Wednesday, 19 November 2008

A Place in the Auvergne, Tuesday, 18th November 2008


Tsvangirai urges Europe to increase food aid to Zimbabwe
By Katrin Bennhold and Alan Cowell
Tuesday, November 18, 2008
PARIS: Morgan Tsvangirai, the prime minister-designate of Zimbabwe, made an urgent appeal to European countries Tuesday to be generous with food aid to alleviate increasingly critical food shortages in his country.
Tsvangirai, who remains Zimbabwe's main opposition leader and entered a fragile power-sharing agreement with President Robert Mugabe in September, said food agencies needed $200 million dollars to feed more than 500 million people through January.
He blamed Mugabe's rule for the shortages. But he also vowed to press ahead with efforts to form a joint government with Mugabe's ZANU-PF party, arguing that the president needed him and his Movement for Democratic Change.
"I don't think ZANU-PF can afford a collapse of this agreement," he said in a joint news conference with the French foreign minister, Bernard Kouchner, in Paris. "President Mugabe and his minority government cannot govern without the support of the MDC."
"Obviously we cannot continue to negotiate ad infinitum," he added. "We should be able to form a government at the earliest possible moment."
After disputed elections in March, Mugabe and Tsvangirai signed what was billed as a historic deal to share power - the first time Mugabe had shown himself ready to dilute his control of the country since its independence from Britain 28 years ago.
But since then, negotiations on sharing the responsibilities for running Zimbabwe have stalled, deadlocked over a dispute relating to control of the ministry that oversees the police.
In the past, the country's powerful security forces have been key backers of Mugabe.
Last week, a regional grouping in southern Africa urged ZANU-PF and the MDC to share control of the ministry, but Tsvangirai rejected the call as unworkable and unfair.
The impasse has left the power-sharing deal in limbo. If Mugabe goes ahead and forms a government without his adversaries, moreover, it is difficult to see how negotiations could continue at all.
Tsvangirai is seeking broader diplomatic support, both in the African Union and the European Union. France currently holds the rotating presidency of the 27-nation European bloc.
One sign of the continuing tension is the fact that Mugabe has so far refused to issue Tsvangirai with a new passport, forcing him to travel with an emergency travel document every time he wants to leave the country.
Tsvangirai, who came to Paris after attending a European Union conference on development Monday and is travelling to Germany on Wednesday, said that he had applied for a new passport after his old one ran out of space for visas.
"I said look." he said of a conversation he had with Mugabe, "how do you not entrust me with a piece of paper in my pocket? How then do you want to entrust me with a whole state?"
Kouchner, standing next to him, joked: "The prime minister is travelling with our ambassador. That is his passport!"
Tsvangirai is not the only one having trouble getting the right papers from the Zimbabwean authorities. A delegation led by Kofi Annan, the former secretary general of the United Nations, is planning to travel to Harare on Friday. But late Tuesday they had still not received entry documents, diplomats said.
Annan, who was in Paris on Monday, has appealed to rich countries to make aid available, irrespective of the political deadlock in the country.
Western donors have made large-scale development aid for Zimbabwe conditional on the creation of an inclusive government. A government without Tsvangirai would therefore be denied the economic help that Zimbabwe needs to rebuild.
While the political deadlock deepens, the plight of ordinary Zimbabweans confronting hyperinflation and hunger has worsened.
The World Food Program said this month that it had trimmed rations to Zimbabweans because of what it called a "severe funding crisis." The WFP is seeking $140 million in donations to stave off a looming crisis in early 2009 when the organization runs out of food to feed an estimated five million needy Zimbabweans, roughly 45 per cent of the population.
China calls on U.S. to lift ban on dairy products
Tuesday, November 18, 2008
BEIJING: China on Tuesday called on the United States to lift its ban on Chinese dairy products, saying it had cracked down on the use of the toxic additive melamine in milk.
The United States issued an import alert for Chinese-made food products last week, calling for foods to be stopped at the border unless importers could certify they are either free of dairy products or free of melamine.
But Chinese Foreign Ministry spokesman Qin Gang said the government had been successful in its crackdown on melamine contamination and had reined in the problem, and hoped the U.S. could take "an objective and calm" approach to the issue.
"We feel deep regret that the U.S. insists on unilaterally taking these steps," Qin told a regular news briefing.
"We hope the U.S. can pay great attention to Chinese concerns, as these steps will have an effect on bilateral trade," he added. "We hope the U.S. ... can lift the ban as soon as possible."
At least four Chinese babies died and tens of thousands were made ill this year from drinking milk powder adulterated with melamine, a chemical used to cheat protein tests. Many countries have begun checking Chinese exports of milk and egg products.
Last year, melamine-tainted pet food ingredients from China were blamed for the deaths of dogs and cats in the United States.
Last week's ban widens earlier health alerts about Chinese products. The burden will be on the importer to certify the food does not contain dairy products, or is melamine-free. No adverse health effects have been reported in the U.S. from melamine contamination in dairy products.
(Reporting by Ben Blanchard; Editing by Sanjeev Miglani)

Obama promises action on climate change
By Brian Knowlton
Tuesday, November 18, 2008
WASHINGTON: President-elect Barack Obama pointedly confirmed on Tuesday that he planned to stick to the aggressive targets he had set earlier for fighting climate change and for spurring the development of clean-energy technology, saying, "Delay is no longer an option."
The remarks were all the more striking for being made, in what was billed as a "surprise taped statement," before a bipartisan conference on climate change in Los Angeles that included governors who had battled the Bush administration in an effort to pass stricter pollution standards than federal guidelines required.
Officials from at least 10 other countries were also present, and Obama addressed his comments to them when he said, "Solving this problem will require all of us working together." He said he had asked lawmakers who would attend a climate-change conference next month in Poland to report back to him.
Obama's remarks were sure to be welcomed by Europeans and others who have been urging the current administration to take tougher measures ever since President George W. Bush turned his back on the Kyoto Protocol on climate change in 2001.
Frances Beinecke, president of the Natural Resources Defense Council, an environmental advocacy group, said the call for legislation to cap emissions, one of the first specific policy statements Obama had made since his election, was a particularly important signal that he would, as he promised during the campaign, make global warming a top priority.
"Now is the time to confront this challenge once and for all," Obama said. "Delay is no longer an option. Denial is no longer an acceptable response. The stakes are too high; the consequences, too serious."
It appeared significant that Obama, who has stayed largely out of sight at his offices in Chicago since being elected Nov. 4, chose to use such strong language on warming so early in his transition period. Still, it remains unclear that the current financial crisis and grim economic outlook will allow him to move as quickly as he might like.
Perhaps with those considerations in mind, Obama cast his planned energy-development measures as critical to national security, by reducing U.S. dependence on foreign oil, and vital to economic revival, by generating an estimated five million "green jobs."
Bush, early in his first term, had insisted that the science of climate change needed to be confirmed, and he then resisted global measures that would exempt big developing countries, including China and India, from making economically painful sacrifices like those being demanded of rich countries. But he later acknowledged that human actions were linked to climate change, and hosted an international conference on the issue.
"Few challenges facing America and the world are more urgent than combating climate change," Obama said. "The science is beyond dispute, and the facts are clear. Sea levels are rising. Coastlines are shrinking. We've seen record drought, spreading famine, and storms that are growing stronger with each passing hurricane season."
He commended by name governors who had been particularly active on warming issues, including those of Kansas, Florida, Illinois, California and Wisconsin, and said that many businesses were also "doing their part by investing in clean-energy technologies."
"But too often," Obama said, "Washington has failed to show the same kind of leadership. That will change when I take office. My presidency will mark a new chapter in America's leadership on climate change that will strengthen our security and create millions of new jobs."
A tougher U.S. line on global warming was virtually ensured in the new year; Obama's rival for the presidency, Senator John McCain, shared many of his views on the matter.
Both men, unlike Bush, support a federal cap-and-trade system not unlike the approach taken by the European Union. In such a system, companies and industries are assigned emissions limits and must purchase "carbon permits" to exceed those limits. Those permits typically come from investments in projects that reduce pollution, like planting trees.
Obama promised to set "strong annual targets that set us on a course to reduce emissions to their 1990 levels by 2020 and reduce them an additional 80 percent by 2050." That is a more aggressive target than McCain had set; he aimed for 60 percent reductions by 2050.
The European Union has said it will reduce its overall carbon dioxide emissions by at least 20 percent by 2020 and by half by 2050.
Obama vowed to invest $15 billion a year to support private clean-energy initiatives - in solar and wind power, biofuels, clean coal technologies and nuclear power.
He also promised to work more closely with U.S. governors in fighting climate change. When California sought to set its own limits on automobile emissions of carbon dioxide, the main human-generated greenhouse gas, the Bush administration turned it down.
Both Obama and McCain had said that they would grant the state a waiver allowing it to go ahead.
And Obama concluded Tuesday by saying: "When I am president, any governor who's willing to promote clean energy will have a partner in the White House. Any company that's willing to invest in clean energy will have an ally in Washington. And any nation that's willing to join the cause of combating climate change will have an ally in the United States of America."
For Tasmanian devils, hope against a deadly disease
By Erica Rex
Tuesday, November 18, 2008
They're inky black, pointy-eared, furry and, in a fierce sort of way, cute. And in May of this year, they were added to Australia's endangered species list.
Ordinarily solitary, Tasmanian devils commune only to feast on carrion and to mate in short-lived passionate couplings during which they tear each other to ribbons. Their spine-decalcifying caterwauls - a sequence of whuffings, snarlings and growlings - have evoked satanic visions since the first European settlers arrived on the island of Tasmania more than a century ago.
"Parents used to tell their kids: 'Don't go out into the bush because the devil will get you,"' recalled Greg Woods, an associate professor of immunology at Menzies Research Institute in Hobart, the Tasmanian capital.
But in the past decade, the Tasmanian devil has been trapped in a purgatory of its own. Since 1996, a deadly cancer, a devil facial tumor disease, has preyed on the devil. Its population plummeted to fewer than 50,000 from about 150,000, said Hamish McCallum, senior scientist with the Devil Facial Tumor Disease Program at the University of Tasmania.
The devils' situation is dire. Yet as more has been learned about the disease, hope has appeared. Scientists have begun an experimental inoculation program, and this year, Woods identified one devil able to mount an antibody response to the tumor.
The devil, Cedric, is a 3-year-old male from western Tasmania who has been living in captivity for several months. Woods inoculated Cedric and his half-brother, Clinky, who was also disease-free at the time, with irradiated - that is, dead - devil tumor cells. Although they had the same mother, Cedric and Clinky had different fathers.
Woods repeated the vaccination three times. He then administered live tumor cells to both. Cedric mounted an immune response and lived. Clinky did not develop an immune response and died. His father's genetics made Clinky's immune system more like that of the devils found in eastern Tasmania.
All mammalian immune systems rely on certain cells to recognize invaders. Demarcation of "otherness" at the cellular level is carried out in a part of the mammalian genome called the major histocompatibility complex, or MHC. An animal's ability to fight off disease depends on this group of genes. MHC is responsible for the cell markers that flag the difference between cells that are "self" and those that are "nonself." But the tumor's MHC is what makes it deadly to the devil.
"The tumor has no foreign cell surface markers," said Katherine Belov, a scientist in the Australasian Wildlife Genomics Group at the University of Sydney. "If tumor cells get into a devil, its own immune system should be able to see the cells as foreign. That doesn't happen because the tumor's cells look like devils' own cells."
Belov likened the process to genetic matching for an organ transplant: "You have to have the same genes at the MHC as your donor. If they're different, you'll reject the organ."
In other words, the devil and the tumor are genetic clones. The immune system, not recognizing a foreign cell, does not create antibodies.
Devil facial tumor disease first showed up in a photo taken in 1996 by a Dutch wildlife photographer, Christo Baars, while he was visiting Mount William in northeastern Tasmania. Sightings of ailing devils - their lips and jaws deformed by tumors, their noses and eyes obscured by swollen, ulcerating wounds - increased in frequency, notably in the east and north. The disease is always fatal. The devils die of starvation and dehydration when the growths in their jaws and throats make eating and drinking impossible.
Until recently, scientists were at a loss to explain the cancer's cause or mode of transmission.
"We'd predicted they'd be vulnerable to viruses" because they are an inbred population, Woods said. "That what got them was a cancer took everyone by surprise."
But this cancer, Woods and his colleagues found, was unlike any the researchers had seen before.
"In all other cancers, what you've got is your own cells gone haywire, whereas in this particular cancer, the cells are not from the host, they're from a different animal," McCallum said. "The tumor itself is the infectious agent."
The tumor plaguing the devil is a clone, derived from one devil. When animals bite each other in the face, as they do during mating season, tumor cells are passed from host to host.
The Tasmanian devil is about the size of a small dog when fully grown and is the largest surviving carnivorous marsupial. The animal became legally protected in 1941, when farmers and settlers hunted them aggressively, believing the nocturnal scavengers were preying on livestock. Both agriculture and population growth have contributed to fragmentation of the devils' habitat. From 1900 to the present, the human population of Tasmania increased almost threefold, to just less than 500,000. Devil populations, once widespread, became more isolated, inbred and genetically similar.
Cedric was the first devil to be inoculated successfully using killed cancer cells. Woods has since found a second devil that was able to mount an immune response. Three other inoculated devils from eastern Tasmania have developed the disease, supporting Woods's hypothesis that devils from the west have maintained greater genetic diversity.
Saving the devil from extinction has become a conservation imperative. According to McCallum, the devil will be extinct in five years without major intervention.
Woods said he would begin the search for naturally resistant devils early next year. He posits that the devils' best bet lies within its own genome.
But Belov thinks the immunological arms race is far from over. She says he has already seen some evidence that the tumor is adapting.
Bark beetles kill millions of acres of trees in the American West
By Jim Robbins
Tuesday, November 18, 2008
HELENA, Montana: On the side of a mountain on the outskirts of Montana's capital city, loggers are racing against a beetle grub the size of a grain of rice.
From New Mexico to British Columbia, the region's signature pine forests are succumbing to a huge infestation of mountain pine beetles that are turning a blanket of green forest into a blanket of rust red. Montana has lost a million acres of trees to the beetles, and in northern Colorado and southern Wyoming the situation is worse.
"We're seeing exponential growth of the infestation," said Clint Kyhl, director of a Forest Service incident management team in Laramie, Wyoming, that was set up to deal with the threat of fire from dead forests. Increased construction of homes in forest areas over the last 20 years makes the problem worse.
In Wyoming and Colorado in 2006 there were a million acres of dead trees. Last year it was 1.5 million. This year it is expected to total over two million. In the Canadian provinces of British Columbia and Alberta, the problem is most severe. It is the largest known insect infestation in the history of North America, officials said. British Columbia has lost 33 million acres of lodgepole pine forest, and a freak wind event last year blew mountain pine beetles, a species of bark beetle, over the Continental Divide to Alberta. Experts fear that the beetles could travel all the way to the Great Lakes.
In the next three to five years, Kyhl said, virtually all of Colorado's lodgepole pine trees over five inches in diameter will be lost, about five million acres. "Already in many places, every lodgepole over five inches is dead as far as the eye can see," he said.
Foresters say the historic outbreak has several causes. Because fires have been suppressed for so long, all forests are roughly the same age, and the trees are big enough to be susceptible to beetles. A decade of drought has weakened the trees. And hard winters have softened, which allows the beetles to flourish and expand their range.
Hoping to keep their forests from completely dying, to earn money by selling dead and infected trees and to mitigate fire risks, landowners are scrambling to cut the pines. If enough are cut — up to 75 percent — it might leave some behind that, with less competition for water, can survive. Still, for many landowners, cutting most of the forest where they have they built their homes is painful. "I've literally had people in my office crying," said Gary Ellingson, a forestry consultant for Northwest Management.
The black, hard-shelled beetle, the size of a fingertip, drills through pine bark and digs a gallery in the wood where it lays its eggs. When the larvae hatch under the bark, they eat the sweet, rich cambium layer that provides nutrients to the tree. They also inject a fungus to stop the tree from moving sap, which could drown the larvae. That fungus stains the wood blue.
"The Latin name is Dendroctunus, which means tree killer," said Gregg DeNitto, a Forest Service entomologist in Missoula, Montana "They are very effective."
To fend off the bugs, trees emit white resin, which looks like candle wax, into the beetle's drill hole. Sometimes the tree wins and entombs the beetle. Often, though, the attacker puts out a pheromone-based call for reinforcements and more of the beetles swarm the tree. In a drought the tree has trouble producing enough resin, and is overwhelmed.
There are some defenses. Owners nail to a tree an "aggregator pheromone" in a small packet, which mimics the chemical scent given off by beetles when a tree is full of insects. It can work when beetles are not too numerous, but at some point the beetles are not deterred.
Large, old, high-value trees, ones that shade campgrounds or yards, can be sprayed with an insecticide. But the trees need to be sprayed from the base to the height at which it is less than 4 inches around. Each tree costs about $10 to $15 if hundreds are sprayed.
Lodgepole pines are largely confined to high altitudes. But the beetles have moved into ponderosa pine forests on Colorado's front range, Kyhl said, which means it could kill forests around homes in the densely populated region.
The beetles will only be truly checked, experts say, if temperatures that used to reach 30 and 40 below for weeks return to the Rockies, temperatures that have not been seen in decades.
The death of the forests worries the tourism industry. Many ski areas have cut down their forests because of the hazard of falling trees and have revegetated the land.
At Vail Ski Resort, for example, which has been particularly hard hit, workers have removed thousands of dead trees and planted new ones.
The dead trees that blanket the mountains are shifting ecosystems as well. In Yellowstone, for example, the beetles are killing the white-barked pine trees, which grow nuts rich in fat that are critical to grizzly bears in the fall. Biologists in Canada say streams will flash-flood because live trees will no longer catch snow and allow it to slowly melt, and it could injure salmon and destroy habitat. On the other hand, woodpeckers and other insect eaters will thrive.
Wildfire is the biggest threat. Some towns like Steamboat Springs and Vail, Colorado, are surrounded by dead forests, and the Forest Service and logging companies are clear-cutting "defensible space" so firefighters have a place to fight fires.
After the trees die, the risk of crown fires that move through the canopy is the threat. After four or five years, as the dead trees fall to the ground, the threat of catastrophic fire is most severe. Fires in the piles of logs severely damage soils, prevent regrowth and cause mudslides.
Rainfall on damaged ground could also lead to widespread mudslides and silt buildup in rivers and reservoirs, which many mountain communities depend on for water. Strontia Springs Reservoir, a main water source for Denver, required a $20 million cleanup after a large fire resulted in severe erosion.
The other major problem is large numbers of falling trees. In Colorado and Wyoming, officials have closed 38 campgrounds for fear trees could fall on campers. They have reopened all but 14.
But there is a lot more to do. "We know they are going to fall," Kyhl said. "And they are going to fall in the next 10 to 15 years. There's campgrounds, thousands of miles of road, picnic areas, power lines and trails. How do we keep the facilities open for people to use?"
The agency is faced with clearing a strip of 75 to 100 feet of dead trees along highways so they are not closed by blow downs.
Then there is a question of what do with the wood. Sawmills have diminished in the West in recent years, and there are not enough mills to take all of the timber.
In Colorado, entrepreneurs have been scrambling to find ways to use it. Two pellet plants have been built, which turn the trees into sawdust and then pack them into a clean-burning pellet used in wood stoves.
Some trees are being shredded for use in biomass boilers, and carpenters are using the pine stained blue from the fungus for furniture.
In Alberta, a newsprint mill is testing a system to use the millions of dead acres of pines. Because of the fungal stain the trees aren't bright enough for paper, but a computerized process adjusts the amount of bleach.
Still, the volume of timber used is small compared with the vast acreage of dead trees.
The West that depends on tourism, meanwhile, wonders what their customers will think about the dramatic change in scenery. Four million visitors a year come for sightseeing and recreation to Grand County in Colorado, where much of the forest is now dead. "What happens," said Ray Jennings, director of emergency management for Grand County, "if this becomes an ugly place to be?"
Congo violence reaches endangered mountain gorillas
By Jeffrey Gettleman
Tuesday, November 18, 2008
BULENGO, Congo: Jean-Marie Serundori wakes up every morning with gorillas on his mind.
"I wash my face, I stare at the mountains and I think of them," he said. "They are like our cousins."
But Serundori, a Congolese wildlife ranger entrusted with protecting some of the most majestic — and most endangered — animals on the planet, is far from the broad-backed mountain gorillas he loves.
Instead, he is stuck in a wet and filthy camp for internally displaced people where the only wildlife are the cockroaches that scurry across the mud floors. He is one of the hundreds of thousands of people left idle and destitute by eastern Congo's most recent spasm of violence, and the consequences in this case may be dire and irreversible.
Eastern Congo is home to almost a third of the world's last 700 wild mountain gorillas (the rest are in nearby areas of Rwanda and Uganda). Now, there are no trained rangers to protect them. More than 240 Congolese game wardens have been run off their posts, including some who narrowly escaped a surging rebel advance last month and slogged through the jungle for three days living off leaves and scoopfuls of mud for hydration.
"We figured if the gorillas can eat leaves, so can we," said Sekibibi Desire, who is staying in a tent near the other rangers.
This is just the latest crisis within a crisis. Congo's gorillas happen to live in one of the most contested, blood-soaked pieces of turf in one of the most contested, blood-soaked corners of Africa. Their home, Virunga National Park, is high ground — with mist-shrouded mountains and pointy volcanoes — along the porous Congo-Rwanda border, where rebels are suspected of smuggling in weapons from Rwanda. Last year in Virunga, 10 gorillas were killed, some shot in the back of the head, execution style, park officials said.
The park used to be a naturalist's paradise, home to more than 2,000 species of plants, 706 types of birds and 218 varieties of mammals, including three great apes: the mountain gorilla, the lowland gorilla and chimpanzees.
Now Virunga is a war zone.
Rebel soldiers command the hilltops. Government soldiers fire mortars at them, blowing up precious gorilla habitat that is rapidly disappearing anyway because of deforestation and an illegal charcoal trade.
"Armed groups hide in the park, they train in the park, and most importantly, they eat in the park," said Samantha Newport, a spokeswoman for Virunga National Park.
Newport said that two years ago, at one of the lakes in the park, a local militia went on a hippopotamus-hunting rampage, machine-gunning hundreds of hippopotamuses for their meat.
"The lake turned red," she said.
Eastern Congo has been stuck in a vise of bloodshed for more than a decade. The trouble began in 1994, with the genocide in Rwanda, which killed 800,000 people and sent waves of refugees into Congo, along with bloodthirsty militias. Since then, various armed groups and neighboring nations have battled for control of this stunningly beautiful land, loaded with gold, diamonds and other precious resources. Last month, a rebel force widely suspected of being supported by Rwanda routed government troops near the strategic city of Goma and was poised to capture it, when the rebels declared a cease-fire.
That cease-fire remains shaky. On Sunday, the same day that the rebels' leader, Laurent Nkunda, vowed to stick to the truce, heavy fighting broke out north of Goma. Congolese troops fired rockets. The rebels responded with mortar bombs. Once again, game wardens were caught in the middle. Some of their families have even been shot.
Last month, the 14-year-old daughter of a ranger was shot in the stomach during a firefight near a ranger post deep in the forest. "I put her in my arms and just ran," said her father, Mberabagabo Rukundaguhaya. "I thought she was dead." She lived, though it is not clear when her family will be able to go home.
Officials with Virunga National Park are urging the rebels and government troops to allow them to return to work. The rebels insist the gorillas are safe.
"We are protecting them," said Babu Amani, a rebel spokesman.
Serundori said that in his 20 years as a ranger, he has seen the gorillas more than 100 times.
"But what always impresses me is how fragile they are," he said. "They could be wiped out — in a minute."
Quake shakes southwestern Iran
Tuesday, November 18, 2008
TEHRAN: An earthquake shook a province in southwest Iran on Tuesday, Iranian media reported, but there were no immediate reports of damage or casualties.
The official news agency IRNA said the tremor had a magnitude of 5.3 but the country's state broadcaster said on its website later it was milder, with a magnitude of 3.5.
The quake struck about 7:30 a.m. (4 a.m. British time) near the town of Farrashband in Fars province, where several large gas fields are located, IRNA said.
An official at a gas refinery in the area told Reuters there was no damage to the installation.
(Reporting by Hashem Kalantari; Writing by Fredrik Dahl; Editing by Andrew Dobbie)

