and Stripes and the Marine Corps colors across the marbled floor beneath the cathedral's dome and laid them before the altar. As the banners were borne out again at the service's end, the congregation of 3,500, many of them families with small children, raised a moving crescendo for the last verse of "America the Beautiful."
"America! America!" they sang, to the accompaniment of the cathedral's great organ, "God shed his grace on thee."
For the 220,000 Americans living in Britain, the annual gathering at St. Paul's, the great masterpiece of Sir Christopher Wren, provides an opportunity to celebrate the two nations that are the pillars of their lives. A centerpiece of the occasion every year is the invocation of the "special relationship" between Britain and the United States, which the U.S. ambassador, Robert Tuttle, described in remarks to the congregation Thursday as "working together, and marching together, as we have sung together, for decades, if not for centuries."
But this year, more than most, the occasion was tinged with shades of light and dark.
Light, literally, because the cathedral is in the midst of celebrating overlapping anniversaries: the 300th anniversary of the laying of its last stone in 1708, and the 50th anniversary this week of the dedication of the American memorial chapel, situated behind the great altar, that honors the 28,000 U.S. servicemen based in Britain who died in World War II.
On Wednesday, another service celebrated the completion of a $60 million, six-year renovation that has restored light and color to a cathedral whose great stone walls and magnificent frescoes had grown dark with age.
Dark, at least figuratively, because many Americans in London have had their lives thrown into turmoil by the financial crisis gripping much of the world. Between 20,000 and 30,000 Americans are said to work in London's financial district, many of them within walking distance of St. Paul's.
Several thousand of those, according to reports in the financial pages of Britain's leading newspapers, have either lost their jobs already or face losing them as banks and investment companies and hedge funds grapple with the worst market conditions in decades.
"I'd guess there are some here today who don't much feel like giving thanks," the Reverend Barry Gaeddert, an American pastor from the International Community Church in London, told the congregation in his sermon. "It's been a wild ride this fall, and it's by no means over."
He offered words of comfort to those attending the service who, he said, "are going through things that nobody else knows about" as they struggle to regain stability in lives upended by events like the sudden collapse in September of Lehman Brothers, which had 5,200 employees in London, many of them Americans.
As the congregation headed out into a chill, blustery English winter morning, some of those working in the financial industry paused to discuss what the crisis meant for Americans here. Brian Tipple, a 50-year-old investment manager, said that for many Americans he knew working in London the uncertainties were mounting.
"It's just beginning to take hold," he said, as U.S. companies faced with the high cost of supporting expatriate Americans in London - eased in recent weeks by a sharp fall in the value of the pound against the dollar, but still punitive because of living costs in Britain, which are among the highest in the western world - began notifying them that they would be transferred back to the United States.
His wife, Traci, said one sign of the growing exodus was visible on the notice boards of the American schools, one in the London neighborhood of St. John's Wood and the other in Surrey, south of London, where the couple's two teenage daughters are being educated. "People want to sell their TVs and other appliances," she said, since the 220-volt equipment required in Britain will not work back home in the United States, with its 110-volt electrical system.
For the service Thursday, organizers had laid the memorial book listing the names of the British-based American servicemen who lost their lives in World War II open to a page with a dedication written in 1946 by General Dwight D. Eisenhower, the supreme allied commander who oversaw the D-Day landings and the drive on Berlin.
A short distance away, a copy of the memorial book lay open to the page giving the name of perhaps the most famous of all the American servicemen honored by the chapel: Major A.G. Miller of the United States Army Air Force, better known as the band leader Glenn Miller, killed when the aircraft carrying him across the English Channel to France disappeared on Dec. 15, 1944.

A chatterer's guide to easing anxiety
By Tim Sanders
Thursday, November 27, 2008
I AM a man on a mission. My job, or some say calling, is spreading the word about corporate social responsibility.
I'm constantly flying somewhere. And when people ask me where I live, I often say, "On a good day, that would be seat 5A."
So I figure that if I have to create a huge carbon footprint from all my travels, I better have a sense of purpose to make it all worthwhile.
In one of my favorite books, "Man's Search for Meaning," the author and Nazi war camp survivor Viktor Frankl argues that when you have a sense of purpose in an effort, you don't suffer as much from its ups and downs.
In the psychology field, he's known to be a logotherapist — one who prescribes meaning to alleviate mental anguish or anxiety. In my experience, logotherapy works like a charm when it comes to travel and life.
I'm a relentless chatterer, one who actually enjoys talking to my seatmates. I want to find out why my seatmates are traveling. I want to find their purpose.
When someone doesn't want to talk to me, I almost take it as a personal challenge. Fortunately, that doesn't happen often.
As we talk, it's almost inevitable that a seatmate will reveal something that can lead to some great conversations.
On a recent flight to New York, I sat next to a man who works for a small start-up in California. He looked very tired.
When we first started talking, he was full of complaints about his day on the road.
But when I asked him about the purpose of his trip, he started to tell me about his big sales presentation.
If it was successful, his small company would receive precious funding to finally launch its product line.
Once he started talking about why he was traveling, his attitude actually improved. By the time the plane landed, he was happy and looked a lot less weary. He even called his wife to tell her how great he felt.
I also recently met a woman who was on her way to Russia to see her granddaughter for the first time.
In the gate area at the Copenhagen Airport, she seemed absolutely miserable. After boarding, I realized that she was right across the aisle from me. The first thing she did was scowl at the flight attendant while demanding a drink.
As we sat on the runway, waiting almost two hours for a storm to pass, we finally got to talking. She explained how nervous she was when she flew and how awful travel has become over the last few years.
Her whole demeanor changed when I asked her why she was headed to Russia. Instead of being nervous, she turned into a proud and confident grandmother. She even showed me pictures of her granddaughter and told me how this trip was one of the highlights of her year.
Although our flight was very turbulent, this woman, who was a nervous flier, remained happy. She even gave me a thumbs-up sign.
That made me feel great.
And when I fly, I may not give people a thumbs-up sign, but I do try and make it a point to say thanks. Especially to the security people. I am one of those rare individuals who doesn't hate TSA
I was in New York at the World Trade Center on Sept. 11. I ran down the street and got knocked down. I was scared, and it changed me.
So when the security lines are long, I just go with it. These people are just trying their best to keep us safe. That is their purpose.
Take some time to think about yours during your next flight. You might be surprised at how it changes your day. And maybe your life.

Spain unveils €11 billion economic stimulus package
South Korea to inject billions into banks through U.S. credit line
ArcelorMittal to cut 9,000 jobs as steel demand slips

UBS finds 'limited' cases of tax fraud
By Julia Werdigier
Thursday, November 27, 2008
LONDON: UBS discovered a small number of tax-fraud cases as part of an investigation into whether the Swiss bank helped clients dodge American taxes, the bank chairman, Peter Kurer, said Thursday.
"Our investigations have uncovered a limited number of cases of tax fraud under both U.S. and Swiss law," Kurer told shareholders at a special meeting in Lucerne, Switzerland. He asserted that Swiss bank-client confidentiality agreements had not been broken during an unfolding investigation of the bank's activities, adding that the rules were not "there to protect cases of tax fraud."
The U.S. Justice Department has argued that UBS, which is based in Zurich and has large operations in the United States, helped as many as 17,000 of its American clients evade $300 million a year in taxes through hidden offshore accounts. Kurer's remarks contained no specifics about whether he disputed the American estimate, nor did he clarify what number of fraud cases he would regard as "limited."
Raoul Weil, who oversaw UBS's cross-border private banking operations until 2007, was indicted this month by a U.S. grand jury on a charge of conspiracy.
Kurer asked for the support of the shareholders, of whom about 2,400 gathered at a conference center on Thursday to approve his a recapitalization program for UBS.
Shareholders applauded when Kurer said former executives and other managers had agreed to repay the bank a total of 70 million Swiss francs, or about $58 million, in bonuses. He added that UBS was still in discussions about getting more money back. Marcel Ospel, who was chairman when UBS accumulated more than $40 billion in write-downs on assets linked to the U.S. subprime market, surrendered about 22 million francs of pay. Peter Wuffli, former chief executive, and Marco Suter, former finance chief, also gave up part of their compensation.
Kurer reaffirmed a decision that none of the bank's current managers would receive a bonus for 2008 and that UBS was going ahead with plans for a new remuneration system, which was announced this month. The new system includes lower bonuses, which will not be fully paid upfront.
Some shareholders still expressed dissatisfaction with management and criticized UBS for seeking help from the Swiss government shortly after saying it would not need extra funds to weather the crisis.
The bank agreed earlier to transfer $60 billion worth of toxic assets tied to the U.S. subprime market into a separate entity backed by the Swiss central bank and to issue 6 billion francs in mandatory convertible notes to the government, which could leave UBS partly state-owned. Shareholders approved the steps by an overwhelming majority at the meeting.
Kurer called on shareholders to support management despite a 66 percent decline of the bank's share price over the last year and said he "understands the disappointment and anger" among them. But he added: "Fear and anger are bad advisers. To solve problems, we have to keep a clear head and work together and not against each other."