U.S. automakers plead for government help, to little avail
By Bill Vlasic and David M. Herszenhorn
Tuesday, November 18, 2008
WASHINGTON: The heads of the Big Three automakers of Detroit pleaded on Tuesday for emergency government aid to stave off potential collapse, but after four hours of testimony, it appeared they had not persuaded enough lawmakers to move quickly on a bailout.
Senate Democratic leaders said they had not been able to muster the support for legislation that would provide $25 billion to the troubled auto industry from the Treasury Department's $700 billion economic rescue fund.
There is still a possibility that money may be freed up for Detroit from a previously approved loan program to help automakers retool their plants for more fuel-efficient vehicles.
But the industry hardly received a warm reception in Washington, despite its mounting troubles. The frantic bid from Detroit for help was laid bare at a packed hearing of the Senate banking committee, in which two of the three automakers said they might run out of money by the end of the year.
The cause of their misfortunes was not management mistakes, they said, but the weak economy and the inability of consumers to obtain credit to buy cars.
The executives from General Motors, Ford Motor and Chrysler seemed stunned by the general lack of confidence that lawmakers showed in their companies.
"We have little evidence that $25 billion will do anything to promote long-term success," said Senator Michael Enzi, Republican of Wyoming.
It was a tense discussion, with the automotive executives on the defensive from the start. At times, it appeared the lawmakers had little familiarity with the deep reorganization steps already taken at the companies. On the other side, the Detroit executives painted a bleak picture of an industry under siege.
The chief executives of GM and Chrysler said their companies were using up their cash at a rate that could leave them close to insolvency without U.S. government aid.
"Without immediate bridge financing support, Chrysler's liquidity could fall below the level necessary to sustain operations," said Robert Nardelli, the chairman of Chrysler.
His comments were echoed by GM's chairman, Rick Wagoner, who warned that the rippling impact of the auto industry's cash woes could put three million American jobs at risk.
He said that a failure by GM, Ford or Chrysler would rapidly bring the entire domestic industry down. "The societal costs would be catastrophic — three million jobs lost within the first year, U.S. personal income reduced by $150 billion and a government tax loss of more than $156 billion over three years," Wagoner said.
Alan Mulally, Ford's chief executive, added, "If any one of the domestic companies should fail, we believe there is a strong chance that the entire industry would face severe disruption."
Despite the urgent tone of the executives, lawmakers in both parties saw little chance that a bailout could be put together and passed during the current lame-duck session. The Bush administration has steadfastly refused requests by Democratic leaders to tap into the financial rescue program to aid the automakers.
The Treasury secretary, Henry Paulson Jr., at a House hearing on Tuesday morning and again at a lunch with Republican senators, implored lawmakers to oppose using any of the $700 billion financial bailout for the auto companies, which he said would set a dangerous precedent.
The White House instead has pushed for the auto companies to get immediate access to $25 billion in previously approved loans to retool production plants to make fuel-efficient vehicles.
Senator Carl Levin, Democrat of Michigan and one of the auto industry's chief allies on Capitol Hill, said he remained hopeful that a deal could be worked out. He added that a consensus had emerged among leaders in both parties and at the White House on providing $25 billion in so-called bridge loans as a lifeline for the struggling companies.
But even Levin conceded that hammering out the details was proving difficult. "Progress? No," Levin said bluntly when asked where things stood on Tuesday, but added that efforts were being made.
With so much rancor on Capitol Hill, lawmakers from states with some of the biggest stakes in the auto industry were angling to come to the rescue.
Senator George Voinovich, Republican of Ohio, and Senator Christopher Bond, Republican of Missouri, said they were drafting a compromise measure that would speed access to the $25 billion in loan guarantees.
Levin said that lawmakers were considering several approaches, including rewriting the provision that mandates that any subsidized loans go toward retooling plants to produce advanced fuel-efficient cars.
The suddenness of the cash crisis at GM has caught Washington by surprise.
Senator Richard Shelby of Alabama, the ranking Republican on the banking committee, said he was skeptical that the Detroit companies could sufficiently reorganize their operations and improve their competitiveness.
"How is this money going to be used?" he said. "Will it be used to improve their business model and product lines, or is this just life support?"
The hearing underscored how deeply complicated the problems are at the Big Three, which have been losing billions of dollars even as they close factories and cut tens of thousands of jobs.
It also stirred fresh criticisms of Detroit's ability to compete in the global marketplace. Several senators called into question the carmakers' vehicle quality, high labor costs and the capability of their senior management.
Senator Christopher Dodd, who is chairman of the banking committee and has been generally supportive of aid to the auto companies, gave little solace to the Detroit executives.
"Their discomfort in coming to the Congress with hat in hand is only exceeded by the fact that they are seeking treatment for wounds that are to a large extent self-inflicted," he said. "No one can say they didn't see this coming."
But the auto executives argued that their turnaround strategies were taking hold just as the economy faltered and available credit dried up for consumers.
The overall U.S. vehicle market has fallen 14.8 percent through the first 10 months of the year. However, sales in October plummeted 31.9 percent, mostly because of the lack of available credit for potential car buyers.
"There is no great mystery as to why this enormous decline in sales has occurred," said Ron Gettelfinger, president of the United Auto Workers union. "Because of the overall credit crunch, most families cannot get credit on reasonable terms to finance the purchase of a vehicle."
While Democratic lawmakers have vowed to get some type of aid for Detroit this week, the process of producing a coherent and effective package has proven elusive.
After the hearing, Dodd was greeted in the hallway by reporters asking him if he "had the votes" to fix Detroit. "Votes for what?" he said, indicating that a vote on any legislation was questionable this week.
Detroit's huge financial problems have caused some legislators to question the haste to rush a bailout through Congress.
"I am prepared to consider economic aid to the automakers, but providing regular order is followed," said Senator Arlen Specter, Republican of Pennsylvania. "And by that I mean, we have a bill we know the specifics of, to have a chance to study it, to have hearings, to have a floor debate, to have amendments."
Carmakers in China copy U.S. playbook
By Keith Bradsher
Tuesday, November 18, 2008
GUANGZHOU: The Chinese auto industry is quietly pressing Beijing officials for help in coping with a sharp slowing in sales growth this autumn, top Chinese auto executives said in interviews here Tuesday.
Six years of sales growing at 20 percent or more annually have suddenly been turned this autumn to flat or slightly declining sales, a shock for an industry that has borrowed heavily to build ever more car factories for a market that seemed insatiable.
Citing the $25 billion in loans that the U.S. Congress had already voted to help American automakers step up their research spending, and the additional $25 billion in loans that the U.S. automakers are seeking this week to cope with a slow economy, Chinese executives are now telling Beijing that they need measures like lower taxes on new cars, lower fuel prices and increased grants for research into hybrid cars and other new technologies.
"The Chinese government will undoubtedly support us," She Cairong, general manager of JAC Motors, said. He added that state-owned Chinese banks had already become more willing to lend money to Chinese automakers in recent weeks as bank regulators have eased restrictions on loans to heavy industry.
But She and other auto industry leaders said that while government officials had voiced concern to them about the industry's deteriorating condition this autumn, there had been no specific initiatives.
"They're asking the questions but they haven't said anything yet" on how an aid package might be structured, said Frank Zhao, vice president and chief technology officer of Geely Automobile Holdings. "We really hope the Chinese government will come and help us."
The Chinese government has already provided considerable help over the years with research and development spending, as well as loans from state-owned banks.
Michael Dunne, managing director for China at the market research firm J.D. Power & Associates, said in a telephone interview from Shanghai that the executives' remarks represented a shift in the position of the Chinese auto industry.
"This is the first I've heard of it," he said. "As the market slows down, Chinese automakers are going to face competition as they never have before."
There is some disagreement within the Chinese auto industry on how the government can be most helpful. Some companies, like Geely, are looking for more government grants to help them develop hybrid gasoline-electric cars and other technologies for which research spending may be cut if sales do not recover.
But Zheng Qinghong, the general manager of Guangzhou Auto, one of the largest and fastest-growing Chinese automakers, said the industry needed the government to help consumers become more enthusiastic again about buying cars.
"The best way is to boost growth in demand" for cars, through steps like lower car taxes and lower fuel prices, he said in an interview.
Western multinationals are also likely to benefit at least indirectly from any Chinese government initiative to help the auto industry, because in order to do business in China they must go through joint ventures with Chinese automakers, most of which are partly or entirely owned by the government.
Jeffrey Shen, chief executive and president of one of these joint ventures, Changan Ford Mazda Automobile, said that he did not know how the government would help the auto industry but that some help was inevitable. "I'm sure it will come - it will be both" extra assistance for research and greater availability of loans, he said.
The renewed willingness of state-owned banks to lend money to the auto industry this autumn is in contrast with the situation in the United States, where the Big 3 have found banks and other investors leery of loans.
Government-mandated lending quotas, not interest rates, tend to be the most important limit on bank lending in China. Regulators began easing the quotas this autumn after four years of fairly tight restrictions imposed in an effort to control the growth of the money supply and inflation.
Direct loans from the government of the sort under discussion in Washington are not needed in China, Zheng said. "For now, the Chinese auto industry doesn't need saving" in the same way as the U.S. industry, he said.
Chinese automakers began facing real difficulties only in the third quarter and have not released results for that period; many release their results twice a year, not quarterly.
But they could face even tougher times in their home market in the months ahead. Dealership lots across China became increasingly crowded with unsold cars as sales were slightly lower in August and September than a year earlier. Yet manufacturers increased their shipments of new vehicles to dealerships last month by 10 percent compared to a year earlier, in a bid to keep new factories busy and avoid layoffs.
Chinese automotive retail sales figures for October are due this week and will most likely show a further decline, which could trigger another round of price cuts in a market where discounting is already becoming increasingly common, Dunne said.
The Chinese auto industry faces several threats simultaneously. Weakening economic growth, falling real estate prices and a yearlong plunge in the stock market have made consumers wary of spending money. Fuel prices in China are still high despite the recent decline in world oil prices. And Chinese auto exports are starting to crumble.
China pushed up the regulated retail gasoline and diesel prices at service stations to more than 80 cents a liter, or $3 a gallon, over the past year in response to high oil prices, and it has not lowered retail prices as oil prices have plunged. The government is trying to encourage energy conservation and allow oil refiners to recover financially from sometimes being forced to sell gasoline and diesel below cost earlier this year during the spike in oil prices.
China's top three export markets for fully assembled vehicles are Russia, Ukraine and Vietnam, all of which are struggling with the financial crisis.
The company has seen its monthly exports to Russia plunge 40 percent in the past three months, said Steven Wang, the deputy manager of the company's international trade division. But it has still managed to avoid layoffs because domestic sales are less affected.
With the largest Chinese automakers involved in joint ventures with U.S. automakers, and with the entire Chinese auto industry now seeking its own forms of government help as well, criticism of any bailout for Detroit has been muted. Producers elsewhere in Asia, facing declining markets at home as well, have also been hesitant to criticize.
"We support vigorous competition in the automotive market place and recognize there may be extraordinary situations when such a vital sector of the American economy may require unprecedented actions to assure its long-term viability and a healthy American economy," said Jake Jang, a spokesman for Hyundai Motor in South Korea.
But managers at a few Chinese manufacturers, especially those with hopes of entering the U.S. market someday, still dislike assistance for Detroit.
"If GM, Ford and Chrysler get a lot of support from their government, it's not fair," said Gordon Chen, international business manager of Changfeng Motor, which has displayed cars at the last two Detroit auto shows to prepare for entry into the U.S. market in 2011 or 2012.
Choe Sang-Hun contributed reporting from Seoul.
Falling oil prices hurt EU banks
By James SaftReuters
Tuesday, November 18, 2008
LONDON: Banks in Europe, and their unfortunate would-be borrowers, face another blow as plunging oil prices tighten the spigot of petrodollar deposits.
Billions of dollars' worth of funds from oil-exporting nations have made their way into banks from Zurich to London in recent years. These inflows helped banks withstand credit crisis losses and, given that much of the money was in dollars, were a source of dollar liquidity during recent money market difficulties.
Petrodollars also arguably fed the lending boom while it lasted and cushioned the effects when the boom turned to bust. But with oil having tumbled to around $55 a barrel from almost $150 this summer and the mid-$90s a year ago, flows into European banks will most likely drop dramatically. What's more, a global recession and rolling financial crises mean that oil producers like Russia and the Middle East states will have new calls to spend money at home, further diminishing the money available to grease the wheels of international banking.
Though it is impossible to track exactly, depositors from oil- exporting states have long shown a preference for British and European banks over U.S. ones, some for political reasons, like Venezuela, and some out of concern over the effects of U.S. banking disclosure laws passed after the terrorist attacks of Sept. 11, 2001.
This, needless to say, is not a good time for these banks to lose an important source of inflows. It will worsen their position and make it tougher for their clients to secure loans.
Borrowers in emerging European countries, like Hungary, may be particularly hard hit, having gorged on credit during the boom.
Deposits abroad from oil-producing countries hit more than $1.2 trillion at the end of 2007, according to the most recent figures from the Bank for International Settlements, up from less than half a trillion in the third quarter of 2003. More than $150 billion flowed into international accounts in 2007 alone, according to the bank. Those flows continued to be strong in the first half of this year as oil soared, but are surely slowing now and will continue to diminish as long as oil and the global economy struggle.
Certainly the oil-producing states have new calls on their funds. The Gulf is particularly suffering from crashing confidence and tight liquidity and has its own housing boom turning to dust. The United Arab Emirates poured $6.8 billion into the financial system in October as part of a $19.1 billion rescue facility, while Saudi Arabia injected $3 billion in long-term deposits into its banks, echoing similar moves elsewhere.
Russian central bank reserves are down about $120 billion since their August peak, sapped in part by huge interventions to support the ruble.
Huge amounts of petrodollars flowed into U.S. banks during the oil price spike of the 1970s, much of which was recycled into ill-fated floating rate loans to Latin America. That ended with the Latin American crises of the 1980s, causing a series of problems that now seem familiar, including bank capital woes and the need for official intervention.
"This time around, petrodollars may have been deposited with European banks, which in turn lent aggressively to emerging market economies in all three time zones," Stephen Jen, currency strategist at Morgan Stanley in London, wrote in a note to clients. "Assuming this thesis is correct, sharply lower oil prices will constrain the recycling of petrodollars, and constrained risk-taking appetite of European banks could choke off loan flows into emerging Europe."
Jen also notes that European banks are five times more exposed to emerging markets through bank debt than their U.S. and Japanese peers.
For some countries that have benefited from petrodollar banking flows, there is another problem that their diminution will make worse; the banking sector is huge in relation to the size and wherewithal of the host economy.
Whereas bank liabilities in the United States were equal to about 20 percent of gross domestic product in 2006, the last time the Bank for International Settlements published such data, for Britain it was 285 percent and for Switzerland 317 percent.
That certainly gives things a piquancy when bank rescues are in the air.
High oil prices were a huge burden on oil consumers, and you can argue that as usual, when faced with a surfeit of cash, banks used it for trinkets and speculative loans. But a cutback in that flow of deposits is one of the last things the banks or their overburdened regulators want to see.
Iran aims for 2009 launch of nuclear plant
Tuesday, November 18, 2008
TEHRAN: Iran is aiming to commission its first nuclear power plant in 2009 after years of delays, the official IRNA news agency reported on Tuesday.
Russia has already delivered nuclear fuel under a $1 billion (665 million pounds) contract to build the Bushehr plant on the Gulf coast in southwest Iran. But the start-up timetable has frequently been put back because of issues such as a row over payments.
Russia agreed to build the plant in 1995 on the site of an earlier project begun in the 1970s by German firm Siemens. The Siemens' project was disrupted by Iran's 1979 Islamic revolution and the 1980-88 Iran-Iraq war.
"The commissioning stage of Bushehr nuclear power station has begun and we are hopeful the power station will be commissioned in 2009 as per the agreement we have had with the Russian party," the spokesman for Iran's Atomic Energy Organisation, Mohsen Delaviz, was quoted a saying.
He did not give a more precise date.
"There is a good environment prevailing in our relations with the Russians and we are hoping they will honour their commitments," he added.
Atomstroyexport, the Russian firm building the plant, said in September the plant was nearing completion and that it would start "technological work" in December 2008 to February 2009 that would put the plant on an "irreversible final" course.
Analysts say Russia has used Bushehr as a lever in relations with Tehran. It had previously said it expected the plant to start up some time this year.
Iran is at loggerheads with the West over its nuclear programme that Tehran says has only civilian aims but which the United States and its allies say is a smokescreen for building atomic weapons.
(Reporting by Hossein Jaseb, writing by Edmund Blair; Editing by Dominic Evans)
Pirates seize Saudi supertanker
By Robert F. Worth and Mark Mcdonald
Tuesday, November 18, 2008
JIDDA, Saudi Arabia: A hijacked Saudi-owned supertanker carrying more than $100 million worth of crude oil is approaching Somali waters where it is expected to anchor so that negotiations can begin on the release of the vessel and its 25 crew, United States navy officials said Tuesday.
The vessel, the 1,080-foot Sirius Star, is the largest ship ever seized by pirates — about the size of an aircraft carrier — and was captured off the coast of Kenya.
"At this time we believe the ship is just off the Somali coast," said Commander Jane Campbell, a spokeswoman for the U.S. Navy's Fifth Fleet, stationed in Bahrain. "We don't have a specific indication that the ship is at anchor, but if it follows the pattern of previous attacks, that's what will happen and negotiations will begin between the pirates and the owners of ship."
Although the supertanker's exact location near the Somali coast is not clear, in the past most pirates have brought hijacked vessels to a stretch of coastline between Eyl in the north to the Harradera region to the south, Campbell said in a telephone interview.
The hijacking follows a string of increasingly brazen attacks by Somali pirates in recent months, but this appeared to be the first time that pirates have seized a loaded oil tanker.
Asked about a possible naval intervention, Campbell said: "Once the attack takes place, this is a hostage situation, and there are 25 crew members on board that ship. As with any hostage situation, there has to be concern for those individuals." Negotiations with pirates have often taken weeks or even months. A Ukrainian vessel hijacked in September, loaded with tanks and other heavy weapons, is still being held at Hobyo on the Somali coast, where the ship's crew remain captives, Campbell said.
The International Maritime Bureau, the global clearinghouse for piracy reporting, based in Kuala Lumpur, Malaysia, has seen a sharp increase in maritime piracy this year.
Noel Choong, head of the piracy reporting center at the bureau, said Tuesday that 88 ships have been attacked in the Gulf of Aden alone this year. And 14 hijacked ships remain in the gulf — the heavily armed hijackers still on board, with the crews, cargo and the vessels themselves being held for ransom.
"They're still at sea and still negotiating," he said, noting that as ransom payoffs have risen, pirates have raised their demands. "They know the going rate."
Only a few years ago, the average ransom was in the tens of thousands to hundreds of thousands of dollars. Now payments can range from $500,000 to $2 million.
The pirates' profits are set to reach a record $50 million in 2008, Somali officials say. Shipping firms are usually prepared to pay, because the sums are low compared with the value of the ships.
The attack on the Sirius Star took place despite an increased multinational naval presence off the Somali coast, where most of the recent hijackings have taken place. The pirates, often armed with automatic weapons and rocket-propelled grenades, travel in speedboats equipped with satellite phones and GPS equipment.
The supertanker was hijacked more than 450 nautical miles southeast of Mombasa, Kenya, navy officials said. That is far to the south of most recent attacks, suggesting that the pirates may be expanding their range in an effort to avoid the multinational naval patrols now plying the Gulf of Aden and the Arabian Sea.
"I'm stunned by the range of it," said Admiral Mike Mullen, the chairman of the Joint Chiefs of Staff, at a news conference in Washington. The ship's distance from the coast was "the longest distance I've seen for any of these incidents," he said.
The vessel was headed for the United States when it was seized, Reuters reported.
Maritime experts recently have noticed a new development in the gulf — the pirates' use of "mother ships," large oceangoing trawlers carrying fleets of speedboats that are then deployed when a new prize is encountered.
"They launch these boats and they're like wild dogs," said Choong in Kuala Lumpur. "They attack the ship from the port, from starboard, from all points, shooting, scaring the captain, firing RPGs and forcing the ship to stop."
There are some countermeasures the merchant ships can use when approaching pirates are spotted. Fire-retardant foam or huge blasts of water can be sprayed from the ship to douse the would-be hijackers.
Once pirates get aboard, however, the ship is theirs, because crews on commercial vessels are rarely armed, according to Choong and other maritime experts. "They are not mentally or physically fit enough to handle weapons," he said.
Nor do many ship owners use armed contractors — seagoing mercenaries — to fight or ward off approaching pirates. Experts said crew safety and insurance liability were overriding concerns of captains and owners.
"We do not advocate this, having armed escorts on board," said Lee Yin Mui, assistant director of research at the Regional Cooperation Agreement on Combating Piracy and Armed Robbery Against Ships at Sea. Known as ReCAAP, the 16-nation network is based in Singapore.
"Armed escorts could only escalate the situation," she said, "and perhaps trigger off heavy crossfire."
The Sirius Star is owned by Vela International, a subsidiary of the Saudi Arabia-based oil giant Saudi Aramco. Its 25-member crew includes citizens of Croatia, Britain, the Philippines, Poland, and Saudi Arabia, the United States Navy said.
Big underground thermal lake unveiled in Hungary
Tuesday, November 18, 2008
BUDAPEST: An underground thermal lake Hungarian officials say is one of the biggest in the world was unveiled Tuesday after its discovery below a Turkish bath in the capital Budapest.
"This is the biggest active, water-filled thermal water cave and hall in the world," speleologist Sandor Kalinovits, one of the lake's discoverers, said during a tour of the cave below one of Budapest's more affluent residential districts.
The lake, discovered earlier this year, lies in a subterranean hall 86 m (282 ft) long, 27 (89 ft) m wide and 15 m (49 ft) high and belongs to the Janos Molnar cave.
Budapest is built above a labyrinth of caves filled with warm thermal water and many have only partially been explored.
Environment Minister Imre Szabo told reporters the cave might be opened to the public. City officials plan to apply to UNESCO to declare the cave system a World Heritage Site.
The Ottoman Empire, which governed Hungary in the 17th century, left a legacy of Turkish baths which remain extremely popular with local residents as well as tourists.
(Reporting by Sandor Peto; Editing by Catherine Bosley)