Sharing the pain, but not equally
Thursday, November 27, 2008
NEW YORK: It was as badly timed a takeover as there was during the private equity boom.
At the end of 2006 Apollo Management, the private equity firm headed by Leon Black, agreed to buy Realogy, a conglomerate with a number of franchised real estate businesses, among them Century 21 and Coldwell Banker, for $7 billion in cash.
That was a few months after house prices peaked. By the next spring, when the deal closed, subprime mortgage lenders were starting to go broke. The great housing bubble was bursting, and that was very bad news for a company whose revenue was based on how many homes it could sell, and on how high the prices were.
Now a struggle is emerging over how the unfortunate lenders should be treated. Realogy, under the direction of Apollo, is using a classic divide and conquer strategy. Bondholders are screaming that the tactics are illegal.
The tactic is simple. Tell one group of bondholders that they could move up in the capital structure and be more likely to get paid if your company went broke. That sounds attractive. But to get there, they would have to agree to forget about collecting most of the money they are owed. They are being asked to trade in old bonds for new loans with much smaller face values.
Overindebted consumers can only look on with jealousy, wishing they could pull off something similar, perhaps by telling one credit card company that they would pay another one first unless the first company agreed to forgive most of what it was owed.
No owner of Realogy bonds has to make the exchange, of course. But if a bondholder turns it down, and others do make the exchange, that bondholder may find that he is much farther back in line, with even less probability of being paid anything.
One thing that makes this tactic irritating is that it is planned by the people who are supposed to be at the rear of the line in case of bankruptcy - the people who own the equity. In theory, they should not get anything if all the creditors are not paid in full. In reality, they often can get away with changing the rules.
Realogy wants to make as much as $650 million in debt disappear, trading $500 million in new loans for $1.15 billion in old bonds.
Not, however, that the new loans have any guarantee of being paid off. But not only are they senior to the old ones, they mature a few months earlier. There is a possibility that the bondholders who refuse the deal get nothing in the end.
All this is possible because companies, in most cases, do not owe fiduciary duties to their bondholders, as they do to their creditors. Realogy claims that it has the approval of senior creditors to issue more debt and says that is all that is needed. The debtor-creditor transaction is a contractual one, and if a tactic is allowed by the contract, the courts generally will not stop it.
Of course, those creditors have no reason to care. Their claims will remain senior to everyone else's. It is sort of like getting Jimmy's permission to hit Bobby. Bobby may not think Jimmy was the appropriate person to ask.
Realogy has yet to violate the covenants on its bonds, but its business is suffering and it is reasonable to think it might. Revenue is down 21 percent so far this year, and Realogy has not been able to cut costs that fast. Losses are rising.
There is one part of Realogy's business that is faring well. Revenue is soaring at a subsidiary that sells foreclosed homes. It reports that in the third quarter, business in the area around Sacramento, California, was up 91 percent from a year earlier. But that is not enough to offset the growing problems in other operations.
The bonds trade as if disaster were almost certain, all at prices of less than 20 cents on the dollar. Some of them go for prices where a profit would be assured if the bond simply paid interest for the next 18 months, before becoming totally worthless.
Realogy disclosed this week that a lawyer, claiming to represent owners of a majority of one class of bonds, had threatened to sue, claiming the offering violated bond indentures. The company did not identify the lawyer, but one person involved in the case said Carl Icahn, the financier, owned the bonds. Icahn declined to comment.
Realogy became an independent company in July 2006, just a few months before Apollo swooped in to buy it.
Realogy began trading when Cendant, a franchising conglomerate that had fought back from what was, before Enron, the largest accounting fraud in U.S. history, split into four pieces.
Realogy was the only one of the four that worked out for shareholders, selling to Apollo for 19 percent more than the shares were worth just after the split-up. The other three - PHH, a mortgage services company; Wyndham Worldwide, which franchises hotel brands like Days Inn and Ramada; and Avis Budget, the car rental company - have all cratered in the recession. PHH, with a 72 percent decline, is the best performer of the three. Avis Budget, down 97 percent, is the worst.
As it turned out, Cendant split up not long before bad times arrived at virtually all of its businesses. Apollo, which did not see what was coming, now wants those who lent money to it to share the pain.

Arizona towns rise and fall with price of copper
By John Collins Rudolf
Thursday, November 27, 2008
MORENCI, Arizona: Night was falling, and Ed Morin was headed to work. He bought an extra-large can of energy drink and a tin of snuff at the company store. Then he drove up the hill and through the gates of the Morenci copper mine, to spend the next 13 hours running a front-end loader in the pit.
It was a familiar routine to Morin, 32, who worked at the mine for almost a year. "The sun goes down. The sun comes up. Call it a day," he said. "That's money in your pocket."
Morin was but one of thousands of new workers who have flocked to the small towns of Arizona's copper belt in recent years, to take part in a major revival of the state's once-battered mining industry. This year, even as the dire housing market contributed to widespread job losses and other economic woes in Arizona, the mines remained a bright spot.
But the arrival of the credit crisis this autumn has stalled the mining boom. Reeling financial markets stripped copper of 60 percent of its value in only a few months, and expansion projects in Arizona, the leading copper-producing state in the United States, are being postponed.
"The end has come just incredibly abruptly," said Nyal Niemuth, chief mining engineer for the Arizona Department of Mines and Mineral Resources. "There weren't many of us predicting this collapse."
In late October, Freeport-McMoRan Copper & Gold, the copper industry's largest employer in Arizona, announced plans to lay off 600 mine workers in the state. Those layoffs come in addition to hundreds of independent contractors already let go by the company.
"Most of those employees were recently hired, many in anticipation of expansions, which have been deferred," Eric Kinneberg, a Freeport-McMoRan spokesman, said in an e-mail message.
Demand for copper - a component in construction, industrial and manufacturing uses - has long been closely associated with the overall health of the world economy. After a steep slide this autumn, prices stabilized in recent days. Another decline could signal that a more prolonged global recession is on its way.
At today's price of about $1.68 a pound, copper remains marginally profitable to produce at many Arizona mines, giving some mining communities hope they may avoid more sweeping layoffs.
"Right now we're taking a deep breath and hoping that everything's going to be O.K.," said Mayor Fernando Shipley, of Globe, Arizona, home of several mines and one of the country's last operating smelters.
A collapse in copper production - and a return to the mass layoffs and mine closings of the past - would mark a major reversal for Arizona's copper industry, which has only just recovered from one of its worst slumps in decades.
That era of relentless downsizing, driven by a sustained period of copper prices lower than at any point since the 1930s, reversed course sharply in late 2003, as prices surged in response to turbocharged demand from China.
The mining industry responded by increasing employment and initiating a wave of exploration and new development not seen in a generation. For long-depressed mining towns like Morenci, the thousands of new jobs meant a new lease on life. The Morenci mine - owned by Freeport McMoRan, which acquired the site in its merger with Phelps Dodge last year - doubled its work force over the last five years, to 4,000 employees. Production at the mine has risen by 55 percent since 2003, to an average of one million tons of ore a day.
This autumn, despite the gathering economic storm, an almost frenetic energy pulsed through Morenci, a remote hamlet tucked in a mountain valley in southeast Arizona, evidence of the intense effort that has been required to increase the mine's production.
Hundreds of new homes, many still under construction, lined steep hillsides dotted with sagebrush and creosote. Day and night, mud-streaked pickups and tanker trucks loaded with diesel fuel and with sulfuric acid, used in copper extraction, rumbled continuously along the two-lane highway that cuts through the center of town.
Despite the new construction, the town's limited housing stock - all still company-owned - has been badly overwhelmed, leading Freeport-McMoRan to haul in several dozen corrugated steel trailers to fill the gap. The trailers, assembled in an expansive gravel lot, form a makeshift community the miners call Man Camp. There, $20 a day secures a tiny room, breakfast, lunch and dinner in a company mess hall.
"Three hots and cot," said Morin, who lived at the camp for almost a year before leaving this month because of family obligations. "It's not a bad deal."
Earning about $28 an hour, he saved more than $60,000 in less than a year by working hundreds of hours of overtime. His work ethic was motivated in part by the experiences of his father and grandfather, both miners who lived through copper crashes in their day.
With the drastic fall in copper prices, the atmosphere in the town has shifted sharply since this summer, said Hector Ruedas, a member of the Morenci School Board. "The mood is not good," said Ruedas, himself a former mine employee. "You go downtown and there aren't smiling faces anymore."
The surge in exploration and development swept across the West, from Alaska to New Mexico. But the epicenter of the boom was Arizona, the source of 62 percent of U.S. copper and about 5 percent of world supply.
Alongside Chile, the state continues to rank as one of the two richest copper-producing regions in the world because of the proliferation of rich, near-surface deposits, a remnant of severe volcanic events in the distant past.
Over the past five years, the world's largest mining interests - BHP Billiton, Freeport McMoRan, Rio Tinto and Sumitomo - poured billions of dollars into reopening long-shuttered operations and expanding production at existing mines in the state. For the first time in more than 30 years, they also opened new mines, bringing a promise of prosperity to struggling rural areas, along with challenges.
Among the first to be touched by the expansion was Safford, Arizona, a small agricultural community about 150 miles southeast of Phoenix, where Freeport McMoRan recently opened a $550 million open-pit copper mine. When work on the mine began in July 2006, 1,500 construction workers flooded into the Safford valley with money to burn.
"If you had a pulse, you could get a job," said Jim Palmer, chairman of the Graham County Board of Supervisors.
Not all, however, are pleased by the arrival of the mine. Among them is Bud Smith, 84, a cotton farmer whose grandfather settled in the Safford Valley well over a hundred years ago, traveling there from Utah in a covered wagon.
"Now, you pull out on the road and it's just a solid string of cars, coming and going at shift change," Smith said. "I don't care for it, but that's progress, I guess."
For old timers, the price swings of recent months cannot help but evoke searing memories of strikes and layoffs, buyouts and bankruptcies - and the hard times that invariably follow a copper crash. "It goes up and down, the copper industry," said Richard Perez, 68, a retired miner who runs a diner in town. "Being with the copper mines is like being with a wife for 25 years. You argue and you fight sometimes, but when it's over and done with, you're happy to have them around."