France decides not to deport group of 43 Afghans
By Caroline Brothers
Tuesday, November 18, 2008
PARIS: France has rejected a plan to carry out a joint charter flight with Britain to deport to Kabul 43 Afghans found without papers near Calais, officials said Tuesday.
Geoffroy Didier, an adviser to Immigration Minister Brice Hortefeux, said France had decided not to go ahead with the flight after Britain invited France to join one of its regular deportation flights to Afghanistan.
"The security conditions were not right," Didier said, referring to safety for the returnees in Afghanistan. He added that the ministry was working with the United Nations refugee agency, which had recommended no deportations of women or children, nor of Afghans who come from dangerous regions of the country.
"You cannot simply send to Kabul people who may not actually come from Kabul," said Marie-Ange Lescure, a Paris-based spokeswoman for the office of the UN High Commissioner for Refugees, which annually suspends its own voluntary return program during the harsh Afghan winter.
In London, the UK Border Agency would not comment on whether the flight would still go ahead, nor on newspaper reports that Britain was financing the charter and that France's withdrawal had caused a diplomatic spat. An agency spokesman, speaking on customary condition of anonymity, added that Britain would continue to cooperate with France over immigration.
But the National Coalition of Anti-Deportation Campaigns said Britain had not canceled the flight that was scheduled to depart Tuesday evening.
According to a copy of removal directions for an Afghan in detention in England, Flight PVT008 had been scheduled to stop in the northern French city of Lille after leaving London Stansted Airport on its way to Kabul.
A member of the European Parliament, Hélène Flautre, and several British and French nongovernmental organizations had objected to the flight, calling it a mass expulsion that violated the European Convention on Human Rights.
France sees no new threat after Taliban message
Tuesday, November 18, 2008
PARIS: France said on Tuesday it saw no new menace against it in a Taliban video threatening attacks in Paris if French troops did not withdraw from Afghanistan.
The recorded message aired by Al Arabiya television on Monday also claimed responsibility for an ambush in which 10 French troops were killed in August, the biggest single combat loss of foreign troops in Afghanistan since 2001.
"There is no particular additional threat today," French Foreign Ministry spokesman Frederic Desagneaux told a news conference when asked about the recording, adding the tape seemed to have been recorded shortly after the ambush.
"Looking at these remarks, they repeat themes that are not new," Desagneaux said, adding: "It is a renewed communications exercise but one which is not new."
Measures were in place to guarantee the security of French citizens but no additional steps had been taken after the recording was aired, he said.
"Of course, in the context of permanent vigilance, we are concerned about the security of our troops, our forces engaged in Afghanistan, as we are about the security of all French people," Desagneaux told reporters.
"Additional security measures were not taken after this broadcast," he added.
France has about 2,600 troops in Afghanistan.
(Reporting by Francois Murphy; Editing by Janet Lawrence)
Sarkozy and Blair to host economic crisis meeting
Tuesday, November 18, 2008
PARIS: French President Nicolas Sarkozy and former Prime Minister Tony Blair will host a meeting of international leaders and experts in January to discuss the global economic crisis, the president's office said Tuesday.
"We are living in a crucial period for our economies and our social organisations. More than ever, we must show that we can propose concrete solutions to the challenges confronting us," Sarkozy's office said in a statement.
The meeting, dubbed "New world: values, development and regulation" would include "international political leaders" as well as economists such as Nobel Prize winners Joseph Stiglitz and Amartya Sen, the Elysee Palace said.
"At a time when we are trying to define a new model of capitalism and reflect on the values that will help us adapt to globalisation, this even will make an essential contribution," Blair said in the statement.
(Reporting by Yan Le Guernigou, writing by James Mackenzie; Editing by Matthew Jones)
French parliament votes to limit tax breaks
Tuesday, November 18, 2008
PARIS: The French parliament voted in the early hours of Tuesday to cap the level of income tax breaks that can be claimed by high earners, closing loopholes that had allowed some to escape paying tax altogether.
The measure, estimated to raise some 200 million euros (172 million pounds) for government coffers, limits the total benefit that can be claimed from so-called "tax niches" to 25,000 euros plus 10 percent of a taxpayer's revenue.
It balances one of the more controversial reforms introduced by President Nicolas Sarkozy after his election in 2007, the so-called "tax shield," which guarantees that no one has to pay more than 50 percent of their total income in tax.
"With a floor and a ceiling, we have a well balanced structure," said Gilles Carrez, a senior deputy from Sarkozy's centre-right party who sponsored the bill.
The "tax shield" has been repeatedly attacked by the opposition and other government critics as a present to the rich and critics said the amendment to the 2009 finance law voted in the early hours of the morning did not go far enough.
"You will continue to be able to have comfortable revenues and realise very significant tax breaks," said Didier Migaud, a senior deputy from the opposition Socialists who abstained from voting for the measure in protest that it did not go far enough.
French taxpayers can claim relief for activities ranging from investing in rental property in France's overseas territories, renovating historic buildings or renting furnished accommodation.
Some 200,000 individuals are estimated to benefit from the breaks which currently allow some to avoid paying tax entirely.
(Reporting by Emile Picy; Writing by James Mackenzie; Editing by Matthew Jones)

Report finds that East European migrants don't harm economies
By Stephen Castle
Tuesday, November 18, 2008
BRUSSELS: Despite heavy currents of migration among East Europeans over the past decade, their increased presence in Western countries has done virtually nothing to alter local job prospects or wages, according to a European Union report on Tuesday.
As a result, those nations that still restrict workers from Eastern Europe should abandon those curbs, the European Commission said.
The report essentially concluded that worries that the "Polish plumber" would displace West European jobs were ill founded.
In fact, the report said, migration "contributed significantly to overall economic growth and employment expansion in the EU." The report even suggested that some Eastern nations had paid a heavier price in terms of brain drain and social upheaval than Western nations who received an influx. In Poland, for example, people talk of the "EU orphan," or child brought up by relatives because both parents are working abroad.
The admission of 10 new nations to the European Union in 2004, followed by Romania and Bulgaria in 2007, prompted concern in several nations that the foreign workers would cost jobs and stoke social tensions.
Since the big expansion in 2004, the number of citizens from the new 10 nations residing in the old 15 countries has increased by roughly 1.1 million. Totaling around 900,000 in 2003, it now stands at about 2 million - a fraction of the approximately 80 million inhabitants of those countries.
Many of the more prosperous Western members of the 27-nation bloc imposed restrictions on their labor market. Four countries - Denmark, Belgium, Germany and Austria - still apply some restrictions to workers from the new 2004 members.
The commissioner for employment and social affairs, Vladimir Spidla, recommended that they lift them at least by May 2009, when they expire. An option to extend to 2011, Spidla suggested, is unnecessary.
"Lifting restrictions now," said Spidla, "would not only make economic sense but would also help reduce problems such as undeclared work and bogus self-employment."
The report cites one study which found that wages in the old 15 EU nations were on average only 0.08 percent lower in the short term with "no impact at all in the long run." The effect on unemployment was just 0.04 percentage points in the short term, it said.
The report underlined fluid and unpredictable patterns of European migration. The number of Bulgarian and Romanian citizens resident in the 25 nations that made up the EU before they joined increased from around 690,000 at the end of 2003 to about 1.8 million at the end of 2007.
But instead of heading for Ireland and Britain, like the previous wave of Eastern immigrants, this group mainly settled in Spain and Italy.
At present restrictions are in place on Romanian and Bulgarian workers in 15 EU nations. They are subject to review in 2011 but can be extended to 2013.
The report Tuesday was issued before national governments have to decide whether to continue restrictions.
Caroline Sägesser, a political analyst at the Centre de Recherche et d'Information Socio-Politique in Brussels, said voters were likely to be skeptical of any push to lift barriers now.
"In the current situation of economic crisis," said Sägesser, "people are extremely wary of seeing more workers coming onto the labor market. The mood is currently one of restriction."
Population movements have proved difficult to predict. Britain famously underestimated in 2004, predicting that no more than 15,000 East Europeans would arrive each year.
In 2006 the British government said that 427,000 workers had applied to work in Britain, almost two-thirds of them from Poland, and that the figure was closer to 600,000 if self-employed workers including those in the construction business, were included.
The report Tuesday said that Ireland had received the most East Europeans, relative to its size, equivalent to around 5 percent of its working-age population, followed by Britain (1.2 percent). Many of the Poles and Balts who arrived in Britain and Ireland are now returning home, the report noted.
Over all, it noted, there is still much more migration from non-EU nationals than from new to old EU states.
Pawel Swieboda, director of the demosEuropa research institute in Warsaw, highlighted the social problems thrown up by immigration: an estimated 6 to 8 percent of trained medical workers leave Poland.
"I was on a plane from Stockholm to Warsaw," said Swieboda, "when someone was taken ill and the cabin crew asked if there was a doctor on board. Most of the plane stood up because it was a Friday night and Polish doctors were going home."

Spanish judge drops investigation of Franco-era crimes
By Victoria Burnett
Tuesday, November 18, 2008
MADRID: A high-profile judge Tuesday dropped an investigation into Franco-era killings, ending what had promised to be the first criminal investigation into alleged atrocities committed by Spain's former dictator and his allies.
The judge, Baltasar Garzón, last month declared himself competent to investigate the killings of 114,000 people at the hands of Franco's supporters during the 1936-1939 civil war and the dictatorship that followed and ordered the exhumation of at least 19 mass graves.
Garzón had intended to investigate whether crimes against humanity were committed under Franco and, if so, whether 34 former generals and ministers were involved.
But the judge said Tuesday that he was dropping the investigation after state prosecutors questioned his jurisdiction in crimes that were committed 70 years ago and that involved dead suspects. In a 152-page statement, Garzón passed responsibility to regional courts for opening 19 mass graves believed hold the remains of hundreds of victims, including those of the poet García Lorca.
Activists pressing for the state to take responsibility for opening hundreds of graves and pursue some process of retroactive justice said Garzón's decision was a symbolic blow and blamed a lack of political will in the Socialist government to push for a reckoning with Spain's dark past.
"It's a disgrace," said José María Pedreño, president of the State Federation of Forums for Historical Memory. "We have teams of Spanish peacekeepers exhuming mass graves in Bosnia and yet we can't even deal with our own graves. As a Spaniard, I find this shameful. How can we call ourselves a stable, mature democracy if we can't resolve this issue?"
But those activists said it was unclear how much the statement Tuesday would affect the process of opening graves, begun by volunteers eight years ago.
Emilio Silva, head of the Association for the Recovery of Historical Memory, said Garzón's court order would potentially give a boost to a process that so far has depended on weekend volunteers and has little official backing. Pedreño said that existing attempts to get regional courts to open investigations were usually fruitless.
Some who had closely followed the legal debate over whether Garzón had jurisdiction over the civil war crimes said the decision Tuesday was a setback for a judge who has built an international reputation by pushing the limits of the law to bring cases against defendants accused of human rights violations, like Augusto Pinochet of Chile.
But they said they believed the judge knew he would likely be challenged and that he had opened the investigation partly in the hope of putting pressure on the government of José Luis Rodríguez Zapatero. Garzón's investigation prompted an outcry from conservatives who claimed that raking over the past would only serve to reopen wounds in Spanish society.
"From a social point of view it has been positive," Pedreño said. "He has sent up a cloud of dust, prompted debate about this issue and awoken our consciences again."
UN court to hear Croatian case accusing Serbia of genocide
The Associated Press
Tuesday, November 18, 2008
THE HAGUE: Croatia won the right Tuesday to sue Serbia for genocide after the highest UN court ruled that it had jurisdiction in the case.
The decision marks the second time Serbia will face the allegation of genocide at the International Court of Justice. Bosnia also accused Serb forces of being responsible for genocide during the brutal conflicts that followed the breakup of Yugoslavia.
Croatia alleged that Serb attacks that killed and displaced thousands of Croats during the 1991-95 war of Croatian independence was a form of genocide.
Zagreb demanded that the court order Belgrade to pay compensation. Croatia also asked the court to order Serbia to help trace people missing from the war and return cultural items plundered during the fighting.
Serbia countered that the court had no jurisdiction in the case, saying that it was not a United Nations member state when Croatia filed the case in 1999.
But the 17-judge tribunal rejected the arguments by Serbia, ruling that the country had assumed the responsibilities of the former Yugoslavia after that state crumbled in the early 1990s - including its responsibility to adhere to the convention outlawing genocide.
In a 12-5 decision, the court ruled that it had "jurisdiction to entertain the case," said the court president, Rosalyn Higgins.
The court will likely take years to hear the case and issue a ruling.
A representative of Serbia, Tibor Varady, criticized the ruling, saying that it would only serve to prolong tensions between the Balkan neighbors.
"I think it would be much better to insist consistently on individual criminal responsibility," he said.
But the leader of the Croatian delegation, Ivan Simonovic, said the case should help both countries move forward by bringing legal closure for wartime atrocities.
President Stipe Mesic of Croatia described the ruling as "just."
In a similar case brought by Bosnia, the court exonerated Serbia in February 2007 of direct responsibility for genocide in Bosnia in the early 1990s, but ruled that the authorities had failed to prevent the 1995 slaughter of 8,000 Bosnian Muslims at Srebrenica.Congo rebel to go on trial
The International Criminal Court cleared the way Tuesday to begin its first trial in January, in the case of a Congolese rebel charged with recruiting child soldiers and sending them into battle, The Associated Press reported.
The court in The Hague lifted its suspension of the case against Thomas Lubanga after the prosecution accepted a request that it hand over to the judges confidential evidence received from the United Nations.
The case is a landmark on several scores: Lubanga is the first defendant brought before the court since it was created in 2002 as the first permanent war crimes tribunal, and it is the first trial to deal exclusively with the use of child soldiers.
The judges were on the verge of throwing out the case in July and had ordered Lubanga's release, saying that he could not get a fair trial because some of the material being withheld by the prosecution could help Lubanga's defense.
The United Nations and other agencies in Congo had sought to keep the information private to shield field workers from the possibility of retribution.
Appeals judges agreed last month that Lubanga's trial would be unfair unless all the evidence was disclosed, at least to the judges if not to the defense.
After reading the material, the three-judge tribunal ruled Tuesday the trial could go ahead and set a provisional starting date of Jan. 26.
Lubanga denies recruiting and conscripting children to fight in eastern Congo during 2002-03.