Indonesia seeks credit lines as $4.4 billion deficit looms
Babcock & Brown's dispute with bank puts its future in jeopardy

New details about Reserve Primary fund breaking the buck
By Diana B. Henriques
Thursday, November 27, 2008
The Reserve Primary Fund did break the buck, just not when everyone thought it did.
The fund, whose announcement on Sept. 16 that its per-share value had fallen below a dollar touched off a panic in the money market, corrected its timeline of events on Wednesday.
Initially, the $62 billion fund said its per-share value had fallen to 97 cents at 4 p.m. on Sept. 16, after its Lehman Brothers investments were written down to zero.
The latest version now goes like this: On Monday, Sept. 15, the Lehman notes were written down to 80 cents on the dollar, which did not immediately cause the fund to break the buck. The fund correctly reported a per-share value of $1 all that day, the fund said in a statement.
But the next day, the employees who calculated the fund's share prices did not reflect the new Lehman values in their equations. If they had, given a sharp jump in redemptions, they would have realized that the fund broke the buck at 11 a.m. with a share price of 99 cents, not the $1 quoted most of the day. Then at 4 p.m., after the Lehman assets were cut to zero from 80 cents, the per-share price was accurately reported as 97 cents.
This means that those who submitted redemption orders between 11 a.m. and 4 p.m. on Sept. 16 expected a penny a share more than they were entitled to. That adds a fresh knot to the legal macramé already entangling the fund but poses no practical problems because redemptions have been suspended for more than two months and no one has actually received the undeserved penny.

Mining deal's collapse bodes ill for investment banks
By Douwe MiedemaReuters
Thursday, November 27, 2008
LONDON: The collapse of BHP Billiton's $66 billion takeover of Rio Tinto robs bankers of one of the few chunky deals left as their business crumbles in the credit crisis.
Moribund markets offer plenty of excuses for buyers to get out of mergers that were often agreed to long ago, and few new deals are popping up because debt is hard to get and the value of any asset is almost impossible to determine.
A recovery may take years, bankers said.
"It's not next year; it's going to take a long time," said one investment banker, asking not to be named for lack of authorization to speak about clients in public. "We see a gradual slowdown of anything that is driven purely by strategy rather than either opportunism or financial necessity."
Failed deals have hit a record high, and one-third of the deals announced this year in the United States were terminated, according to a UBS study.
A squeeze is hitting the syndicated loan market, the first liquidity resource for financing deals.
Banks are making money from bailing out less fortunate rivals, with Bank of America's purchase of Merrill Lynch and Lloyds TSB Group's merger with HBOS among the 10 largest deals still open.
The Swiss drug maker Roche Holding hastened to say Tuesday that it was still committed to a $43.7 billion bid to buy the biotech group Genentech, the third-largest deal in the works, according to Thomson Reuters data.
But speculation has long surrounded the buyout of the Canadian telecom giant BCE - the second-largest deal still around - with investors fretting that the deal could be repriced, delayed or even abandoned.
The credit crisis initially stoked expectations that companies would return to the fore and drive consolidation, as private equity firms suddenly lacked access to debt markets and leveraged buyouts ground to a halt.
When that did not happen, investment bankers said prospective sellers just needed time to get used to the idea that their share prices had dropped so much and a deal would yield less than they had first thought.
But with the volume of mergers and acquisitions down roughly a quarter this year, that hope has also evaporated. Bankers are focusing on restructuring deals to shore up financially weak companies, because the sale of any company remains cumbersome.
BHP Billiton, the Anglo-Australian mining giant, said the sale of some of its units would have been hard. Analysts said such a sale would have been mandatory for the deal to be approved by the Europe Union's antitrust watchdog.
Debt markets reacted with relief when the deal was called off, and the cost of protecting BHP Billiton's debt against default fell sharply. Syndicated loans markets also cheered the fact that they no longer had to find buyers for the huge financing.
Credit markets are bracing for a surge in demand next year, when a wave of companies will need to renew maturing bonds while the loan market also needs to offload huge financing of mergers and acquisitions, by refinancing loans into bonds.
BHP mentioned concerns about its debt levels to explain why it opted out of the mega-merger, the valuation of which at one stage amounted to a whopping $193 billion.
The advisers of Rio Tinto, itself an Anglo-Australian mining giant, though smaller than BHP, will gain most from the collapse of BHP's attempt to buy it, but it is a big disappointment for the suitor's investment bankers, who stood to reap a pile of extra fees if the deal succeeded.
For the investment bankers at the losing end of the takeover, it comes at about the worst possible time, as the investment banking industry continues to get hammered by the credit market turmoil.
According to joint estimates by Thomson Reuters and Freeman, based on the peak offer, BHP Billiton's advisers were in line to receive a total of $140 million in fees, an estimate that includes both upfront and closing fees. They are now likely to have pocketed only $10 million to $15 million. The advisers were Citigroup, Goldman Sachs, UBS, Gresham Investment House, HSBC and Merrill Lynch as a corporate broker.


Woolworths in hands of administrators as British retailers warn of fresh trouble

Merrill banker picked to sell bank stakes
Thursday, November 27, 2008
LONDON: A top banker has been recruited from Merrill Lynch to handle the sale of the government's investment of up to 28 billion pounds in a trio of banks, the company set up to manage the holdings said on Thursday.
UK Financial Investments (UKFI), set up to manage the government's shareholding in Royal Bank of Scotland , Lloyds TSB and HBOS , named John Crompton as head of market investments.
Crompton will be responsible for devising and executing a strategy for selling the stakes when appropriate. He joins from Merrill , which he joined last year as managing director and head of equity capital markets for EMEA. He has 20 years' experience of capital markets and was previously at Morgan Stanley, and spent two years on secondment to the UK Treasury from 2005 to 2007.
Britain last month underwrote share offers as part of last month's 37 billion pound bank rescue plan. It is likely to see the state buy 15 billion pounds of RBS shares, giving it a 58 percent stake, and buy up to 13 billion pounds of shares in the combined Lloyds/HBOS, or a 43 percent holding.
(Reporting by Steve Slater; Editing by David Cowell)

Bank should have "acted earlier" on rate cut
Thursday, November 27, 2008
LONDON: Policymakers should have started cutting interest rates much sooner to help prevent an economic crisis in Britain, Bank of England policymaker David Blanchflower was quoted as saying on Thursday.
"This is not something I wanted to get right," Blanchflower told the Guardian in an interview.
"That's why I warned that this was going to happen unless we acted -- I wanted to prevent the crisis. I'm not saying everything would have been wonderful, but at least if we'd acted earlier we would be ahead of events and not reacting to them."
The Bank slashed interest rates by 1.5 percentage points this month to shore up the economy against a deep recession.
Blanchflower, who has voted to cut interest rates every month since last October, said the bank was now "doing the things we should be doing."
"All hands are to the pump and I get the sense that people have absolutely got it right."