David Brooks: The formerly middle class
Tuesday, November 18, 2008
At the beginning of every recession, there are people who see the downturn as an occasion for moral revival: Americans will learn to live without material extravagances. They'll simplify their lives. They'll rediscover what really matters: home, friends and family.
But recessions are about more than material deprivation. They're also about fear and diminished expectations. The cultural consequences of recessions are rarely uplifting.
The economic slowdown of the 1880s and 1890s produced a surge of agrarian populism and nativism, with particular hostility directed toward Catholics, Jews and blacks. The Great Depression was not only a time of FDR's optimism and escapist movies, it was also a time of apocalyptic forebodings and collectivist movements that crushed individual rights.
The recession of the 1970s produced a cynicism that has never really gone away. The share of students who admitted to cheating jumped from 34 percent in 1969 to 60 percent a decade later. More than a quarter of all employees said the goods they produced were so shoddily made that they wouldn't buy them for themselves. As David Frum noted in his book, "How We Got Here," job dissatisfaction in 1977 was higher than at any time in the previous quarter-century.
Recessions breed pessimism. That's why birthrates tend to drop and suicide rates tend to rise. That's why hemlines go down. Tamar Lewin of The New York Times reported on studies that show that the women selected to be Playboy Playmates of the Year tend to look more mature during recessions - older, heavier, more reassuring - though I have not verified this personally.
This recession will probably have its own social profile. In particular, it's likely to produce a new social group: the formerly middle class. These are people who achieved middle-class status at the tail end of the long boom, and then lost it. To them, the gap between where they are and where they used to be will seem wide and daunting.
The phenomenon is noticeable in developing nations. Over the past decade, millions of people in these societies have climbed out of poverty. But the global recession is pushing them back down. Many seem furious with democracy and capitalism, which they believe led to their shattered dreams. It's possible that the downturn will produce a profusion of Hugo Chávezes. It's possible that the Obama administration will spend much of its time battling a global protest movement that doesn't even exist yet.
In America, there are also millions of people facing the psychological and social pressures of downward mobility. In the months ahead, the members of the formerly middle class will suffer career reversals. Paco Underhill, the retailing expert, tells me that 20 percent of the mall storefronts could soon be empty. That fact alone means that thousands of service-economy workers will experience the self-doubt that goes with unemployment.
They will suffer lifestyle reversals. Over the past decade, millions of Americans have had unprecedented access to affordable luxuries. These indulgences were signs of upward mobility. But these affordable luxuries will no longer be so affordable. Suddenly, the door to the land of the upscale will slam shut for millions of Americans.
The members of the formerly middle class will suffer housing reversals. The current mortgage crisis is having its most concentrated effect on people on the lowest rungs of middle-class life - people who live in fast-growing exurbs in Florida and Nevada that are now rife with foreclosures; people who just moved out of their urban neighborhoods and made it to modest, older suburbs in California and Michigan. Suddenly, the home of one's own is gone, and it's back to the apartment complex.
Finally, they will suffer a drop in social capital. In times of recession, people spend more time at home. But this will be the first steep recession since the revolution in household formation. Nesting amongst an extended family rich in social capital is very different from nesting in a one-person household that is isolated from family and community bonds. People in the lower middle class have much higher divorce rates and many fewer community ties. For them, cocooning is more likely to be a perilous psychological spiral.
In this recession, maybe even more than other ones, the last ones to join the middle class will be the first ones out. And it won't only be material deprivations that bites. It will be the loss of a social identity, the loss of social networks, the loss of the little status symbols that suggest an elevated place in the social order. These reversals are bound to produce alienation and a political response. If you want to know where the next big social movements will come from, I'd say the formerly middle class.
Economic crisis hits new veterans hard
By Lizette Alvarez
Tuesday, November 18, 2008
After a mortar shell sent Andrew Spurlock hurtling off a roof in Iraq, ending his army career in 2006, the seasoned infantryman set aside bitterness over his back injury and began to chart his life in storybook fashion: a new house, a job as a police officer and more children.
"We had a budget and a plan," said Spurlock, 29, a father of three, who with his wife, Michelle, hoped to avoid the pitfalls of his transition from Ramadi, Iraq, to Apopka, Florida.
But the move proved treacherous, as it often does for veterans. The job with the Orange County Sheriff's Office fell through after officials there told Spurlock that he needed to "decompress" after two combat tours, a judgment that took him by surprise. Scrambling, he settled for a job delivering pizzas.
Spurlock's disability claim for his back injury took 18 months to process, a year longer than expected. With little choice, the couple began putting mortgage payments on credit cards. The family debt climbed to $60,000, a chunk of it for medical bills, including for his wife and child. Foreclosure seemed certain.
While few Americans are sheltered from the jolt of the recent economic crisis, the nation's newest veterans, particularly the wounded, are being hit especially hard. The triple-whammy of injury, unemployment and waiting for disability claims to be processed has forced many veterans into foreclosure or sent them teetering on its edge, according to veterans' organizations.
The problem is hard to quantify because there are no foreclosure statistics singling out veterans and service members. Congress recently asked the Department of Veterans Affairs to find out how badly veterans were being affected, particularly by foreclosures. The army also began tracking requests for help on foreclosure issues for the first time. Service organizations report that requests for help from military personnel and new veterans, especially those who were wounded, mentally or physically, and are struggling to keep their houses and pay their bills, have jumped sharply.
"The demand curve has gone almost straight up this year," said Bill Nelson, executive director for USA Cares, a nonprofit group that provides financial help to members of the military and to veterans. Housing, Nelson said, "is the biggest driver in the last 12 months."
Congress has recently taken small steps to help, banning lenders from foreclosing on military personnel for nine months after their return from overseas, up from three months, and ensuring that interest rates on their loans remain stable for a year. Another relief bill to prevent certain injured veterans from losing their homes while they wait for their disability money was signed into law in October. The protection is good for one year.
"We owe these men and women more than a pat on the back," said Senator John Kerry, the Massachusetts Democrat who introduced one of the bills.
But the short-term measures do little to address the underlying economic difficulties that new veterans face, beginning with the job hunt. Veterans, particularly those in their 20s and 30s, face higher unemployment rates this quarter than those who never served in the military, though the gap is beginning to shrink as the economy worsens.
Recently discharged veterans, though, fared worst of all. A 2007 survey for the Department of Veterans Affairs of 1,941 combat veterans who left the military mostly in 2005 showed nearly 18 percent were unemployed as of last year. The average national jobless rate in October was 6.5 percent.
A quarter of those who found jobs failed to make a living wage, earning less than $21,840 a year.
"You fill out a job application, and you can't write 'long-range reconnaissance and sniper skills,"' said Spurlock, who searched a year for a better-paying job than delivering pizza, finally finding one as a construction supervisor despite his bad back.
The situation is especially troubling for the injured, whose financial problems begin almost immediately.
"The wife drops everything to be by his bedside," said Meredith Leyva, founder of Operation Homefront, a nonprofit group that provides emergency money and aid to 33,000 military families a year, including the Spurlocks. "She stays at the nearest hotel to make sure he is alive. They live that way for months. She either has to quit her job or she is fired. This bankrupts people."
Some injured veterans cannot work at all and must rely on disability checks and other government payouts. The wait for a disability check from the Veterans Affairs Department averaged six months in August, enough to financially crush some families.
Those who can work struggle to find employers willing to accommodate their injuries, including mental health problems. The Department of Labor recently started a Web site, America's Heroes at Work, that prods employers into hiring more wounded veterans and explains that post-traumatic stress disorder and traumatic brain injury are manageable conditions and not necessarily long term.
Some believe that the government has to do more.
"There have to be incentives for employers," said Thomas Wilkerson, a retired Marine Corps general who is now chief executive of the U.S. Naval Institute, an independent nonprofit organization.
Facing one challenge at a time
By Henry M. Paulson Jr.
Tuesday, November 18, 2008
We are going through a financial crisis more severe and unpredictable than any in our lifetimes. We have seen the failures, or the equivalent of failures, of Bear Stearns, IndyMac, Lehman Brothers, Washington Mutual, Wachovia, Fannie Mae, Freddie Mac and the American International Group. Each of these failures would be tremendously consequential in its own right. But we faced them in succession, as our financial system seized up and severely damaged the economy.
By September, the government faced a system-wide crisis. After months of making the most of the authority we already had, we asked Congress for a comprehensive rescue package so we could stabilize our financial system and minimize further damage to our economy.
By the time the legislation had passed on Oct. 3, the global market crisis was so broad and so severe that we needed to move quickly and take powerful steps to stabilize our financial system and to get credit flowing again.
Our initial intent was to strengthen the banking system by purchasing illiquid mortgages and mortgage-related securities. But the severity and magnitude of the situation had worsened to such an extent that an asset purchase program would not be effective enough, quickly enough. Therefore, exercising the authority granted by Congress in this legislation, we quickly deployed a $250 billion capital injection program, fully anticipating we would follow that with a program for buying troubled assets.
There is no playbook for responding to turmoil we have never faced.
We adjusted our strategy to reflect the facts of a severe market crisis, always keeping focused on our goal: to stabilize a financial system that is integral to the everyday lives of all Americans. By mid-October, our actions, in combination with the Federal Deposit Insurance Corporation's guarantee of certain debt issued by financial institutions, helped us to accomplish the first major priority, which was to immediately stabilize the financial system.
As we assessed how best to use the remaining money for the Troubled Asset Relief Program, we carefully considered the uncertainties around the deteriorating economic situation in the United States and globally. The latest economic reports underscore the challenges we are facing. The gross domestic product for the third quarter (which ended Sept. 30, three days before the bill passed) shrank by 0.3 percent.
The unemployment rate rose in October to a level not seen since the mid-1990s. Home prices in 10 major cities have fallen 18 percent over the previous year. Auto sales numbers plummeted in October and were more than a third lower than one year ago. The slowing of European economies has been even more drastic.
I have always said that the decline in the housing market is at the root of the economic downturn and our financial market stress. And the economy, as it slows further, threatens to prolong this decline, as well as the stress on our financial institutions and financial markets.
A troubled-asset purchase program, to be effective, would require a huge commitment of money. In mid-September, before economic conditions worsened, $700 billion in troubled asset purchases would have had a significant impact. But half of that sum, in a worse economy, simply isn't enough firepower.
If we have learned anything throughout this year, we have learned that this financial crisis is unpredictable and difficult to counteract. We decided it was prudent to reserve our TARP money, maintaining not only our flexibility, but also that of the next administration.
The current $250 billion capital purchase program is strong medicine for our financial institutions. More capital enables banks to take losses as they write down or sell troubled assets. And stronger capitalization is essential to increasing lending, which is vital to economic recovery.
Recently I've been asked two questions. First, Congress gave you the authority you requested, and the economy has only become worse.
What went wrong? Second, if housing and mortgages are at the root of our economic difficulties, why aren't you addressing those problems?
The answer to the first question is that the purpose of the financial rescue legislation was to stabilize our financial system and to strengthen it. It is not a panacea for all our economic difficulties. The crisis in our financial system had already spilled over into the overall economy. But recovery will happen much, much faster than it would have had we not used TARP to stabilize our system. If Congress had not given us the authority for TARP and the capital purchase program and our financial system had continued to shut down, our economic situation would be far worse today.
The answer to the second question is that more access to lower-cost mortgage lending is the No. 1 thing we can do to slow the decline in the housing market and reduce the number of foreclosures. Together with our bank capital program, the moves we have made to stabilize and strengthen Fannie Mae and Freddie Mac, and through them to increase the flow of mortgage credit, will promote mortgage lending. We are also working with the Department of Housing and Urban Development, the FDIC and others to reduce preventable foreclosures.
I am very proud of the decisive actions by the Treasury Department, the Federal Reserve and the FDIC to stabilize our financial system. We have done what was necessary as facts and conditions in the market and economy have changed, adjusting our strategy to most effectively address the crisis. We have preserved the flexibility of President-elect Barack Obama and the new secretary of the Treasury to address the challenges in the economy and capital markets they will face.
As policymakers face the difficult challenges ahead, they will begin with two considerable advantages: a significantly more stable banking system, one where the failure of a major bank is no longer a pressing concern; and the resources, authority and potential programs available to deal with the future capital and liquidity needs of credit providers.
Deploying these new tools and programs to restore our financial institutions, financial markets and the flow of lending and credit will determine, to a large extent, the speed and trajectory of our economic recovery. I am confident of success, because our economy is flexible and resilient, rooted in the entrepreneurial spirit and productivity of the American people.
Henry M. Paulson Jr. is the secretary of the Treasury.
U.S. lawmakers press for direct aid to homeowners
By Brian Knowlton and John H. Cushman Jr.
Tuesday, November 18, 2008
WASHINGTON: Top U.S. financial regulators faced new calls Tuesday from lawmakers to aim more of the government's huge financial relief package at programs that would directly help homeowners escape foreclosure.
At a hearing Tuesday of the House of Representatives' Committee on Financial Services, several members expressed dismay at the prospect of a continuing or even accelerating avalanche of foreclosures, despite the commitment of hundreds of billions of dollars to the broad bailout program being put into effect by the administration of President George W. Bush. Later in the day, the Senate Banking Committee was scheduled to hear from the auto industry, which is also seeking a government bailout.
Representative Barney Frank, the Massachusetts Democrat who is committee chairman and one of the architects of the compromise that produced the bailout bill, read from several pages of the legislation that he said authorized more direct steps on behalf of homeowners. One member after another, especially among the Democrats, urged Treasury Secretary Henry Paulson Jr., who runs the main program aimed at troubled loans and the lenders that issued them, to do more to encourage modifications of costly mortgages on houses that have plummeted in value.
Paulson, testifying alongside the chairmen of the Federal Reserve and the Federal Deposit Insurance Corp., two other major players in the economic rescue efforts, said they were focusing on economic stabilization, but Frank said that the problem of foreclosures was not being addressed effectively.
At one point, when Paulson said, "We've been working very, very aggressively at helping the individual," Frank cut him off, saying that pouring capital into banks to strengthen them was no substitute for helping distressed homeowners.
The three witnesses, whose agencies are struggling to come up with coordinated approaches to address the crisis, warned that the U.S. economy still needed urgent attention, with credit markets remaining tight, millions of homeowners sliding toward foreclosure and government's relief payments unlikely to flow into the markets soon.
Ben Bernanke, chairman of the Federal Reserve, described signs of only modest improvement in the credit markets, warning that "over all, credit conditions are still far from normal, with risk spreads remaining very elevated."
Sheila Bair, chairman of the FDIC, said she planned to continue her campaign to get relief to troubled homeowners. Bair has been calling for actions that go beyond what the Treasury supports.
She said a program that her agency had proposed to the Treasury Department would modify mortgages and ease repayment terms, preventing "as many as 1.5 million avoidable foreclosures by the end of 2009."
She also said that if nothing was done, four million to five million mortgage loans would enter foreclosure over the next two years.
In his opening statement, Bernanke strongly urged banks to improve the flow of loans to their most creditworthy borrowers.
"There are some signs that credit markets, while still quite strained, are improving," Bernanke said. He pointed to some technical improvements: banks were charging one another less for short-term lending, and money-market mutual funds and the commercial paper market were stabilizing.
But now that banks' access to capital had improved, he said, they must ease their grip on lending. "It is imperative that all banking organizations and their regulators work together to ensure that the needs of creditworthy borrowers are met in a manner consistent with safety and soundness," Bernanke said.
Paulson said in his prepared testimony that the Bush administration decided this week to defer reaching much more deeply into the $700 billion in bailout funds approved by Congress in October until the next administration takes over Jan. 20.
France plans January summit
France will hold a meeting of world leaders in Paris on Jan. 8 and 9 to seek solutions to the global financial crisis, in a follow-up to the meeting held last weekend in Washington, the office of President Nicolas Sarkozy said Tuesday, The Associated Press reported.
World Bank halves Russian growth forecast for 2009
China's central bank sets aid for commercial banks
Indian mergers and acquisitions feel the chill
Mitsubishi UFJ and Macquarie Group post sharp drops in profit
Citigroup plans to sell assets and cut more jobs
Taiwan Semiconductor freezes hiring
Ford to relinquish control of Mazda through stake sale
U.S. business travelers join in cutting costs
Take your medicine, Detroit: It's called Chapter 11
Big U.S. retailers feeling pain, on the web and off it
GE plans $2 billion in finance arm cuts next year
No government interference at Northern Rock
Ford abandons Mazda control with 20 percent stake sale
John Lewis weekly store sales down 14 percent
Layoffs as property slowdown increases
Inflation falls at record pace
Barratt anticipates further writedowns by December
ICAP misses forecasts but confident on outlook
Barclays capital plan rejigged and pay bonuses axed
Enterprise Inns profit falls in tough environment
British Energy profits fall but upbeat over new build
Premier Foods to pay lenders for stress test
Wolseley to shed 2,300 jobs
EasyJet says profit down 35 percent
Carphone plunges on gloomy outlook
Oil rebounds to near $56 after near 22 month low
HSBC says to shed 500 jobs in Asia
Emerging nations seen as economic lifesavers
By Tom Redburn
Tuesday, November 18, 2008
BARCELONA: The United States may have plunged the world into a sharp economic downturn, but it will take the combined efforts of China and other emerging nations to lead the global economy out of what is likely to be a long and painful recession.
That was the view of a number of business executives, government officials and economic experts gathered Monday and Tuesday for a conference on China's role in the global economy.
"China alone may be only 6 percent of the world economy," said Josep Piqué, chairman of Vueling, a budget airline based in Barcelona. "But together with India, Brazil and other big emerging nations, they represent about 30 percent of global GDP. The emerging countries are the solution to the overall global slump."
His point of view was echoed by Claude Béglé, chairman of Swiss Post, which runs Switzerland's public savings bank, who predicted that developing Asian nations would be the first to recover from the slump, followed by the United States and finally Europe.
But not everybody was so confident in the ability of China and Asia's other fast-growing countries to spur a global economic recovery.
"China cannot replace the U.S. economy as the engine of global growth," said Chang Dae Whan, chairman of Maeil, a South Korean newspaper company. "We're going to need a huge stimulus package from the United States, on the order of $2 trillion, to get the global economy out of the financial crisis. So far, we've only seen about $700 billion. As a result, next year I expect to see more pain and fear."
The Global China Business Meeting in Barcelona, sponsored by Horasis, a consulting organization based in Geneva, and supported by several business and government organizations in Spain, China and elsewhere, is the fourth annual gathering of the group, whose primary goal is to encourage more trade and business contact between China and Europe.
The Chinese economy, for all its success since emerging from economic isolation in the 1980s, was at a major turning point, participants here suggested, that would require a fundamental adjustment in its approach to development.
Timothy Beardson, chairman of Albert Place Holdings in Hong Kong and a leading adviser to companies doing business in China, said that China had lost a number of advantages that powered its phenomenal double-digit growth rates of recent years.
"For the last 10 years, China had it good," Beardson said. "For the next 10 years, it won't have it so good at all."
Beardson pointed to several factors that were going to make it far more difficult for China to rely on booming exports to power its growth and to improve the nation's standard of living at a rapid pace. He said that China spent far less on research and development, as a share of its economy, than Japan, the United States and most other advanced economies, making it difficult for the country to upgrade its industrial structure. He also said that China had a very weak system of higher education, and lacked any substantial social safety net, which made its citizens fearful about their own future and encouraged them to save to excess rather than spend.
The most immediate challenge, he said, was that the Chinese currency, while rising only modestly against the dollar, has strengthened sharply against the currencies of its Asian competitors and against most European currencies, making its exports far less competitive in global markets.
"If Chinese companies are to succeed in the future," he said, they will have to recognize that "their comparative advantage lies in the domestic market, not the export economy."
Chinese officials here, while acknowledging many difficulties, made clear they were convinced that the nation would weather the first real test of its economic resilience since Beijing adopted a market approach to economic development. But they said that China would need to work more closely with other economies, including the United States and Europe, to overcome the current financial crisis.
"Confidence and cooperation," said Xu Kuangdi, chairman of the China Federation of Industrial Economics, "are worth more than money and gold."China moves to aid its banks
China's central bank has opened a special facility to help commercial banks overcome fund-raising difficulties in the interbank money market, Reuters reported Tuesday from Shanghai, citing two people in the banking industry with direct knowledge of the decision.
The global financial crisis has made it hard for some foreign banks and some smaller Chinese institutions to borrow money in China's interbank market, since big Chinese banks have become wary of lending to them.
The new "term auction facility," begun in recent days, is intended to provide those cash-short banks with funds and thus reduce pressure on the banking system, said the sources, who declined to be identified because they were not authorized to speak to media on the issue.
Trial resumes for former Bank of Italy head
By Eric Sylvers
Tuesday, November 18, 2008
MILAN: As head of the Bank of Italy for 12 years, Antonio Fazio helped protect the country's banks from foreign rivals, making him popular among entrenched Italian bankers, but less so at European Union headquarters.
Now, two years after his stint at the helm of the central bank ended in scandal, he goes on trial in Milan on Thursday, facing criminal charges of market rigging to achieve his goal of keeping Italian banks in Italian hands.
Fazio, 72, worked at the Italian central bank for 45 years and was governor until December 2005, when he stepped down in the face of mounting political pressure from the Italian government and the European Commission, the executive arm of the European Union. Fazio had been under attack since the preceding July, when newspapers published the transcripts of phone conversations between him and Gianpiero Fiorani, the chief executive of a bank mired in a controversial takeover battle.
The case captivated the Italian public as well as the country's political and economic elite for much of 2005. Fazio had a lifetime appointment as head of the central bank and a personal veto on all bank mergers in Italy, making him more powerful than any of his Western European counterparts. His power remained unfettered until he used it - illegally, prosecutors say - to favor the takeover of Banca Antonveneta by Fiorani's bank, the Banca Popolare di Lodi. At the time, the Dutch bank ABN AMRO was also seeking to buy Banca Antonveneta.
After Fazio's resignation, ABN AMRO eventually bought Banca Antonveneta, although the bank was soon under Italian ownership again when it was subsequently sold to Monte dei Paschi di Siena.
The trial breaks new ground in the realm of Italian finance, experts say.
"New territory is being charted here because this is really the first time in Italy that somebody at this high of a level has been charged with something this serious," said Alberto Alessandri, a law and finance professor at Bocconi University, who is representing Popolare di Lodi in the trial.
The trial opened in October, but the judge suspended it until Thursday so he could consider a motion by the consumer association Adusbef asking that the central bank and the Italian market regulator pay €10 million in damages for their lack of oversight.
Fazio could receive a prison term as severe as 12 years if he is convicted of market rigging, although legal experts said a guilty verdict would probably not lead to any actual prison time for him.
"The result of the trial will be fair and presumably severe, but the problem is the execution of the penalty," Alessandri said. "He is old, and it is problematic to send somebody of that age to jail in Italy."
In a plea bargain, Fiorani collaborated with investigators. But the transcripts of the telephone conversations between the two men seem to pose the most serious challenge to Fazio's defense.
"I just put my signature on it," Fazio was recorded as telling Fiorani in July 2005 in a midnight phone conversation regarding the final approval of the takeover of Banca Antonveneta by Banca Popolare di Lodi.
Fiorani replied, "I've got goose bumps," and added, "I'd give you a kiss right now, on the forehead."
Fazio could not be reached for comment and has not spoken to the news media for three years. Seventeen other people are on trial in connection with Popolare di Lodi's failed assault on Antonveneta, and 58 have reached plea bargains with the court.
"Economic crimes like these are extremely complex when you drill down, and it is very difficult to prove guilt even when there is what seems to be irrefutable evidence," said Gabrio Forti, a professor of criminal law and criminology at Università Cattolica in Milan.
The trial will probably drag on for at least a year, according to several legal experts. If found guilty, Fazio would have the right to two appeals, so a final verdict could be at least two years away.
Though experts agree that Fazio protected Italian banks from takeovers by foreign rivals, the dispute is over whether he used illicit means to achieve his goal.
While that gets argued in the courthouse in Milan, financial experts have also begun to consider Fazio's legacy. Is it of the corrupt central banker who favored his friends at the expense of the Italian economic system, or is it of somebody who used all legal means at his disposal to protect Italian banks until they could consolidate and fend for themselves against larger rivals north of the Alps?
The trial promises to offer much theater, with the list of witnesses submitted by the public prosecutors including Fazio's successor, Mario Draghi, and Cesare Geronzi, chairman of the investment bank Mediobanca and one of the most powerful figures in Italian finance.
As governor of the Bank of Italy, Draghi has taken an anti-protectionist stance, encouraging consolidation among the country's banks and removing barriers to foreign takeovers. His actions led the European Commission to drop its complaint against Italy for hindering takeovers by foreign banks.
"Things have drastically changed," said Oliver Drewes, a spokesman for the financial services commissioner, Charlie McCreevy, said at the time.
Fazio, meanwhile, has begun efforts to rehabilitate his reputation. At the end of October he wrote an editorial for Il Sole/24 Ore, the influential Italian financial newspaper, in which he laid out the main thoughts of his just-published book, "Globalization, Political Economy and Social Doctrine." A devout Catholic, Fazio has long maintained that financial markets cannot be left to run free.
"The attempt to maximize profits unhinges and destroys the foundations and organization of civil society, that environmental harmony that economic activity needs to be able to prosper," Fazio wrote in the editorial.
Fazio, who was himself a regulator without any oversight, has argued in the past for the need for more regulation. Unwittingly, he might have achieved just that.
"Both this scandal and lesser scandals have led to more oversight by regulators," said Forti, the criminal-law professor. "Fazio has certainly seen his image damaged, but not as much as would have happened in other countries because of cultural reasons and also because in recent years the Italian judiciary has been accused of carrying out politically motivated trials. Even though it's a false accusation most of the time, it has contributed to lessening the weight of guilty verdicts."
For its part, Adusbef, the consumer association, is piggybacking on the Fazio case to continue its battle to bring class-action lawsuits to the Italian banking sector, something that many experts say would serve to regulate the regulators and the financial companies. The right of consumers to bring class-action suits against banks and insurance companies was supposed to have started in July, but that was postponed to January as the details are worked out.
"The banks used to win every single case brought against them, but in the last few years the situation has changed because the court has slapped their wrists several times and class-action suits will help with this even more," said Alberto Galasso, the lawyer representing Adusbef in the Milan trial. "The Fazio trial is an important step forward."
2 former Siemens managers confess in bribery scandal
Tuesday, November 18, 2008
MUNICH: Two former Siemens managers on trial for helping to organize bribery payments have confessed and could receive suspended sentences.
The men, who under German law could be identified only as Wolfgang Ru., 69, and Heinz K.-von J., 58, told a court in Munich on Tuesday that they had helped hide illegal payments by establishing a secret accounting system and used sham contracts for payments into slush funds.
The confessions were the result of an agreement between the court, prosecutors and defense lawyers.
Siemens, the biggest European engineering company, has been dogged since November 2006 by an investigation into allegations of bribes to customers that have spread to at least 12 countries including the United States. The company, based in Munich, said it had found that €1.3 billion, or $1.6 billion, of "unclear payments" were made from 2000 to 2006.
The men entered their confessions after the presiding judge, Peter Noll, said that the court would not give Ru. more than a one-year suspended sentence and K.-von J. more than a two-year suspended term and a fine if they admitted guilt.
"I wasn't a decision maker at Siemens," K.-von J. told the court. "When salespeople needed money for bribes, I forwarded their request to the responsible people. I didn't decide who got something and who didn't."
Ru. testified: "We used sham contracts after banks became more and more reluctant to handle secret payments. We needed a substitute for banks." He said he "always wanted to act for the best of the company."
A Siemens spokesman, Stefan Schmidt, declined to comment.
The case is the second to go to trial in Munich in the scandal. Both men have cooperated with prosecutors and helped uncover details in the case. The court's verdict was expected as soon as Wednesday.
The trial follows the conviction of a former Siemens unit manager, Reinhard Siekaczek, in July. Siekaczek, who also confessed, received a two-year suspended sentence and a fine.
Ru. and K.-von J. helped Siekaczek, who in 2002 established a system of slush funds to hide bribery payments.
"We used the payments because Siemens couldn't really compete with its products on the market," K.-von J. said. "It was also convenient to just use the contacts we had to generate business."
According to the indictment, the men helped make payments of €73 million to slush funds. Some of the money was used to bribe Nigerian government officials, the authorities said. Bribes were also paid in Russia, according to the prosecutors.
NBA team owner charged with insider trading
By Michael J. de la Merced and Floyd Norris
Tuesday, November 18, 2008
NEW YORK: SEC accuses Cuban of insider trading
As anyone who follows the U.S. National Basketball Association knows, Mark Cuban, the Internet entrepreneur turned owner of the Dallas Mavericks basketball team, has never shied from a fight. But now the pugnacious billionaire is squaring off against his biggest adversary yet: the U.S. federal government.
On Monday, the Securities and Exchange Commission filed a civil lawsuit charging Cuban with insider trading for selling shares of a small Internet search company in 2004, just before its share price fell. Cuban saved himself a $750,000 loss, according to the complaint filed in U.S. District Court in Dallas.
Cuban swiftly fired back, accusing the regulator of "prosecutorial misconduct" and alleging that he was the victim of a political vendetta by the agency in the waning days of the Bush administration.
"I am disappointed that the commission chose to bring this case based upon its enforcement staff's win-at-any-cost ambitions," Cuban said. "The staff's process was result-oriented, facts be damned."
Since he bought the Mavericks in 2000 with money he earned by selling his start-up,, to Yahoo for $5.9 billion before the dot-com crash, Cuban has become one of the biggest lightning rods in American professional sports. From his seat behind the Mavericks bench, clad in his signature team gear, he has not hesitated in picking arguments, and has paid nearly $1.7 million in fines to the NBA.
(After once saying he would not hire the NBA's chief of referees to "manage a Dairy Queen," Cuban paid a $500,000 fine - and spent a day at a Dairy Queen fast-food outlet serving soft ice cream Blizzards to fans.)
But he also turned around a flagging franchise, attracting star players and helping to bring the Mavericks to the brink of an NBA championship in 2006.
Mike Bass, an NBA spokesman, declined to comment on the lawsuit.
The charges could pose a problem for his dreams of a burgeoning sports empire. Cuban is widely reported to be the leading bidder for the Chicago Cubs baseball team, but he is thought to be too hot to handle by many of Major League Baseball's current owners. The insider-trading lawsuit may only make his quest for the baseball team more difficult to fulfill.
At issue in the lawsuit is Cuban's sale in June 2004 of shares in, a small Internet search engine based in Canada, whose corporate name is now Copernic.
Cuban had purchased 600,000 shares, or a 6.3 percent stake, just three months earlier as the stock was soaring. The share price tripled over a two-day period in early March on volume that totaled more than 12 times the number of outstanding shares. That prompted an investigation by the commission that ended without charges being filed.
Scott Friestad, the commission's deputy director of enforcement, said the investigation of Cuban's trading began in early 2007, but declined to say what had set off the inquiry.
On June 28, 2004, Cuban called's chief executive after receiving an e-mail message from the executive, who told him of a planned stock offering and asked if he would like to invest. Such offerings often depress share prices, at least temporarily.
According to the complaint, Cuban was told the information was confidential.
After the conversation, the chief executive wrote to the company's chairman in an e-mail message: "As anticipated, he initially 'flew off the handle' and said he would sell his shares (recognizing that he was not able to do anything until we announce the equity)."
But within minutes of the call Cuban began selling his shares, and completed the sales on June 29, according to the lawsuit, fetching an average of $13.24 a share. The next day, after the offering was announced, stock opened at $11.89, sparing him a $750,000 loss. By July 8, the shares had plummeted to $8. On Monday, the stock closed at 28 cents.
" entrusted Cuban with nonpublic information after he promised to keep the information confidential," Friestad said. "Less than four hours later, Cuban betrayed that trust by placing an order to sell all of his shares. It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market."
In a press release, and in a post on his blog, Cuban accused the commission of being "infected by the misconduct of the staff of its enforcement division," but did not discuss details of the lawsuit.
The commission has the authority to bring only civil lawsuits, not criminal complaints. The Justice Department can file criminal insider-trading charges, but does so only rarely and did not in this case. Cuban presumably could have settled the commission case by paying the $750,000 and perhaps an additional penalty, and accepting an injunction barring him from further violations of securities laws.
B&B ex-chairman says board "massively sorry"
Tuesday, November 18, 2008
By Myles Neligan
Rod Kent, former chairman of nationalised bank Bradford & Bingley, said the B&B board was "massively sorry" for the bank's collapse in September.
"The board accepts it is fully accountable for what happened," Kent told MPs on Tuesday.
"We are deeply disappointed and massively sorry about what happened."
The government took B&B's mortgage book into public ownership and sold its savings business and branch network to Spanish banking group Banco Santander in late September.
B&B, which specialised in buy-to-let and self-certified mortgages, had been hit by a sharp rise in funding costs as the global credit crunch pushed up the cost of wholesale funding.
B&B's executive chairman Richard Pym, who appeared alongside Kent before the House of Commons' Treasury Select Committee, said the Financial Services Authority intervened on Sept 27 after media speculation over the group's future prompted worried customers to withdraw 316 million pounds from the bank in three days.
"It was that which forced the FSA to act," Pym said.
"As the last mortgage bank standing, all the media focus was on us. There was a loss of customer confidence."
Pym said the bank currently has a workforce of 1,100, down from 3,100 at the end of August, reflecting redundancies and the transfer of some staff to Santander's UK subsidiary Abbey.
B&B's demise came one year after the collapse of Northern Rock, which was forced to seek emergency funds from the Bank of England in Sept 2007 after the credit squeeze left it unable to raise funding in the wholesale markets.
In July this year, rival mortgage bank Alliance & Leicester accepted a takeover offer from Santander.
Kent stepped down as B&B chairman on Friday, clearing the way for former chief executive Pym to take on the role of executive chairman.
(Editing by Victoria Bryan)
($1=.6645 Pound)
'Devoted' Yang had to leave Yahoo
By Michael Liedtke
The Associated Press
Tuesday, November 18, 2008
SAN FRANCISCO: Jerry Yang has never concealed how much he cares about Yahoo, the company he co-founded. His emotional attachment is one of the reasons he balked at a $47.5 billion takeover offer from Microsoft six months ago.
The same devotion finally led Yang to conclude that he should step aside as chief executive as the company seeks to bolster its depressed stock price and sagging earnings in an economic downturn that might prove even more wrenching than the dot-com bust of eight years ago.
Yang's surrendering of the reins, announced Monday, will not happen until Yahoo finds a suitable replacement. The company, based in Sunnyvale, California, said it was interviewing candidates inside and outside Yahoo in a search led by its chairman, Roy Bostock, and the executive recruitment firm Heidrick & Struggles.
It did not take long for analysts to conclude that Yang's departure would clear the way for a major overhaul that could culminate in Yahoo's sale to Microsoft - something Yang refused to do in May, to the great irritation of shareholders.
"We still believe Microsoft will eventually own Yahoo," a UBS analyst, Benjamin Schachter, wrote in a research note. "Jerry moving out of the CEO role may accelerate this."
Microsoft declined to comment.
Although Yang had publicly expressed his desire to remain at the helm, Yahoo's board faced growing pressure to cast him aside as the company's shares plunged to their lowest levels since early 2003. The stock closed at $10.63 on Monday before surging by about 10 percent at the open on Tuesday, still far from Microsoft's last bid in early May, at $33 a share.
Steven Ballmer, the Microsoft chief executive, withdrew the offer after Yang sought $37 a share. The negotiating breakdown provoked a shareholder revolt led by the billionaire investor Carl Icahn, who called for Yang's ouster in July.
Icahn reached a truce that put him and two allies on Yahoo's 11-member board, but he still has been lobbying for Yahoo to pursue a deal with Microsoft that would either involve selling the company in its entirety or just its search engine, which ranks a distant second to Google. A spokeswoman Icahn said he had no comment.
The shake-up, however, comes as no surprise, given the challenges facing Yahoo.
"The shareholders were ready to pick up pitchforks and torches," said Rob Enderle, a technology industry analyst. "If Jerry wasn't a founder, he already would have been gone" months ago.
Bostock made it sound as if the change in command had been in the works for some time.
"Jerry and the board have had an ongoing dialogue about succession timing, and we all agree that now is the right time to make the transition to a new CEO who can take the company to the next level," he said.
Yang, who started working on Yahoo with a Stanford University classmate, David Filo, in 1994, will revert to "Chief Yahoo," a titular role he filled before replacing Terry Semel as chief executive in June 2007. He will also remain on Yahoo's board.
"All of you know that I have always, and will always bleed purple," Yang wrote Monday memo to employees, referring to the company's official color.
Sue Decker, Yahoo's president, is expected to be among the candidates to succeed Yang, although she has been an integral part of the management team that has exasperated the company's shareholders.
Dan Rosensweig, who resigned as Yahoo's chief operating officer, could also be lured back as chief executive, or the board could turn to one of its own directors, like the former Viacom chief executive Frank Biondi or John Chapple, the former Nextel chief.
Yang, 40, had been pursuing a strategy that he thought would prove Yahoo was worth more than Microsoft was willing to pay, but the rapidly deteriorating economy made a comeback seem increasingly unlikely.
After squandering the opportunity to sell to Microsoft, Yang tried to improve Yahoo's profit by forging an advertising partnership with Google.
But that backup plan fell through two weeks ago when Google walked away from the deal to avoid a court battle with the U.S. Justice Department, which had concluded the partnership would have throttled competition in the online advertising market.
Just a few hours after the Google partnership collapsed, Yang publicly said he thought that Microsoft should hook up with Yahoo. But the next day, Ballmer expressed doubts that a deal could be worked out.
Yang had also been exploring a possible acquisition of AOL, but most analysts panned the idea as a desperation move that threatened to hurt Yahoo more than it would help.
Book Review: - Reviewed by Janet Maslin
Tuesday, November 18, 2008
Outliers The Story of Success
By Malcolm Gladwell
309 pages. Little, Brown & Co. $27.99.
Malcolm Gladwell's two humongous best sellers, "The Tipping Point" and "Blink," share a shake-and-bake recipe that helps explain their popularity.
Both popularize scientific, sociological and psychological theories in a fashion that makes for lively chatter about Big Intriguing Concepts: "The Tipping Point" promotes the notion that ideas and fads spread in much the same way as infectious diseases do, while "Blink" theorizes that gut instincts and snap judgments can be every bit as good as decisions made more methodically. Both books are filled with colorful anecdotes and case studies that read like entertaining little stories. Both use PowerPoint-type catchphrases to plant concepts in the reader's mind. And both project a sort of self-help chirpiness, which implies that they are giving the reader useful new insights into the workings of everyday life.
"Outliers," Gladwell's latest book, employs this same recipe, but does so in such a clumsy manner that it italicizes the weaknesses of his methodology. The book, which purports to explain the real reason some people - like Bill Gates and the Beatles - are successful, is peppy, brightly written and provocative in a buzzy sort of way. It is also glib, poorly reasoned and thoroughly unconvincing.
Much of what Gladwell has to say about superstars is little more than common sense: that talent alone is not enough to ensure success, that opportunity, hard work, timing and luck play important roles as well. The problem is that he then tries to extrapolate these observations into broader hypotheses about success. These hypotheses not only rely heavily on suggestion and innuendo, but they also pivot deceptively around various anecdotes and studies that are selective in the extreme: the reader has no idea how representative such examples are, or how reliable - or dated - any particular study might be.
Citing what Robert Merton called the "Matthew Effect" (after the New Testament verse that goes, "For unto everyone that hath shall be given, and he shall have abundance. But from him that hath not shall be taken away even that which he hath"), Gladwell suggests that children from wealthy or middle-class backgrounds are much more likely to succeed than those from impoverished ones. He describes a study, begun in the 1920s by a professor of psychology named Lewis Terman, that tracked a group of gifted children and found, in Gladwell's words, that "almost none of the genius children from the lowest social and economic class ended up making a name for themselves."
To Gladwell the stories of the Beatles and Bill Gates are also distinguished not by "their extraordinary talent but their extraordinary opportunities." The Beatles became the Beatles, he suggests, because they happened to be invited, repeatedly, to Hamburg, where they had to perform many hours an evening for many nights - practice time that enabled them to hone their craft. Gladwell does not explain why other groups, who practiced as much as the Beatles, never became one of the seminal rock groups of all time.
In much the same fashion, Gladwell suggests that Bill Gates became Bill Gates because he was lucky enough to attend a high school that "had access to a time-sharing terminal in 1968" and because he had another series of opportunities to spend hours working on computer programming before dropping out of Harvard to start his own software company. Both the Beatles and Gates, Gladwell argues, exceeded or came close to what he calls "the 10,000-Hour Rule" - the number of hours of practice that a neurologist named Daniel Levitin says are likely required "to achieve the level of mastery associated with being a world-class expert - in anything."
Gladwell raises the notion that cultural traditions may play a role in plane crashes, that the 1990 crash of Avianca Flight 52 over Long Island, New York, might have had something to do with the pilots' being Colombian. He quotes Suren Ratwatte, a veteran pilot involved in "human factors" research, saying that "no American pilot would put up with" being held up by air traffic control several times on its way to New York for more than an hour if he or she were running short of fuel.
Such assessments turn individuals into pawns of their cultural heritage, just as Gladwell's emphasis on class and accidents of historical timing plays down the role of individual grit and talent to the point where he seems to be sketching a kind of theory of social predestination, determining who gets ahead and who does not - and all based on a flimsy selection of colorful anecdotes and stories.