FSA raises deposit protection in building society mergers
German jobless rate hit 16-year low in November
Bailouts increase cost of insuring rich countries' bonds
Macquarie is said to be cutting as much as 15% of its staff in Asia

Isolation shields frontier stock markets from crash
Thursday, November 27, 2008
By Peter Apps
Trading with whiteboards and paper slips, a handful of fledgling stock markets such as Iraq and Ghana have escaped the crash of their more developed rivals -- benefiting in large part from isolation and lack of liquidity.
Ghana's stock exchange is up 60 percent this year according to the official indicator, in sharp contrast to other emerging markets which are down more than 60 percent on the year to date, savaged by recent market turmoil.
The official indicator for Baghdad's Iraqi stock exchange showed it soaring 40 percent in September alone -- the same month Lehman Brothers went bankrupt and other markets nosedived.
Some distrust that figure, but say that overall, Iraqi stocks remain in positive territory this year.
Neither market is electronically traded -- although both aim to become so. Both have been largely overlooked by foreign investors even during the recent boom in frontier markets that preceded the crash.
Godvig Capital fund manager Bjorn Englund -- whose $22 million (14.3 millionpounds) Babylon fund is the only substantial foreign portfolio investor in the Iraqi bourse -- says the moral for investing in a downturn is clear.
"The lesson is that you shouldn't follow the herd," he told Reuters by telephone from his office in Sweden. "You have to go somewhere where other people are not, where you have the first- mover advantage."
Other markets still up by mid-November included Tunisia and Ecuador, again small markets with little foreign involvement. By contrast, according to index provider MSCI Barra, more mainstream frontier markets from Nigeria to the Middle East have broadly tracked the standard emerging markets index.
The Iraqi stock exchange lost well over half its value after it opened in 2004 following the U.S. invasion the previous year, but has benefited this year from a dramatic fall in sectarian violence and, until recently, from high oil prices.
As world markets tumbled last month, sweaty investors waved and made hand signals at the brokers working behind a low partition. Hotels and banks are the hottest picks among the exchange's 95 listed companies, as investors eye a reconstruction bonanza and the need to house expatriate workers.
Englund said Iraq's isolation from global markets was also key. International investors are often highly leveraged and liable to sudden margin calls, prompting them to pull money from emerging markets across the board regardless of fundamentals.
"There is very little foreign money in the (Iraqi) market so it has not seen the sort of outflows you have had elsewhere," he said. "The exchange has been immune to what has happened in the outside world."
But the market is far from transparent, he warned. He is sceptical of the official main index figures, saying its calculation is opaque and does not always correspond to movements in the main stocks.
The more liquid ISX banking index, which makes up more than 80 percent of turnover, was flat in September and has risen 6.2 percent this year in local currency or 9.6 percent in U.S. dollar terms as the dinar strengthened.
"That is still pretty good when you compare it to what has happened elsewhere," Englund said.
Ghana too has benefited from good local fundamentals, based around recent oil discoveries, good prices for its main gold and cocoa exports, political stability and economic growth, although the market has retreated from its peaks of early October.
The IMF expects Ghana's economic growth to slow to 5.8 percent in 2009 from a projected 6.5 percent this year as the global slowdown hits. But those rates are still well ahead of advanced economies, where 2009 growth is seen below 0.5 percent.
And crude oil production, scheduled for late 2010, should give a boost to what is already one of Africa's more attractive and stable economies for outside investors.
But again, Ghana's relative isolation is key to recent gains.
"There is not the foreign investment here that you get in some markets, and that is why we have not seen the falls you saw in South Africa or Kenya," said Databank analyst Dorothy L. Ametefe from the capital Accra.
She said lack of liquidity in the market was itself limiting the speed of the correction lower, with both foreign and local investors who were trying to sell out finding it almost impossible.
"The problem is that volumes have dried up and it is very difficult to find buyers at these prices," she said. Some days the market is effectively untraded.
But if foreign investors are trying to exit Ghana, they are still coming into Iraq. Englund said they made up almost 18 percent of overall trading volume since August, more than triple the average during the December-February period.
Both markets' transition to electronic trading should deliver greater volatility and ease of access for foreign investors in the hope of facilitating long-term investment -- but that may end the isolation that has protected them.
"There are clear advantages to electronic trade," said Databank's Ametefe. "But it will increase the vulnerability to external events."
(Additional reporting by Kwasi Kpodo in Accra and Mohammed Abbas in Baghdad; Editing by Ruth Pitchford and Sara Ledwith)

Nokia will sell only luxury cellphones in Japan
Thursday, November 27, 2008
TOKYO: Nokia, the biggest cellphone maker in the world, said Thursday that it would stop selling mobile phones in Japan, except for the luxury Vertu line, after struggling to expand there.
Nokia, based in Finland, previously said it would cut costs "decisively," expecting global mobile phone sales to fall next year in the economic downturn.
Japan is the fourth-largest cellphone market after the United States, China and India. But it makes up only a tiny part of sales at Nokia, whose products have failed to compete with the more sophisticated Japanese phones.
Mobile phone companies expect limited growth in Japan, where 109 million subscribers, or some 85 percent of the population, already own a mobile phone. In addition, a new sales plan based on higher telephone prices is expected to reduce annual cellphone sales in Japan by about 20 percent.
Nokia's executive vice president, Timo Ihamuotila, said Nokia's business in Japan would concentrate on research, development and sourcing for the global market as well as specific projects like Vertu.
The quirks of the mobile phone market in Japan have prevented foreign companies, including Nokia's rivals like Samsung Electronics and LG, from being successful. Most of the cellphones used in Japan are part of third-generation networks and have features like television broadcasting and electronic payment functions. This makes it tough for outside manufacturers to compete with phones made in Japan.
Overseas companies, excluding Sony Ericsson, only have about 5 percent of Japan's cellphone market, according to IDC Japan, a research company. In turn, Japanese manufacturers have only a small presence outside of their home market.
"Nokia is facing global earnings problems and many other issues, and this shows Japan was a low-priority market at a time when they are shoring up global operations, even though it may still be attractive," IDC Japan's analyst, Michito Kimura, said.
The move was still rather abrupt as NTT DoCoMo, the biggest mobile phone operator in Japan, said this month that it would sell a new Nokia smartphone for the winter season.
The third-ranked Japanese operator, Softbank, also sells Nokia phones.
Nokia, which has a nearly 40 percent share of the global market, had originally planned to increase its market percentage in Japan to the double digits. It had only about 0.3 percent of the Japanese market last business year, according to the Nikkei newspaper.

Webcams keeping far-flung families virtually within touch
By Amy Harmon
Thursday, November 27, 2008
DEER PARK, New York: Her grandfather wanted to play tea party, but Alexandra Geosits, 2½, insisted she only had apple juice.
She held out a plastic cup, giggling as she waited to see if he would accept the substitute.
That they were a thousand miles apart, their weekly visit unfolding over computer screens in their respective homes, did not faze either one. Like many other grandchildren and grandparents who live far apart, Alex and Joe Geosits, 69, have become fluent in the ways of the webcam.
"Delicious," Joe Geosits pronounced from Florida, pretending to take a sip from the cup, which remained clasped here in Alex's small hand.
Video calling, long anticipated by science fiction, is filtering into everyday use. And demographic groups not particularly known for being high-tech are among the earliest adopters.
In a way that e-mailed photos and postcards never could, the webcam promises to transcend both distance and the inability of toddlers to hold up their end of a phone conversation.
Some grandparent enthusiasts say this virtual form of communication makes the actual separation even harder. Others are so sustained by webcam visits with services like Skype and iChat that they visit less in person. And no one quite knows what it means to a generation of 2-year-olds to have slightly pixelated versions of their grandparents as regular fixtures on their screens.
But at a time when millions of people around the world are beginning to beam themselves across the ether, the webcam adventures of the nursery school set and their grandparents offer a glimpse at what can be gained - and what may be lost - by almost-being there.
"We would be strangers to them if we didn't have the webcam," said Susan Pierce, 61, of Shreveport, Louisiana, who was to be a virtual attendee at Thanksgiving dinner with her grandchildren in Jersey City, New Jersey, this year.
Over the last year, Pierce and her husband, Joe, watched Dylan, 17 months, learn to walk and talk over the webcam, and witnessed his 4-year-old sister Kelsie's drawings of people evolve from indeterminate blobs to figures with arms and fingers and toes.
But the powerful illusion of physical proximity also sharpens their ache for the real thing. "You just wish you could reach out and cuddle them," said Pierce, a nursing professor. "Seeing them makes you miss them more."
In the United States, nearly half of grandparents live more than 200 miles, or about 320 kilometers, from at least one of their grandchildren, according to AARP, a U.S.-based organization for people 50 or older. Professor Merril Silverstein, a sociologist at the University of Southern California, has found that about two-thirds of grandchildren see one set of grandparents only a few times a year, if that.
But many grandparents find the webcam eases the transition during in-person visits, when grandchildren may refuse to sit on their laps or reject their hugs because they don't recognize them. As one webcam evangelist wrote on her blog, "You'll be able to pick up where you left off without those warming up to you, awkward moments."
On Pierce's most recent visit to New Jersey last month, for instance, Dylan called out the nickname he uses for her over the webcam, "Buffy!" and jumped into her arms. "It melted my heart," Pierce said.
Urged on by strong word-of-mouth, grandparents are often the ones to buy webcams for their grandchildren, or, technically, their own children. But the youngsters, who spend much of their time playing games of pretend, may shuttle more easily between the virtual and the real.
The recent inclusion of webcams in most laptops helps account for a surge in video calling over the last year, said Rebecca Swensen, an analyst at the technology research firm IDC.
Internet companies are also promoting "video chat" as an enhancement to standard instant-messaging and Internet phone services.
About 20 million people around the world have made a video call for personal communication in the last month, Swensen said. American soldiers in Iraq beam themselves home over webcams; parents on business trips (including President-elect Barack Obama) bid goodnight to their children, face-to-onscreen face.
Grandparents and grandchildren are already working on ways to nudge the medium a little closer to actual teleportation.
When Deborah Lafferty, 55, and her granddaughter Natalie, 2, want to hug, for instance, Natalie comes to the screen in Seattle and squeezes her own face, just as her grandmother does to her when she visits from England. Lafferty then squeezes her face, a proxy.
"Grammy loves you so much," she says, echoing the phrase she uses in person.
Grandparents use their own children as surrogates to close the tactile gap. Barbara Turner once sang her fussing newborn grandson to sleep from Ottawa, watching as her son rocked him in Indiana. She could almost feel the baby against her shoulder.
But this week Turner and her husband rushed to Indiana for the birth of her second grandchild. "Some things you just can't do over the webcam," she said. "You make the trip."

U.S. woman convicted in MySpace suicide case
By Jennifer Steinhauer
Thursday, November 27, 2008
LOS ANGELES: A federal jury here has handed down what legal experts said was the country's first cyber-bullying verdict, convicting a Missouri woman of three misdemeanor charges of computer fraud for her involvement in creating a phony account on MySpace to trick a teenager who later committed suicide.
The jury deadlocked Wednesday on a fourth count of conspiracy against the woman, Lori Drew, 49, and the judge, George Wu of the U.S. District Court for the Central District of California, declared a mistrial on that charge.
While it was unclear how severely Drew will be punished - the jury reduced the charges to misdemeanors from felonies, and no sentencing date was set - the conviction was highly significant, computer fraud experts said, because it was the first time that a federal statute designed to combat computer crimes was used to prosecute what were essentially abuses of a user agreement on a social-networking site.
Under federal sentencing guidelines, Drew could face up to three years in prison and $300,000 in fines, though she has no previous criminal record.
In a highly unusual move, Thomas O'Brien, the U.S. attorney in Los Angeles, prosecuted the case himself with two subordinates after law enforcement officials in Missouri determined Drew had broken no local laws.
O'Brien, who asserted jurisdiction on the theory that MySpace is based in Los Angeles, where its servers are housed, said the verdict sent an "overwhelming message" to Internet users.
During the trial, prosecutors portrayed Drew as working with her daughter, Sarah, and Ashley Grills, a family friend in Dardenne Prairie, Missouri.
Testimony showed that they created a fake MySpace account to communicate with Megan Meier, who was 13 and had a history of depression and suicidal impulses. Megan hanged herself in October 2006, after, according to testimony, receiving cruel messages.
Legal and computer fraud experts said that the application of the federal Computer Fraud and Abuse Act, passed in 1986 and amended multiple times, appeared to be expanding with technology and the growth of social networking on the Internet. More typically, prosecutions under the act have involved cases involving people who hack into computer systems.