A test for bias proves elusive on answers By John TierneyTuesday, November 18, 2008 Last year, a team of researchers at Harvard made headlines with an experiment testing unconscious bias at hospitals. Doctors were shown the picture of a 50-year-old man - sometimes black, sometimes white - and asked how they would treat him if he arrived at the emergency room with chest pains indicating a possible heart attack. Then the doctors took a computer test intended to reveal unconscious racial bias.The doctors who scored higher on the bias test were less likely than the other doctors to give clot-busting drugs to the black patients, according to the researchers, who suggested addressing the problem by encouraging doctors to test themselves for unconscious bias.The results were hailed by other psychologists as some of the strongest evidence that unconscious bias leads to harmful discrimination.But then two other researchers, Neal Dawson and Hal Arkes, pointed out a curious pattern in the data. Even though most of the doctors registered some anti-black bias, as defined by the researchers, on the whole doctors ended up prescribing the clot-busting drugs to blacks just as often as to whites. The doctors scoring low on bias had a pronounced preference for giving the drugs to blacks, while high-scoring doctors had a relatively small preference for giving the drugs to whites - meaning that the more "biased" doctors actually treated blacks and whites more equally.Does this result really prove dangerous bias in the emergency room? Or, as critics suggest, does it illustrate problems with the way researchers have been using split-second reactions on a computer test to diagnose an epidemic of racial bias?In a series of scathing critiques, some psychologists have argued that this computerized tool, the Implicit Association Test, or IAT, has methodological problems and uses arbitrary classifications of bias. If Barack Obama's victory seemed surprising, these critics say, it's partly because social scientists helped create the false impression that three-quarters of whites are unconsciously biased against blacks.The IAT, which has been taken by millions of people on an academic Web site, measures respondents' reaction times as they follow instructions to associate words like "joy" or "awful" with either blacks or whites. It generally takes whites longer to associate positive words with blacks than with whites, although some do show no bias. (To meet one of these exceptional cases, go to TierneyLab, at test is widely used in research, and some critics acknowledge that it's a useful tool for detecting unconscious attitudes and studying cognitive processes. But they say it's misleading for IAT researchers to give individuals ratings like "slight," "moderate" or "strong" - and advice on dealing with their bias - when there isn't even that much consistency in the same person's scores if the test is taken again."One can decrease racial bias scores on the IAT by simply exposing people to pictures of African-Americans enjoying a picnic," says Hart Blanton, a psychologist at Texas A&M. "Yet respondents who take this test on the Web are given feedback suggesting that some enduring quality is being assessed." He says that even the scoring system itself has been changed arbitrarily in recent years. "People receiving feedback about their 'strong' racial biases," Blanton says, "are encouraged in sensitivity workshops to confront these tendencies as some ugly reality that has meaning in their daily lives. But unbeknownst to respondents who take this test, the labels given to them were chosen by a small group of people who simply looked at a distribution of test scores and decided what terms seemed about right. This is not how science is done."Two of the leading IAT researchers, Anthony Greenwald of the University of Washington and Mahzarin Banaji of Harvard, say that some of the past criticism about their measurement techniques has been useful. But they dismiss most of the current objections as moot because the IAT's validity has been confirmed repeatedly.In a new a meta-analysis of more than 100 studies, Greenwald, Banaji and fellow psychologists conclude that scores on IAT reliably predict people's behavior and attitudes, and that the test is a better predictor of interracial behavior than self-description. Their critics reach a different conclusion after reanalyzing the data in some of those studies, which they say are inconsistent and sometimes demonstrate the reverse of what has been reported. They have suggested addressing the scientific dispute over bias - and the researchers' arguments about the legal implications for affirmative-action policies - by having the two sides join in an "adversarial collaboration."One critic, Philip Tetlock, a psychologist at the University of California, Berkeley, said he had found prominent research groups and scholars willing to mediate joint experiments. But so far nothing has happened - and each side blames the other. Greenwald says he tried proposing a joint experiment to Tetlock only to have it rejected.Tetlock says that he tried a counterproposal and offered to work out a compromise, but that the IAT researchers had refused two invitations to sit down with independent mediators.After all the mutual invective in the IAT debate, maybe it's unrealistic to expect the two sides to collaborate. But these social scientists are supposed to be experts in overcoming bias and promoting social harmony. If they can't figure out how to get along with their own colleagues, how seriously should we take their advice for everyone else?

The wrong place to be chronically ill
Tuesday, November 18, 2008
Chronically ill Americans suffer far worse care than their counterparts in seven other industrial nations, according to a new study by the Commonwealth Fund, a New York-based foundation that has pioneered in international comparisons. It is the latest telling evidence that the U.S. health care system badly needs reform.
The results of the study, published by the journal Health Affairs, belie the notion held by many American politicians that health care in the U.S. is the best in the world. That may be true at a handful of pre-eminent medical centers, but it is hardly true for the care provided to a huge portion of the population.
The Commonwealth Fund's survey of 7,500 patients in Australia, Canada, France, Germany, the Netherlands, New Zealand, Britain and the United States focused on patients who suffered from at least one of seven chronic conditions: hypertension, heart disease, diabetes, arthritis, lung problems, cancer or depression.
The care they received in America - or more often did not receive - ought to be a cause for shame. More than half of the American patients went without care because of high out-of-pocket costs. They did not visit a doctor when sick, skipped a recommended test or treatment or failed to fill a prescription. The uninsured suffered most, but even 43 percent of those who had insurance all year skipped care because of costs.Americans also were most likely to report wasting time because their care was so poorly organized. About a third reported that medical records and test results were not available when needed or that tests were duplicated unnecessarily. A third experienced a medical error, such as being given the wrong medication or test results.
The United States did comparatively well in some areas, such as providing relatively prompt access to specialists and clear instructions to patients leaving the hospital. But the nation's overall performance was abysmal.
By contrast, Dutch patients reported far more favorable experiences, largely because the Netherlands provides universal coverage (through individual mandates and private health insurance), a strong primary care system and widespread use of electronic medical records. It should be possible to achieve the same level of performance in America.

Protests over a Bush rule to protect health providers
By Robert PearTuesday, November 18, 2008
WASHINGTON: A last-minute Bush administration plan to grant sweeping new protections to health care providers who oppose abortion and other procedures on religious or moral grounds has provoked a torrent of objections, including a strenuous protest from the government agency that enforces job discrimination laws.
The proposed rule would prohibit recipients of federal money from discriminating against doctors, nurses and other health care workers who refuse to perform or to assist in the performance of abortions or sterilization procedures because of their "religious beliefs or moral convictions."
It would also prevent hospitals, clinics, doctors' offices and drugstores from requiring employees with religious or moral objections to "assist in the performance of any part of a health service program or research activity" financed by the Department of Health and Human Services.
But three officials from the Equal Employment Opportunity Commission, including its legal counsel, whom President George W. Bush appointed, said the proposal would overturn 40 years of civil rights law prohibiting job discrimination based on religion.
The counsel, Reed Russell, and two Democratic members of the commission, Stuart Ishimaru and Christine Griffin, also said that the rule was unnecessary for the protection of employees and potentially confusing to employers.Title VII of the Civil Rights Act of 1964 already prohibits employment discrimination based on religion, Russell said, and the courts have defined "religion" broadly to include "moral or ethical beliefs as to what is right and wrong, which are sincerely held with the strength of traditional religious views."Ishimaru and senior members of the commission staff said that neither the Department of Health and Human Services nor the White House had consulted their agency before issuing the proposed rule. The White House Office of Management and Budget received the proposal on Aug. 21 and cleared it on the same day, according to a government Web site that keeps track of the rule-making process.
The protest from the commission comes on the heels of other objections to the rule by doctors, pharmacists, hospitals, state attorneys general and political leaders, including President-elect Barack Obama.Obama has said the proposal will raise new hurdles to women seeking reproductive health services, like abortion and some contraceptives. Michael Leavitt, the health and human services secretary, said that was not the purpose.Officials at the Health and Human Services Department said they intended to issue a final version of the rule within days. Aides and advisers to Obama said he would try to rescind it, a process that could take three to six months.
To avoid the usual rush of last-minute rules, the White House said in May that new regulations should be proposed by June 1 and issued by Nov. 1. The "provider conscience" rule missed both deadlines.
Under the White House directive, the deadlines can be waived "in extraordinary circumstances." Administration officials were unable to say immediately why an exception might be justified in this case.
The proposal is supported by the United States Conference of Catholic Bishops and the Catholic Health Association, which represents Catholic hospitals.
Sister Carol Keehan, president of the Catholic Health Association, said that in recent years, "we have seen a variety of efforts to force Catholic and other health care providers to perform or refer for abortions and sterilizations."
But the National Association of Chain Drug Stores, the American Hospital Association, the American Medical Association, 28 senators, more than 110 representatives and the attorneys general of 13 states have urged the Bush administration to withdraw the proposed rule.
Pharmacies said the rule would allow their employees to refuse to fill prescriptions for contraceptives and could "lead to Medicaid patients being turned away." State officials said the rule could void state laws that require insurance plans to cover contraceptives and require hospitals to offer emergency contraception to rape victims.
The Ohio Health Department said the rule "could force family planning providers to hire employees who may refuse to do their jobs", a concern echoed by Cecile Richards, president of the Planned Parenthood Federation of America.Under the Civil Rights Act, an employer must make reasonable accommodations for an employee's religious practices, unless the employer can show that doing so would cause "undue hardship on the conduct of its business."
In a letter commenting on the proposed rule, Ishimaru and Griffin, from the employment commission, said that 40 years of court decisions had carefully balanced "employees' rights to religious freedom and employers' business needs."
The proposed rule, they said, "would throw this entire body of law into question."Leavitt, a leading proponent of the rule, said it would increase compliance with laws adopted since 1973 to protect health care workers.
"Federal law," he said, "is explicit and unwavering in protecting federally funded medical practitioners from being coerced into providing treatments they find morally objectionable."
As an example of the policies to which they object, Bush administration officials cited a Connecticut law that generally requires hospitals to provide rape victims with timely access to and information about emergency contraception.
Governor M. Jodi Rell of Connecticut, a Republican, said the state law represented "an earnest compromise" between the rights of rape victims and the interests of health care practitioners who had moral or religious scruples against emergency contraception.
The state attorney general, Richard Blumenthal, a Democrat, said the proposed regulation "would blow apart solutions and compromises that have been reached by people of good will in Connecticut and elsewhere."

Rather's lawsuit shows role of Republican in inquiry
By Jacques Steinberg
Tuesday, November 18, 2008
When Dan Rather filed suit against CBS 14 months ago — claiming, among other things, that his former employer had commissioned a politically biased investigation into his work on a "60 Minutes" segment about President George W. Bush's National Guard service — the network predicted the quick and favorable dismissal of the case, which it derided as "old news."
So far, Rather has spent more than $2 million of his own money on the suit. And according to documents filed recently in court, he may be getting something for his money.
Using tools unavailable to him as a reporter — including the power of subpoena and the threat of punishment against witnesses who lie under oath — he has unearthed evidence that would seem to support his assertion that CBS intended its investigation, at least in part, to quell Republican criticism of the network.
Among the materials that money has shaken free for Rather are internal CBS memorandums turned over to his lawyers, showing that network executives used Republican operatives to vet the names of potential members of a panel that had been billed as independent and charged with investigating the "60 Minutes" segment.
Rather attracted the ire of Republican bloggers and talk radio in particular after the segment, which was broadcast on a weekday edition of "60 Minutes" in September 2004. It purported to have unearthed evidence about favorable treatment extended to Bush during his Vietnam-era service in the Texas Air National Guard.
The network eventually responded to its critics by saying it could no longer vouch for the authenticity of the documents on which the report had been based. The network also commissioned an investigation led by Dick Thornburgh, a prominent Republican and former United States attorney general, and Louis Boccardi, a former chief executive of The Associated Press, not so much to verify the documents, but to determine how the segment got on the air.
In its final report, which was issued in January 2005, the panel cited a breakdown in standards by CBS in rushing the Bush segment onto the air but found no evidence of liberal bias in CBS's preparation of the segment.
By the time the panel's report was issued, Rather had already announced that, under pressure, he would step down as anchor of "CBS Evening News." But he did not leave the network until more than a year later.
In September 2007, he filed the $70 million lawsuit charging that CBS had violated his contract and that the investigation was compromised. A New York State Supreme Court judge has since jettisoned parts of the suit, including Rather's contention that CBS had engaged in fraud.
But the judge has permitted Rather to go forward with the core of his case, including his argument that CBS had limited his work as a correspondent after he left the anchor desk and, in the process, damaged his reputation. The case is on track to go to trial soon, possibly early in the new year.
Those who have worked on the case with Rather, 77, say he has approached it with the zeal of a correspondent trying to report out a "60 Minutes" segment about himself, burying himself in deposition transcripts late into the night and providing his lawyers with road maps of leads he thinks they should pursue. He rarely misses a court hearing on the case.
"I want to go the distance," Rather said recently over a lunch of chili and cornbread at a barbecue restaurant. "Like any good reporter, I want to get as many as facts as possible; I want to get to the bottom of the story."
Some of the documents unearthed by his investigation include notes taken at the time by Linda Mason, a vice president of CBS News. According to her notes, one potential panel member, Warren Rudman, a former Republican senator from New Hampshire, was deemed a less-than-ideal candidate over fears by some that he would not "mollify the right."
Meanwhile, Thornburgh, who served as attorney general for both Ronald Reagan and George H. W. Bush, was named a panelist by CBS, but only after a CBS lobbyist "did some other testing," in which she was told, according to Mason's notes, "T comes back with high marks from GOP."
Another memorandum turned over to Rather's lawyers by CBS was a long typed list of conservative commentators apparently receiving some preliminary consideration as panel members, including Rush Limbaugh, Matt Drudge, Ann Coulter and Pat Buchanan. At the bottom of that list, someone had scribbled "Roger Ailes," the founder of Fox News.
Asked about the assembly of the panel in a sworn deposition, Andrew Heyward, the former president of CBS News, acknowledged that he had wanted at least one member to sit well with conservatives: "CBS News, fairly or unfairly, had a reputation for liberal bias," and "the harshest scrutiny was obviously going to come from the right."
Other documents, meanwhile, suggest that Mason, who reported to Heyward, was getting updates from panel investigators on some of their findings, at a point when CBS News was telling outsiders that the network was staying out of the investigation.
Jim Quinn, a lawyer at Weil, Gotshal & Manges who is representing CBS, said in an interview that whatever Rather had learned in the discovery process would not help his case. He said it was the network that had gained the most ground, especially in persuading the judge to dismiss five of the seven original claims by Rather, as well any claims against individual CBS executives. CBS is believed to be spending about as much on its defense as Rather is spending.
Quinn also said CBS would consider asking for a summary dismissal of the case, once the process of discovery had concluded. "Either on summary judgment or at trial, we feel very comfortable we'll succeed," he said. "We feel the case is meritless."
Still, Chaim Book, a Manhattan employment lawyer who is not connected to the case, said that Rather and his team had already reached something of a milestone.
"Getting through discovery and getting a case significantly closer to trial, in and of itself, is an achievement," Book said. "Discovery, besides being expensive and time-consuming, can lead to embarrassing disclosures."
One of Rather's initial goals was to compel depositions of many of his former bosses and colleagues under oath. Thus far, in addition to Heyward and Mason, his lawyers have questioned Leslie Moonves, the chief executive of CBS; Gil Schwartz, executive vice president of communications for CBS; Sandra Genelius, a former CBS News spokeswoman; and Michael Missal, who helped oversee the panel report on behalf of Thornburgh.
Each could conceivably be called to testify in open court, as could Sumner Redstone, executive chairman of CBS. ( Rather's lawyers have expressed interest in deposing Redstone, a request the judge, Ira Gammerman, has neither granted nor ruled out.)
The day after Election Day, the two sides squared off in Judge Gammerman's courtroom in State Supreme Court in Manhattan over a request by Rather's lawyers, led by Martin R. Gold of Sonnenschein Nath & Rosenthal, to gain access to several thousand documents that were used by the investigative panel to compile its report, including notes from interviews and e-mail messages from top executives.
Lawyers representing the panel have resisted Rather's request for documents, citing attorney-client privilege. At the same time, CBS suggested in its latest filing that Rather was engaging "in nothing more than an intrusive and expensive fishing expedition."
In court in July, Judge Gammerman spoke openly about the extraordinary attention that a Rather-versus-CBS trial would attract and reassured the lawyers that, having previously tried cases involving Woody Allen and Rosie O'Donnell, he could promise both sides a fair hearing.
"And I tried a case involving Joan Collins," he said, adding that, despite intense publicity, "the jury was able to reach what was a reasonable decision."
For books, is Obama new Oprah?
By Motoko Rich
Tuesday, November 18, 2008
When President-elect Barack Obama appeared on "60 Minutes" on CBS on Sunday in his first interview since winning the election, he mentioned having read "a new book out about F .D. R.'s first 100 days" without specifically naming a title or author.
That tantalizing reference set off a scramble for the claim to First Reader rights all day Monday before a spokesman for Obama disclosed what the president-elect had actually read.
The publishers and authors of at least three such books that could fit Obama's description each spent much of Monday wondering whether they had just gotten a plug from the soon-to-be leader of the free world.
Anthony Badger, a professor at Cambridge University in England, assumed it was his book "F D R: The First Hundred Days" when he started receiving e-mail messages from CNN producers on Monday morning, asking for interviews. Meanwhile, executives at Penguin Press, publisher of a forthcoming book, "Nothing to Fear: F D R's Inner Circle and the Hundred Days That Created Modern America," by Adam Cohen (a member of the editorial board of The New York Times), were convinced it was their title.
And then there was Jonathan Alter, a Newsweek reporter and author of "The Defining Moment: F D R's Hundred Days and the Triumph of Hope," published in 2006. On Sunday night, he said, "I got a bunch of e-mails on my BlackBerry from excited friends saying Obama just mentioned your book, exclamation point."
The mystery persisted for most of the day until a spokesman for Obama said late on Monday that the president-elect was actually referring to two books: Alter's and "F D R" by Jean Edward Smith, a biography published last year by Random House that covers far more than the first 100 days.
There was already evidence that Obama had read Alter's book. In a Nov. 6 interview with Larry King on CNN, Paul Begala, a CNN political analyst, said, "Jonathan Alter of Newsweek wrote a wonderful book called 'The Defining Moment,' " adding that Senator Obama "has been quoting from that book."
But "The Defining Moment" was published by Simon & Schuster in 2006, and the paperback edition came out last year. Given that Obama referred to a "new" book on Franklin Delano Roosevelt in the "60 Minutes" interview, Alter's work didn't appear to meet that criterion. Alter said that Obama was "literate enough that he's probably reading more than one book about that period."
After learning that his book was, in fact, one of the titles referred to by Obama, Alter said: "It's just nice that we're going to have a president that has a strong sense of history."
Smith could not be reached, but Carol Schneider, a spokeswoman for Random House, was surprised to learn that "FDR" had been one of the books behind Obama's comment on Sunday because Smith's book was not new. "It's probably safe to say there was no flurry here," Schneider said.
Hill & Wang, an imprint of Farrar, Straus & Giroux, which originally printed fewer than 5,000 copies of "F D R: The First Hundred Days" in June and received scant review coverage in the United States, decided to reprint 5,000 copies on Monday morning, partly in response to orders from booksellers. In an e-mail message, Bob Wietrak, a vice president of merchandising for Barnes & Noble Booksellers, said the company had noticed an uptick in orders on following the interview and was trying to get more copies in stock.
Badger said on Monday in a telephone interview he wasn't sure the president-elect was definitely referring to his book, but he figured the mention couldn't hurt. "It was a matter of good fortune that it's come out at this moment," he said.
Once the actual books read by Obama had been identified, Badger wrote in an e-mail message that he admired both Alter's and Smith's books. "I like to think that my book is rather more analytical and therefore offers a bit more to a comparison of what can and cannot be learned from the 100 Days for the new President," Badger wrote. "But I would think that, wouldn't I?"
On Sunday night Cohen, whose book will be published in January, said he received several e-mail messages from friends, including his former editor, Scott Moyers, now an agent with the Wylie Agency in Manhattan, who sent a message with the subject heading "Bingo."
Earlier on Monday, Tracy Locke, associate publisher at Penguin Press, said, "We have every reason to believe that this is our book," but she declined to say whether the publisher was planning an increase in its print run.
After learning that Cohen's book was not one referred to in the "60 Minutes" interview, Locke said she was disappointed, but added, "I think the timing is right, and the fact that so many people in that administration are recognizing the importance of that time period can only serve us."
Cohen initially said many factors pointed to his book's being the one on Obama's nightstand, including that galleys had been distributed to Obama's transition team and that it was one of the books that David Remnick, editor of The New Yorker, had listed on a blog as one that the newly elected president should read. He added, though, that Obama might well be reading another title.
Once the actual titles had been disclosed, Cohen said "obviously everyone would like to think that the president-elect was reading their book so you can see why it caused a furor."
He added that despite not being the chosen one (yet), he was heartened by Obama's interest in history. "When people write history, they do not think that it will have any impact on world events," Cohen said. "So the idea that we now have a president-elect who is reading multiple books of history and is reading them to shape how he will approach his presidency, I think is inspiring to historians everywhere and augurs well for his presidency. If those who forget history are condemned to repeat it, President Obama seems to really be trying to learn the lessons of history and any historian, whether he reads their book or not, should be very pleased by that."
Jeff Seroy, a spokesman for Farrar, Straus & Giroux, said he was delighted to have a president-elect who might improve book sales. "Maybe he's the new Oprah," Seroy said, "and a rising tide of interest in FDR could float a number of boats, even the ones he hasn't read."