Randy Scandinavia? Calm down, boys, you're misinformed
By Michael Kimmelman
Thursday, November 27, 2008
OSLO: Despite the come-on of its irresistible title, the show here called "Whatever Happened to Sex in Scandinavia?" turns out to be not quite as advertised. It's as erotic as pickled herring. Two 30-something men looked crestfallen recently at the sight of so many documents and so much high-minded art. Noticing a lone naked young woman in a video across the room, they positioned themselves discreetly before it, full of hope, then realized it was a German documentary about the making of a Playboy photo shoot, meant to deflate all erotic illusions.
Dreaming of the young Britt Ekland but encountering instead yellowing editions of Herbert Marcuse and fabric knit into Rorschach patterns by the Conceptualist Rosemarie Trockel, they retreated, forlorn, into the gray autumn.
It's a good question, though. What did happen to the image of Scandinavia as the frigid tundra of hot sex?
The show is organized by the Office for Contemporary Art. Call it a virtuous mess, really an essay masquerading as an exhibition, unearthing a wealth of historic information. It tracks the roots of sexual liberation in Scandinavia to longstanding state-sponsored social movements, like women's rights, sex education, health care and freedom of expression. Naturally, when the cold war arrived, the United States began casting an increasingly wary eye on this calm, liberal, peace-loving region of saunas, socialism and smorgasbord, neighboring the Soviet Union.
A "lack of moderation discernible on all fronts" is how Dwight D. Eisenhower assessed Sweden in 1960, seeing Scandinavia in general as a cautionary tale about extended social welfare. "We don't sin any more than other people, but we probably sin more openly," responded an irate Swedish baker, when approached by a journalist. Other Swedes noted that the Kinsey Report and tales of wife swapping exposed an America no less fixated on sex than Scandinavia, only more furtive and hypocritical about it. True enough.
As the columnist C. L. Sulzberger observed in The New York Times after Denmark, the most libertine of the Scandinavian constellation, legalized pornography, "There is nothing in the least bit either unwholesome or immoral about the Danes who simply share with Benjamin Franklin, an American never renowned for excessive Puritanism, a belief that honesty is the best policy."
But calling out American criticism of Scandinavia for its hypocrisy missed one point: to many Americans, procreation aside, sex was supposed to be naughty. Making it wholesome spoiled the fun. Anyone who has had to acclimate to the obligatory nakedness (supposedly for health reasons) of saunas in this part of the world knows that to be true. There is nothing sexy, believe me, I know, about sweating in a small, dark sauna with a half dozen large, middle-aged Germans.
But I digress. While Eisenhower was taking his swipe at Scandinavia, Federico Fellini was casting Anita Ekberg as the wet wench in the Trevi Fountain in "La Dolce Vita." Even Bob Hope, in the mid-1960s, flirted with Scandinavian free love. In "I'll Take Sweden" the eternally square Hope played a single father who brings his daughter (Tuesday Weld) on a trip to Europe to separate her from her boyfriend (Frankie Avalon), only to decide that marriage is better than time in swinging Sweden.
Too bad the show doesn't slum a bit in sexploitation films like "The Seduction of Inga," "Maid in Sweden" and "My Swedish Cousins," which flooded the American marketplace, alongside pornographic movies, like "The Language of Love," presenting themselves as sex educational. Now dimly recalled for the censorship ruckus caused by its full-frontal male nudity, "I Am Curious (Yellow)" became the ultimate Scandinavian sex film. Its naked couplings, involving notably ordinary lovers, were punctuated by ponderous disquisitions on Swedish labor law, interviews with Olaf Palme, the Swedish labor minister, and a section with the Soviet poet Yevgeny Yevtushenko. Norman Mailer championed it as "one of the most important pictures." There you go. Even "Bonanza" was sexier, in retrospect.
How did Scandinavia turn from "Maid in Sweden" to Ikea, from the purveyor of earnest free love into the purveyor of affordable love seats, from the home of Christina Lindberg (the maid) into the home of Abba?
Marta Kuzma, who organized the exhibition, kindly rounded up a few local experts the other day to mull over an answer at lunch. Berge Ragnar Furre, a Norwegian historian, theologian and a politician in the Socialist Left Party, now on the Nobel Committee, offered this thought: "You have to remember that here in Norway we have also had a strong tradition of liberal democracy that is against sexuality, so we are historically divided as a liberal society." In other words, Norwegians have long split between being sexually liberated and puritanical, while remaining politically liberal in both cases.
Havard Nilsen, a fellow historian specializing in Wilhelm Reich, the psychiatrist and sexologist, nodded. "There has always been a moral high-mindedness here about sexuality, connected, like the labor movement and teetotaling, with issues of reform and salvation," he said. "It used to be that even prominent actors in Scandinavia acted in pornographic movies because it was socially acceptable here, being linked to liberal politics."
But already by the late 1970s, as Wencke Mühleisen, who teaches women's studies at the University of Oslo, pointed out, "feminism in Norway turned against sexuality and toward the family, the winning political line cooperating with the state in looking for equality laws that meant a gradual cleansing of sexual promiscuity." Culture generally became more globalized in the following years, along with patterns of social behavior, meaning that "while it was normal to see women here in the '70s on the beach without a bikini top, now it is very seldom," Mühleisen added. "The commercial ideal body has replaced the desexualized healthy body."
Scandinavian parents today think twice about bathing nude with their children. And at the same time the role of the blue-eyed blond in the sexual pantheon of pornographic commerce has been diluted by the Web and multiculturalism.
Which is to say that Scandinavia has become more like everywhere else. As further proof there has been a fuss here lately over the influx of Nigerian prostitutes. They fill the main street in Oslo at night. Sexual freedom today is bound up with immigration and nationalism, the big issues across Europe.
"Suddenly we are very proud of our native prostitutes," Mühleisen said, shaking her head. "They're supposedly cleaner, more law-abiding, they stay out of the tourist center in Oslo. So a whole new discussion about good Norwegian sexuality — which, this being Scandinavia, includes equal rights for women — has arisen in contrast to bad sexuality, which is now the sexuality of the 'other.' "
Lunch over, the sun already had started to set by midafternoon. Bjorn Blumenthal, a founder of the European Association for Body Psychotherapy, said, "You should go to Vigeland Park before it gets dark." He had a wry smile and a shock of white hair.
Vigeland was Gustav Vigeland, who filled a park in the middle of Oslo during the early decades of the last century with hundreds of his sculptures of naked men and women, young and old. They're vaguely Aryan, cartoonish blimps, muscled and smooth.
In America just the idea of showing naked sculptures in public would invite a scandal. Here Vigeland thought nothing of installing 58 of his figures atop granite pedestals along a bridge at the heart of the park. Cuddling, waving their arms, tossing their hair, suckling babies, they assume elastic poses just shy of the Kama Sutra, always in the altogether, all Scandinavian metaphors for good health and social welfare.
There they stood against the orange-purple sky before a silhouette of barren trees, oblivious to the cold. A busker played a doleful tune on his accordion. The park was empty. Then a mother pushing a baby carriage and few joggers crossed the bridge. Nobody gave the naked sculptures a second glance.
Some things, it turns out, never change.
Swine into pearls
By Claudia Barbieri
Friday, November 21, 2008
ROCCALANZONA, Italy: pearls
Dusk is falling when Gemino Cenci makes his evening round, collecting milk from the farms surrounding this hamlet nestled beneath a ruined castle on the flanks of the Apennine hills, southwest of Parma.
Curds from the milk go to make great wheels of Parmesan cheese in Cenci's dairy plant. The whey feeds the White Landrance and Duroc pigs from which, in neighboring villages in this small region on the southern edge of the Po Valley, the sweetly delicate air-dried ham known as prosciutto di Parma is made.
People drive from miles around to dine on the ham, cheese and other local delicacies in the Cenci family's trattoria across the church square from the dairy.
Some like it sweet, some like it strong.
For sensualists who like their ham delicate, rose pink, shaved translucently thin so that it melts in the mouth, nothing beats a fine prosciutto from the Parma hills.
But gourmets in search of richer, deeper sensations will look elsewhere for their pleasure.
George Scott, a Briton born and raised in Spain, runs a family business between the two countries, exporting to London the luxury-quality Spanish ham known as pata negra, or jamón ibérico de Bellota, from his home in the Sierra de Huelva region of Andalucia.
Pata negra, named for the long-legged, black-hoofed Iberian pig, has a smoothness, a succulent richness and a deep, almost crimson color. The taste is nutty, almost spicy, a legacy of the herbs, and above all, the acorns - bellotas in Spanish - on which the pigs, close descendants of wild boar, feed as they roam freely in the Mediterranean oak and cork forests of southeastern Andalucia and Estremadura.
For four months, in the fall, each pig grazes at least an acre, or two-fifths of a hectare, of oak forest pasture, a fattening diet that produces a ham not only rich in taste, but in iron, magnesium, zinc, calcium, phosphorus, vitamins, niacin - and so much oleic acid that in Spain the pigs are known as four-legged olive trees.
Scott's parents bought the Trasierra estate, near the town of Cazalla de la Sierra, 80 kilometers, or 50 miles, northeast of Seville, as an uninhabitable ruin in 1979. A cluster of outbuildings surrounding olive and wine presses and abandoned dwellings, it had not been lived in or worked for 20 years.
Today, 29 years later, Trasierra has been restored and converted into an elegant 18-room country house hotel, run by his mother, Charlotte Scott, with gardens and terraces enclosed behind a thick encircling wall, in classic Spanish hacienda style.
For his export business, Scott buys whole hams from Jabugo, a small town about 700 meters, or 2,300 feet, high in the hills east of Trasierra with a microclimate that has made its curing cellars famous for the quality of their products.
To cure, the hams are first marinated in natural sea salt to draw out moisture through osmosis - a process that takes two days for each kilogram, or 2.2 pounds, of meat.
Then they are hung in special rooms, the curing cellars, where ventilation and light are carefully controlled, for two to three years, to complete the air-drying process.
For the festive season Scott sells Christmas hampers at prices ranging from £40, or $60, to £190. The £190 hamper contains 400 grams of sliced jamón ibérico de Bellota, a Manchego cheese, sun-dried tomatoes, organic olive oil, a pot of truffle-flavored honey (great with Manchego cheese), various other Spanish delicacies and a bottle of dry manzanilla sherry - the perfect drinking companion for the acorn-fed ham.
Bellota Bellota, a fine épicerie and restaurant group, is a larger-scale distributor, with outlets in Paris, Lyon and Berlin.
Luis Isern, manager of one of its Paris shops, at 18 Rue Nicot in the tony Seventh Arrondissement, said he sells hams from four distinct production regions, each with its own recognizable flavor.
Climate, he said, plays an important role: the colder the production region, the sweeter the ham; warmer regions produce a meat with a coarser, stronger flavor.
Guijuelo de Salamanca produces the sweetest of the four; the Estremadura region of Spain and Portugal produces a more rustic meat; Jabugo, in Andalucia - Scott's region - is known for stronger flavor; while Valle de Los Pedroches, near Córdoba, produces ham that is rich and fruity.
Back in Italy, the Parma ham producers might just recognize some aspects of the curing process - the hams are first salted and then hung to dry; but just about everything else is different.
The pigs, for a start, are different - white Landrance and black Iberian; the living is different - Parma's pigs stay in, while the half-wild Iberians roam; and the diet is different - Parma's pigs are fattened on a blend of cereals and whey from the milk of cows that have themselves been fed on grass and hay from the local hillside meadows.
Langhirano, a small town nestled in the foothills of the Apennines, a couple valleys east of the Cencis' dairy farm, is blessed with a perfect geography and climate for producing prosciutto. The town houses a local prosciutto museum and for the past 11 years has held a festival in September to celebrate its signature delicacy.
The small area covering the Parma hillsides has 167 establishments producing Parma ham. Parmesans say that no Parma ham is better than from pigs fattened on their own hillsides.
Ferrari Barazzoni, a family business, is one of the oldest seasoning factories in the region, located in Langhirano and dating from 1860.
Nino Barazzoni, the current owner, runs a modernistic, super-streamlined establishment that combines the most up-to-date industrial equipment with traditional artisanal methods.
"There is a rigorous selection process in choosing the hams," Barazzoni said. "Only the best are chosen. They have to have perfect color, rose, and perfect weight."
"Quality control is of the utmost importance during the curing process," he added. "The pig is slaughtered at 9 months and is cured for anything between 18 and 22 months in a highly controlled environment of airing and drying."
The small towns of Langhirano, Felino, Sala Baganza, Noceto and Moderno are the top locations for the curing business, and the quality-control procedures and products of their curing houses are strictly monitored by the Consorzio del Prosciutto di Parma, a self-regulating consortium that delivers its prized quality seal - a five-pointed ducal crown - only to hams that meet its rigorous standards.
Patrizio Codispoti, a specialist artisan, carries out one of the key processes, known as the "sugnatura," or greasing. Codispoti, with expert hands, lards and massages the ham's surface, using a special paste of pig fat, rice flour, salt and pepper to soften the meat after it has cured for six or seven months, a first airing stage that is crucial to the ham's ultimate flavor but that hardens it slightly as it dries.
The open windows of the curing house let in aromatic breezes that both dry and penetrate the hams.
"It is the sea breezes, coming across the Apennines, their chestnut, olive and pine forests, that give this ham its special sweet and slightly savory aromas," Codispoti said in an interview.
A leg of about seven kilograms sells for about €700, or $875, to €800.
The ham is best eaten sliced translucently thin, with ripe melon or figs, and accompanied by the local malvasia, a light, fragrant, summery white wine.
So, in the end, which is better, the delicate product of Italy, or the richer product of Spain? The white pig, or the black?
It comes down to a question of personal preference, of course.
To misquote the late Chinese paramount leader Deng Xiaoping: It doesn't matter whether the pig is black or white, as long as the ham is nice.

Spanish novelist Juan Marse wins Cervantes Prize
The Associated Press
Thursday, November 27, 2008
MADRID, Spain: Novelst Juan Marse, known for his descriptions of hardship in his native Catalonia region after Spain's civil war, has won the Spanish-speaking world's highest literary honor — the Cervantes Prize.
Culture Minister Cesar Antonio Molina announced the award Thursday for the 75-year-old writer from Barcelona.
The prize, created by Spain in 1975 and carrying a €125,000 ($160,000) cash stipend, is likened to a Nobel for literature in Spanish and honors a writer's body of work.
Marse is best known for his novels about people enduring tough times in Catalonia after the 1936-1939 civil war, which ended with fascist dictator Francisco Franco's victory and was followed by years of repression against his foes.
Many of Marse's books have been made into movies including "Ultimas Tardes con Teresa," or "Last Evenings with Teresa," in 1983. It is the story of an ill-fated romance between a rich young woman and working-class man.
Last year the Cervantes prize went to Argentine poet Juan Gelman.
The prize is presented each April by King Juan Carlos in Alcala de Henares, the birthplace of "Don Quixote" author Miguel de Cervantes.
Previous winners include Jorge Luis Borges of Argentina, Peruvian-born Mario Vargas Llosa and Carlos Fuentes of Mexico.
The prize tends to alternate each year between Spanish and Latin American writers.

Lawmaker says Germans arrested in Kosovo are spies
Thursday, November 27, 2008
BERLIN: The German government has told deputies that three Germans arrested in Kosovo on suspicion of throwing explosives at an EU office are intelligence operatives, the head of a parliamentary committee said Thursday.
Thomas Oppermann, who chairs the German parliamentary committee overseeing intelligence operations, said the government had informed the committee the three were working for Germany's BND intelligence agency in Kosovo.
"They were operating there for the BND," he told reporters after the committee met in Berlin. He declined to say what their assignment had been.
The explosive charge was thrown on November 14 at the International Civilian Office (ICO), the office of EU Special Representative Pieter Feith, who oversees Kosovo's governance, but caused only minor damage.
"We don't have any indication that the three German officials in Kosovo had any connection to the attack," said Oppermann, a member of the Social Democrats, the junior partner in Chancellor Angela Merkel's coalition government.
He called for their immediate release.
The men were detained last Thursday.
The three were questioned Saturday by a Pristina district court judge who ordered them to be detained until December 22.
Kosovo declared independence from Serbia in February after nine years under U.N. stewardship and is recognized by more than 50 countries, including Germany.
Four days before the bomb attack, its leaders rejected a plan by U.N. Secretary General Ban Ki-moon's for the deployment of an EU police and justice mission, EULEX.
(Reporting by Sabine Siebold, writing by Paul Carrel)
U.N. council clears way for EU mission in Kosovo
Thursday, November 27, 2008
By Patrick Worsnip
The U.N. Security Council cleared the way on Wednesday for a European Union police and justice mission to deploy in Kosovo, in a statement welcoming agreement by Serbia and Kosovo to the move.
The EU mission is intended ultimately to take over from a U.N. mission that has administered the former Serbian province from 1999. Kosovo, 90 percent of whose people are ethnically Albanian, declared independence from Belgrade in February.
Many Western countries have recognized Kosovo but Serbia, backed by Russia, has refused to do so. The Security Council has long been divided over the future of Kosovo and Wednesday's statement was the first time the 15-nation body had been able to agree on it since the independence declaration.
In speeches to the council, Serbian and Kosovo ministers clashed over details of future operations of the EU mission, known as EULEX, but made clear they accepted the deployment.
"The Security Council ... taking into account the positions of Belgrade and Pristina ... which were reflected in their respective statements, welcomes their intentions to cooperate with the international community," said a formal statement agreed upon by all council members.
"This will create the conditions for a quick deployment of EULEX," the U.N. special envoy to Kosovo, Lamberto Zannier, told reporters. All parties had seen Security Council backing as a precondition for the EU to move in.
EU foreign policy chief Javier Solana said last week he hoped EULEX would deploy in Kosovo in early December. The move has long been supported by Western countries, which see it as part of a gradual normalization of Kosovo.
The United Nations began running Kosovo after NATO bombing drove out Serb forces accused of mass killings of civilians.
In February, the EU agreed to send EULEX to take over from the world body and oversee the police, judiciary and customs, but its deployment was delayed first by opposition from Serbia and later by objections from Kosovo.
U.N. Secretary-General Ban Ki-moon won over Serbia with a six-point plan whereby police, customs officers and judges in Serb-run areas of Kosovo would remain under the U.N. umbrella, while their Albanian counterparts would work with EULEX.
Kosovo, even though it had pledged to cooperate with EULEX, said the plan violated its constitution and would result in a de facto partition of the fledgling state. Many of the remaining 120,000 Serbs in Kosovo live in the north.
The eventual council statement got round the problem by failing to mention the six-point plan, despite earlier pressure from Russia to do so. But Serbia and Kosovo remained divided over the plan.
"The Republic of Serbia gives its full consent to the six points agreement and conditions laid out to the deployment of EULEX," Serbian Foreign Minister Vuk Jeremic said.
Kosovo Foreign Minister Skender Hyseni said Pristina continued to reject the plan. But he said the council's statement "did bring a clear support of the council for the EULEX deployment throughout Kosovo."
The council agreement on Kosovo is significant after what appeared to be an unbreakable deadlock on the issue and the deterioration of Russia's ties with the West after it invaded its neighbour Georgia in August.
Western diplomats admitted the statement papered over differences on Ban's plan and details of how EULEX would operate and take over U.N. functions remained to be negotiated. They said the important thing was to get the EU mission on the ground and leave the details for later.
"EULEX's deployment is an important step forward in the integration of the region into the European Union," British envoy Karen Pierce told reporters.
(Editing by Todd Eastham)

Mexico's unsuccessful drug war, painfully preserved and hidden
By Marc Lacey
Thursday, November 27, 2008
MEXICO CITY: At their best, museums are glorious cultural repositories, reflecting the highest flowering of human creativity, ingenuity and art. But not everything in every culture is glorious, and there are museums for those aspects, too, which is why, hidden from the public, there is an institution here devoted to Mexico's dark side, the Museum of Drugs.
It is a place that leaves those who manage to get inside shaking their heads and lamenting the long, spirited but largely unsuccessful war this country has waged to control illegal narcotics.
Run by the Mexican military and open only to graduating cadets and select guests, the Museo de los Enervantes presents the drug war in all its ugliness and complexity. There is a room devoted to the ancient roots of drug use in Mesoamerica, like the use of hallucinogenic peyote and mushrooms by the Maya and Aztecs, and displays that show all the military does to try to stem the tide, uprooting marijuana plants and uncovering hidden caches of cocaine and heroin.
"You eradicate in one place and you continue on, and when you go back they're growing it again," said Major Mario Ayala López, who insisted that his face not be shown in any photographs, an atypical request for a museum curator but a reality in present-day Mexico, where the drug violence knows no bounds.
To give young cadets a sense of what they will be hunting for once deployed into the field, drugs themselves are on display, real-life samples under glass of everything from methamphetamines, which are manufactured in huge quantities in Mexican laboratories, to heroin, to marijuana, which is grown in fields hidden away in the countryside. The museum itself could not be more secure, located on the top floor of the Defense Ministry.
Along the halls, there is a farmworker mannequin propped up under a tree with a rifle in his hands, guarding a field of poppies and marijuana. Around his neck is a pendant of Jesús Malverde, considered the patron saint of outlaws. Nearby is a board with nails sticking into it, a makeshift trap set to injure anyone, but especially soldiers, who might creep near.
In a display case are actual notes that soldiers have recovered in raids on fields growing the precursors for the drugs that will be smoked, snorted or injected. The handwritten messages are pleas from the farmers to the soldiers to leave their fields alone in exchange for a little cash.
Getting the drugs to the biggest market on Earth, the United States, requires ingenuity, and there is an entire room devoted to that. Drug-filled shoes, beer crates and even a drug-filled surfboard are on display. There is a doughnut sprinkled with poppy seeds that were to be used to make heroin, and a doll that was stuffed with drugs and then handed to a child to carry.
A model of a woman who was apprehended in Tijuana shows her with a protruding stomach, which was caused not by pregnancy but by a package containing several pounds of tightly wrapped cocaine. A photograph features another female trafficker, this one with cocaine surgically implanted in her buttocks. She died after one of the packages burst upon her arrival at Mexico City's airport.
Toward the end of the tour the museum, which opened in 1985, introduces the people who have turned Mexico into the prime trafficking country in the hemisphere. There is a model of a stereotypical trafficker wearing fancy cowboy boots, a big belt buckle imprinted with a marijuana plant and plenty of jewelry.
On the wall is a photograph of a trafficker's child, a baby dressed in camouflage surrounded by dozens of shotguns. "There are generations that grow up in this culture," Major Ayala said. "For them it's normal."
Farther on are some of the vestments recovered during drug raids, like a bulletproof trench coat and a protective polo shirt, both designed by Miguel Caballero, a Colombian clothing designer who runs a pricey boutique not far away.
Traffickers have plenty of money to spend, and this museum gives a taste of some of their buying habits. There is a gold-encrusted cellphone recovered from Daniel Pérez Rojas, a founder of the Zetas, a paramilitary group, and plenty of weaponry decorated with precious metals and stones. A Colt pistol recovered from Alfredo Beltra Leyva, a leader of the feared Sinaloa cartel who was arrested in January, bears the oft-repeated revolutionary quotation, "I'd rather die on my feet than live on my knees."
There is another Colt pistol encrusted with emeralds that once belonged to Joaquín Guzmán Loera, the leader of the Sinaloa cartel and probably the most wanted trafficker of all. It was marked with the initials ACF, for Armado Carrillo Fuentes, who once led the Juárez Cartel but died while undergoing plastic surgery in 1997. The gun was probably a gift from Carrillo to Guzmán, the curator speculated, and thus a sign of an alliance between their rival cartels.
Nowhere is the word "guerra," or war, featured in the museum, because the Mexican military considers its counternarcotics mission to be something different from that. "We don't use that term," said Major Ayala, who was wearing his dress uniform as he strode formally through the museum.
At the museum entrance, though, is a shrine that features the names of 570 Mexican soldiers who have died fighting illegal drugs as far back as 1976. In the last two years, since President Felipe Calderón has sent soldiers on more antidrug missions than any of his predecessors, 67 names have been added to the list.
And, sadly, there is plenty of room on the wall for more. More Articles in World » A version of this article appeared in print on November 27, 2008, on page A6 of the New York edition.