Clashes on Afghan-Pakistani border kill 25
The Associated Press
Tuesday, November 18, 2008
KABUL: Clashes on both sides of the Pakistan-Afghanistan border have killed at least 25 people, officials said Tuesday, including seven left dead after Taliban militants in Pakistan's northwest attacked pro-government tribal elders.
Meanwhile, NATO troops in eastern Afghanistan fired 20 artillery rounds at insurgents inside Pakistan in an attack the alliance said was coordinated with the government in Islamabad.
Pakistan and foreign forces in Afghanistan have stressed the need for coordination in battling Qaeda and Taliban militants who hide out on both sides of the frontier. Pakistani coordination with foreign troops in the region, while not unusual, is nonetheless a sensitive subject because of strong local opposition to the presence of Western troops.
NATO said it fired the rounds Sunday after insurgents attacked its troops in Paktika Province in eastern Afghanistan with rockets from across the border.
"The artillery fire caused a secondary explosion at the rocket launch site, which indicates additional munitions in the location," the NATO statement said.
In an official statement Tuesday, the Pakistani military said only that a NATO post was attacked by militants Sunday and that NATO troops engaged the fleeing militants on the Afghan side.
Asked to confirm if any activity occurred inside Pakistan, a military spokesman refused to go beyond the issued statement.
Officials say relations between NATO-led troops in Afghanistan and the Pakistani military are improving, although Pakistan has been complaining about unilateral missile strikes conducted by U.S. forces into its tribal areas. Pakistani officials say the American airstrikes violate their country's sovereignty.
In other violence, Taliban militants attacked Pakistani tribal leaders near the Afghan border, triggering a gun battle and a blast that killed seven people, an official said Tuesday.
The gun battle occurred late Monday in Bajaur, a lawless tribal region in Pakistan where troops and government-backed tribal militias have been battling militants since August.
The battle killed a Taliban commander as well as two guards of the elders' compound, said Israr Khan, a government representative. Four elders also died when an explosion hit the compound, he said. It was unclear what caused the blast.
The Pakistani military also is engaged in an offensive against militants in the Swat Valley, elsewhere in the country's northwest.
Security forces in the Kabal area of the restive valley killed seven militants Tuesday, according to the army media center. In another incident in the valley's Kanju area, insurgents ambushed an army convoy, killing a soldier, the statement said.
In western Afghanistan, insurgents in the Bala Buluk region of Farah Province ambushed an Afghan Army supply convoy, killing five troops and wounding five others, said General Fazludin Sayar, the army commander for the western region. Sayar said five insurgents also died in the clash Monday.
Insurgent attacks in Afghanistan are up 30 percent from 2007, military officials say.
A tally of official figures provided to The Associated Press show that more than 5,400 people have died in insurgency-related violence this year. Most of the casualties are thought to be militants.
China says no plan to send troops to Afghanistan
Tuesday, November 18, 2008
BEIJING: China is not planning on sending troops to Afghanistan to join the International Security Assistance Force there, state media said on Tuesday.
Prime Minister Gordon Brown said last week in New York that it was possible China would send troops to Afghanistan.
"The Chinese government consistently supports efforts of Afghanistan's government and people to maintain stability, promote economic development and realise peaceful reconstruction," state media quoted Foreign Ministry spokesman Qin Gang as saying.
"Except United Nations' peace-keeping operations approved by the UN Security Council, China never sends troops abroad. The media reports about China sending troops to participate in the ISAF in Afghanistan are groundless," he added.
(Reporting by Ben Blanchard; Editing by Sanjeev Miglani)

Civilians suffered most during war in Georgia
By Ellen Barry
Tuesday, November 18, 2008
MOSCOW: Russian, Georgian and South Ossetian forces failed to protect civilians, and in some cases singled them out for attack, during the war in Georgia, according to a report released Tuesday by Amnesty International.
The report calls for an independent investigation into "serious violations of international humanitarian and human rights law" that Amnesty International contends were committed by all sides during the war in August.
The conflict has been muddied by exaggeration and prejudice from its first hours, said John Dalhuisen, one of the report's authors. But he said, "The truth will out, eventually."
Amnesty International, the London-based human rights group, studied satellite imagery of damage around the separatist enclave of South Ossetia and interviewed witnesses and victims during four visits to the region.
The report said that in attacking Tskhinvali, the South Ossetian capital, on Aug. 7 and 8, Georgia fired Grad missiles that seemed to miss their targets and hit civilian areas. It also criticized Russia for bombarding Georgian territory later and for allowing South Ossetian forces to loot ethnic Georgian villages for weeks.
Both sides, the report concludes, used cluster bombs.
Russian and Georgian officials could not be reached for comment early Tuesday.
The report makes no attempt to determine who started the war, noting that "all sides have declared their actions to be 'defensive,' even when civilians bore the brunt of their military operations."
Researchers in Tskhinvali concluded that Georgian forces aimed Grad rockets at military targets - a Russian peacekeeper base, fuel depots and munitions stockpiles, among others - but that the targets were adjacent to civilian areas. The impact of the rockets had a radius of as much as 150 meters, or 500 feet, and in some cases missiles struck a half a kilometer, or a third of a mile, from their apparent targets, the report said.
The researchers also found that several thousand civilians were in Tskhinvali the night of the attack, Aug. 7, and that 182 structures in the city were damaged, mostly in the first hours of the war.
Unlike the Georgian attack, described as "a fixed, localized incident that took place over eight hours," the Russian bombardment that followed was sporadic and lasted for days, Dalhuisen said.
The Georgian authorities commented on their military strategy to Amnesty International's researchers, but Russian leaders did not.
The report found that Georgian towns, villages and civilians were hit during Russian bombing raids, sometimes "in the apparent absence of nearby military targets," which would violate international law.
Russian infantry treated civilians in a disciplined fashion, but the Russians allowed South Ossetian forces to loot and burn in the ethnic Georgian villages north of the separatist capital, the report determined. Amnesty International's researchers "documented unlawful killings, beatings, threats, arson and looting" by armed South Ossetian groups, the report said.
"It is clear that the Russian authorities singularly failed in their duty to prevent reprisals and serious human rights abuses carried out by South Ossetian forces and militia units," the report said. In South Ossetia in late August, it said, researchers observed "scenes of total destruction, with houses pillaged, burnt and many in ruins."
Russia says Georgia is building up its forces
Tuesday, November 18, 2008
By Zerin Elci
Russia's defence minister said on Tuesday that Georgia was trying to build up its military and he warned this could spark even greater instability in the region than there was in the war in August.
"The Georgian side's efforts to increase military potential is causing concern and I think those initiatives could have bigger consequences than what we saw in August," the minister, Anatoly Serdyukov, told a news conference in Ankara.
Russian troops poured into Georgia in August and pushed government troops back after they tried to retake the pro-Moscow rebel region of South Ossetia.
Russia and Georgia have accused each other of starting the five-day war in which Russian forces took control of large swathes of Georgian territory for some time.
Moscow is incensed by the pro-Western course taken by its small ex-Soviet neighbour and particularly its drive to join the U.S.-led NATO alliance.
Outgoing U.S. President George W. Bush had pushed for swift acceptance of Georgia and Ukraine into NATO, but this failed to generate unanimous support among European NATO members.
U.S. and European officials say Washington is now studying whether NATO could give Georgia something short of a formal path to membership to satisfy European opposition.
Serdyukov, who was in NATO member Turkey to discuss military cooperation, repeated that Moscow remained opposed to U.S. plans to deploy a radar in Poland and interceptor missiles in the Czech Republic as part of a proposed missile defence shield.
Washington says the plan is intended to defend against possible attacks from Iran, but Russia sees the project as a threat to its security.
"Efforts to build air defences in Poland and in the Czech Republic has awakened concerns and this is causing Russia to take similar initiatives," he said.
Russian President Dmitry Medvedev earlier this month announced plans to deploy missiles near NATO's borders to neutralise the missile shield installations.
But on Saturday he said he was ready for compromise and promised to hold off on a possible military response to the project. (Additional reporting by Ibon Villelabeitia; Editing by Richard Balmforth)

Australian navy sets 2-month leave
By Meraiah Foley
Tuesday, November 18, 2008
SYDNEY, Australia: Australian sailors have received an early Christmas gift with the announcement that all non-essential naval staff will be placed on two months' paid leave over the holidays.
Instead of swabbing the decks and polishing the brass, most of Australia's roughly 13,000 naval personnel will be allowed to enjoy the lazy days of their southern hemisphere summer break, which begins Dec. 3.
The initiative, announced Tuesday by Defense Minister Joel Fitzgibbon, is part of reforms designed to make Australia's navy a more family-friendly employer.
Australia's defense forces, like many industries, have suffered from a shortage of skilled workers over the past 15 years as the local economy boomed. Competition from the mining sector and a shift in workers' attitudes away from lifetime careers have made recruiters' jobs more difficult.
But a new program, known as New Generation Navy, is looking at ways to make the navy a kinder, gentler place to work, with better child care services and flexible conditions for working parents.
Of course, the husbands and wives of the Australian Navy will still have to endure long separations at sea, but they may soon be better rewarded for their sacrifices.
Fitzgibbon said the government plans additional benefits for navy staff next year.
The government regards the recruitment and retention of staff as "the single biggest challenge" facing its defense forces over the next decade. Eleven percent of navy staff quit each year and only 73 percent of annual recruitment targets are met, according to a report in the Sydney Morning Herald newspaper on Tuesday.
"We can invest billions in capability — warships and fast jets, et cetera — but they're not much use to us if we don't have the people to man them," Fitzgibbon told national radio. The extended Christmas break is an "interim" measure designed to relieve staff exhausted from covering a 2,020 personnel shortfall, but may become a permanent fixture, Fitzgibbon said.
"There's no reason why we can't have a longer stand-down period each Christmas," he said. "We're looking at all sorts of ways of encouraging people to stay."
Navy ships will continue to patrol Australia's 10,000-plus kilometers of coastline, and around 500 sailors and officers will remain on active duty in the Gulf and other parts of the Middle East, helping with the U.S.-led mission in Iraq.
"Australia's national security remains our first priority," Australia's deputy naval chief, Rear Admiral Davyd Thomas, said in a statement. "Our ships will continue to undertake border protection duties and meet our commitments in the Middle East."

Leaders break deadlock in Northern Ireland
The Associated Press
Tuesday, November 18, 2008
BELFAST: Protestant and Catholic leaders in Northern Ireland ended a five-month deadlock Tuesday by agreeing to form a Justice Department that will oversee the police and courts.
Catholics have long rejected British control of law enforcement and justice in Northern Ireland, while Protestants have supported it. Handing joint control to Protestants and Catholics is meant to ensure that a power-sharing deal between the two sides will not unravel, undoing the central objective of a decade-old peace agreement.
"For the first time we have seen a breakthrough in the deadlock over the devolution of policing and justice," Prime Minister Gordon Brown said in London. "This is the last building block in the process for bringing peace and democracy to Northern Ireland."
First Minister Peter Robinson, a Protestant, and Deputy First Minister Martin McGuinness, a Catholic, stood side by side at Stormont Castle - the Parliament of Northern Ireland - to introduce a deal reached in behind-the-scenes negotiations over the weekend.
The agreement commits both sides to support the selection of a politician from another party to oversee the new Justice Department.
The Irish Republican Army killed nearly 1,800 people, including 300 police officers, in a failed 1970-97 campaign to force Northern Ireland out of Britain. The IRA renounced violence and disarmed in 2005. McGuinness's political party, Sinn Fein, accepted the authority of the Northern Ireland police in 2007, opening the door for power-sharing with the Protestant majority.
But Robinson's Democratic Unionists had been blocking a new Justice Department for more than a year, in part because they oppose giving any role in overseeing law and order to McGuinness or other veterans of the outlawed IRA.
Sinn Fein had been blocking all cabinet meetings since June, rendering the power-sharing government dysfunctional. McGuinness said he would permit the cabinet to resume meeting Thursday.
McGuinness and Robinson declined to express any concrete deadlines or target dates. Instead, they expressed a hope in seeing Britain transfer justice powers "without undue delay."
Robinson and McGuinness agreed that taxpayers throughout Britain should pay for the new Justice Department and said they expected Brown to agree to increase British funds to Northern Ireland.
The rest of Britain already subsidizes the cost of government services in Northern Ireland with several million pounds annually. Brown has emphasized that he expects Northern Ireland increasingly to cover its own costs - or take responsibility for cutting services and the province's government payroll.
ECB's Trichet says UK must respect EU budget rules
Tuesday, November 18, 2008
By David Milliken and Kirsten Donovan
The British government must respect European Union budget rules when considering a fiscal stimulus plan to lift the economy, European Central Bank President Jean-Claude Trichet said on Tuesday.
Answering questions at an event organised by the Daiwa Anglo-Japanese foundation in London, he also said that the euro zone economy was not in a deflationary situation.
Asked his views on British Prime Minister Gordon Brown's plans to borrow to boost public spending in an effort to avert a deep recession, Trichet said: "All I can say is that the UK as well as (euro zone countries) ... are members of the EU and therefore members of the Stability and Growth Pact."
The pact limits national budget deficits to 3 percent of gross domestic product.
Trichet also said he saw no sign of deflation in the euro zone.
"We are not in a situation that characterises deflation. If I look at some facts and figures, I don't see yet any trace of deflation or negative inflation," he said.
It is important to distinguish between disinflation and deflation, Trichet added.
He stressed that confidence is essential as the world grapples with the effects of the financial crisis.
"Economics is complex and confidence is of the essence ... At a global level, confidence is the thing that is lacking most," he said.
Countries on both sides of the Atlantic were doing what was necessary to manage the financial crisis, he said.
Stressing he was not referring to any particular country, Trichet said that if that a country people lacked confidence in its public finances, then fiscal stimulus was likely to prove ineffective.
Brown's government is expected to announce unfunded tax cuts in its pre-budget report on Monday as part of its efforts to mute what is expected to be a deep and prolonged recession in Britain.
The opposition Conservatives say it is time to reel in spending growth.
In July, before the worst effects of the financial crisis hit, the European Union's executive arm called for Britain to cut its deficit by the end of the 2009-10 fiscal year.
However, since Britain is outside the euro zone, the bloc cannot fine it for breaching the deficit rules.
At that time, the European Commission expected the shortfall to swell to 3.3 percent of GDP in the fiscal years 2008-09 and 2009-10 with no policy change.
(Additional reporting by Adrian Croft and Christina Fincher; Editing by Gary Crosse)


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