The pound is down, but foreign shoppers are not flocking
By Julia Werdigier
Thursday, November 27, 2008
LONDON: Last Christmas, American stores were flooded with British tourists hunting for bargains as the dollar fell to its weakest level against the pound in 26 years.
This year, with the pound worth $1.50, the lowest level in almost six years, British retailers are waiting for a wave of U.S. shoppers to bolster their business. Their bet is that a lower pound would not only attract more American tourists, but also lead those Britons who shopped abroad last year to spend their money at home instead.
But so far an influx of American shoppers - or a spending spree by visitors from the 15 countries that share the euro, which rose to a record against the pound in November - has failed to materialize. Some British retailers have noticed a rise in visitor numbers, but their impact on the economy is negligible. With many developed economies heading into a recession and fears about rising unemployment weighing on consumers, the weak pound is not enough to encourage Americans to travel across the Atlantic to help prop up the British economy and offset a drop in consumer spending.
"Consumers are a fragile beast," said Geoffrey Dicks, an economist at Royal Bank of Scotland. "Americans aren't traveling, or spending either, if they're scared to lose their jobs."
To attract those who might, British shops and travel companies are using the exchange rate as a marketing tool. Visit Britain, the national tourism agency, tells visitors to its Web site that "It's not 2:1 any more! Britain is now 20 percent cheaper for Americans than it was in the summer. If you're planning a trip, now is the time." The agency's London branch said it was flooding American travel agencies with marketing material and encouraging them to alert customers to the favorable exchange rate.
Selfridges, the upmarket department store, is presenting itself as a discount designer store for those paying in dollars or euros. "This is a very good time for customers from the euro zone, but also from America, to take advantage of the current exchange rates and buy the best fashion at lower prices," said the chief executive, Paul Kelly.
The store even published a list of items comparing prices at its flagship store on Oxford Street in London to those in the United States. A pair of leopard print Dolce & Gabbana shoes, for example, would cost London shoppers 38 percent less than in New York and a Prada handbag would be 23 percent cheaper, according to Selfridges.
Richard Dickinson, chief executive of New West End, which is promoting London's theater and shopping district, said he expected 10 million overseas shoppers to come to London for Christmas, lured by the favorable exchange rate. Virgin Atlantic said demand for flights to London, especially from New York, Boston and Los Angeles, is up 3 percent from last year.
The Liberty department store in London has recorded a 30 percent increase in American visitors compared with last year and said it also expected more British shoppers this year, since people can no longer afford to do their Christmas shopping abroad. Maureen Hinton, a retail analyst at Verdict Research in London, said the British economy might benefit from visitors attracted by the exchange rate but it will not be enough to compensate for falling sales over all.
Doug and Beth Feldman from Milwaukee came to London to visit their son Michael, who started studying at a university here this year, and said the exchange rate was a pleasant surprise but would not encourage them to spend more.
"We heard how expensive London was but now it's actually quite affordable," Doug Feldman said. He paid £150 a night, or $230, for a hotel room and bought tickets to the musical "Chicago" for £30 each - more or less what he would have paid at home. A year ago, the hotel room would have cost him $309 and a theater ticket $62, at the exchange rates prevailing at the time.
At a corner on busy Oxford Street, three women from Italy stood in front of a window displaying iPods and compared prices. "It's definitely much cheaper than in Rome," said Anna Illiano, a human resources manager who traveled to London for three days to work but added a day of shopping. "The discounts are fantastic. I'll be doing some of my Christmas shopping here."
Illiano and the Feldmans are benefiting from a drop of around 25 percent in the pound against the dollar and a 15 percent slump against the euro this year. The decline came as Britain entered its first recession in 17 years and investors grew increasingly concerned about the prospects of a recovery amid a widening budget deficit. To revive consumer spending, the government earlier this month cut value-added tax and announced some support for smaller businesses, but the measures will make Britain the most indebted economy among the Group of Seven industrialized nations.
Normally, a weak currency can help support an economy because it makes the price of the country's exports more competitive in world markets. But such effects diminish in a widespread downturn, as demand for exports declines.
In the British economy, whose past growth was fueled by consumers who borrowed more in order to spend more, the credit crisis is hitting hard. Consumer spending fell 0.2 percent in the third quarter, the most since 1995, and British retailers are suffering. Woolworths, a retailer of household goods and children's clothing, sought bankruptcy administration on Wednesday after 99 years in business. The furniture chain MFI entered administration the same day. (Page 16)
Those that survive are trying to attract customers with the types of offers common for the days after Christmas but unheard of 10 weeks before the holiday - including discounts of 25 percent. Some stores are offering their customers breakfast. Marks & Spencer has extended its opening hours.
While the falling pound has not resulted in an influx of shoppers for British retailers, it has increased the cost of the goods they import.
"A year ago retailers here got a huge boost on their margins because of the dollar as they sourced a lot of their materials from the Far East, but now it's snapped back," said Nick Coulter, a retail analyst at Numis Securities in London. "That combined with the recession, they are worried they won't get the stock out."
To save costs, many clothing retailers moved part of their production to Asian countries whose currencies are tied to the dollar. Argos, a shopping chain whose wares range from furniture to jewelry, told analysts that for every cent the dollar increases against the pound, the company loses about £4 million in gross profit. Other companies face higher debt payments if they - like the house builder Taylor Wimpey - have large operations in the United States and borrowed money there to fund themselves.
Many retailers are hedged against currency swings, but those hedges are likely to expire next year, exposing companies to a double whammy of falling sales and falling margins.
"The biggest issue is import costs," said Nick Bubb, an analyst at Pali International. "They are hedged out fairly well into next spring and summer, but after that there's a lot of pain."
But the weak pound is not all bad news, according to Dicks, the economist at Royal Bank of Scotland, who said that the drop in the pound helps to even out some economic imbalances.
"The weakness of the pound is part of the solution, not the problem," Dicks said. "We are coming out of a decade where we had constant GDP growth but that trend was not sustainable. We are a much cheaper economy than we used to be and that is a good thing."
A dilemma in British housing
By James SaftReuters
Friday, November 28, 2008
LONDON: Britain needs to reinvigorate its mortgage markets to save its economy and its banks. The problem is, few want to borrow and there is precious little money to lend.
British property prices are down about 15 percent in a year and mortgage approvals are down 52 percent. Given the freeze in the securitization market and the scarcity of savings in Britain, new net mortgage lending may even fall below zero in 2009, according to James Crosby, former head of the British mortgage bank HBOS, who wrote a government report on the mortgage market.
While the Crosby report rightly points out the damage that such an unprecedented fall would do to employment and the economy, it is also worth pointing out that it would be bad for another segment - the banks, which would suffer losses as borrowers fell into negative equity and defaulted, or lost their jobs and defaulted.
Britons simply do not save enough to supply their banks with enough to lend to fund the debt requirement implied by their housing prices. That circle was squared in the old days by borrowing money from abroad, either through banks borrowing and relending or via securitization.
The solution to this advocated by Britain, as laid out in the Crosby report and endorsed by Finance Minister Alistair Darling, is to plaster a government guarantee on mortgage securities totaling as much as £100 billion, or $154 billion. The securities would contain only house purchase loans and would be highly rated by the same agencies that rated the old, now discredited stuff. The securities would also exclude nasty high-loan-to-value mortgages, or loans made to people who had already demonstrated they were not that good at paying back money.
The theory is that investors, including central banks, may not want to buy mortgage-backed securities - investments that look a bit dubious, given the expected fall in house prices - or lend to British banks - which look a bit dubious for the same reason and several others - but will be very happy to buy bonds backed by the government and that pay more than government debt.
There are some problems with this approach.
"I'm all in favor of finding ways of encouraging a sustainable rate of mortgage lending, but I'm not entirely confident that the best way to do this is to resurrect a form of lending that for rather good reason has fallen out of favor," the Bank of England's governor, Mervyn King, told the British Parliament this week.
And even if we all agree to forget the recent experience with securitization, there is the issue of who, exactly, is going to buy these guaranteed bonds, and who will buy all the houses these loans will fund.
The idea that there are investors out there who will pay a great price for these bonds is not supported by the evidence. Look at the United States, where the government has been slapping government guarantees, or - wink, wink - "implicit" guarantees on all sorts of financial paper.
Goldman Sachs, which used to borrow on its name, sold $5 billion worth of bonds under a Federal Deposit Insurance Corp. guarantee this week. The bonds paid about 2 percentage points more than equivalent government bonds, reflecting the dislocation in credit markets.
That's crazy, I hear you say. To paraphrase the economist John Maynard Keynes, the markets can stay crazy longer than you can stay solvent.
Or look at paper issued by Fannie Mae and Freddie Mac, which are under government conservatorship and enjoy an "implicit" guarantee. Their bonds have done so stunningly badly in recent weeks, as central banks outside the United States deserted them in droves, that the U.S. government was forced to go in and buy them up.
My best guess is that even with a fat premium, the world will have more than it can handle of pound-denominated British government risk in the coming years.
On the other side of the equation, you have to wonder which buy-to-rent investor or potential home buyer is out there who a) is a good risk, b) possesses a 20 percent down payment and c) is willing to buy an asset that is losing 2 percent of its value a month.
So, it's looking as if the fall in British house prices will be further than expected.
If you look at the U.S. experience where a higher percentage of loans was securitized and thus tended not to end up on bank balance sheets, that is bad news for the banks.
Bank liabilities in the United States are about 20 percent of the size of the economy. In Britain, the figure is 285 percent.
Ask yourself then what might happen to Britain.


Rural France
Living in France
Blogs about France

1 comment:

Gregory Williams said...

I have visited this site and got lots of information than other site. I like to know more about this site and its vary helpful for me.

earn and learn